Item 1.01 Entry into a Material Definitive Agreement.
On February 9, 2023, NovAccess Global Inc. ("NovAccess," the "company" or "we")
entered into an interest-free loan agreement with Jason M. Anderson, an
independent member of our board of directors. Reflecting his faith in NovAccess
and our management team, Mr. Anderson loaned the company $8,500. The loan does
not bear interest (except on default) and is due on the earlier of August 31,
2023 or our receipt of debt or equity financing of at least $3.0 million. We
will use the proceeds of the loan for general working capital purposes.
Also on February 9, we entered into a letter agreement (the "letter agreement")
with AJB Capital Investments, LLC ("AJB"). In connection with a loan previously
provided by AJB, we issued a promissory note to AJB on February 15, 2022 in the
principal amount of $250,000 that was due February 16, 2023. The letter
agreement extended the due date to May 9, 2023.
On May 5, 2022, we issued a promissory note to AJB in the principal amount of
$1.0 million in connection with another loan from AJB. On February 9, 2023, AJB
loaned us an additional $265,000, which was added to the May 2022 note. The
$265,000 loan has an original issuance discount of 10% of the principal and
bears interest at 10% a year. This loan is due on May 9, 2023. We will use the
proceeds of the loan for general working capital purposes. Our chief executive
officer Dwain K. Irvin guaranteed repayment of the $265,000 loan.
Also pursuant to the letter agreement, NovAccess paid AJB a commitment fee of
500,000 unregistered shares of the company's common stock (the "commitment fee
shares"). If AJB is unable to sell the commitment fee shares for $0.20 a share,
then AJB may require NovAccess to issue additional shares or pay cash in the
amount of the shortfall. We are also required to register the commitment fee
shares for resale under the Securities Act.
Pursuant to the letter agreement, NovAccess also issued to AJB a common stock
purchase warrant (the "warrant") to purchase 1.0 million shares of the company's
common stock for $0.20 a share. The warrant expires on February 9, 2028.
In connection with loans previously provided by AJB, we had issued two warrants
to AJB to acquire up to 1.5 million shares of our stock for $1.50 a share.
Pursuant to the letter agreement, the exercise price of these warrants was
reduced to $0.20 a share.
The Anderson loan agreement and the AJB letter agreement and warrant are filed
as exhibits to this Current Report on Form 8-K. The descriptions above are
qualified in their entirety by reference to the full text of these documents.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure included under Item 1.01 above is incorporated by reference to
this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The disclosure included under Item 1.01 above is incorporated by reference to
this Item 3.02. The issuances of the commitment fee shares and warrant to AJB
were exempt from registration under Section 4(a)(2) of the Securities Act of
1933.
Item 9.01 Financial Statements and Exhibits.
Exhibit 10.1 Interest Free Loan Agreement dated February 9, 2023 between
NovAccess Global Inc. and Jason M. Anderson
Exhibit 10.2 Letter Agreement dated February 9, 2023 between NovAccess Global
Inc. and AJB Capital Investments, LLC
Exhibit 10.3 Common Stock Purchase Warrant dated February 9, 2023 for
1,000,000 shares issued by NovAccess Global Inc. to AJB Capital Investments,
LLC
Exhibit 104 Cover Page Interactive Data File (formatted as Inline XBRL)
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