SHARE PURCHASE AND EXCHANGE AGREEMENT

 

by and among

 

 

 

 

 

Novo Integrated Sciences, Inc.

 

Novo Healthnet Limited

 

Pulse Rx Inc. o/a Pulse Rx LTC Pharmacy

 

And

 

Shareholders of Pulse Rx Inc.

 

   

 

 

TABLE OF CONTENTS

 

        PAGE           ARTICLE I.   DEFINITIONS   2 Section 1.01   Definitions.
  2 Section 1.02   Interpretive Provisions.   4           ARTICLE II.   SHARE
PURCHASE AND EXCHANGE   5 Section 2.01   The Purchase   5 Section 2.02   The
Exchange   5 Section 2.03   Additional Terms   6 Section 2.04   Closing   6
Section 2.05   Tax Consequences.   6 Section 2.06   Conveyance Taxes.   6      
    ARTICLE III.   REPRESENTATIONS, COVENANTS, AND WARRANTIES OF SPR and PR   7
Section 3.01   Corporate Existence and Power.   7 Section 3.02   Due
Authorization.   7 Section 3.03   Valid Obligation   7 Section 3.04  
Governmental Authorization.   7 Section 3.05   Authorized Shares and Capital.  
7 Section 3.06   Validity of Shares.   8 Section 3.07   Title to and Issuance of
the PR Stock.   8 Section 3.08   Subsidiaries and Predecessor Corporations.   8
Section 3.09   Books and Records.   8 Section 3.10   Financial Statements.   8
Section 3.11   Absence of Certain Changes or Events.   8 Section 3.12  
Litigation and Proceedings.   9 Section 3.13   Contracts.   9 Section 3.14  
Compliance with Law and Regulations.   9 Section 3.15   Taxes.   9 Section 3.16
  Tax Returns and Audits.   9 Section 3.17   Employee Benefit Plans; ERISA.   9
Section 3.18   Investment Representations   10         ARTICLE IV.  
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF NOVO INTEGRATED SCIENCES AND NOVO
HEALTHNET LIMITED (collectively “the Buyers”)   11 Section 4.01   Organization.
  11 Section 4.02   Due Authorization.   12 Section 4.03   Governmental
Authorization.   12 Section 4.04   Capitalization.   12 Section 4.05   Options
or Warrants.   12 Section 4.06   Validity of Shares.   12 Section 4.07  
Subsidiaries and Predecessor Corporations.   12 Section 4.08   Information.   12
Section 4.09   Books and Records.   12 Section 4.10   Financial Statements.   13
Section 4.11   Absence of Certain Changes or Events.   13 Section 4.12  
Litigation and Proceedings.   13 Section 4.13   No Conflict with Other
Instruments.   13 Section 4.14   Compliance with Law and Regulations.   14
Section 4.15   Approval of Agreement.   14 Section 4.16   Valid Obligation.   14
Section 4.17   Contracts.   14

 

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Section 4.18   Taxes.   14 Section 4.19   Tax Returns and Audits.   14 Section
4.20   Investment Representations.   15           ARTICLE V.   CONDITIONS TO
CLOSING   15 Section 5.01   Condition to the Obligations of all of the Parties.
  15 Section 5.02   Condition to the Obligations of the Buyers.   15 Section
5.03   Condition to the Obligations of PR and SPR   16           ARTICLE VI.  
ADDITIONAL COVENANTS OF THE PARTIES   16 Section 6.01   Access to Properties and
Records.   16 Section 6.02   Delivery of Books and Records.   16 Section 6.03  
Third Party Consents and Certificates.   16 Section 6.04   Actions Prior to
Closing.   17 Section 6.05   Limitations on Actions.   17 Section 6.06   Actions
at the Closing.   17           ARTICLE VII.   TERMINATION   18 Section 7.01  
Termination.   18 Section 7.02   Survival After Termination.   18 Section 7.03  
Disposition of Shares After Termination.   18           ARTICLE VIII.  
INDEMNIFICATION   18 Section 8.01   Indemnification of Parent and NHL.   18
Section 8.02   Indemnification of SPR and PR.   18 Section 8.03   Procedure.  
19 Section 8.04   Periodic Payments.   20 Section 8.05   Insurance.   20 Section
8.06   Time Limit.   20           ARTICLE IX.   DISPUTE RESOLUTION   20 Section
9.01   Arbitration.   20 Section 9.02   Waiver of Jury Trial; Exemplary Damages.
  22           ARTICLE X.   MISCELLANEOUS   22 Section 10.01   Brokers.   22
Section 10.02   Governing Law .   22 Section 10.03   Notices.   22 Section 10.04
  Attorneys’ Fees.   23 Section 10.05   Confidentiality.   23 Section 10.06  
Public Announcements and Filings.   23 Section 10.07   Schedules; Knowledge.  
24 Section 10.08   Third Party Beneficiaries.   24 Section 10.09   Expenses.  
24 Section 10.10   Entire Agreement.   24 Section 10.11   Survival; Termination.
  24 Section 10.12   Amendment; Waiver; Remedies; Agent.   24 Section 10.13  
Arm’s Length Bargaining; No Presumption Against Drafter.   24 Section 10.14  
Headings.   25 Section 10.15   Exhibits and Schedules.   25 Section 10.16   No
Assignment or Delegation.   25 Section 10.17   Commercially Reasonable Efforts.
  25 Section 10.18   Further Assurances.   25 Section 10.19   Specific
Performance.   25 Section 10.20   Counterparts.   25

 

Exhibits       Exhibit A Novo Integrated Sciences FY’18 Annual Audit 10-K
(8/31/18)     Schedules       Schedule 1 Novo Healthnet Limited Disclosure
Schedule Schedule 2 Novo Integrated Sciences, Inc. Disclosure Schedule Schedule
3 Pulse Rx Inc. Disclosure Schedule Schedule 4 Certificate of Use of Funds
Directive Schedule 5 Certificate Respecting Employment Contracts Schedule 6
Certificate Respecting Loan Funding

 

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SHARE PURCHASE AND EXCHANGE AGREEMENT

 

Dated as of February 20, 2019

 

This Share Purchase and Exchange Agreement (this “Agreement”) is entered into as
of the date first set forth above (the “Effective Date”) by and between (i) Novo
Integrated Sciences, Inc., a Nevada corporation (the “Parent”); (ii) Novo
Healthnet Limited, a limited company incorporated under the Laws (as defined
below) of the Province of Ontario, Canada (“NHL” and together with the Parent,
the “Buyer”) and (iii) the shareholders of Pulse Rx Inc. (the “SPR” or the
“Sellers” wherever referred to collectively) and (iv) Pulse Rx Inc., an Ontario,
Canada corporation (“PR”). Each of the Parent, NHL, SPR and PR may be referred
to herein collectively as the “Parties” and separately as a “Party.”

 

RECITALS

 

WHEREAS, Parent is a public company, the common stock, $0.001 par value per
share (the “Common Stock”), of which is registered under the Securities Act,
which files periodic reports with the Securities and Exchange Commission (the
“SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange Act”);

 

WHEREAS, NHL is a wholly-owned subsidiary of the Parent and is in the business
of providing multi-disciplinary primary healthcare services and products
throughout Canada;

 

WHEREAS, PR is in the business of providing pharmacy services to the LTC,
Retirement and contract-based sectors. ;

 

WHEREAS, the Parent, NHL, the SPR and PR agree to enter into this definitive
Share Purchase and Exchange Agreement resulting in NHL having total ownership
interest in PR and shareholders of Class B common shares of PR (“PRB”) having
ownership in the NHL, as defined herein, ;

 

WHEREAS, the Parent will arrange to be advanced at the Closing (as defined
below) up to CAD $6,000,000.00 for the purposes of existing PR payables
discharging and debt restructuring, as stipulated herein;

 

WHEREAS, for federal income tax purposes, it is intended that the Exchange (as
defined below) qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the “Code”);

 

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NOW THEREFORE, on the stated premises and for and in consideration of the mutual
covenants and agreements hereinafter set forth and the mutual benefits to the
Parties to be derived herefrom, and intending to be legally bound hereby, it is
hereby agreed as follows:

 

Article I. DEFINITIONS

 

Section 1.01 Definitions. For the purposes of this Agreement, unless the context
otherwise requires, the following terms shall have the respective meanings set
forth below and grammatical variations of such terms shall have corresponding
meanings:

 

  (a) “Action” means any legal action, suit, claim, investigation, hearing or
proceeding, including any audit, claim or assessment for Taxes or otherwise.    
    (b)  “Affiliate” means, with respect to any Person, any other Person
directly or indirectly Controlling, Controlled by, or under common Control with
such Person.         (c) “Agreement” means this Share Purchase and Exchange
Agreement, dated February 20, 2019.         (d) “Authority” means any
governmental, regulatory or administrative body, agency or authority, any court
or judicial authority, any arbitrator, or any public, private or industry
regulatory authority, whether international, national, federal, state,
provincial or local.         (e) “Business Day” means any day that is not a
Saturday, Sunday or other day on which banking institutions in Nevada (in the
case of the Buyer) or Ontario (in the case of SPR and PR) are closed for regular
business.         (f) “Buyer” has the meaning set forth in the Preamble.        
(g) “Closing Date” has the meaning set forth in Section 2.04.         (h)
“Control” of a Person means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract, or otherwise.
“Controlled”, “Controlling” and “under common Control with” have correlative
meanings. Without limiting the foregoing, a Person (the “Controlled Person”)
shall be deemed Controlled by (a) any other Person (the “10% Owner”) (i) owning
beneficially, as meant in Rule 13d-3 under the Exchange Act, securities
entitling such Person to cast 10% or more of the votes for election of directors
or equivalent governing authority of the Controlled Person or (ii) entitled to
be allocated or receive 10% or more of the profits, losses, or distributions of
the Controlled Person; (b) an officer, director, general partner, partner (other
than a limited partner), manager, or member (other than a member having no
management authority that is not a 10% Owner ) of the Controlled Person; or (c)
a spouse, parent, lineal descendant, sibling, aunt, uncle, niece, nephew,
mother-in-law, father-in-law, sister-in-law, or brother-in-law of an Affiliate
of the Controlled Person or a trust for the benefit of an Affiliate of the
Controlled Person or of which an Affiliate of the Controlled Person is a
trustee.         (i)  “Effective Date” means 4:00 pm EST February 20, 2019.    
    (j) “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.         (k) “Escrow Agent” means an
independent agent appointed by the Parent which will hold the all of the shares
being transacted pursuant to this Agreement until the Closing Date.         (l)
“Escrow Closing Date” means 4: 00 pm EST March 15, 2019.         (m) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.         (n) “Loan”
means the loan being advanced by the Buyer to PR in satisfaction of the
condition precedent to purchase the PRAS.         (o) “Law” means any domestic
or foreign, federal, state, provincial, municipal or local law, statute,
ordinance, code, rule, or regulation having the force of law.         (p)
 “Lien” means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset, and any conditional sale or
voting agreement or proxy, including any agreement to give any of the foregoing.

 

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  (q) “Material Adverse Effect” or “Material Adverse Change” means a material
and adverse change or a material and adverse effect, individually or in the
aggregate, on the condition (financial or otherwise), net worth, management,
earnings, cash flows, business, operations or properties of a Party taken as a
whole, whether or not arising from transactions in the ordinary course of
business.         (r) “Material Contract” means any contract, agreement,
franchise, license agreement, debt instrument or other commitment to which any
Party is a party or by which it or any of its assets, products, technology, or
properties are bound and which (i) will remain in effect for more than six (6)
months after the date of this Agreement or (ii) involves aggregate obligations
of at least ten thousand dollars ($10,000).         (s) “Order” means any
decree, order, judgment, writ, award, injunction, rule or consent of or by an
Authority.         (t) “Parent” has the meaning set forth in the Preamble.      
  (u) “Parent Shares” means the common shares of the publicly traded Parent,
represented by the trading symbol “OTCQB:NVOS” that are being allotted to PRB
pursuant to this Agreement.         (v) “Person” means an individual,
corporation, partnership (including a general partnership, limited partnership
or limited liability partnership), limited liability company, association, trust
or other entity or organization, including a government, domestic or foreign, or
political subdivision thereof, or an agency or instrumentality thereof.        
(w)  “PRA” means the shareholder of PRAS; namely, Family Pharmacy Clinic Inc.
(“FPC”), an Ontario, Canada corporation.         (x) “PRAS” means 100 Class A
Common Shares of PR, representing all of the issued and outstanding Class A
Common Shares in the capital stock of PR.         (y) “PRB” means the
shareholders of PRBS; namely, Martin Kusmirek (“MK”), Tanya Kusmirek, Andrew
Kusmirek, and Christine Kusmirek, each owning 40, 20, 20, and 20 of the PRBS,
respectively. Any reference to PRB, where several allocation and/or endorsement
to each of them is required, shall apply a pro rata apportionment in relation to
their respective holdings.         (z) “PRBS” means 100 Class B Common Shares of
PR, representing all of the issued and outstanding Class B Common Shares in the
capital stock of PR.         (aa) “Rule 144” means Rule 144 of the Securities
Act.         (bb) “Securities Act” means the Securities Act of 1933, as amended.
        (cc) “SPR” or “Seller” means, collectively, all of the shareholders of
PR shares, regardless of their class of shares.         (dd) “Tax(es)” means any
federal, state, provincial, local or foreign tax, charge, fee, levy, custom,
duty, deficiency, or other assessment of any kind or nature imposed by any
Taxing Authority (including any income (net or gross), gross receipts, profits,
windfall profit, sales, use, goods and services, ad valorem, franchise, license,
withholding, employment, social security, workers compensation, unemployment
compensation, employment, payroll, transfer, excise, import, real property,
personal property, intangible property, occupancy, recording, minimum,
alternative minimum, environmental or estimated tax), including any liability
therefor as a transferee (including under Section 6901 of the Code or similar
provision of applicable Law) or successor, as a result of Treasury Regulation
Section 1.1502-6 or similar provision of applicable Law or as a result of any
Tax sharing, indemnification or similar agreement, together with any interest,
penalty, additions to tax or additional amount imposed with respect thereto.    
    (ee) “Taxing Authority” means the Internal Revenue Service, the Canada
Revenue Agency and any other Authority responsible for the collection,
assessment or imposition of any Tax or the administration of any Law relating to
any Tax.         (ff) “Tax Return” means any return, information return,
declaration, claim for refund or credit, report or any similar statement, and
any amendment thereto, including any attached schedule and supporting
information, whether on a separate, consolidated, combined, unitary or other
basis, that is filed or required to be filed with any Taxing Authority in
connection with the determination, assessment, collection or payment of a Tax or
the administration of any Law relating to any Tax.

 

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Section 1.02 Interpretive Provisions. Unless the express context otherwise
requires:

 

  (a) the words “hereof,” “herein,” and “hereunder” and words of similar import,
when used in this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement;         (b) terms defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa;         (c) the terms “Dollars” and “$” means United States Dollars (USD)
unless otherwise indicated to mean Canadian Dollars (CAD);         (d)
references herein to a specific Section, Subsection, Recital, Schedule or
Exhibit shall refer, respectively, to Sections, Subsections, Recitals, Schedules
or Exhibits of this Agreement;         (e) wherever the word “include,”
“includes,” or “including” is used in this Agreement, it shall be deemed to be
followed by the words “without limitation”;         (f) references herein to any
gender shall include each other gender;         (g) references herein to any
Person shall include such Person’s heirs, executors, personal representatives,
administrators, successors and assigns; provided, however, that nothing
contained in this Section 1.02(g) is intended to authorize any assignment or
transfer not otherwise permitted by this Agreement;         (h) references
herein to a Person in a particular capacity or capacities shall exclude such
Person in any other capacity;         (i) references herein to any contract or
agreement (including this Agreement) mean such contract or agreement as amended,
supplemented or modified from time to time in accordance with the terms thereof;
        (j) with respect to the determination of any period of time, the word
“from” means “from and including” and the words “to” and “until” each means “to
and including”;         (k) references herein to any Law or any license mean
such Law or license as amended, modified, codified, reenacted, supplemented or
superseded in whole or in part, and in effect from time to time; and         (l)
references herein to any Law shall be deemed also to refer to all rules and
regulations promulgated thereunder.

 

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Article II. SHARE PURCHASE AND EXCHANGE

 

Section 2.01 The Purchase

 

  (a) On the terms and subject to the conditions set forth in this Agreement, on
the Escrow Closing Date PRA will endorse for transfer the PRAS in favor of the
Buyer, or as directed, and deliver them to the Escrow Agent.         (b) The
purchase price for the PRAS shall be CAD $10.00 and the condition precedent that
up to CAD $6,000,000.00 is arranged by the Buyer and advanced to PR (the “Loan”)
to discharge payables and restructure debt pursuant to and in accordance with
the Certificate of Use of Funds Directive forming Schedule 4 hereof.

 

Section 2.02 The Exchange

 

  (a) On the terms and subject to the conditions set forth in this Agreement, on
the Escrow Closing Date PRB will endorse for transfer the PRBS in favor of NHL
and deliver them to the Escrow Agent, free and clear of all Liens;         (b)
In exchange for the PRBS to NHL, on the Escrow Closing Date, NHL shall issue in
favor of PRB, exchangeable preferred shares (the “NHL Exchangeable Shares”) free
and clear of all Liens, which shares can only be utilized for the purposes of
exchange for Parent Shares and will be delivered to the Escrow Agent. The Parent
shall allot in favor of PRB, CAD $6,000,000.00 worth of the Parent restricted
common stock (the “Parent Shares”), free and clear of all Liens, which shares
will be solely used for the purposes of exchange with the NHL Exchangeable
Shares . The number of Parent Shares allotted in favor of PRB will be based on a
per share price of $1.7975, as was determined by establishing the 30-trading day
closing average as of the close of business on the Business Day immediately
preceding the date of this Agreement;         (c) The Parties acknowledge and
agree that the CAD-to-USD conversion rate for the CAD $6,000,000.00 shall be
based on the conversion rate of 0.757669, as reported by X-Rates.com, as of the
close of business on the Business Day immediately preceding the date of this
Agreement. The CAD $6,000,000 converts to $4,546,013, rounded-up to the nearest
whole dollar amount. Dividing by the determined per share price of $1.7975, as
noted in Sec 2.02 (b), provides for a total share allotment of 2,529,076
restricted shares of the Parent’s common stock, rounded-up to the nearest whole
number, to be allotted to PRB under this Agreement;         (d) The exchange as
set forth in Section 2.02(a) through 2.02(c), subject to the other terms and
conditions herein, is referred to as the “Exchange”; and         (e) The Parties
acknowledge and agree that the Parent Shares allotted in favor of PRB, under the
terms of the Exchange will be available to be exchanged for the NHL Exchangeable
Shares, at any time, subject only to any of the PRB providing written direction
to effect the exchange of any or all of their NHL Exchangeable Shares and Rule
144 restrictions placed on the unregistered Parent Shares.

 

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Section 2.03 Additional Terms

 

  (a) The Buyer has the right to restructure the PR board resulting in the
Parent having control of the PR board, subject to the condition, a requirement
to maintain PR’s accreditation with the Ontario College of Pharmacists, that the
majority of the board of directors remain to be registered and accredited
pharmacists in the Province of Ontario, Canada, and PRB has the right to appoint
one (1) board member, with voting rights, to the Parent Board of Directors. Each
Party shall take all necessary corporate action required to ensure that the
other Party has the irrevocable right to appoint directors as provided herein.  
      (b) MK will enter into an employment agreement with PR outlining duties
and expectations for PR performance as well as integration performance into
existing NHL business silos. MK’s employment agreement will identify PR and NHL
performance levels for bonus metrics based on gross and net delta revenue from
an agreed revenue benchmark. Bonus payout will comprise of shares or options and
cash as identified within the employment agreement.         (c) The existing
director of PR will enter into an employment agreement with PR outlining duties
and expectations for PR performance. The director’s employment agreement will
identify PR performance levels for bonus metrics based on gross and net delta
revenue from an agreed revenue benchmark. Bonus payout will comprise of shares
or options and cash as identified within the employment agreement.         (d)
NHL, SPR and PR shall execute, acknowledge, and deliver (or shall ensure to be
executed, acknowledged, and delivered), any and all certificates, opinions,
financial statements, schedules, agreements, resolutions, rulings or other
instruments required by this Agreement to be so delivered at or prior to the
Escrow Closing, together with such other items as may be reasonably requested by
the Parties and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby.

 

Section 2.04 Closing. The closing shall occur upon the Buyer advancing the Loan
funds to PR, and the mutual delivery of the PRAS, PRAB, and the NHL Exchangeable
Shares held by the Escrow Agent to the respective beneficial Parties by April
15, 2019, the “Closing Date”. Notwithstanding the foregoing, the Closing Date
shall be accelerated by the earlier availability to the Buyer of the Loan funds,
which availability shall immediately trigger an earlier Closing Date, to be
effected within 10 business days thereof. For greater certainty, the
availability of the Loan funds shall be determined in accordance with the
Certificate Respecting Loan Funding forming Schedule 6 hereof. Prior to the
Escrow Closing Date, the Parties shall have either been satisfied with or
provided their waiver (by the Party for whose benefit the conditions exist) of
the conditions to closing set forth in Article V, at the offices of Legal &
Compliance, LLC, 330 Clematis Street, Suite 217, West Palm Beach, FL 33401, at
10:00 a.m. local time, or at such other date, time or place as the Parties may
agree. At the Closing:

 

  (a) The Escrow Agent shall deliver the NHL Exchangeable Shares to PRB and the
PRAS and the PRBS to NHL;         (b) The Buyer shall have caused the Loan funds
to be advanced to PR such that they may be disbursed pursuant to the Certificate
of Use of Funds Directive.

 

Section 2.05 Tax Consequences. For U.S. federal income tax purposes, the
Exchange is not intended to be a reorganization within the meaning of the Code
and the Treasury Regulations. Each party is responsible for their own taxable
consequences as a result of the Exchange.

 

Section 2.06 Conveyance Taxes. The respective beneficiaries will pay all sales,
use, value added, transfer, stamp, registration, documentary, excise, real
property transfer or gains, or similar Taxes incurred as a result of the
transactions contemplated by this Agreement.

 

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Article III. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF SPR and PR

 

As an inducement to, and to obtain the reliance of the Buyer, except as set
forth in the disclosure schedules attached hereto as Schedule 3, and referencing
the particular section of this Article III to which the disclosure relates (the
“PR Disclosure Schedules”), SPR and PR represents and warrants to the Buyer, as
of the Effective Date and as of the Closing Date, as follows:

 

Section 3.01 Corporate Existence and Power. PR is a corporation duly organized,
validly existing, and in good standing under the Laws of the Province of
Ontario, Canada, and has the corporate power and is duly authorized under all
applicable Laws, regulations, ordinances, and orders of public authorities to
carry on its business in all material respects as it is now being conducted. PR
has delivered to NHL complete and correct copies of the organizational documents
in effect on the Effective Date (the “PR Organizational Documents”). PR has full
corporate power and authority to carry on its businesses as it is now being
conducted and as now proposed to be conducted and to own or lease its properties
and assets. Except as set forth in the PR Disclosure Schedules, PR does not have
any subsidiaries or direct or indirect interest (by way of stock ownership or
otherwise) in any firm, corporation, limited liability company, partnership,
association or business.

 

Section 3.02 Due Authorization. The execution, delivery and performance of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not, violate (i) any provision of the PR Organizational Documents, or (ii)
any applicable Law. PR has taken all actions required by Law, the PR
Organizational Documents or otherwise to authorize the execution, delivery and
performance of this Agreement and to consummate the transactions herein
contemplated. This Agreement has been duly executed and delivered by SPR and PR
upon its execution and delivery, will constitute a valid and legally binding
agreement in accordance with its terms.

 

Section 3.03 Valid Obligation. This Agreement and all agreements and other
documents executed by SPR and PR in connection herewith constitute the valid and
binding obligations of SPR and PR, enforceable in accordance with its or their
terms, except as may be limited by bankruptcy, insolvency, moratorium or other
similar Laws affecting the enforcement of creditors’ rights generally and
subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefore may
be brought.

 

Section 3.04 Governmental Authorization. Neither the execution, delivery nor
performance of this Agreement by SPR and PR requires any consent, approval,
license or other action by or in respect of, or registration, declaration or
filing with any Authority.

 

Section 3.05 Authorized Shares and Capital.

 

  (a) The authorized capital stock of PR consists of an unlimited number of
Class A common shares, of which 100 shares are issued and outstanding as of the
Effective Date.         (b) The authorized capital stock of PR consists of an
unlimited number of Class B common shares, of which 100 shares are issued and
outstanding as of the Effective Date.         (c) Except as set forth in the PR
Disclosure Schedules, PR has no outstanding options, rights or commitments to
issue shares of PR Stock or any other equity security of PR, and there are no
outstanding securities convertible or exercisable into or exchangeable for
shares of PR Stock or any other equity security of PR.         (d) There is no
voting trust, agreement or arrangement among any of the beneficial holders of PR
Stock affecting the nomination or election of directors or the exercise of the
voting rights of PR Stock.         (e) The offer, issuance and sale of such
shares of PR Stock were (a) exempt from the registration and prospectus delivery
requirements under applicable Canadian securities Law, (b) registered or
qualified (or were exempt from registration or qualification) under the
registration or qualification requirements of all applicable Canadian securities
Laws and (c) accomplished in conformity with all other applicable securities
Laws.

 

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Section 3.06 Validity of Shares. The PR Shares to be delivered at the Closing,
shall be duly and validly issued, fully paid and non-assessable and free and
clear of any Liens.

 

Section 3.07 Title to and Issuance of the PR Stock. The PR Shares issued to NHL
under this Exchange are, and on the Closing Date will, not be subject to any
pre-emptive or similar rights, either pursuant to any Organizational Document,
requirement of Law or any contract.

 

Section 3.08 Subsidiaries and Predecessor Corporations. PR does not have any
predecessor corporation(s), no subsidiaries, and does not own, beneficially or
of record, any shares of any other corporation other than any set forth in the
PR Disclosure Schedules.

 

Section 3.09 Books and Records. The books and records, financial and otherwise,
of PR are in all material aspects complete and correct and have been maintained
in accordance with good business and accounting practices.

 

Section 3.10 Financial Statements.

 

Intentionally Blank

 

Section 3.10(i) Executive Summary and Projections. PR will provide a corporate
Executive Summary and a detailed one, three- and five-year projection report
with expenditures and gross and net revenue expectations. The Executive Summary
and Projection report will be provided to the Buyer prior to the Escrow Closing
Date.

 

Section 3.11 Absence of Certain Changes or Events. Since the date of this
Agreement:

 

  (a) there has not been any Material Adverse Change in the business,
operations, properties, assets, or condition (financial or otherwise) of PR;    
    (b) PR has not (i) amended the PR Organizational Documents; (ii) declared or
made, or agreed to declare or make, any payment of dividends or distributions of
any assets of any kind whatsoever to stockholders or purchased or redeemed, or
agreed to purchase or redeem, any of its shares; (iii) made any material change
in its method of management, operation or accounting; (iv) entered into any
other material transaction other than sales in the ordinary course of its
business; or (v) made any increase in or adoption of any profit sharing, bonus,
deferred compensation, insurance, pension, retirement, or other employee benefit
plan, payment, or arrangement made to, for, or with its officers, directors, or
employees; and         (c) PR has not (i) granted or agreed to grant any
options, warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof, (ii) borrowed or agreed to borrow
any funds or incurred, or become subject to, any material obligation or
liability (absolute or contingent) except as disclosed herein and except
liabilities incurred in the ordinary course of business; or (iii) sold or
transferred, or agreed to sell or transfer, any of its assets, properties, or
rights or canceled, or agreed to cancel, any debts or claims.

 

  Page | 8

 

 

Section 3.12 Litigation and Proceedings. Save and except as disclosed in the PR
Disclosure Schedules, there are no actions, suits, proceedings, or
investigations pending or, to the knowledge of PR after reasonable
investigation, threatened by or against PR or affecting PR or its properties, at
law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind. PR
does not have any knowledge of any material default on its part, which has not
been disclosed in the PR Disclosure Schedule, with respect to any judgment,
order, injunction, decree, award, rule, or regulation of any court, arbitrator,
or governmental agency or instrumentality or of any circumstances which, after
reasonable investigation, would result in the discovery of such a default.

 

Section 3.13 Contracts.

 

  (a) All Material Contracts to which PR is a party or by which it or any of its
assets, products, technology, or properties are bound other than those incurred
in the ordinary course of business are set forth on the PR Disclosure Schedules.
        (b) All Material Contracts to which PR is a party or by which its
properties are bound and which are material to the operations of PR taken as a
whole are valid and enforceable by PR in all respects, except as limited by
bankruptcy and insolvency Laws and by other Laws affecting the rights of
creditors generally.         (c) As at the Closing Date, save and except for
those employment contracts disclosed to the Buyer, PR is not a party to any oral
or written (i) contract for the employment of any officer or employee; (ii)
profit sharing, bonus, deferred compensation, stock option, severance pay,
pension benefit or retirement plan, (iii) agreement, contract, or indenture
relating to the borrowing of money, (iv) guaranty of any obligation; (vi)
collective bargaining agreement; or (vii) agreement with any present or former
officer or director of PR.

 

Section 3.14 Compliance with Law and Regulations. To the best of its knowledge,
PR has complied with all applicable statutes and regulations of any provincial,
federal, state, or other governmental entity or agency thereof, except to the
extent that noncompliance would not materially and adversely affect the
business, operations, properties, assets, or condition of PR or except to the
extent that noncompliance would not result in the occurrence of any material
liability for PR.

 

Section 3.15 Taxes. Save and except as noted in the PR Disclosure Schedule PR
has duly paid all governmental fees and taxes which it has become liable to pay
and has duly allowed for all taxes reasonably foreseeable and is under no
liability to pay any penalty or interest in connection with any claim for
governmental fees or taxes and PR has made any and all proper declarations and
returns for tax purposes and all information contained in such declarations and
returns is true and complete.

 

Section 3.16 Tax Returns and Audits. All required federal, state, provincial and
local Tax Returns of PR have been accurately prepared in all material respects
and duly filed, and all federal, provincial and local Taxes required to be paid
with respect to the periods covered by such returns have been paid to the extent
that the same have become due, except as noted on the PR Disclosure Schedule. PR
has not had a Tax deficiency assessed against it and has not executed a waiver
of any statute of limitations or the assessment or collection of any Tax, except
as noted on the PR Disclosure Schedule. PR (i) is not a party to, nor is it
bound by or obligated under, any tax sharing agreements, and (ii) does not have
any potential liability or obligation to any Person as a result of, or pursuant
to, any such tax sharing agreements. PR has no liability for any other taxpayer
under U.S. Treasury Regulation 1.1502-6 or any other similar provision.

 

Section 3.17 Employee Benefit Plans; ERISA. Except as disclosed in the NHL
Schedules, there are no “employee benefit plans” (within the meaning of Section
3(3) of ERISA) nor any other employee benefit or fringe benefit arrangements,
practices, contracts, policies or programs other than programs merely involving
the regular payment of wages, commissions, or bonuses established, maintained or
contributed to by PR, whether written or unwritten and whether or not funded.
Any plans listed in the PR Schedules are hereinafter referred to as the “PR
Employee Benefit Plans.”

 

  Page | 9

 

 

Section 3.18 Investment Representations.

 

  (a) Investment Purpose. As of the Closing Date, PR and PRB understands and
agrees that the consummation of the exchange of NHL Exchangeable Shares for the
Parent Shares, as contemplated hereby, constitutes the offer and sale of
securities under the Securities Act and applicable state statutes and that the
Parent Shares are being acquired for PRB’s own account and not with a present
view towards the public sale or distribution thereof, except pursuant to sales
registered or exempted from registration under the Securities Act.         (b)
Investor Status. PRB is (i) an “accredited investor” as that term is defined in
Rule 501(a) of Regulation D (an “Accredited Investor”), and/or (ii) an exempt
investor in accordance with the provisions of Regulation S promulgated under the
Securities Act. PRB has been furnished with all documents and materials relating
to the business, finances and operations of both the Parent and NHL, and NHL’s
subsidiaries and information that such PRB has requested and deemed material to
making an informed decision regarding this Agreement and the underlying
transactions.         (c) Reliance on Exemptions. PRB understands that the
Parent Shares are being offered and sold to PRB in reliance upon specific
exemptions from the registration requirements of United States federal and state
securities Laws and that the Parent and NHL are relying upon the truth and
accuracy of, and PRB’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of PRB set forth herein in order
to determine the availability of such exemptions and the eligibility of PRB to
acquire the Parent Shares.         (d) Information. PRB, and its advisors, if
any, have been furnished with all materials relating to the business, finances
and operations of the Buyer and materials relating to the offer and sale of the
Parent Shares which have been requested by PRB. PRB and its advisors, if any,
have been afforded the opportunity to ask questions of the Buyer. PRB and its
advisors understand that their investment in the Parent Shares involves a
significant degree of risk. PRB and its advisors are not aware of any facts that
may constitute a breach of any of the Buyer’s representations and warranties
made herein.         (e) Governmental Review. PRB and its advisors understand
that no United States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or endorsement of
the Parent Shares.         (f) Transfer or Resale. PRB understands that upon
exchanging the NHL Exchangeable Shares for Parent Shares (i) the sale or re-sale
of the Parent Shares has not been and is not being registered under the
Securities Act or any applicable state securities Laws, and the Parent Shares
may not be transferred unless (a) the Parent Shares are sold pursuant to an
effective registration statement under the Securities Act, (b) PRB has delivered
to the Parent, at the cost of PRB, an opinion of counsel that shall be in form,
substance and scope customary for opinions of counsel in comparable transactions
to the effect that the Parent Shares to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration, which opinion shall
be accepted by the Parent, (c) the Parent Shares are sold or transferred to an
“affiliate” (as defined in Rule 144 promulgated under the Securities Act (or a
successor rule) (“Rule 144”)) of PRB who agree to sell or otherwise transfer the
Parent Shares only in accordance with this Section 3.18 and who is an Accredited
Investor, (d) the Parent Shares are sold pursuant to Rule 144, or (e) the Parent
Shares are sold pursuant to Regulation S under the Securities Act (or a
successor rule) (“Regulation S”), and PRB shall have delivered to the Parent, at
the cost of PRB, an opinion of counsel that shall be in form, substance and
scope customary for opinions of counsel in corporate transactions, which opinion
shall be accepted by the Parent; (ii) any sale of such Parent Shares made in
reliance on Rule 144 may be made only in accordance with the terms of said Rule
and further, if said Rule is not applicable, any re-sale of such Parent Shares
under circumstances in which the seller (or the person through whom the sale is
made) may be deemed to be an underwriter (as that term is defined in the
Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Parent or NHL nor any other person is under any obligation to
register such Parent Shares under the Securities Act or any state securities
Laws or to comply with the terms and conditions of any exemption thereunder (in
each case). Notwithstanding the foregoing or anything else contained herein to
the contrary, the Parent Shares may be pledged as collateral in connection with
a bona fide margin account or other lending arrangement.

 

  Page | 10

 

 

  (g) Legends. PRB understand that the Parent Shares issued as a result of an
exchange of NHL Exchangeable Shares, until such time as the Parent Shares have
been registered under the Securities Act, or may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, the Parent Shares may bear a
standard Rule 144 legend and a stop-transfer order may be placed against
transfer of the certificates for such Parent Shares.         (h) Removal. The
legend(s) referenced in Section 3.18(g) shall be removed and the Parent shall
issue a certificate without such legend to the holder of any Parent Shares upon
which it is stamped, if, unless otherwise required by applicable state
securities Laws, (a) the Parent Shares are registered for sale under an
effective registration statement filed under the Securities Act, or otherwise
may be sold pursuant to Rule 144 or Regulation S without any restriction as to
the number of securities as of a particular date that can then be immediately
sold, or (b) such holder provides the Parent with an opinion of counsel, in
form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Parent Shares
may be made without registration under the Securities Act, which opinion shall
be accepted by the Parent so that the sale or transfer is affected. PRB agrees
to sell all Parent Shares, including those represented by a certificate(s) from
which the legend has been removed, in compliance with SEC regulations.        
(i) Residency. PRB represents and warrants to the Buyers that it is not a United
States legal entity or U.S. citizen and it will not be a United States legal
entity or U.S. citizen at the time of Closing, and that the PR signatories were
not in the United States at the time this Agreement was signed by such
signatory.

 

Article IV. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF NOVO INTEGRATED
SCIENCES AND NOVO HEALTHNET LIMITED (collectively “the Buyers”)

 

As an inducement to, and to obtain the reliance of SPR, except as set forth in
the disclosure schedules as attached hereto as Schedule 4, and referencing the
particular section of this Article IV to which the disclosure relates (the
“Buyer’s Schedules”), the Buyers represent and warrant to SPR, as of the
Effective Date and as of the Closing Date, as follows:

 

Section 4.01 Organization. Novo Integrated he execution Organization. Novo
Integrated Sciences, Inc. is a corporation duly organized, validly existing, and
in good standing under the Laws of the State of Nevada and has the corporate
power and is duly authorized under all applicable Laws, regulations, ordinances,
and orders of public authorities to carry on its business in all material
respects as it is now being conducted. Novo Healthnet Limited is a limited
corporation duly organized, validly existing, and in good standing under the
Laws of the Province of Ontario, Canada and has the corporate power and is duly
authorized under all applicable Laws, regulations, ordinances, and orders of
public authorities to carry on its business in all material respects as it is
now being conducted. NHL has delivered to complete and correct copies of the
articles of incorporation and bylaws of the Buyers as in effect on the Effective
Date (the “Buyer’s Organizational Documents”).

 

  Page | 11

 

 

Section 4.02 Due Authorization. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
violate (i) any provision of the Buyer’s Organizational Documents, or (ii) any
applicable Law. The Buyers have taken all action required by Law, the Buyer’s
Organizational Documents, or otherwise to authorize the execution and delivery
of this Agreement, and the Buyers have full power, authority, and legal right
and has taken all action required by Law, the Buyer’s Organizational Documents
or otherwise to consummate the transactions herein contemplated.

 

Section 4.03 Governmental Authorization. Neither the execution, delivery nor
performance of this Agreement by the Buyers requires any consent, approval,
license or other action by or in respect of, or registration, declaration or
filing with any Authority.

 

Section 4.04 Capitalization. As of February 13, 2019, the Parent’s authorized
capitalization consists of (a) 499,000,000 shares of common stock, par value
$0.001 per share (“the Parent Common Stock”) and (b) 1,000,000 shares of
preferred stock, par value $0.001 per share, none of which are issued and
outstanding and all of which are undesignated. There are currently 222,589,856
shares of Parent Common Stock issued and outstanding. Additionally, the Parent
has 10,105,000 granted stock options and warrants to purchase Parent Common
Stock. All issued and outstanding Parent Common Stock is legally issued, fully
paid, non-assessable and not issued in violation of the preemptive or other
rights of any person.

 

Section 4.05 Options or Warrants. Other than as set forth on the Buyer’s
Schedules, there are no options, warrants, convertible securities,
subscriptions, stock appreciation rights, phantom stock plans or stock
equivalents or other rights, agreements, arrangements or commitments (contingent
or otherwise) of any character issued or authorized by the Parent relating to
the issued or unissued capital stock of the Parent (including, without
limitation, rights the value of which is determined with reference to the
capital stock or other securities of the Parent) or obligating the Parent to
issue or sell any shares of capital stock of, or options, warrants, convertible
securities, subscriptions or other equity interests in, the Parent. There are no
outstanding contractual obligations of the Parent to repurchase, redeem or
otherwise acquire any shares of the Parent Common Stock, to pay any dividend or
make any other distribution in respect thereof, or to provide funds to, or make
any investment (in the form of a loan, capital contribution or otherwise) in,
any person.

 

Section 4.06 Validity of Shares. The Parent Shares to be allotted at the
Closing, can be duly and validly issued, fully paid and non-assessable and free
and clear of any Liens.

 

Section 4.07 Subsidiaries and Predecessor Corporations. NHL is the wholly-owned
subsidiary of Parent. The Parent and NHL do not have any other subsidiaries, and
does not own, beneficially or of record, any shares of any other corporation
other than set forth in Buyer’s Disclosure Schedules.

 

Section 4.08 Information. The information concerning the Buyers set forth in
this Agreement and the Buyer’s Disclosure Schedules is complete and accurate in
all material respects and does not contain any untrue statements of a material
fact or omit to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading.

 

Section 4.09 Books and Records. The books and records, financial and otherwise,
of the Buyers are in all material aspects complete and correct and have been
maintained in accordance with good business and accounting practices.

 

  Page | 12

 

 

Section 4.10 Financial Statements. The Buyer’s annual audited consolidated
financial statements (Exhibit A) for the fiscal year ending August 31, 2018: (i)
have been prepared in accordance with generally accepted accounting principles
on a basis consistent with prior fiscal periods; (ii) are complete and accurate;
and (iii) present fairly the assets, liabilities (whether accrued, absolute,
contingent or otherwise) and financial condition of the Buyer at the applicable
balance sheet date, and the results of operations of the Buyer. Except to the
extent reflected or reserved against in the balance sheet (including the notes
thereto) forming part of the Buyer’s annual audited consolidated financial
statements for the fiscal year ending August 31, 2018 or incurred subsequent to
the date thereof and disclosed in Buyer’s Disclosure Schedule, and except in
respect of normal trade payables arising in the ordinary course of the Business,
the Buyers do not have any outstanding indebtedness or any liabilities (whether
accrued, absolute, contingent or otherwise) nor any outstanding commitments or
obligations of any kind.

 

Section 4.11 Absence of Certain Changes or Events. Since the date of this
Agreement or such other date as provided for herein:

 

  (a) there has not been any Material Adverse Change in the business,
operations, properties, assets or condition of the Buyer;         (b) the Buyer
has not (i) amended the Buyer’s Organizational Documents except as required by
this Agreement; (ii) declared or made, or agreed to declare or make any payment
of dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or redeem, any of
its capital stock; (iii) waived any rights of value which in the aggregate are
outside of the ordinary course of business or material considering the business
of the Buyers; (iv) made any material change in its method of management,
operation, or accounting; (v) entered into any transactions or agreements other
than in the ordinary course of business; (vi) made any accrual or arrangement
for or payment of bonuses or special compensation of any kind or any severance
or termination pay to any present or former officer or employee; (vii) increased
the rate of compensation payable or to become payable by it to any of its
officers or directors or any of its salaried employees whose monthly
compensation exceed $1,000; or (viii) made any increase in any profit sharing,
bonus, deferred compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement, made to, for or with its officers,
directors, or employees;         (c) to its knowledge, the Buyers have not
become subject to any Law or regulation which materially and adversely affects,
or in the future, may adversely affect, the business, operations, properties,
assets or condition of the Buyers.

 

Section 4.12 Litigation and Proceedings. There are no actions, suits,
proceedings or investigations pending or, to the knowledge of either the Parent
or NHL after reasonable investigation, threatened by or against the Buyers or
affecting the Buyers or their properties, at Law or in equity, before any court
or other governmental agency or instrumentality, domestic or foreign, or before
any arbitrator of any kind except as disclosed in the Buyers Schedules. The
Buyer has no knowledge of any default on its part with respect to any judgment,
order, writ, injunction, decree, award, rule or regulation of any court,
arbitrator, or governmental agency or instrumentality or any circumstance which
after reasonable investigation would result in the discovery of such default.

 

Section 4.13 No Conflict with Other Instruments. The execution of this Agreement
and the consummation of the transactions contemplated by this Agreement will not
result in the breach of any term or provision of, constitute a default under, or
terminate, accelerate or modify the terms of, any indenture, mortgage, deed of
trust, or other material agreement or instrument to which either the Parent or
NHL are a party or to which any of its assets, properties or operations are
subject, which would result in a Material Adverse Effect on either the Parent or
NHL.

 

  Page | 13

 

 

Section 4.14 Compliance with Law and Regulations. The Parent has complied with
all United States federal, state or local or any applicable foreign Laws
applicable to the Parent and the operation of its business, except where the
failure to so comply would reasonably be expected to result in a Material
Adverse Effect on the Parent. NHL has complied with all Canadian, provincial,
local or any applicable foreign Laws applicable to NHL and the operation of its
business, except where the failure to so comply would reasonably be expected to
result in a Material Adverse Effect on NHL.

 

Section 4.15 Approval of Agreement. The Board of Directors of both the Parent
and NHL have authorized the execution and delivery of this Agreement by the
Buyers and has approved this Agreement and the transactions contemplated hereby.

 

Section 4.16 Valid Obligation. This Agreement and all agreements and other
documents executed by the Buyers in connection herewith constitute the valid and
binding obligation of both the Parent and NHL, enforceable in accordance with
its or their terms, except as may be limited by bankruptcy, insolvency,
moratorium or other similar Laws affecting the enforcement of creditors’ rights
generally and subject to the qualification that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefore may be brought.

 

Section 4.17 Contracts.

 

  (a) All Material Contracts to which the Buyers are a party or by which it or
any of its assets, products, technology, or properties are bound other than
those incurred in the ordinary course of business are set forth on the Buyer’s
Disclosure Schedules.         (b) All Material Contracts to which any Buyer is a
party or by which its properties are bound and which are material to the
operations of the Buyers taken as a whole are valid and enforceable by the
Buyers in all respects, except as limited by bankruptcy and insolvency Laws and
by other Laws affecting the rights of creditors generally.

 

Section 4.18 Taxes.

 

  (a) The Parent has duly and punctually paid all governmental fees and taxes
which it has become liable to pay and has duly allowed for all taxes reasonably
foreseeable and is under no liability to pay any penalty or interest in
connection with any claim for governmental fees or taxes and the Parent has made
any and all proper declarations and returns for tax purposes and all information
contained in such declarations and returns is true and complete, except as noted
on the Parent’s Disclosure Schedule.         (b) NHL has duly and punctually
paid all governmental fees and taxes which it has become liable to pay and has
duly allowed for all taxes reasonably foreseeable and is under no liability to
pay any penalty or interest in connection with any claim for governmental fees
or taxes and NHL has made any and all proper declarations and returns for tax
purposes and all information contained in such declarations and returns is true
and complete, except as noted on the Buyer’s Disclosure Schedule.

 

Section 4.19 Tax Returns and Audits. All required federal, state, provincial and
local Tax Returns of the Buyers have been accurately prepared in all material
respects and duly and timely filed, and all federal, provincial and local Taxes
required to be paid with respect to the periods covered by such returns have
been paid to the extent that the same have become due, except where the failure
so to file or pay could not reasonably be expected to have a Material Adverse
Effect on the Buyers. The Buyers are not and have not been delinquent in the
payment of any Tax, except as noted on the Buyer’s Disclosure Schedule. The
Buyers have not had a Tax deficiency assessed against it and have not executed a
waiver of any statute of limitations or the assessment or collection of any Tax.
None of the Buyer’s federal income, provincial and local income and franchise
tax returns has been audited by any Authority. The reserves for Taxes reflected
on the Buyers Consolidated Financial Statements are and will be sufficient for
the payment of all unpaid Taxes payable by the Buyers. The Buyers have not
received any notice of any proposed audits, investigations, claims or
administrative proceedings relating to Taxes or any Tax Returns. The Buyers (i)
are not a party to, nor are they bound by or obligated under, any tax sharing
agreements, and (ii) do not have any potential liability or obligation to any
Person as a result of, or pursuant to, any such tax sharing agreements. The
Parent has no liability for any other taxpayer under U.S. Treasury Regulation
1.1502-6 or any other similar provision. The Buyer’s file a consolidated
Financial Statement with the SEC, based on a fiscal year end of August 31. The
Fiscal Year 2018 Annual Audited Financial Statements filed with the SEC as Form
10-K are provided as Exhibit A to this Agreement.

 

  Page | 14

 

 

Section 4.20 Investment Representations.

 

INTENTIONALLY BLANK

 

Article V. CONDITIONS TO CLOSING

 

Section 5.01 Condition to the Obligations of all of the Parties. The obligations
of all of the Parties to consummate the Closing are subject to the satisfaction,
or waiver by each of the Parties, at or before the Closing Date, of all the
following conditions:

 

  (a) No provisions of any applicable Law, and no Order shall prohibit or impose
any condition on the consummation of the Closing.         (b) There shall not be
any Action brought by a third-party to enjoin or otherwise restrict the
consummation of the Closing.         (c) The Parties shall have received all
necessary approvals from all required Authorities to consummate the transactions
contemplated herein.

 

Section 5.02 Condition to the Obligations of the Buyers. The obligations of the
Buyers to consummate the Closing are subject to the satisfaction (or waiver by
the Buyers), at or before the Escrow Closing Date, of the following conditions:

 

  (a) the Buyers shall have completed its due diligence investigation of PR to
the Buyer’s satisfaction in the Buyers sole discretion;         (b) the Closing
shall not result in PR being debarred or losing its status with any third-party
or government payor for the provision of pharmacy services;         (c) The
representations and warranties made by PR and SPR in this Agreement shall have
been true and correct when made and shall be true and correct in all material
respects at the Escrow Closing Date with the same force and effect as if such
representations and warranties were made at and as of the Closing Date, except
for changes therein permitted by this Agreement;         (d) No Material Adverse
Change shall have occurred in the business, assets, liabilities, results,
financial condition, affairs or prospects of PR from the Effective Date to the
Escrow Closing Date;         (e) PR and SPR shall have performed or complied
with all covenants and conditions required by this Agreement to be performed or
complied with by PR and SPR prior to or at the Escrow Closing Date;         (f)
No Order, statute, rule, regulation, executive order, injunction, stay, decree,
judgment or restraining order shall have been enacted, entered, promulgated or
enforced by any court or governmental or regulatory authority or instrumentality
which prohibits the consummation of the transactions contemplated hereby; and  
      (g) PR’s Board of Directors shall have approved this Agreement and the
transactions contemplated herein.

 

  Page | 15

 

 

Section 5.03 Condition to the Obligations of PR and SPR. The obligation of SPR
to consummate the Closing is subject to the satisfaction (or waiver by PR), at
or before the Escrow Closing Date, of the following conditions:

 

  (a) SPR shall have completed its due diligence investigation of the Buyers to
SPR’s satisfaction in its discretion;         (b) The representations and
warranties made by the Buyers in this Agreement shall have been true and correct
when made and shall be true and correct in all material respects at the Closing
Date with the same force and effect as if such representations and warranties
were made at and as of the Closing Date, except for changes therein permitted by
this Agreement;         (c) No Material Adverse Change shall have occurred in
the business, assets, liabilities, results, financial condition, affairs or
prospects of the Buyers from the Effective Date to the Escrow Closing;        
(d) The Buyers shall have performed or complied with all covenants and
conditions required by this Agreement to be performed or complied with by the
Buyers prior to or at the Closing;         (e) No order, statute, rule,
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby; and         (f) The
Parent’s and NHL’s Boards of Directors shall have approved this Agreement and
the transactions contemplated herein.

 

Article VI. ADDITIONAL COVENANTS OF THE PARTIES

 

Section 6.01 Access to Properties and Records. From the Effective Date until the
Closing or the earlier termination of this Agreement in accordance with its
terms, each of the Parent, NHL and PR will each afford to the officers and
authorized representatives of the other full access to the properties, books and
records of the Parent, NHL and PR, as the case may be, in order that each may
have a full opportunity to make such reasonable investigation as it shall desire
to make of the affairs of the other, and each will furnish the other with such
additional financial and operating data and other information as to the business
and properties of the Parties, as the case may be, as the other shall from time
to time reasonably request.

 

Section 6.02 Delivery of Books and Records. At the Escrow Closing, PR will
identify to Parent and NHL the location on record where the books and records
are kept.

 

Section 6.03 Third Party Consents and Certificates. The Parent, NHL and PR and
SPR agree to cooperate with each other in order to obtain any required
third-party consents to this Agreement and the transactions herein contemplated.

 

  Page | 16

 

 

Section 6.04 Actions Prior to Closing. From and after the Effective Date until
the Closing Date and except as set forth in the Buyers Schedules, if any, or the
PR Schedules, or as permitted or contemplated by this Agreement, the Parties,
respectively, will each:

 

  (a) carry on its business in substantially the same manner as it has
heretofore;         (b) maintain and keep its properties in states of good
repair and condition as at present, except for depreciation due to ordinary wear
and tear and damage due to casualty;         (c) maintain in full force and
effect insurance comparable in amount and in scope of coverage to that now
maintained by it;         (d) perform in all material respects all of its
obligations under material contracts, leases, and instruments relating to or
affecting its assets, properties, and business;         (e) use its best efforts
to maintain and preserve its business organization intact, to retain its key
employees, and to maintain its relationship with its material suppliers and
customers; and         (f) fully comply with and perform in all material
respects all obligations and duties imposed on it by all applicable Laws
(including without limitation, all securities Laws) and all rules, regulations,
and orders imposed by federal, state or provincial governmental authorities.

 

Section 6.05 Limitations on Actions. From and after the Effective Date until the
Closing Date, except as required by this Agreement neither of the Parties will:

 

  (a) make any changes in their charter documents, except as contemplated by
this Agreement;         (b) enter into or amend any contract, agreement, or
other instrument of any of the types described in such Party’s schedules, except
that a Party may enter into or amend any contract, agreement, or other
instrument in the ordinary course of business involving the sale of goods or
services; or         (c) sell any assets or discontinue any operations, sell any
shares of capital stock or conduct any similar transactions other than in the
ordinary course of business.

 

Section 6.06 Actions at the Closing.

 

  (a) As of the Closing, the Board of Directors of the Parent shall allow for
the appointment of one more board member appointed by PRB         (b)  The
Escrow Agent will complete its duties and release the PRAS, the PRBS and the
Parent Shares as contemplated in this Agreement.         (c) The Parties shall
ensure that all previously provided personal guarantees respecting PR and the
mortgage provided by MK to LPG Pharmaceuticals Inc. (“LPG”), as additional
security for the PR indebtedness to LPG, will have been discharged prior to or
on Closing.

 

  Page | 17

 

 

Article VII. TERMINATION

 

Section 7.01 Termination. This Agreement may be terminated on or prior to the
Closing Date:

 

  (a) By the mutual written consent of the Parent, NHL and SPR;         (b) By
the Buyer if the conditions to Closing as set forth in Section 5.01 and Section
5.02 have not been satisfied or waived by the Buyer, which waiver the Buyer may
give or withhold in its sole discretion, by the Escrow Closing Date, provided,
however, that the Buyer may not terminate this Agreement pursuant to this
Section 7.01(b) if the reason for the failure of any such condition to occur was
the breach of the terms of this Agreement by the Buyer;         (c) By SPR if
the conditions to Closing as set forth in Section 5.01 and Section 5.03 have not
been satisfied or waived by SPR, which waiver SPR may give or withhold in its
sole discretion, by the Closing Date, provided, however, that SPR may not
terminate this Agreement pursuant to this Section 7.01(c) if the reason for the
failure of any such condition to occur was the breach of the terms of this
Agreement by SPR;         (d) By any Party, if a court of competent jurisdiction
or other Authority shall have issued an order or taken any other action
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated under this Agreement and such order or action shall have become
final and non-appealable.

 

Section 7.02 Survival After Termination. If this Agreement is terminated in
accordance with Section 7.01, this Agreement shall become void and of no further
force and effect with no liability to any Person on the part of any Party hereto
(or any officer, agent, employee, direct or indirect holder of any equity
interest or securities, or Affiliates of any Party); provided, however, that
this Section 7.02, Article VIII and Article X shall survive the termination of
this Agreement and (iii) nothing herein shall relieve any Party from any
liability for fraud or any willful and material breach of the provisions of this
Agreement prior to the termination of this Agreement.

 

Section 7.03 Disposition of Shares After Termination. If this Agreement is
terminated without completion of the transaction contemplated herein, then the
Escrow Agent will return all respective shares to the original shareholders.

 

Article VIII. INDEMNIFICATION

 

Section 8.01 Indemnification of Parent and NHL. SPR hereby agrees to indemnify
and hold harmless to the fullest extent permitted by applicable law the Parent,
NHL, each of its Affiliates and each of its and their respective members,
managers, partners, directors, officers, employees, stockholders, attorneys and
agents and permitted assignees (each a “Buyer Indemnified Party”), against and
in respect of any and all loss, cost, payments, demand, penalty, forfeiture,
expense, liability, judgment, deficiency or damage, and diminution in value or
claim (including actual costs of investigation and attorneys’ fees and other
costs and expenses) (all of the foregoing collectively, “Losses”) incurred or
sustained by any Buyer Indemnified Party as a result of or in connection with
(a) any breach, inaccuracy or nonfulfillment or the alleged breach, inaccuracy
or nonfulfillment of any of the representations, warranties, covenants and
agreements of SPR contained herein or in any of the additional agreements or any
certificate or other writing delivered pursuant hereto, and (b) any Actions by
any third parties with respect to the business or operations of PR (including
breach of contract claims, violations of warranties, trademark infringement,
privacy violations, torts or consumer complaints) for any period on or prior to
the Closing Date.

 

Section 8.02 Indemnification of SPR and PR. The Parent and NHL hereby agree,
jointly and severally, to indemnify and hold harmless to the fullest extent
permitted by applicable law SPR AND PR, its Affiliates, and each of their
respective officers, directors, employees, stockholders, attorneys and agents
and permitted assignees (each a “SPR AND PR Indemnified Party”), against and in
respect of any and all Losses incurred or sustained by any SPR AND PR
Indemnified Party as a result of or in connection with (a) any breach,
inaccuracy or nonfulfillment or the alleged breach, inaccuracy or nonfulfillment
of any of the representations, warranties, covenants and agreements of the
Buyers contained herein or in any of the additional agreements or any
certificate or other writing delivered pursuant hereto, and (b) any Actions by
any third parties with respect to the business or operations of the Buyers
(including breach of contract claims, violations of warranties, trademark
infringement, privacy violations, torts or consumer complaints) for any period
on or prior to the Closing Date.

 

  Page | 18

 

 

Section 8.03 Procedure. The following shall apply with respect to all claims by
any SPR AND PR Indemnified Party or Buyer Indemnified Party for indemnification
in respect of Third-Party Claims:

 

  (a) An indemnified Party shall give the indemnifying Party prompt notice (an
“Indemnification Notice”) of any third-party Action with respect to which such
indemnified Party seeks indemnification pursuant to Section 8.01 or Section 8.02
(a “Third-Party Claim”), which shall describe in reasonable detail the Loss that
has been or may be suffered by the indemnified Party. The failure to give the
Indemnification Notice shall not impair any of the rights or benefits of such
indemnified Party under Section 8.01 or Section 8.02, except to the extent such
failure materially and adversely affects the ability of the indemnifying Party
to defend such claim or increases the amount of such liability.         (b) In
the case of any Third-Party Claims as to which indemnification is sought by any
indemnified Party, such indemnified Party shall be entitled, at the sole expense
and liability of the indemnifying Party, to exercise full control of the
defense, compromise or settlement of any Third-Party Claim unless the
indemnifying Party, within a reasonable time after the giving of an
Indemnification Notice by the indemnified Party (but in any event within ten
(10) days thereafter), shall (i) deliver a written confirmation to such
indemnified Party that the indemnification provisions of Section 8.01 or Section
8.02 are applicable to such Action and the indemnifying Party will indemnify
such indemnified Party in respect of such Action pursuant to the terms of this
Article VIII and, notwithstanding anything to the contrary, shall do so without
asserting any challenge, defense, limitation on the indemnifying Party’s
liability for Losses, counterclaim or offset, (ii) notify such indemnified Party
in writing of the intention of the indemnifying Party to assume the defense
thereof, and (iii) retain legal counsel reasonably satisfactory to such
indemnified Party to conduct the defense of such Third-Party Claim.         (c)
If the indemnifying Party assumes the defense of any such Third-Party Claim
pursuant to Section 8.03(b), then the indemnified Party shall cooperate with the
indemnifying Party in any manner reasonably requested in connection with the
defense, and the indemnified Party shall have the right to be kept fully
informed by the indemnifying Party and their legal counsel with respect to the
status of any legal proceedings, to the extent not inconsistent with the
preservation of attorney-client or work product privilege. If the indemnifying
Party so assumes the defense of any such Third-Party Claim, the indemnified
Party shall have the right to employ separate counsel and to participate in (but
not control) the defense, compromise, or settlement thereof, but the fees and
expenses of such counsel employed by the indemnified Party shall be at the
expense of such indemnified Party unless (i) the indemnifying Party has agreed
to pay such fees and expenses, or (ii) the named parties to any such Third-Party
Claim (including any impleaded parties) include an indemnified Party and the
indemnifying Party and the indemnified Party shall have been advised by 2its
counsel that there may be a conflict of interest between such indemnified Party
and the indemnifying Party in the conduct of the defense thereof, and in any
such case the reasonable fees and expenses of such separate counsel shall be
borne by the indemnifying Party.

 

  Page | 19

 

 

  (d) If the indemnifying Party elects to assume the defense of any Third-Party
Claim pursuant to Section 8.03(b), the indemnified Party shall not pay, or
permit to be paid, any part of any claim or demand arising from such asserted
liability unless the indemnifying Party withdraws from or fails to vigorously
prosecute the defense of such asserted liability, or unless a judgment is
entered against the indemnified Party for such liability. If the indemnifying
Party does not elect to defend, or if, after commencing or undertaking any such
defense, the indemnifying Party fails to adequately prosecute or withdraw such
defense, the indemnified Party shall have the right to undertake the defense or
settlement thereof, at the indemnifying Party’s expense. Notwithstanding
anything to the contrary, the indemnifying Party shall not be entitled to
control, but may participate in, and the indemnified Party (at the expense of
the indemnifying Parties) shall be entitled to have sole control over, the
defense or settlement of (x) that part of any Third Party Claim (i) that seeks a
temporary restraining order, a preliminary or permanent injunction or specific
performance against the indemnified Party, or (ii) to the extent such Third
Party Claim involves criminal allegations against the indemnified Party or (y)
the entire Third Party Claim if such Third Party Claim would impose liability on
the part of the indemnified Party. In the event the indemnified Party retains
control of the Third-Party Claim, the indemnified Party will not settle the
subject claim without the prior written consent of the indemnifying Party, which
consent will not be unreasonably withheld or delayed.         (e) If the
indemnified Party undertakes the defense of any such Third-Party Claim pursuant
to Section 8.03(b) and proposes to settle the same prior to a final judgment
thereon or to forgo appeal with respect thereto, then the indemnified Party
shall give the indemnifying Party prompt written notice thereof and the
indemnifying Party shall have the right to participate in the settlement, assume
or reassume the defense thereof or prosecute such appeal, in each case at the
indemnifying Party’s expense. The indemnifying Party shall not, without the
prior written consent of such indemnified Party settle or compromise or consent
to entry of any judgment with respect to any such Third-Party Claim (i) in which
any relief other than the payment of money damages is or may be sought against
such indemnified Party, (ii) in which such Third Party Claim could be reasonably
expected to impose or create a monetary liability on the part of the indemnified
Party (such as an increase in the indemnified Party’s income Tax) other than the
monetary claim of the third party in such Third-Party Claim being paid pursuant
to such settlement or judgment, or (iii) which does not include as an
unconditional term thereof the giving by the claimant, person conducting such
investigation or initiating such hearing, plaintiff or petitioner to such
indemnified Party of a release from all liability with respect to such
Third-Party Claim and all other Actions (known or unknown) arising or which
might arise out of the same facts.

 

Section 8.04 Periodic Payments. Any indemnification required by this Article
VIII for costs, disbursements or expenses of any indemnified Party in connection
with investigating, preparing to defend or defending any Action shall be made by
periodic payments by the indemnifying Party to each indemnified Party during the
course of the investigation or defense, as and when bills are received or costs,
disbursements or expenses are incurred.

 

Section 8.05 Insurance. Any indemnification payments hereunder shall take into
account any insurance proceeds or other third-party reimbursement actually
received.

 

Section 8.06 Time Limit. The obligations of SPR AND PR and the Buyers
Indemnifying Party under Section 8.01 and Section 8.02 shall expire two (2)
years from the Closing Date, except with respect to (i) an indemnification claim
asserted in accordance with the provisions of this Article VIII which remains
unresolved, for which the obligation to indemnify shall continue until such
claim is resolved; and (ii) resolved claims for which payment has not yet been
paid to the indemnified Party.

 

Article IX. DISPUTE RESOLUTION

 

Section 9.01 Arbitration.

 

  (a) The Parties shall promptly submit any dispute, claim, or controversy
arising out of or relating to this Agreement (including with respect to the
meaning, effect, validity, termination, interpretation, performance, or
enforcement of this Agreement) or any alleged breach thereof (including any
action in tort, contract, equity, or otherwise), to binding arbitration before
one arbitrator (the “Arbitrator”). Binding arbitration shall be the sole means
of resolving any dispute, claim, or controversy arising out of or relating to
this Agreement (including with respect to the meaning, effect, validity,
termination, interpretation, performance or enforcement of this Agreement) or
any alleged breach thereof (including any claim in tort, contract, equity, or
otherwise).

 

  Page | 20

 

 

  (b) If the Parties cannot agree upon the Arbitrator within ten (10) Business
Days of the commencement of the efforts to so agree on an Arbitrator, each of
the Parties shall select one arbitrator and the two arbitrators so selected
shall select the Arbitrator.         (c) The laws of the State of Nevada shall
apply to any arbitration hereunder. In any arbitration hereunder, this Agreement
and any agreement contemplated hereby shall be governed by the laws of the State
of Nevada applicable to a contract negotiated, signed, and wholly to be
performed in the State of Nevada, which laws the Arbitrator shall apply in
rendering his decision. The Arbitrator shall issue a written decision, setting
forth findings of fact and conclusions of law, within sixty (60) days after he
shall have been selected. The Arbitrator shall have no authority to award
punitive or other exemplary damages.         (d) The arbitration shall be held
in Palm Beach County, Florida in accordance with and under the then-current
provisions of the rules of the American Arbitration Association, except as
otherwise provided herein.         (e) On application to the Arbitrator, any
Party shall have rights to discovery to the same extent as would be provided
under the Federal Rules of Civil Procedure, and the Federal Rules of Evidence
shall apply to any arbitration under this Agreement; provided, however, that the
Arbitrator shall limit any discovery or evidence such that his decision shall be
rendered within the period referred to in Section 9.01(c).         (f) The
Arbitrator may, at his discretion and at the expense of the Party who will bear
the cost of the arbitration, employ experts to assist him in his determinations.
        (g) The costs of the arbitration proceeding and any proceeding in court
to confirm any arbitration award or to obtain relief, as applicable (including
actual attorneys’ fees and costs), shall be borne by the unsuccessful Party and
shall be awarded as part of the Arbitrator’s decision, unless the Arbitrator
shall otherwise allocate such costs in such decision. The determination of the
Arbitrator shall be final and binding upon the Parties and not subject to
appeal.         (h) Any judgment upon any award rendered by the Arbitrator may
be entered in and enforced by any court of competent jurisdiction. The Parties
expressly consent to the non-exclusive jurisdiction of the courts (Federal and
state) in Palm Beach County, Florida to enforce any award of the Arbitrator or
to render any provisional, temporary, or injunctive relief in connection with or
in aid of the Arbitration. The Parties expressly consent to the personal and
subject matter jurisdiction of the Arbitrator to arbitrate any and all matters
to be submitted to arbitration hereunder. None of the Parties hereto shall
challenge any arbitration hereunder on the grounds that any party necessary to
such arbitration (including the Parties) shall have been absent from such
arbitration for any reason, including that such Party shall have been the
subject of any bankruptcy, reorganization, or insolvency proceeding.

 

  Page | 21

 

 

Section 9.02 Waiver of Jury Trial; Exemplary Damages.

 

  (a) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS Section 9.02(a).         (b) Each of the Parties
acknowledge that each has been represented in connection with the signing of
this waiver by independent legal counsel selected by the respective Party and
that such Party has discussed the legal consequences and import of this waiver
with legal counsel. Each of the Parties further acknowledge that each has read
and understands the meaning of this waiver and grants this waiver knowingly,
voluntarily, without duress and only after consideration of the consequences of
this waiver with legal counsel.

 

Article X. MISCELLANEOUS

 

Section 10.01 Brokers. The Parent, NHL and SPR agree that there were no finders
or brokers involved in bringing the Parties together or who were instrumental in
the negotiation, execution or consummation of this Agreement. The Parent, NHL
and SPR each agree to indemnify the other against any claim by any third person
other than those described above for any commission, brokerage, or finder’s fee
arising from the transactions contemplated hereby based on any alleged agreement
or understanding between the indemnifying Party and such third person, whether
express or implied from the actions of the indemnifying Party.

 

Section 10.02 Governing Law. This Agreement shall be governed by, enforced, and
construed under and in accordance with the Laws of the State of Nevada, without
giving effect to the principles of conflicts of law thereunder. Each of the
Parties (a) irrevocably consents and agrees that any legal or equitable action
or proceedings arising under or in connection with this Agreement shall be
brought exclusively in the state or federal courts of the United States with
jurisdiction in Palm Beach County, Florida. By execution and delivery of this
Agreement, each Party hereto irrevocably submits to and accepts, with respect to
any such action or proceeding, generally and unconditionally, the jurisdiction
of the aforesaid courts, and irrevocably waives any and all rights such Party
may now or hereafter have to object to such jurisdiction.

 

Section 10.03 Notices.

 

  (a) Any notice or other communications required or permitted hereunder shall
be in writing and shall be sufficiently given if personally delivered to it or
sent by email, overnight courier or registered mail or certified mail, postage
prepaid, addressed as follows:

 

If to the Parent:

 

Novo Integrated Sciences, Inc.

Attn: Chris David, President

11120 NE 2nd St., Suite 200

Bellevue, WA 98004

Email: xxxxxxxxxxxxx.com

 

  Page | 22

 

 

If to NHL:

 

Novo Healthnet Limited

Attn: Robert Mattacchione, Chairman

119 Westcreek Drive, Suite 1

Woodbridge, Ontario Canada L4L 9N6

Email: xxxxxxxxxxx.com

 

If to PR:

 

Pulse Rx LTC Pharmacy

Attn: Martin S. Kusmirek, President

111 Zenway Blvd., Suite 3

Woodbridge, Ontario Canada, L4H 3H9

Email: xxxxxxxxxxx.ca

 

  (b) Any Party may change its address for notices hereunder upon notice to each
other Party in the manner for giving notices hereunder.         (c) Any notice
hereunder shall be deemed to have been given (i) upon receipt, if personally
delivered, (ii) on the day after dispatch, if sent by overnight courier, (iii)
upon dispatch, if transmitted by email with return receipt requested and
received and (iv) three (3) days after mailing, if sent by registered or
certified mail.

 

Section 10.04 Attorneys’ Fees. In the event that any Party institutes any action
or suit to enforce this Agreement or to secure relief from any default hereunder
or breach hereof, the prevailing Party shall be reimbursed by the losing Party
for all costs, including reasonable attorney’s fees, incurred in connection
therewith and in enforcing or collecting any judgment rendered therein.

 

Section 10.05 Confidentiality. Each Party agrees that, unless and until the
transactions contemplated by this Agreement have been consummated, it and its
representatives will hold in strict confidence all data and information obtained
with respect to another Party or any subsidiary thereof from any representative,
officer, director or employee, or from any books or records or from personal
inspection, of such other Party, and shall not use such data or information or
disclose the same to others, except (i) to the extent such data or information
is published, is a matter of public knowledge, or is required by Law to be
published; or (ii) to the extent that such data or information must be used or
disclosed in order to consummate the transactions contemplated by this
Agreement. In the event of the termination of this Agreement, each Party shall
return to the applicable other Party all documents and other materials obtained
by it or on its behalf and shall destroy all copies, digests, work papers,
abstracts or other materials relating thereto, and each Party will continue to
comply with the confidentiality provisions set forth herein.

 

Section 10.06 Public Announcements and Filings. Unless required by applicable
Law or regulatory authority, none of the Parties will issue any report,
statement or press release to the general public, to the trade, to the general
trade or trade press, or to any third party (other than its advisors and
representatives in connection with the transactions contemplated hereby) or file
any document, relating to this Agreement and the transactions contemplated
hereby, except as may be mutually agreed by the Parties. The Parties acknowledge
and agree that the Parent is obligated to file a Form 8-K pursuant to the
Exchange Act relating to this Agreement and the transactions contemplated herein
(the “Form 8-K”). In addition, the Parties acknowledge and agree that
information related to this Agreement and the transactions contemplated herein
shall be provided to the prospective investors in the Parent, NHL or PR, on a
confidential basis, with written permission from the other party. Other than the
Form 8-K or the confidential disclosures referenced in the immediately preceding
sentence, copies of any such filings, public announcements or disclosures,
including any announcements or disclosures mandated by Law or regulatory
authorities, shall be delivered to each Party at least one (1) business day
prior to the release thereof.

 

  Page | 23

 

 

Section 10.07 Schedules; Knowledge. Each Party is presumed to have full
knowledge of all information set forth in the other Party’s schedules delivered
pursuant to this Agreement.

 

Section 10.08 Third Party Beneficiaries. This contract is strictly between the
Parent, NHL and PR AND SPR, except as specifically provided, no other Person and
no director, officer, stockholder, employee, agent, independent contractor or
any other Person shall be deemed to be a third-party beneficiary of this
Agreement.

 

Section 10.09 Expenses. Subject to Section 10.04, whether or not the Exchange is
consummated, each of the Buyers and PR AND SPR will bear their own respective
expenses, including legal, accounting and professional fees, incurred in
connection with the Exchange or any of the other transactions contemplated
hereby.

 

Section 10.10 Entire Agreement. This Agreement represents the entire agreement
between the Parties relating to the subject matter thereof and supersedes all
prior agreements, understandings and negotiations, written or oral, with respect
to such subject matter.

 

Section 10.11 Survival; Termination. The representations, warranties, and
covenants of the respective Parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of two years.

 

Section 10.12 Amendment; Waiver; Remedies; Agent.

 

  (a) At any time prior to the Closing Date, this Agreement may be amended,
modified, superseded, terminated or cancelled, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, only by a
written instrument executed by all of the Parties hereto.         (b) Every
right and remedy provided herein shall be cumulative with every other right and
remedy, whether conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any Party of the performance of any
obligation by the other shall be construed as a waiver of the same or any other
default then, theretofore, or thereafter occurring or existing.         (c)
Neither any failure or delay in exercising any right or remedy hereunder or in
requiring satisfaction of any condition herein nor any course of dealing shall
constitute a waiver of or prevent any Party from enforcing any right or remedy
or from requiring satisfaction of any condition. No notice to or demand on a
Party waives or otherwise affects any obligation of that Party or impairs any
right of the Party giving such notice or making such demand, including any right
to take any action without notice or demand not otherwise required by this
Agreement. No exercise of any right or remedy with respect to a breach of this
Agreement shall preclude exercise of any other right or remedy, as appropriate
to make the aggrieved Party whole with respect to such breach, or subsequent
exercise of any right or remedy with respect to any other breach.         (d)
Notwithstanding anything else contained herein, no Party shall seek, nor shall
any Party be liable for, consequential, punitive or exemplary damages, under any
tort, contract, equity, or other legal theory, with respect to any breach (or
alleged breach) of this Agreement or any provision hereof or any matter
otherwise relating hereto or arising in connection herewith.

 

Section 10.13 Arm’s Length Bargaining; No Presumption Against Drafter. This
Agreement has been negotiated at arm’s-length by parties of equal bargaining
strength, each represented by counsel or having had but declined the opportunity
to be represented by counsel and having participated in the drafting of this
Agreement. This Agreement creates no fiduciary or other special relationship
between the Parties, and no such relationship otherwise exists. No presumption
in favor of or against any Party in the construction or interpretation of this
Agreement or any provision hereof shall be made based upon which Person might
have drafted this Agreement or such provision.

 

  Page | 24

 

 

Section 10.14 Headings. The headings contained in this Agreement are intended
solely for convenience and shall not affect the rights of the Parties.

 

Section 10.15 Exhibits and Schedules. Any matter, information or item disclosed
in the Schedules delivered under any specific representation, warranty or
covenant or Schedule number hereof, shall be deemed to have been disclosed for
all purposes of this Agreement in response to every representation, warranty or
covenant in this Agreement where its application is reasonably apparent on the
face of the disclosure, even in the absence of an explicit cross reference. The
inclusion of any matter, information or item in any Schedule to this Agreement
shall not be deemed to constitute an admission of any liability by the Parent or
NHL to any third party or otherwise imply, that any such matter, information or
item is material or creates a measure for materiality for the purposes of this
Agreement.

 

Section 10.16 No Assignment or Delegation. No Party may assign any right or
delegate any obligation hereunder, including by merger, consolidation, operation
of law, or otherwise, without the written consent of the all of the other
Parties and any purported assignment or delegation without such consent shall be
void, in addition to constituting a material breach of this Agreement. This
Agreement shall be binding on the permitted successors and assigns of the
Parties.

 

Section 10.17 Commercially Reasonable Efforts. Subject to the terms and
conditions herein provided, PR AND SPR and the Buyers shall use their respective
commercially reasonable efforts to perform or fulfill all conditions and
obligations to be performed or fulfilled by it under this Agreement so that the
transactions contemplated hereby shall be consummated as soon as practicable,
and to take, or cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable under applicable Laws and regulations
to consummate and make effective this Agreement and the transactions
contemplated herein.

 

Section 10.18 Further Assurances. Each Party shall execute and deliver such
documents and take such action, as may reasonably be considered within the scope
of such Party’s obligations hereunder, necessary to effectuate the transactions
contemplated by this Agreement.

 

Section 10.19 Specific Performance. The Parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed by them in accordance with the terms hereof or were otherwise breached
and that each Party hereto shall be entitled to an injunction or injunctions,
specific performance and other equitable relief to prevent breaches of the
provisions hereof and to enforce specifically the terms and provisions hereof,
without the proof of actual damages, in addition to any other remedy to which
they are entitled at law or in equity. Each Party agrees to waive any
requirement for the security or posting of any bond in connection with any such
equitable remedy, and agrees that it will not oppose the granting of an
injunction, specific performance or other equitable relief on the basis that (a)
the other Party has an adequate remedy at law, or (b) an award of specific
performance is not an appropriate remedy for any reason at law or equity.

 

Section 10.20 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument. The execution and delivery of a
facsimile or other electronic transmission of a signature to this Agreement
shall constitute delivery of an executed original and shall be binding upon the
person whose signature appears on the transmitted copy.

 

[Signatures Appear on Following Page]

 

  Page | 25

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first-above written.

 

  Novo Integrated Sciences, Inc.         By: /s/ Robert Mattacchione   Name:
Robert Mattacchione   Title: CEO         Novo Healthnet Limited         By: /s/
Dr. Pierre Dalcourt   Name: Dr. Pierre Dalcourt   Title: President        
Family Pharmacy Clinic Inc., PRA Shareholder         By: /s/ Martin S. Kusmirek
  Name: Martin S. Kusmirek   Title: President         Address for Notices:      
2-111 Zenway Blvd.   Woodbridge, Ontario, Canada L4H 3H9   Email:
xxxxxxxxxxxxx.com         Pulse Rx Inc. o/a Pulse Rx LTC Pharmacy         By:
/s/ Martin S. Kusmirek   Name: Martin S. Kusmirek   Title: President        
Martin Kusmirek, an individual, PRB shareholder         By: /s/ Martin S.
Kusmirek   Name: Martin S. Kusmirek         Address for Notices:      
xxxxxxxxxxx Rd.   xxxxxxxxxx Ontario, Canada XXX XR8   Email: xxxxxxxxxxxxxx.ca

 

  Page | 26

 

 

  Tanya Kusmirek, an individual, PRB shareholder         By: /s/ Tanya Kusmirek
  Name: Tanya Kusmirek         Address for Notices:       xxxxxxxxxxx Rd.  
xxxxxxxxxxxx Ontario, Canada XXX 1R8   Email: xxxxxxxxxxxxxx.com         Andrew
Kusmirek, an individual, PRB shareholder         By: /s/ Andrew Kusmirek   Name:
Andrew Kusmirek         Address for Notices:       xxxxxxxxxxxxxx Ave.  
xxxxxxxxxx B.C., Canada XXX 2V1   Email: xxxxxxxxxx.com         Christine
Kusmirek, an individual, PRB shareholder         By: /s/ Christine Kusmirek  
Name: Christine Kusmirek         Address for Notices:       Xxxxxxxxxxxxx Ave.  
xxxxxxxxxxx B.C., Canada XXX 2V1   Email: xxxxxxxxxxxxxxxx.com

 

  Page | 27

 

 

EXHIBIT A

 

NOVO INTEGRATED SCIENCES, INC.

(formerly Turbine Truck Engines, Inc.)

Consolidated Financial Statements

 

Contents

 

  Page Financial Statements:       Report of Independent Registered Public
Accounting Firms F-1 Report of NVS Chartered Accountants Professional
Corporation F-1 Report of AJ Robbins CPA LLC F-2     Consolidated Balance Sheets
as of August 31, 2018 and 2017 F-3     Consolidated Statements of Operations and
Comprehensive Income (Loss) for the Years Ended August 31, 2018 and 2017 F-4    
Consolidated Statement of Stockholders’ Equity (Deficit) for the Years Ended
August 31, 2018 and 2017 F-5     Consolidated Statements of Cash Flows for the
Years Ended August 31, 2018 and 2017 F-6     Notes to Consolidated Financial
Statements F-7

 

  Exhibit  A

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

[image_001.jpg]

 

To the Board of Directors and

Stockholders of Novo Integrated Sciences, Inc.

 

We have audited the accompanying consolidated balance sheets of Novo Integrated
Sciences, Inc and Subsidiaries (collectively “the Company”) as of August 31,
2018, and the related consolidated statements of operations and comprehensive
loss, changes in stockholders’ deficit, and cash flows for the year then ended.
The Company’s management is responsible for these consolidated financial
statements. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Novo
Integrated Sciences, Inc. as of August 31, 2018, and the consolidated results of
their operations and their cash flows for each of the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.

 

/s/ NVS Chartered Accountants Professional Corporation

 

NVS Chartered Accountants Professional Corporation

 

Markham, Ontario

November 6, 2018

 

NVS CHARTERED ACCOUNTANTS PROFESSIONAL CORPORATION

100 Allstate Parkway, Suite 303, Markham, Ontario L3R 6H3 Tel: 905.415.2511 Fax:
905.415.2011

 

F-1

 

 

[audit_001.jpg]

 

 

To the Board of Directors and

Stockholders of Novo Integrated Sciences, Inc.

 

We have audited the accompanying consolidated balance sheet of Novo Integrated
Sciences, Inc and Subsidiaries (collectively “the Company”) as of August 31,
2017, and the related consolidated statements of operations and comprehensive
loss, changes in stockholders’ deficit, and cash flows for the year then ended.
The Company’s management is responsible for these consolidated financial
statements. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Novo
Integrated Sciences, Inc. as of August 31, 2017 , and the consolidated results
of their operations and their cash flows for the year then ended, in conformity
with accounting principles generally accepted in the United States of America.

 

[audit_002.jpg]

Denver, Colorado

 

December 6, 2017

 

aj@ajrobbins.com

400 South Colorado Blvd, Suite 870 East, Denver, Colorado 80246

(B)303-537-5898    (M)720-339-5566   (F)303-845-9078

 

F-2

 

 

NOVO INTEGRATED SCIENCES, INC.

CONSOLIDATED BALANCE SHEETS

As of August 31, 2018 and 2017

 

   August 31, 2018   August 31, 2017  ASSETS                       Current
Assets:           Cash and cash equivalents  $675,705   $1,896,572  Accounts
receivable, net   1,337,545    1,128,898  Other receivables, current portion 
 393,821    372,024  Prepaid expenses and other current assets   161,838  
 252,536  Total current assets   2,568,909    3,650,030              Property
and equipment, net   400,321    302,951  Other receivables, net of current
portion   57,352    -  Acquisition deposits   1,112,404    1,162,009  Goodwill 
 604,113    399,400  TOTAL ASSETS  $4,743,099   $5,514,390             
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                       Current
Liabilities:           Accounts payable  $1,307,599   $1,703,342  Accrued
expenses   383,998    341,657  Accrued interest (principally to related
parties)   156,121    403,119  Due to related parties   1,116,261    1,812,613 
Notes payable, current portion   382,350    13,171  Total current liabilities 
 3,346,329    4,273,902              Debentures, related parties   1,224,000  
 5,114,327  Notes payable, net of current portion   -    414,351  TOTAL
LIABILITIES   4,570,329    9,802,580              Commitments and contingencies 
 -    -              STOCKHOLDERS’ EQUITY (DEFICIT)           Novo Integrated
Sciences, Inc.           Convertible Preferred stock; $0.001 par value;
1,000,000 shares authorized; 0 and 0 shares issued and outstanding at August 31,
2018 and 2017           Common stock; $0.001 par value; 499,000,000 shares
authorized; 207,881,743 and 201,837,254 shares issued and outstanding at August
31, 2018 and 2017   207,882    201,837  Additional paid-in capital 
 10,053,683    3,381,643  Other comprehensive income   1,139,815    1,240,844 
Accumulated deficit   (11,199,989)   (9,091,977) Total Novo Integrated Sciences,
Inc. stockholders’ equity (deficit)   201,391    (4,267,653) Noncontrolling
interest   (28,621)   (20,537) Total stockholders’ equity (deficit)   172,770  
 (4,288,190) TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)  $4,743,099  
$5,514,390 

 

The accompanying footnotes are an integral part of these consolidated financial
statements.

 

F-3

 

 

NOVO INTEGRATED SCIENCES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Years Ended August 31, 2018 and 2017

 

   Years Ended     August 31, 2018   August 31, 2017  Revenues  $8,894,464  
$7,963,045              Cost of revenues   5,471,376    4,985,715             
Gross profit   3,423,088    2,977,330              Operating expenses:          
Selling expenses   109,295    59,026  General and administrative expenses 
 4,883,221    3,031,348  Total operating expenses   4,992,516    3,090,374    
         Income (loss) from operations   (1,569,428)   (113,044)             Non
operating income (expense)           Interest income   16,702    34,139 
Interest expense   (564,467)   (554,657) Total other income (expense) 
 (547,765)   (520,518)             Loss before income taxes   (2,117,193) 
 (633,562)             Income tax expense   -    111,702              Net loss 
$(2,117,193)  $(745,264)             Net loss attributed to noncontrolling
interest   (9,181)   (6,880)             Net loss attributed to Novo Integrated
Sciences, Inc.  $(2,108,012)  $(738,384)             Comprehensive loss:      
    Net loss   (2,117,193)   (745,264) Foreign currency translation gain (loss) 
 (101,029)   (36,605) Comprehensive loss:  $(2,218,222)  $(781,869)            
Weighted average common shares outstanding - basic and diluted   207,568,978  
 177,675,415              Net loss per common share - basic and diluted 
$(0.01)  $(0.00)

 

The accompanying footnotes are an integral part of these consolidated financial
statements.

 

F-4

 

 

NOVO INTEGRATED SCIENCES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the Years Ended August 31, 2018 and 2017

 

                       Total                                 Novo            
        Additional   Other       Stockholders’       Total     Common Stock  
Paid-in   Comprehensive   Accumulated   Equity/   Noncontrolling   Equity/    
Shares   Amount   Capital   Income   Deficit   (Deficit)   Interest   (Deficit) 
Balance, August 31, 2016   167,797,406   $92   $-   $1,277,449   $(8,353,593) 
$    (7,076,052)  $(12,668)  $(7,088,720)                                      
    Common stock issued in connection with reverse merger transaction 
 22,751,307    190,457    (183,553)   -    -    6,904    -    6,904  Common
stock issued for cash   11,288,541    11,288    3,375,272    -    -  
 3,386,560    -    3,386,560  Offering costs   -    -    (62,504)   -    -  
 (62,504)   -    (62,504) Fair value of vested stock options   -    -  
 252,428    -    -    252,428    -    252,428  Foreign currency translation
loss   -    -    -    (36,605)   -    (36,605)   (989)   (37,594) Net loss   -  
 -    -    -    (738,384)   (738,384)   (6,880)   (745,264)                  
                        Balance, August 31, 2017   201,837,254    201,837  
 3,381,643    1,240,844    (9,091,977)   (4,267,653)   (20,537)   (4,288,190)   
                                       Common stock issued for cash   25,104  
 25    15,539    -    -    15,564    -    15,564  Common stock issued for
acquisition   384,110    384    232,771    -    -    233,155    -    233,155 
Common stock issued for conversion of debt   12,452,356    12,453    5,110,446  
 -    -    5,122,899    -    5,122,899  Cancellation of common stock previously
issued   (6,817,081)   (6,817)   6,817    -    -    -    -    -  Fair value of
vested stock options   -    -    1,274,931    -    -    1,274,931    -  
 1,274,931  Fair value of modification of stock option terms   -    -  
 31,536    -    -    31,536    -    31,536  Foreign currency translation loss 
 -    -    -    (101,029)        (101,029)   1,097    (99,932) Net loss   -  
 -    -    -    (2,108,012)   (2,108,012)   (9,181)   (2,117,193)             
                             Balance, August 31, 2018   207,881,743   $207,882  
$10,053,683   $1,139,815   $(11,199,989)  $201,391   $(28,621)  $172,770 

 

The accompanying footnotes are an integral part of these consolidated financial
statements.

 

F-5

 

 

NOVO INTEGRATED SCIENCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended August 31, 2018 and 2017

 

   Years Ended     August 31, 2018   August 31, 2017  CASH FLOWS FROM OPERATING
ACTIVITIES:           Net loss  $(2,117,193)  $(745,264) Adjustments to
reconcile net loss to net cash used in operating activities:          
Depreciation   73,447    67,776  Fair value of vested stock options 
 1,274,931    252,428  Expense associated with modified stock option terms 
 31,536    -  Changes in operating assets and liabilities:           Accounts
receivable   (263,152)   (289,316) Prepaid expenses and other current assets 
 23,244    (84,161) Accounts payable   (331,870)   (412,877) Accrued expenses 
 58,328    89,937  Accrued interest   316,228    310,790  Net cash used in
operating activities   (934,501)   (810,687)             CASH FLOWS FROM
INVESTING ACTIVITIES:           Purchase of furniture and equipment   (178,626) 
 (38,238) Deposit paid for acquisition   -    (1,101,639) Amounts loaned for
other receivables   (38,604)   -  Cash acquired in reverse merger transaction 
 -    12,249  Repayments of other receivables   -    378,098  Net cash provided
by (used in) investing activities   (217,230)   (749,530)             CASH FLOWS
FROM FINANCING ACTIVITIES:           Advances (repayments) to related parties 
 (20,141)   (85,063) Proceeds from the sale of common stock   15,564  
 3,386,560  Offering cost paid   -    (62,504) Payments on notes payable 
 (6,997)   (131,454) Net cash used in financing activities   (11,574) 
 3,107,539              Effect of exchange rate changes on cash and equivalents 
 (57,562)   238,935              NET DECREASE IN CASH AND CASH EQUIVALENTS 
 (1,220,867)   1,786,257              CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD   1,896,572    110,315              CASH AND CASH EQUIVALENTS, END OF
PERIOD  $675,705   $1,896,572              CASH PAID FOR:           Interest 
$240,366   $186,618  Income taxes  $-   $-              SUPPLEMENTAL NON-CASH
INVESTING AND FINANCING ACTIVITIES:           Note payable issued for purchase
of assets  $-   $375,450 

 

The accompanying footnotes are an integral part of these consolidated financial
statements.

 

F-6

 

 

Note 1 - Organization and Basis of Presentation

 

Organization and Line of Business

 

Novo Integrated Sciences, Inc. (“Novo Integrated”) was incorporated in Delaware
on November 27, 2000, under the name Turbine Truck Engines, Inc. On February 20,
2008, the Company was re-domiciled to the State of Nevada. Effective July 12,
2017, the Company’s name was changed to Novo Integrated Sciences, Inc. When used
herein, the terms the “Company,” “we,” “us” and “our” refer to Novo Integrated
and its consolidated subsidiaries.

 

The Company delivers multi-disciplinary primary healthcare to over 400,000
patients annually through our 16 corporate-owned clinics and a contracted
network of 88 affiliate clinics and 234 eldercare centric homes located across
Canada. Our team of practitioners and staff are trained for assessment,
diagnosis, treatment, pain management, rehabilitation and primary prevention.
Our specialized services and products include physiotherapy, chiropractic care,
occupational therapy, eldercare, laser therapeutics, massage therapy,
acupuncture, chiropody, neurological functions, kinesiology, concussion
management and baseline testing, women’s pelvic health, sports medicine therapy,
assistive devices and private personal training. We do not provide primary care
medical services, none of our employees practices primary care medicine, and our
services do not require a medical or nursing license.

 

Since inception and through May 9, 2017, our activities and business operations
were limited to raising capital, organizational matters and the implementation
of our business plan related to research, development, testing and
commercialization of various alternative energy technologies.

 

On April 25, 2017 (the “Effective Date”), we entered into a Share Exchange
Agreement (the “Share Exchange Agreement”) by and between (i) Novo Integrated;
(ii) NHL, (iii) ALMC-ASAP Holdings Inc. (“ALMC”); (iv) Michael Gaynor Family
Trust (the “MGFT”); (v) 1218814 Ontario Inc. (“1218814”) and (vi) Michael Gaynor
Physiotherapy Professional Corp. (“MGPP,” and together with ALMC, MGFT and
1218814, the “NHL Shareholders”). Pursuant to the terms of the Share Exchange
Agreement, Novo Integrated agreed to acquire from the NHL Shareholders all of
the shares of both common and preferred stock of NHL, held by the NHL
Shareholders, in exchange for the issuance by Novo Integrated to the NHL
Shareholders of shares of Novo Integrated’s common stock, such that following
the closing of the Share Exchange Agreement, the NHL Shareholders would own
167,797,406 restricted shares Novo Integrated common stock, representing 85% of
the issued and outstanding Novo Integrated common stock, calculated including
all granted and issued options or warrants to acquire Novo Integrated common
stock as of the Effective Date, but to exclude shares of Novo Integrated common
stock that are subject to a then-current Regulation S offering that was
undertaken by Novo Integrated (the “Exchange”).

 

On May 9, 2017, the Exchange closed and, as a result, NHL became a wholly owned
subsidiary of Novo Integrated.

 

The Exchange was accounted for as a reverse acquisition under the purchase
method of accounting since NHL obtained control of Novo Integrated Sciences,
Inc. Accordingly, the Exchange was recorded as a recapitalization of NHL, with
NHL being treated as the continuing entity. The historical financial statements
presented are the financial statements of NHL. The Share Exchange Agreement was
treated as a recapitalization and not as a business combination; therefore, no
pro forma information is disclosed. At the closing date of the Exchange, the net
assets of the legal acquirer, Novo Integrated Sciences, Inc., were $6,904.

 

On May 9, 2017, our Board of Directors determined, in connection with the
closing of the Exchange, to change our fiscal year end from December 31 to
August 31 but did not memorialize such determination in writing. On July 17,
2017, the Board ratified and memorialized in writing its May 9, 2017
determination regarding the change in fiscal year end.

 

On April 1, 2017, NHL purchased assets of Apka Health to expand our community OT
services. On December 1, 2017, NHL acquired substantially all of the assets of
Executive Fitness Leaders, with operations located in Ottawa Ontario Canada,
entered into an Asset Purchase Agreement, pursuant to which NHL acquired
substantially all of the assets of Executive Fitness Leaders in exchange for the
issuance by Novo Integrated of 384,110 restricted shares of its common stock.

 

F-7

 

 

Basis of Presentation

 

The accompanying consolidated financial statements were prepared in conformity
with accounting principles generally accepted in the United States of America
(“U.S. GAAP”). The Company’s functional currency is the Canadian Dollar (“CAD”);
however, the accompanying consolidated financial statements were translated and
presented in United States Dollars (“$” or “USD”).

 

Foreign Currency Translation

 

The accounts of the Company’s Canadian subsidiaries are maintained in CAD. The
accounts of these subsidiaries are translated into USD in accordance with the
Financial Accounting Standards Board (the “FASB”) Accounting Standards
Codification (“ASC”) Topic 830, Foreign Currency Transaction, with the CAD as
the functional currency. According to Topic 830, all assets and liabilities are
translated at the exchange rate on the balance sheet date, stockholders’ equity
is translated at historical rates and statement of operations items are
translated at the weighted average exchange rate for the period. The resulting
translation adjustments are reported under other comprehensive income in
accordance with ASC Topic 220, Comprehensive Income. Gains and losses resulting
from the translations of foreign currency transactions and balances are
reflected in the statement of operations and comprehensive income. The following
table details the exchange rates used for the respective periods:

 

   August 31, 2018   August 31, 2017            Period end: CAD to USD exchange
rate  $0.7647   $0.7988  Average period: CAD to USD exchange rate  $0.7835  
$0.7573 

 

Note 2 – Summary of Significant Accounting Policies

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. The
Company regularly evaluates estimates and assumptions. The Company bases its
estimates and assumptions on current facts, historical experience and various
other factors that it believes to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities and the accrual of costs and expenses that are not
readily apparent from other sources. The actual results experienced by the
Company may differ materially and adversely from the Company’s estimates. To the
extent there are material differences between the estimates and the actual
results, future results of operations will be affected.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, NHL, Novo Peak Health Inc., Novo
Healthnet Rehab Limited, Novo Assessments Inc., an 80% interest in Novo
Healthnet Kemptville Centre, Inc., a Back on Track Physiotherapy and Health
Centre clinic operated by NHL, and a 50% stake in a joint venture with the
Sophie Freeman Dental Hygiene Professional Corporation operated as Novo Dental.
All of the Company’s subsidiaries are incorporated under the laws of the
Province of Ontario, Canada. All intercompany transactions have been eliminated.

 

Noncontrolling Interest

 

The Company follows FASB ASC Topic 810, Consolidation, which governs the
accounting for and reporting of non-controlling interests (“NCIs”) in partially
owned consolidated subsidiaries and the loss of control of subsidiaries. Certain
provisions of this standard indicate, among other things, that NCIs be treated
as a separate component of equity, not as a liability, that increases and
decreases in the parent’s ownership interest that leave control intact be
treated as equity transactions rather than as step acquisitions or dilution
gains or losses, and that losses of a partially owned consolidated subsidiary be
allocated to the NCI even when such allocation might result in a deficit
balance.

 

F-8

 

 

The net income (loss) attributed to the NCI is separately designated in the
accompanying consolidated statements of operations and other comprehensive
income (loss).

 

Cash Equivalents

 

For the purpose of the statement of cash flows, cash equivalents include time
deposits, certificate of deposits, and all highly liquid debt instruments with
original maturities of three months or less.

 

Accounts Receivable

 

Accounts receivable are recorded, net of allowance for doubtful accounts and
sales returns. Management reviews the composition of accounts receivable and
analyzes historical bad debts, customer concentration, customer credit
worthiness, current economic trends and changes in customer payment patterns to
determine if the allowance for doubtful accounts is adequate. An estimate for
doubtful accounts is made when collection of the full amount is no longer
probable. Delinquent account balances are written-off after management has
determined that the likelihood of collection is not probable and known bad debts
are written off against the allowance for doubtful accounts when identified. As
of August 31, 2018 and 2017, the allowance for uncollectible accounts receivable
was $464,527 and $507,636, respectively.

 

Property and Equipment

 

Property and equipment are stated at cost. Expenditures for maintenance and
repairs are charged to earnings as incurred; additions, renewals and betterments
are capitalized. When property and equipment are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Depreciation of property and equipment is provided using the declining balance
method for substantially all assets with estimated lives as follows:

 

Leasehold improvements 5 years Clinical equipment 5 years Computer equipment 3
years Office equipment 5 years Furniture and fixtures 5 years

 

Long-Lived Assets

 

The Company applies the provisions of ASC Topic 360, Property, Plant, and
Equipment, which addresses financial accounting and reporting for the impairment
or disposal of long-lived assets. ASC 360 requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the discounted cash flows estimated to be generated by those
assets are less than the assets’ carrying amounts. In that event, a loss is
recognized based on the amount by which the carrying amount exceeds the fair
value of the long-lived assets. Loss on long-lived assets to be disposed of is
determined in a similar manner, except that fair values are reduced for the cost
of disposal. Based on its review at August 31, 2018 and 2017, the Company
believes there was no impairment of its long-lived assets.

 

Goodwill

 

Goodwill represents the excess of purchase price over the underlying net assets
of businesses acquired. Under accounting requirements, goodwill is not amortized
but is subject to annual impairment tests. At August 31, 2018, the Company
recorded goodwill of $382,350 and $221,763, respectively, related to its
acquisition of Apka Health, Inc. during the fiscal year ended August 31, 2017
and Executive Fitness Leaders during the fiscal year ended August 31, 2018. As
of August 31, 2018 and 2017, the Company performed the required impairment
reviews. Based on its reviews at August 31, 2018 and 2017, the Company believes
there was no impairment of its goodwill.

 

F-9

 

 

Acquisition Deposits

 

The Company has signed letters of understanding with two potential acquisition
candidates which includes refundable acquisition deposits totaling $1,112,404
and $1,162,009, as of August 31, 2018 and 2017, respectively.

 

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash and
equivalents, restricted cash, accounts receivable, advances to suppliers,
accounts payable, accrued liabilities and short-term debt, the carrying amounts
approximate their fair values due to their short maturities.

 

FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure
of the fair value of financial instruments held by the Company. FASB ASC Topic
825, Financial Instruments, defines fair value, and establishes a three-level
valuation hierarchy for disclosures of fair value measurement that enhances
disclosure requirements for fair value measures. The carrying amounts reported
in the consolidated balance sheets for receivables and current liabilities each
qualify as financial instruments and are a reasonable estimate of their fair
values because of the short period of time between the origination of such
instruments and their expected realization and their current market rate of
interest. The three levels of valuation hierarchy are defined as follows:

 

  ● Level 1 inputs to the valuation methodology are quoted prices for identical
assets or liabilities in active markets.         ● Level 2 inputs to the
valuation methodology include quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets in inactive
markets, and inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the financial
instrument.         ● Level 3 inputs to the valuation methodology us one or more
unobservable inputs which are significant to the fair value measurement.

 

The Company analyzes all financial instruments with features of both liabilities
and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and
FASB ASC Topic 815, Derivatives and Hedging.

 

As of August 31, 2018 and 2017, respectively, the Company did not identify any
assets and liabilities required to be presented on the balance sheet at fair
value.

 

Revenue Recognition

 

ASU No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became
effective for the Company on March 1, 2018. The Company’s revenue recognition
disclosure reflects its updated accounting policies that are affected by this
new standard. The Company applied the “modified retrospective” transition method
for open contracts for the implementation of Topic 606. As sales are and have
been primarily from providing healthcare services, and the Company has no
significant post-delivery obligations, this new standard did not result in a
material recognition of revenue on the Company’s accompanying consolidated
financial statements for the cumulative impact of applying this new standard.
The Company made no adjustments to its previously-reported total revenues, as
those periods continue to be presented in accordance with its historical
accounting practices under Topic 605, Revenue Recognition.

 

Revenue from providing healthcare services are recognized under Topic 606 in a
manner that reasonably reflects the delivery of its services to customers in
return for expected consideration and includes the following elements:

 

  ● executed contracts with the Company’s customers that it believes are legally
enforceable;   ● identification of performance obligations in the respective
contract;   ● determination of the transaction price for each performance
obligation in the respective contract;   ● allocation the transaction price to
each performance obligation; and   ● recognition of revenue only when the
Company satisfies each performance obligation.

 

F-10

 

 

These five elements, as applied to each of the Company’s revenue category, is
summarized below:

 

  ● Healthcare services - gross service revenue is recorded in the accounting
records at the time the services is provided on an accrual basis at the
provider’s established rates, regardless of whether the provider expects to
collect that amount. The Company reserves a provision for contractual adjustment
and discounts that are deducted from gross service revenue. The Company reports
revenues net of any sales, use and value added taxes.

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, Income
Taxes. ASC 740 requires a company to use the asset and liability method of
accounting for income taxes, whereby deferred tax assets are recognized for
deductible temporary differences, and deferred tax liabilities are recognized
for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion, or all of, the
deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more
likely than not” that the tax position would be sustained in a tax examination,
with a tax examination being presumed to occur. The amount recognized is the
largest amount of tax benefit that is greater than 50% likely of being realized
on examination. For tax positions not meeting the “more likely than not” test,
no tax benefit is recorded. The Company has no material uncertain tax positions
for any of the reporting periods presented.

 

Basic and Diluted Earnings Per Share

 

Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per
Share. Basic earnings per share (“EPS”) is based on the weighted average number
of common shares outstanding. Diluted EPS is based on the assumption that all
dilutive securities are converted. Dilution is computed by applying the treasury
stock method. Under this method, options and warrants are assumed to be
exercised at the beginning of the period (or at the time of issuance, if later),
and as if funds obtained thereby were used to purchase common stock at the
average market price during the period. There were 10,030,000 and 7,860,000
options/warrants outstanding as of August 31, 2018 and 2017, respectively. Due
to the net loss incurred potentially dilutive instruments would be
anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for
all periods presented.

 

Foreign Currency Transactions and Comprehensive Income

 

U.S. GAAP generally requires recognized revenue, expenses, gains and losses be
included in net income. Certain statements, however, require entities to report
specific changes in assets and liabilities, such as gain or loss on foreign
currency translation, as a separate component of the equity section of the
balance sheet. Such items, along with net income, are components of
comprehensive income. The functional currency of the Company’s Canadian
subsidiaries is the Canadian dollar. Translation gains of $1,139,815 and
$1,240,844 for the years ended August 31, 2018 and 2017, respectively, are
classified as an item of other comprehensive income in the stockholders’ equity
section of the balance sheet.

 

Statement of Cash Flows

 

Cash flows from the Company’s operations are calculated based upon the local
currencies using the average translation rates. As a result, amounts related to
assets and liabilities reported on the statements of cash flows will not
necessarily agree with changes in the corresponding balances on the balance
sheets.

 

Recent Accounting Pronouncements

 

In January 2017, the FASB issued an Accounting Standards Update (“ASU”) 2017-01,
Business Combinations (Topic 805) Clarifying the Definition of a Business. The
amendments in this update clarify the definition of a business with the
objective of adding guidance to assist entities with evaluating whether
transactions should be accounted for as acquisitions or disposals of assets or
businesses. The definition of a business affects many areas of accounting
including acquisitions, disposals, goodwill, and consolidation. The guidance is
effective for interim and annual periods beginning after December 15, 2017 and
should be applied prospectively on or after the effective date. The adoption of
this ASU did not have an impact on its financial statements.

 

F-11

 

 

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic
230): Restricted Cash, which requires restricted cash to be presented with cash
and cash equivalents on the statement of cash flows and disclosure of how the
statement of cash flows reconciles to the balance sheet if restricted cash is
shown separately from cash and cash equivalents on the balance sheet. ASU
2016-18 is effective for interim and annual periods beginning after December 15,
2017, with early adoption permitted. The adoption of this ASU did not have an
impact on its financial statements.

 

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740):
Intra-Entity Transfer of Assets Other than Inventory, which requires the
recognition of the income tax consequences of an intra-entity transfer of an
asset, other than inventory, when the transfer occurs. ASU 2016-16 is effective
for interim and annual periods beginning after December 15, 2018, with early
adoption permitted. The Company is in the process of evaluating the impact of
this ASU on its financial statements.

 

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic
230), Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15
provides guidance for targeted changes with respect to how cash receipts and
cash payments are classified in the statements of cash flows, with the objective
of reducing diversity in practice. ASU 2016-15 is effective for interim and
annual periods beginning after December 15, 2017, with early adoption permitted.
The adoption of this ASU did not have an impact on its financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02
requires lessees to recognize lease assets and lease liabilities on the balance
sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02
is effective for fiscal years beginning after December 15, 2018 and interim
periods in fiscal years beginning after December 15, 2018, with early adoption
permitted. The Company is in the process of evaluating the impact of this ASU on
its financial statements.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with
Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will
supersede nearly all existing revenue recognition guidance under current U.S.
GAAP and replace it with a principle-based approach for determining revenue
recognition. ASU 2014-09 will require that companies recognize revenue based on
the value of transferred goods or services as they occur in the contract. The
ASU also will require additional disclosure about the nature, amount, timing and
uncertainty of revenue and cash flows arising from customer contracts, including
significant judgments and changes in judgments and assets recognized from costs
incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim
and annual periods beginning after December 15, 2017. Early adoption is
permitted only in annual reporting periods beginning after December 15, 2016,
including interim periods therein. Entities will be able to transition to the
standard either retrospectively or as a cumulative-effect adjustment as of the
date of adoption. The Company adopted this ASU beginning on March 1, 2018 and
used the modified retrospective method of adoption. The adoption of this ASU did
not have a material impact on the Company’s financial statements and
disclosures.

 

Management does not believe that any recently issued, but not yet effective,
accounting standards could have a material effect on the accompanying financial
statements. As new accounting pronouncements are issued, we will adopt those
that are applicable under the circumstances.

 

Note 3 – Related Party Transactions

 

Due to related parties

 

Amounts loaned to the Company by stockholders and officers of the Company that
are non-interest bearing and payable upon demand. At August 31, 2018 and 2017,
the amount due to related parties was $1,116,261 and $1,812,613, respectively.

 

F-12

 

 

On January 31, 2018, a related party converted $813,125 of outstanding principal
and accrued interest into 1,976,483 shares of the Company’s common stock. The
per share price used for the conversion of this loan was $0.4114 which was
determined as the average price of the five (5) trading days immediately
preceding the date of conversion with a 10% premium added to the calculated per
share price.

 

Note 4 – Accounts Receivables, net

 

Accounts receivables, net at August 31, 2018 and 2017 consisted of the
following:

 

   2018   2017  Trade receivables  $1,564,180   $1,394,507  Amounts earned but
not billed   237,892    242,028      1,802,072    1,636,535  Allowance for
doubtful accounts   (464,527)   (507,637) Accounts receivable, net  $1,337,545  
$1,128,898 

 

Note 5 – Other Receivables

 

Other receivables at August 31, 2018 and 2017 consisted of the following:

 

   2018   2017  Notes receivable dated November 15, 2014; accrues interest at 8%
per annum; secured by assets; due November 15, 2016.  $-   $39,940  Notes
receivable dated April 1, 2015 and amended on May 23, 2017; interest at 8% per
annum; secured by certain assets; due March 1, 2019.   286,763    299,550 
Advance to corporation; non-interest bearing; unsecured; payable upon demand. 
 30,588    32,534  Advance to corporation; accrues interest at 12% per annum;
unsecured; due to September 2019.   76,470    -  Advance to corporation; accrues
interest at 10% per annum; unsecured; due May 1, 2022   57,352    -  Total other
receivables   451,173    372,024  Current portion   (393,821)   (372,024)
Long-term portion  $57,352   $- 

 

Note 6 – Property and Equipment

 

Property and equipment at August 31, 2018 and 2017 consisted of the following:

 

   2018   2017  Leasehold Improvements  $372,010   $329,985  Clinical equipment 
 269,741    177,514  Computer equipment   22,636    21,020  Office equipment 
 24,658    24,319  Furniture and fixtures   39,620    18,218      728,665  
 571,056  Accumulated depreciation   (328,344)   (268,105) Total  $400,321  
$302,951 

 

Depreciation expense for the years ended August 31, 2018 and 2017 was $73,447
and $67,776, respectively.

 

F-13

 

 

Note 7 – Accrued Expenses

 

Accrued expenses at August 31, 2018 and 2017 consisted of the following:

 

   2018   2017  Accrued liabilities  $266,123   $241,174  Accrued payroll 
 106,761    100,105  Other   11,114    378     $383,998   $341,657 

 

Note 8 – Notes Payable

 

Notes payable at August 31, 2018 and 2017 consisted of the following:

 

   2018   2017  Notes payable to financial institution; accrues interest at 7.2%
per annum; monthly principal and interest payment of $3,567; unsecured; due
October 2017. This note has been fully repaid.  $-   $7,134  Notes payable
issued in connection with purchase of assets; accrues interest at 0% per annum;
due on March 27, 2019.   382,350    399,400  Notes payable assumed with
acquisition; accrues interest at 6% per annum; monthly principal and interest
payment of $615; unsecured; This note has been fully repaid.   -    20,988    
 382,350    427,522  Current portion   (382,350)   (13,171) Long-term portion 
$-   $414,351 

 

Note 9 – Debentures, related parties

 

On September 30, 2013, the Company issued five debentures totaling CAD$6,402,512
($5,114,327 at August 31, 2017) in connection with the acquisition of certain
business assets. The holders of the debentures are current stockholders,
officers and/or affiliates of the Company. The debentures are secured by all the
assets of the Company, accrue interest at 8% per annum and were originally due
on September 30, 2016. On December 2, 2017, the debenture holders agreed to
extend the due date to September 30, 2019.

 

On January 31, 2018, the debenture holders converted 75% of the debenture value
of $3,894,809 plus accrued interest of $414,965 into 10,475,872 shares of the
Company’s common stock. The per share price used for the conversion of each
debenture was $0.4114 which was determined as the average price of the five (5)
trading days immediately preceding the date of conversion with a 10% premium
added to the calculated per share price. At August 31, 2018, the amount of
debentures outstanding was $1,224,000.

 

F-14

 

 

Note 10 – Stockholders’ Deficit

 

Convertible preferred stock

 

The Company has authorized 1,000,000 shares of $0.001 par value convertible
preferred stock. As of August 31, 2018 and 2017 there were 0 and 0 convertible
preferred shares issued and outstanding, respectively.

 

Common stock

 

The Company has authorized 499,000,000 shares of $0.001 par value common stock.
As of August 31, 2018 and 2017 there were 207,881,743 and 201,837,254 common
shares issued and outstanding, respectively.

 

During the year ended August 31, 2018, the Company:

 

  ● issued 384,110 shares of common stock for the acquisition of Executive
Fitness Leaders valued at $233,155. The value was based on the closing price of
the Company’s common stock on the acquisition date. The shares were issued on
December 5, 2017;         ● issued 12,452,356 shares of common stock for the
conversion of debt totaling $5,122,899. The per share price used for the
conversion was $0.4114 which was determined as the average price of the five (5)
trading days immediately preceding the date of conversion with a 10% premium
added to the calculated per share price. The shares were issued on February 9,
2018;         ● issued 25,104 shares of common stock for a $15,564 for cash
proceeds of $15,564;         ● cancelled 6,817,084 shares of common stock for no
consideration that were being held as security in connection with a loan
agreement.

 

During the year ended August 31, 2017 the Company issued:

 

  ● 22,751,307 shares of common stock in connection with the reverse merger
transaction; and         ● 11,288,541 shares of common stock for cash proceeds
of $3,386,560.

 

Stock Options and Warrants

 

On September 8, 2015, the Company adopted the 2015 Incentive Compensation Plan
(the “2015 Plan”), which authorizes the issuance of up to 5,000,000 shares of
common stock to employees, officers, directors or independent consultants of the
Company, provided that no person can be granted shares under the 2015 Plan for
services related to raising capital or promotional activities. During 2018 and
2017, the Company did not grant any awards under the 2015 Plan. As of August 31,
2018, 4,987,500 shares were available under the 2015 Plan for future grants,
awards, options or share issuances. However, because the shares issuable under
the 2015 Plan or issuable upon conversion of awards granted under the Plan are
no longer registered under the Securities Exchange Act of 1934, as amended, the
Company does not intend to issue any additional grants under the 2015 Plan.

 

On January 16, 2018, the Company adopted the Novo Integrated Sciences, Inc. 2018
Incentive Plan (the “2018 Plan”). Under the 2018 Plan, 10,000,000 shares of
common stock are authorized for issuance to employees, non-employees, directors
and key consultants to the Company or its subsidiaries. The 2018 Plan authorizes
equity-based and cash-based incentives for participants. There were 9,950,000
shares available for award at August 31, 2018 under the 2018 Plan.

 

F-15

 

 

The following is a summary of stock option/warrant activity:

 

           Weighted             Weighted   Average         Options/   Average  
Remaining   Aggregate     Warrants   Exercise   Contractual   Intrinsic    
Outstanding   Price   Life   Value  Outstanding, August 31, 2016   -            
    Transfer from reverse merger transactions   6,610,000   $0.24           
Granted   1,250,000   $0.42            Forfeited   -                 Exercised 
 -                 Outstanding, August 31, 2017   7,860,000   $0.27    3.53  
$660,000  Granted   2,170,000    0.42            Forfeited   -                
Exercised   -                 Outstanding, August 31, 2018   10,030,000  
 0.30    4.56   $7,045,500  Exercisable, August 31, 2018   10,030,000   $0.30  
 4.56   $7,045,500 

 

The exercise price for options/warrants outstanding at August 31, 2018:

 

Outstanding and Exercisable  Number of      Options/   Exercise  Warrants  
Price   5,500,000   $0.16   1,000,000    0.32   50,000    0.33   120,000  
 0.40   2,000,000    0.42   100,000    0.50   1,000,000    0.62   250,000  
 0.80   10,000    2.00   10,030,000      

 

For options granted during fiscal year 2018 where the exercise price equaled the
stock price at the date of the grant, the weighted-average fair value of such
options was $0.41 and the weighted-average exercise price of such
options/warrants was $0.42. No options were granted during fiscal year 2018
where the exercise price was less than the stock price at the date of grant or
the exercise price was greater than the stock price at the date of grant.

 

For options granted during fiscal year 2017 where the exercise price equaled the
stock price at the date of the grant, the weighted-average fair value of such
options was $0.58 and the weighted-average exercise price of such
options/warrants was $0.42. No options were granted during fiscal 2017 where the
exercise price was less than the stock price at the date of grant or the
exercise price was greater than the stock price at the date of grant.

 

The fair value of the stock options is being amortized to stock option expense
over the vesting period. The Company recorded stock option expense of $1,274,931
and $252,428 during the years ended August 31, 2018 and 2017, respectively. At
August 31, 2018, the unamortized stock option expense was $0.

 

F-16

 

 

The assumptions used in calculating the fair value of options granted using the
Black-Scholes option- pricing model for options granted are as follows:

 

   2018   2017  Risk-free interest rate   1.83%   1.50% Expected life of the
options   2.5 to 3.5 years    2.5 years  Expected volatility   314%   323%
Expected dividend yield   0%   0%

 

During the year ended August 31, 2018, the Company extended the expiration date
of 5,600,000 options by three years. The change in fair value between the
options using the original terms and the options using the new expiration dates
was $31,536 which has been recorded as expense in the accompanying consolidated
statement of operations.

 

Note 11 – Income Taxes

 

The Company’s Canadian subsidiaries are subject to the income tax laws of the
Province of Ontario and the country of Canada.

 

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. A full valuation
allowance is established against all net deferred tax assets as of August 31,
2018 and 2017 based on estimates of recoverability. While the Company has
optimistic plans for its business strategy, it determined that such a valuation
allowance was necessary given the current and expected near term losses and the
uncertainty with respect to its ability to generate sufficient profits from its
business model.

 

Income tax expense for the years ended August 31, 2018 and 2017 is as follows:

 

   2018   2017            Current taxes:           Federal  $   -   $  -  State 
 -    -  Foreign   -    111,702      -    111,702  Deferred taxes:          
Federal   -    -  State   -    -  Foreign   -    -      -    -             
Total income tax expense  $-   $111,702 

 

A reconciliation of the differences between the effective and statutory income
tax rates are as follows:

 

Year Ended August 31, 2018

 

   Canada   United States   Total                            Combined statutory
tax rate        39.0%        40.0%                                        Pretax
loss  $(438,587)       $(1,678,606)       $(2,117,193)                      
             Expected income tax expense (benefit)   (171,049)   -39.0% 
 (671,442)   -40.0%   (842,491)     Stock based compensation   -    0.0% 
 509,972    30.4%   509,972      Change in valuation allowance   171,049  
 39.0%   161,470    9.6%   332,519         $-    0.0%  $-    0.0%  $-    0.0%

 

F-17

 

 

Year Ended August 31, 2017

 

    Canada     United States     Total                                          
          Combined statutory tax rate             39.0 %             40.0 %    
                                                              Pretax loss   $
(257,900 )           $ (375,662 )           $ (699,551 )                        
                                  Expected income tax expense (benefit)    
(100,581 )     -39.0 %     (150,265 )     -40.0 %     (276,582 )         Income
tax from subsidiaries not part of consolidated return     111,702       43.3 %  
  -       0.0 %     111,702           Stock based compensation     -       0.0 %
    100,971       26.9 %     100,971           Change in valuation allowance    
100,581       39.0 %     49,294       13.1 %     175,611               $ 111,702
      43.3 %   $ -       0.0 %   $ 111,702       17.6 %

 

At August 31, 2018 and 2017, the significant components of the deferred tax
assets are summarized below:

 

   2018   2017  Deferred income tax asset           Net operating loss
carryforwards  $2,075,037   $1,856,218  Total deferred income tax asset 
 2,075,037    1,856,218  Less: valuation allowance   (2,075,037)   (1,856,218)
Total deferred income tax asset  $-   $- 

 

The valuation allowance for the years ended August 31, 2018 and 2017 increased
by $218,818 and $464,751, respectively, as a result of the Company generating
additional net operating losses and additional net operating losses resulting
from the merger transaction.

 

The Company has recorded as of August 31, 2018 and 2017 a valuation allowance of
$2,075,037 and $1,856,218, respectively, as it believes that it is more likely
than not that the deferred tax assets will not be realized in future years.
Management has based its assessment on the Company’s lack of profitable
operating history.

 

The Company conducts an analysis of its tax positions and has concluded that it
has no uncertain tax positions as of August 31, 2018 and 2017.

 

The Company has net operating loss carry-forwards of approximately $1,142,000
and $4,162,000 in the United States and Canada, respectively. The use of the net
operating losses in the United States may be significantly limited due to
Internal Revenue Code section 382. The 2018, 2017 and 2016 tax years are still
subject to audit.

 

Note 12 – Acquisition of Assets

 

During the year ended August 31, 2017, the Company acquired certain assets in
exchange for a note payable of $399,400 (CAD$500,000) at April 1, 2017 (the
acquisition date). The purchase of these assets was not considered significant
for accounting purposes; therefore, pro forma financial statements are not
presented.

 

F-18

 

 

On December 1, 2017, the Company and Executive Fitness Leaders, located in
Ottawa Ontario Canada, entered into an Asset Purchase Agreement, pursuant to
which the Company acquired substantially all of the assets of Executive Fitness
Leaders in exchange for the issuance, by the Company, of 384,110 restricted
shares of its common stock valued at $233,155. The purchase price was allocated
to furniture and equipment of $7,772 and goodwill of $225,383. The transaction
closed on December 1, 2017. The purchase of these assets was not considered
significant for accounting purposes; therefore, pro forma financial statements
are not presented.

 

Note 13 – Commitments and Contingencies

 

Litigation

 

The Company is party to certain legal proceedings from time to time incidental
to the conduct of its business. These proceedings could result in fines,
penalties, compensatory or treble damages or non-monetary relief. The nature of
legal proceedings is such that the Company cannot assure the outcome of any
particular matter, and an unfavorable ruling or development could have a
materially adverse effect on our consolidated financial position, results of
operations and cash flows in the period in which a ruling or settlement occurs.
However, based on information available to the Company’s management to date, the
Company’s management does not expect that the outcome of any matter pending
against the Company is likely to have a materially adverse effect on the
Company’s consolidated financial position as of August 31, 2018, results of
operations, cash flows or liquidity of the Company.

 

Leases

 

The Company leases its office space and certain facilities under long-term
operating leases expiring through fiscal year 2023. Rent expense under these
leases was $823,752 and $796,745 for the years ended August 31, 2018 and 2017,
respectively.

 

Future minimum annual payments under operating lease agreements for fiscal years
ending August 31 are as follows:

 

Years ending August 31:       2019   $280,280   2020    179,960   2021  
 162,145   2022    104,149   2023    52,558       $779,092 

 

F-19

 

 

Note 14 – Subsequent Events

 

Increase in Board Size; Officer and Director Changes

 

On October 17, 2018, the Company’s Board of Directors increased the size of the
Board from three members to four members. On the same date, Pierre Dalcourt
resigned his position as Chairman of the Board. Dr. Dalcourt will continue to
serve as a member of the Board.

 

In addition, on October 17, 2018, the Board appointed Robert Mattacchione to
fill the vacancy resulting from the increase in the size of the Board and named
him as Chairman of the Board and Chief Executive Officer.

 

CannaPiece Binding Letter of Intent

 

On October 10, 2018, the Company and NHL executed a binding letter of intent
(“LOI”) with CannaPiece Group Inc. (“CannaPiece”). Pursuant to the terms of the
LOI, NHL and CannaPiece will enter into a joint venture relationship with
CannaPiece and CannaPiece will invest in the Company. The Company and CannaPiece
also agreed to enter into a share exchange agreement resulting in each of the
Company and CannaPiece having an interest in the other company.

 

Pursuant to the terms of the LOI, the parties agreed to the following:

 

  1. CannaPiece will purchase from the Company CAD $5,000,000 (approximately USD
$3,868,988 as of October 16, 2018) worth of the Company’s shares. The share
price will be determined by a 30-day closing average based on the 30-day period
ending on October 10, 2018 and the application of a market acceptable discount
to the determined average.   2. CannaPiece, the Company and NHL will enter into
a share exchange agreement pursuant to which (a) NHL will own or control 25% of
CannaPiece’s common stock, and (b) CannaPiece will own or control CAD
$25,000,000 (approximately USD $19,346,938 as of October 16, 2018) worth of the
Company’s stock, which value will be established by a 30-day closing average
based on the 30-day period ending on October 10, 2018, and the application of a
market acceptable discount to the determined average. The CAD $25,000,000 value
is based on a pre-revenue, post-licensing evaluation of CannaPiece in the amount
of CAD $100,000,000.   3. The Company will have the right to appoint one board
member on CannaPiece’s board of directors, and CannaPiece will have the right to
appoint one board member on the Company’s board of directors.   4. CannaPiece
will rollout a clinic cannabis access program in all applicable Novo network
clinics.   5. CannaPiece will enter into a case conference program with
applicable Novo network stakeholders.

 

The LOI provides that the parties will carry out due diligence and will proceed
reasonably and in good faith toward the negotiation and execution of definitive
documentation regarding the transactions that are the subject of the LOI.
Closing of the transaction is conditioned upon the following, among other
customary closing conditions, including receipt of required regulatory
approvals:

 

  (i) Completion of due diligence,   (ii) CannaPiece’s continuing toward full
cannabis license producer status and not having the license application
compromised in any way, and   (iii) The Company shares that will be the subject
of the share exchange will be held in escrow until CannaPiece receives licensed
producer status.

 

If a definitive agreement is not executed by the parties on or before November
15, 2018 (or such other date agreed to by the parties), the LOI will terminate.

 

F-20

 

 

Schedule 1

Novo Healthnet Limited Disclosure Schedule

 

Section 4.01 - Organization

 

Effective September 2013 to present, Novo Healthnet Limited holds a 100%
shareholder position in Novo Assessments Inc. and Novo Healthnet Rehab Limited.
As such, each Ontario Incorporated entity is a wholly owned subsidiary of Novo
Healthnet Limited.

 

Pursuant to the Agreement of Purchase and Sale of Assets dated September 30,
2013 in which Novo Healthnet Limited purchased the assets of Peak Health LTC
Inc., Healthnet Assessments Inc., ICC Healthnet Canada Inc. and Michael Gaynor
Physiotherapy Professional Corporation, Novo Healthnet Limited operates in the
rehabilitative, eldercare and IME areas of business through the acquired assets.

 

NOVO HEALTHNET KEMPTVILLE CENTRE INC.

 

Effective November 2014 to present, Novo Healthnet Limited holds an 80%
shareholder position in Novo Healthnet Kemptville Centre Inc. As such Novo
Healthnet Limited holds 80 common shares and Micheline Dione holds 20 common
shares of Novo Healthnet Kemptville Centre Inc. an Ontario Incorporated company.

 

Pursuant to the Asset Purchase Agreement entered into November 2014 between Novo
Healthnet Kemptville Centre Inc. (Purchaser) and Synergy Physiotherapy and
Sports Injury Clinic and Micheline Dionne Professional Corp. (collectively the
Sellers) Novo Healthnet Kemptville Centre Inc. operates a rehabilitative
wellness clinic in Kemptville, Ontario, Canada.

 

Section 4.12 - Contracts

 

APKA Health

 

Pursuant to the Asset Purchase Agreement dated April 1, 2017 between Novo
Healthnet Limited and APKA Health, an Ontario incorporated company, Novo
Healthnet limited established an Occupational Therapy and Services division
operating in eldercare, IME and community care sectors.

 

EXECUTIVE FITNESS LEADERS INC.

 

Effective December 1, 2017 to present, Novo Healthnet Limited executed an Asset
Purchase Agreement with Executive Fitness Leaders Inc. (“EFL”) pursuant to which
Novo Healthnet Limited and Novo Integrated Sciences, Inc. acquired substantially
all of EFL’s assets. EFL conducts the business of personalized training and
fitness and related ancillary services based in a wellness model of delivery and
operated by the Seller at 6 Antares Drive, Phase I, Unit 3, Ottawa, ON K2E 8A9.

 

NOVO PEAK HEALTH ELDERCARE CENTRIC

 

Certain contracts held with client homes and client companies follow standard
formats and include generally accepted terms of reference. Specific clauses
within the NHL contracts for services contain language are intended to (1)
clarify which entity is the health information custodian of the medical files
(usually held by the client home or company), (2) define release of liability,
(3) ensure privacy and confidentiality of proprietary information or private
health information, (4) define provisions of worker’s compensation clearance or
benefits for employees and/or contractors, (5) detail provisions of value-added
items, services or programs, (6) set out terms and conditions of the contract
(often for a set number of years with an option to a renew), (7) provide for
termination conditions, and (8) detail invoicing and billing procedures.

 

  Schedule 1 Page | 1

 

 

AFFILIATE CLINICS

 

In order to strengthen our position within the Canadian Preferred Provider
Network (“PPN”), we have built a contracted affiliate relationship with 88
clinics across Canada, including approximately 76 clinics in Ontario province
and approximately 12 clinics located throughout Newfoundland, Nova Scotia, New
Brunswick and Alberta. The PPN is a network of three major insurance companies
and their subsidiaries, totaling approximately 16 insurance companies. PPN
member insurance companies in need of specific primary healthcare solutions for
their patients send referrals to specific clinics registered through the PPN.
We, as one of five major providers to the PPN, receive referrals through the
PPN. This subset of business is a continuous source of referrals, from the
insurance company payer to the approved group of clinics meeting the insurance
companies’ pre-determined set of criteria for what they believe to be an
appropriate clinical setting. Affiliate clinics pay us a mix of a flat fee and a
percentage-based fee upon receipt of a payment for a service referred through
the PPN.

 

BRANDS

 

Pursuant to a binding Letter of Intent dated January 30, 2017 between Novo
Healthnet Limited (Purchaser) and Rubinoff (Seller), Novo Healthnet Limited will
acquire 70% of the total share capital of Brands International Corp., an Ontario
incorporated company. Novo Healthnet Limited will assume majority share position
and control in Brands International Corp. a company involved in the
manufacturing of Health and Beauty products.

 

CannaPiece Group Inc

 

Pursuant to a Share Exchange Agreement, dated December 12, 2018, between Novo
Integrated Sciences, Inc., Novo Healthnet Limited and CannaPiece Group, Inc, an
Ontario province corporation, (“CPG”), NHL will acquire 25%, at closing, of the
total share capital of CPG, a company in the business of producing and selling
cannabis related products and services throughout Canada. CPG is currently in
the process (through its wholly-owned subsidiary) of obtaining a license to
cultivate and sell cannabis under the Cannabis Act (Canada) and its associated
regulations (the “Cannabis Act”). The closing of this transaction is primarily
dependent on CPG receiving approved Licensed Producer Status under the Cannabis
Act. The identified termination date is June 1, 2019 unless amended by all
parties.

 

Section 4.13 - Taxes

 

Effective the date of this Agreement, NHL is in arrears in its HST account as
well as Payroll account. Arrangements with tax authorities have been made to
manage arrears through a payment plan acceptable to both parties. The liability
is reflected in the Parent’s consolidated Financial Statements.

 

*****************************************************************************

 

  Schedule 1 Page | 2

 

 

Schedule 2

Novo Integrated Sciences, Inc. Disclosure Schedule

 

Section 4.01 - Organization

 

Novo Integrated Sciences, Inc. (“Novo Integrated”) was incorporated in Delaware
on November 27, 2000, under the name Turbine Truck Engines, Inc. On February 20,
2008, Novo Integrated was re-domiciled to the State of Nevada. Effective July
12, 2017, Novo Integrated’s name was changed to Novo Integrated Sciences, Inc.

 

Section 4.05 - Stock Options and Warrants

 

As of the Effective Date, a number of these options and warrants are vested, as
follows: (i) There are stock options issued and outstanding to acquire
10,095,000 shares of Company Common Stock at exercise prices ranging from $0.16
to $0.95 per share of Company Common Stock.

 

2018 Incentive Plan

 

On January 16, 2018, the Parent adopted the Novo Integrated Sciences, Inc. 2018
Incentive Plan (the “2018 Plan”). Under the 2018 Plan, 10,000,000 shares of
common stock are authorized for issuance to employees, non-employees, directors
and key consultants to Novo Integrated or its subsidiaries. The 2018 Plan
authorizes equity-based and cash-based incentives for participants. Currently,
there are 9,875,000 shares available for award at under the 2018 Plan.

 

Potential Common Stock Obligation for Asset Purchase Agreement DCGT and GTL
Technology

 

Pursuant to the Asset Purchase Agreement dated as of October 14, 2014, by and
between Robert L. Scragg and Barbara J. Scragg (collectively, the “Sellers”),
Alpha Engines Corporation (“Alpha”) and the Parent (the “APA”), if either (i)
the Parent certifies as to the viability of the Detonation Cycle Gas Turbine
Engine (the “DCGT”) or the Gas-to-Liquid (the “GTL”) technology or (ii)
commercial sales of either the DCGT or GTL technology occur by the Parent, then
the Parent is obligated to issue 50,000 common shares to the Sellers. The APA
references 1,000,000 shares of Parent’s Common Stock, but with the effect of the
Parent’s 1:20 reverse split, effective May 5, 2015, this potential obligation is
now 50,000 common shares. With the execution of the Share Exchange Agreement in
which Novo Healthnet Limited is now a wholly-owned subsidiary of the Parent, the
DCGT and the GTL alternative energy technology purchased under this subject APA
is dormant and not worth pursuing or selling which makes it extremely unlikely
this obligation will ever be paid.

 

Section 4.04 - Subsidiaries and Predecessor Corporations

 

Share Exchange Agreement to Acquire Novo Healthnet Limited and its Subsidiaries

 

On April 25, 2017, the Parent entered into a Share Exchange Agreement (the
“Share Exchange Agreement”) by and between (i) Novo Integrated; (ii) NHL, (iii)
ALMC-ASAP Holdings Inc. (“ALMC”); (iv) Michael Gaynor Family Trust (the “MGFT”);
(v) 1218814 Ontario Inc. (“1218814”) and (vi) Michael Gaynor Physiotherapy
Professional Corp. (“MGPP,” and together with ALMC, MGFT and 1218814, the “NHL
Shareholders”). Pursuant to the terms of the Share Exchange Agreement, Novo
Integrated agreed to acquire from the NHL Shareholders all of the shares of both
common and preferred stock of NHL, held by the NHL Shareholders, in exchange for
the issuance by Novo Integrated to the NHL Shareholders of shares of Novo
Integrated’s common stock, such that following the closing of the Share Exchange
Agreement, the NHL Shareholders would own 167,797,406 restricted shares Novo
Integrated common stock, representing 85% of the issued and outstanding Novo
Integrated common stock, calculated including all granted and issued options or
warrants to acquire Novo Integrated common stock as of the Effective Date, but
to exclude shares of Novo Integrated common stock that are subject to a
then-current Regulation S offering that was undertaken by Novo Integrated (the
“Exchange”).

 

On May 9, 2017, the Exchange closed and, as a result, NHL became a wholly owned
subsidiary of Novo Integrated.

 

Novomerica Health Group, Inc., a Parent wholly-owned Subsidiary

 

Effective November 3, 2017, Novomerica Health Group, Inc., a Nevada corporation
(“NHG”), was incorporated as a wholly owned subsidiary of Novo Integrated
Sciences, Inc. NHG was formed for the Parent to have a vehicle for acquisition
of U.S. based assets. Currently, NHG is not conducting any operations but is an
active corporation.

 

*****************************************************************************

 

  Schedule 2 Page | 1

 

 

Schedule 3

Pulse Rx Inc. Disclosure Schedule

 

Section 1.01 - Organization and Premises

 

Ownership structure of all issued and outstanding shares of PR

 

100 Class A Common Shares held by:

  - Family Pharmacy Clinic Inc.

 

100 Class B Common Shares held by:

  - 40 Martin Kusmirek   - 20 Tanya Kusmirek   - 20 Andrew Kusmirek   - 20
Christine Kusmirek

 

Governance

 

Directors and Officers of PR

  Sole Director: Thelma Sarsam   President: Martin Kusmirek   Secretary: Martin
Kusmirek

 

PR has a valid and subsisting lease for the premises located at:

 

111 Zenway Blvd., Units 2&3

Woodbridge, Ontario L4H 3H9

 

Section 1.02 - Employee Matters and Existing Benefits

 

General Employee Matters

 

A registered pharmacy technician is currently on maternity leave and expected to
return to work in July 2019.

 

Employee Benefits

  o Non-Pharmacist

  ● $500 Annual Employee Health Benefit Allowance

  ● Paid to Employee, upon employee’s presentment of paid health expense
invoice, on their subsequent pay cheque.

  o Pharmacists

  ● $2000 Annual Blend of Employee Health Benefit Allowance and Continued
Pharmacy Related Educational Allowance

  ● Paid to Employee, upon employee’s presentment of paid health expense
invoice, on their subsequent pay cheque.

 

  Schedule 3 Page | 1

 

 

Employee Reimbursements

  o Reimbursement of Annual Ontario College of Pharmacists Membership Dues and
Professional Insurance (pro-rated for part-time employees)

  ● Pharmacists; and   ● Registered pharmacy technicians

  o Travel Allowance and Reimbursement Policy   o Any other prior authorized
expenditures incurred on behalf of PR.

 

Section 1.02 - Restriction to Carrying on Business

 

On Dec 1, 2014, by way of an Asset Purchase Agreement, PR sold a pharmacy
location in Ottawa. Pursuant to the terms of the sale, PR has a 5-year
non-compete precluding it from competing with the buyer of those assets within
100km of the pharmacy location in Ottawa. This non-compete expires on November
30, 2019 and the documents of the asset sale are available for the Buyers to
review.

 

Section 1.03 - Legal Actions

 

PR is currently defending a legal action for wrongful dismal initiated by a
prior part-time employee of PR. Mediation has been set for April 30. The entire
legal file is available for the Buyers’ review. The employee has been paid all
Statutory entitlements and it is not believed that the exposure to any
additional payments would be adversely material.

 

PR has received correspondence threatening legal action from Leviathan Cannabis
Group Inc. in respect of a deposit advance pursuant to their initiative to buy
the shares of PR. Copies of all related material have been provided to the
Buyer.

 

Section 1.04 - Taxes

 

PR owes approximately $500,000 in payroll taxes which will be discharged upon
Closing from the advanced loan funds. PR has been working closely with CRA in
addressing this arrears amount and will obtain an accurate discharge statement
prior to Closing.

 

Section 1.05 - Audits

 

PR has undergone several tax audits, including an appeal that was awarded in
full. The most recent audit results were sent to PR on January 17, 2019 and are
available to the Buyers for review. As a result of the audits, the corporate
annual returns require filing and the corporate accountants will provide all
necessary documentation to this effect.

 

Section 1.06 - Contracts

 

PR has existing contracts for the provision of pharmacy services to nursing and
retirement homes. These contracts are all in good standing and available to the
Buyers for review.

 

Section 1.07 - Indebtedness, Claim, Liability or Obligation

 

Disclosure in Certificate of Use of Funds Directive dated February 20, 2019.

 

Section 1.08 - Remaining Encumbrances

 

Due to ongoing operations and the continued requirement to place daily orders
for pharmaceutical products with PR’s wholesalers, PR will need to maintain its
accounts with McKesson and LPG Inventory Solutions and; accordingly, their
respective security registrations will need to remain.

 

Company vehicles leases remain to be registered.

 

***********************************************************

 

  Schedule 3 Page | 2

 

 

Schedule 4

Certificate of Use of Funds Directive

 

Disclosed in certificate of Martin Kusmirek, dated February 20, 2019.

 

  Schedule 4 Page | 1

 

 

Schedule 5

Certificate Respecting Employment Contracts

 

Disclosed in certificate of Robert Mattacchione, dated February 20, 2019.

 

  Schedule 5 Page | 1

 

 

Schedule 6

Certificate Respecting Loan Funding

 

Disclosed in certificate of Robert Mattacchione, dated February 20, 2019.

 

  Schedule 6 Page | 1