SEC Company Response from Novo Integrated Sciences, Inc. (NVOS) (CIK 0001138978) — May 22, 2020
Novo Integrated Sciences, Inc. (NVOS) (CIK 0001138978)
Date: May 22, 2020 · CIK: 0001138978 · Accession: 0001493152-20-009681
AI Filing Summary & Sentiment
File numbers found in text: 024-11186
Referenced dates: April 29, 2020
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ANTHONY
L.G., PLLC
laura
aNTHONy, esq.
GEOFFREY
ASHBURNE, ESQ.*
JOHN
CACOMANOLIS, ESQ.**
CHAD
FRIEND, ESQ., LLM
SVETLANA
ROVENSKAYA, ESQ.***
OF
COUNSEL:
MICHAEL
R. GEROE, ESQ., CIPP/US ****
CRAIG
D. LINDER, ESQ.*****
PETER
P. LINDLEY, ESQ., CPA, MBA
PHILIP
MAGRI, ESQ.******
STUART
REED, ESQ.
MARC
S. WOOLF, ESQ.
www.ANTHONYPLLC.com
WWW.SECURITIESLAWBLOG.COM
WWW.LAWCAST.COM
DIRECT
E-MAIL: LANTHONY@ANTHONYPLLC.COM
*licensed
in CA
**licensed
in FL and NY
***licensed
in NY and NJ
****licensed
in D.C., CA, NY and MO
*****licensed
in FL, CA and NY
******licensed
in FL and NY
May
22, 2020
VIA
ELECTRONIC EDGAR FILING
Office
of Technology
Division
of Corporation Finance
Securities
and Exchange Commission
100
F. Street, N.E.
Washington,
D.C. 20549
Re:
Novo
Integrated Sciences, Inc.
Offering
Statement on Form 1-A
Filed
April 2, 2020
File
No. 024-11186
Dear
Sir or Madam:
We
have electronically filed herewith on behalf of Novo Integrated Sciences, Inc. (the “Company”) Amendment No. 1 (“Amendment
No. 1”) to the above-referenced offering statement on Form 1-A originally filed on April 2, 2020 (“Form 1-A”).
Amendment No. 1 is marked with < R > tags to show changes made from the original Form 1-A filed on April 2, 2020. In addition,
we have included a narrative response herein keyed to the comments of the staff of the Division of Corporation Finance (the “Staff”)
set forth in the Staff’s comment letter to Robert Mattacchione dated April 29, 2020. We trust you shall deem Amendment No.
1 and the contents of this transmittal letter responsive to your comment letter.
Form
1-A filed April 2, 2020
Summary,
page 3
Comment:
1.
Disclosure indicates that Robert Mattacchione will continue to beneficially own over 50% of your common stock after this offering.
Please add disclosure here highlighting that Mr. Mattacchione will continue to control corporate matters after this offering and
add a risk factor discussing any resulting risks to the company and its stockholders.
625
N. FLAGLER DRIVE, SUITE 600 ● WEST PALM BEACH, FLORIDA ● 33401 • PHONE: 561-514-0936 ● FAX 561-514-0832
Office
of Technology
Division
of Corporation Finance
Securities
and Exchange Commission
May
22, 2020
Page
2
Response:
In response to the Staff’s comment,
the Company has revised pages 4 and 81 of Amendment No. 1 to highlight in the Summary section and Description of Business
section that Mr. Mattacchione will continue to control corporate matters after the offering. The Company has also added a risk
factor on page 34 of Amendment No. 1 discussing the risks to the Company and its shareholders as a result of Mr. Mattacchione
continuing to control corporate matters after this offering.
Item
6: Use of Proceeds to the Issuer, page 80
Comment:
2.
Clarify your disclosure to indicate whether your intended use of proceeds takes into account the potential impacts of COVID-19
that you describe on page 36.
Response:
In
response to the Staff’s comment, the Company has revised the disclosure in the Use of Proceeds to the Issuer section on
page 80 of Amendment No. 1 to indicate that the intended use of proceeds takes into account the potential impacts of
COVID-19.
Business
Growth Strategy, page 81
Comment:
3.
You disclose a number of planned business initiatives and opportunities in your business growth strategy section. Please revise
to disclose the current developmental status of these initiatives and opportunities, such as the concrete steps you have taken
to date, anticipated costs to complete their development, the sources of funding for these anticipated costs and other remaining
actions you have to take before launch. For example, you include a significant amount of disclosure about your planned CBD platform
and your telemedicine platform, but it is unclear what stage of development these platforms are in and when the platforms are
expected to launch.
Response:
In response to
the Staff’s comment, the Company has revised the Business Growth Strategy sections (now entitled “Business Growth
Initiatives”) starting on pages 4, 81 and 106 of Amendment No. 1 to disclose the current developmental status
of the planned business initiatives and opportunities, including, but not limited to the CBD platform and telemedicine platform,
addressing the concrete steps the Company has taken to date, anticipated costs to complete the development of the business initiatives
and opportunities, the sources of funding for these anticipated costs and other remaining actions the Company has to take before
launch.
Item
9: Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 105
Comment:
4.
You disclose on page 36 that as a result of COVID-19 you have closed all corporate clinics effective March 17, 2020. In addition,
you are significantly reducing the engagement of your multi-disciplinary primary healthcare services and products with your client
patients as provided through contracted services with eldercare facilities and your affiliate clinics. Please disclose more specifically
how this has impacted your operating results as compared to the historical periods that you present. That is, clarify the extent
to which your revenue has been reduced as a result of the closures and reductions in service. Further, clarify how this has impacted
your overall liquidity position and outlook, and the course of action you are taking to remedy any liquidity deficiency. Disclose
your current working capital position and clarify whether you expect collectability issues with your accounts receivable. Lastly,
clarify any potential impacts on impairment of long lived assets, intangible assets and goodwill. For additional guidance, refer
to the Division of Corporation Finance Disclosure Guidance Topic No. 9 issued March 25, 2020 and Item 9(b) of Form 1-A.
625
N. FLAGLER DRIVE, SUITE 600 ● WEST PALM BEACH, FLORIDA ● 33401 • PHONE: 561-514-0936 ● FAX 561-514-0832
Office
of Technology
Division
of Corporation Finance
Securities
and Exchange Commission
May
22, 2020
Page
3
Response:
In
response to the Staff’s comment, the Company has revised page 111 of Amendment No. 1 to disclose more specifically
in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital
Resources – Financial Impact of COVID-19” how COVID-19 has impacted its operating results as compared to the historical
periods that the Company presents by (i) clarifying the extent to which the Company’s revenue has been reduced as a result
of the closures and reductions in service due to COVID-19, (ii) clarifying the impact of the reduction in the Company’s
revenue on the Company’s overall liquidity position and outlook, and the course of action the Company is taking to remedy
any liquidity deficiency, (iii) disclosing the Company’s current working capital position and clarifying whether it expects
collectability issues with its accounts receivable, and (iv) clarifying any potential impacts on impairment of long lived assets,
intangible assets and goodwill.
Comment:
5.
Clarify your disclosure to describe the potential impact that COVID-19 has on your ability to execute your license and joint venture
agreements as planned, as well as the other business growth initiatives that you disclose.
Response:
In
response to the Staff’s comment, see the Company’s response to the Staff’s Comment 3 above.
Where
You Can Find More Information, page 133
Comment:
6.
You disclose here certain reporting requirements for issuers of Tier II offerings. We also note that you appear to have an
active reporting obligation pursuant to Section 15(d) of the Exchange Act. Please revise this section to clarify whether you intend
to continue to provide reports pursuant to Section 15(d) and whether you will satisfy your Regulation A reporting requirements
with the filing of these reports. Consider Rule 257(b)(6) of Regulation A.
Response:
In response to the Staff’s comment,
the Company has revised page 133 of Amendment No. 1 to clarify that the Company plans to continue to file reports with
the SEC pursuant to Section 15(d) of the Exchange Act, which, in accordance with Rule 257(b)(6) of Regulation A, will satisfy
our reporting obligations under Regulation A.
General
Comment:
7.
Section 22(a) of your amended and restated articles of incorporation contains a forum selection provision that designates a
state or federal court located within the state of Nevada as the exclusive forum for certain types of actions, including any “derivative”
action. Please revise to clearly and prominently describe the provision, including whether it applies to claims arising under
the U.S. federal securities laws. To the extent this provision applies to claims arising under the Exchange Act, please be advised
that Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability
created by the Exchange Act or the rules and regulations thereunder. Additionally, please revise to describe any risks or impacts
on investors and any uncertainty about the enforceability of this provision.
625
N. FLAGLER DRIVE, SUITE 600 ● WEST PALM BEACH, FLORIDA ● 33401 • PHONE: 561-514-0936 ● FAX 561-514-0832
Office
of Technology
Division
of Corporation Finance
Securities
and Exchange Commission
May
22, 2020
Page
4
Response:
In response to the Staff’s comment,
the Company has revised the Form 1-A to include the following disclosure in a newly created subsection “Exclusive Forum
Provision” on page 124 to the section “Securities Being Offered” of Amendment No. 1:
““Exclusive
Forum Provision. Section 22(a) of our amended and restated articles of incorporation provide that “[u]nless the Corporation
consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding
brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer
or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) an action asserting a claim
arising pursuant to any provision of the NRS, or (iv) any action asserting a claim governed by the internal affairs doctrine,
shall be a state or federal court located within the state of Nevada, in all cases subject to the court’s having personal
jurisdiction over the indispensable parties named as defendants.”
This
provision would not apply to suits brought to enforce a duty or liability created by the Securities Act, Exchange Act or any other
claim for which the U.S. federal courts have exclusive jurisdiction.
This
choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors,
officers and employees. Alternatively, a court could find these provisions of our amended and restated articles of incorporation
to be inapplicable or unenforceable in respect of one or more of the specified types of actions or proceedings, which may require
us to incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business
and financial condition.”
The
Company advises the Staff that it will make the above disclosure in all future filings it makes with the SEC.
In
addition, in response to the Staff´s comment, the Company has added a new risk factor under “Risk
Factors —Risks Related to Our Business” on page 36 of Amendment No.
1 to clarify that the exclusive forum provision in the amended and restated articles of incorporation as disclosed in the Form
1-A, does not apply to claims brought pursuant to the federal securities laws and the rules and regulations thereunder, including
the Securities Act and the Exchange Act, and to identify the related risks of the exclusive forum provision to, and other potential
impacts on, investors.
If
the Staff has any further comments regarding the Form 1-A, Amendment No.1 or any subsequent amendments to the Company’s
offering statement on Form 1-A, please feel free to contact the undersigned.
Anthony
L.G., PLLC
By:
/s/
Laura Anthony
Laura
Anthony, Esq.
cc:
Mitchell
Austin/U.S. Securities and Exchange Commission
Kathleen
Krebs/U.S. Securities and Exchange Commission
Laura
Veator/U.S. Securities and Exchange Commission
Stephen
Krikorian/U.S. Securities and Exchange Commission
Robert
Mattacchione/Novo Integrated Sciences, Inc.
Craig
D. Linder, Esq. /Anthony L.G., PLLC
625
N. FLAGLER DRIVE, SUITE 600 ● WEST PALM BEACH, FLORIDA ● 33401 • PHONE: 561-514-0936 ● FAX 561-514-0832