As
filed with the Securities and Exchange Commission on October 6, 2023.
Registration
No. 333-272942
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT NO. 4
TO
FORM
F-1
REGISTRATION
STATEMENT UNDER SECURITIES ACT OF 1933
Bruush
Oral Care Inc.
(Exact
name of Registrant as specified in its charter)
British
Columbia, Canada |
|
3843 |
|
N/A |
(State
or other jurisdiction of
incorporation
or organization) |
|
(Primary
Standard Industrial
Classification
Code Number) |
|
(I.R.S.
Employer
Identification
No.) |
128
West Hastings Street, Unit 210
Vancouver,
British Columbia V6B 1G8
Canada
(844)
427-8774
(Address,
including zip code, and telephone number, including
area
code, of Registrant’s principal executive offices)
Cogency
Global Inc.
122
East 42nd Street, 18th Floor
New
York, NY 10168
(800)
221-0102
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
Copies
of all communications, including communications sent to agent for service, should be sent to:
Joseph
M. Lucosky, Esq.
Lahdan S. Rahmati, Esq.
Lucosky
Brookman LLP
101
Wood Avenue South, 5th Floor
Woodbridge,
NJ 08830
(732)
395-4496
jlucosky@lucbro.com
Approximate
date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging
growth company ☒
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 7(a)(2)(B) of the Securities Act. ☐
The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective
in accordance with section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date
as the Securities and Exchange Commission, acting pursuant to section 8(a), may determine.
The
information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission, or “SEC”, is effective. This preliminary prospectus is not an
offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PROSPECTUS |
SUBJECT
TO COMPLETION |
DATED
OCTOBER [●], 2023 |
Up
to 3,583,842 Shares of Common Shares
This
prospectus relates to the offer and sale, from time to time, by the Selling Securityholder named herein (the “Selling Securityholder”)
of an aggregate of up to (i) 890,980 shares of common shares without par value (“Common Shares”) of Bruush Oral Care Inc.
(the “Company”) issuable upon conversion in full of a convertible note issued pursuant to a securities purchase agreement
relating to the June 2023 Private Placement (as defined below), (ii) 400,941 Common Shares issuable upon exercise of the warrants issued
in the June 2023 Private Placement, (iii) an additional 1,291,921 Common Shares issuable pursuant to the June 2023 Private Placement,
and (iv) 1,000,000 Common Shares issuable in connection with the October 2023 Private Placement (as defined below).
The Selling
Securityholder may sell Common Shares at market prices prevailing at the times of sale, prices related to the prevailing market
prices or negotiated prices. The Selling Securityholder may offer Common Shares to or through underwriters, dealers or other agents,
directly to investors or through any other manner permitted by law, on a continued or delayed basis. We will bear all costs, expenses
and fees in connection with the registration of the securities offered by this prospectus, and the Selling Securityholder will bear all
incremental selling expenses, including commissions and discounts, brokerage fees and other similar selling expenses they incur in sale
of the securities. See “Plan of Distribution”.
We
are not selling any securities in this offering, and we will not receive any proceeds from the sale of any securities by the Selling
Securityholder. The registration of the securities covered by this prospectus does not necessarily mean that any of these securities
will be offered or sold by the Selling Securityholder. The timing and amount of any sale is within the Selling Securityholder’s
sole discretion, subject to certain restrictions. To the extent that such Selling Securityholder sells any securities,
such holder may be required to provide you with this prospectus identifying and containing specific information about the Selling Securityholder
and the terms of the securities being offered.
The Selling Securityholder and intermediaries
through whom the securities are sold may be deemed “underwriters” within the meaning of the Securities Act of 1933, as amended
(the “Securities Act”), with respect to the securities offered hereby, and any profits realized or commissions received may
be deemed underwriting compensation.
Our
Common Shares and warrants are quoted on The Nasdaq Stock Market (“Nasdaq”) under
the trading symbols “BRSH” and “BRSHW”, respectively. On October
4, 2023, the closing price of our Common Shares on Nasdaq was $1.02 per share,
and the closing price of our warrants on Nasdaq was $0.01 per warrant. On September
21, 2023, the Nasdaq Hearings Panel (the “Panel”) held on a hearing to consider
our appeal of Nasdaq’s determination that we were not in compliance with the minimum
stockholders’ equity requirement for continued listing and its determination to delist
our securities. At the hearing, we presented our plan for regaining and sustaining compliance
with Nasdaq’s continued listing requirements. On October 2, 2023, the Company received
a letter from the Nasdaq notifying the Company that the Panel has granted an exception to
the Company for continued listing on the Nasdaq, subject to the Company demonstrating compliance
with the minimum stockholders’ equity rule on or before December 31, 2023. The Panel reserves the right to reconsider
the terms of this exception based on any event, condition or circumstance that exists or
develops that would, in the opinion of the Panel, make continued listing of the Company’s
securities on Nasdaq inadvisable or unwarranted.
Unless otherwise noted, the share and per share
information in this prospectus reflects a 1-for-25 reverse stock split of our outstanding Common Shares effective as of August
1, 2023.
We
may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read this entire
prospectus and any amendments or supplements carefully before you make your investment decision.
Investing
in our securities involves a high degree of risk. Before buying any securities, you should carefully read the discussion of material
risks of investing in the Common Shares and our Company. See “Risk Factors” incorporated by reference into this prospectus
for a discussion of information that should be considered in connection with an investment in our securities.
We
are a “foreign private issuer” and an “emerging growth company” each as defined under the federal securities
laws, and, as such, we are subject to reduced public company reporting requirements. See the section entitled “Prospectus
Summary—Implications of Being an Emerging Growth Company and a Foreign Private Issuer” for additional information.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is [●], 2023
TABLE
OF CONTENTS
About
This Prospectus
Neither
we nor the Selling Securityholder have authorized anyone to provide information different from or additional to that contained in this
prospectus, any amendment or supplement to this prospectus or in any free writing prospectus prepared by us or on our behalf. The
Selling Securityholder named in this prospectus may, from time to time, sell the securities described in this prospectus in one or more
offerings. Neither we nor the Selling Securityholder take any responsibility for, and can provide no assurance as to the reliability
of, any information other than the information in this prospectus, any amendment or supplement to this prospectus, and any free writing
prospectus prepared by us or on our behalf. Neither the delivery of this prospectus nor the sale of our securities in this offering means
that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or
the solicitation of an offer to buy these shares in any circumstances under which such offer or solicitation is unlawful.
Our
financial statements included or incorporated by reference into this prospectus have been prepared in accordance with International Financial
Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or the IASB. None
of the financial statements included herein were prepared in accordance with generally accepted accounting principles in the United States,
or US GAAP. IFRS differs from US GAAP in certain material respects and thus may not be comparable to financial information presented
by U.S. companies.
The
Selling Securityholder is offering to sell the Common Shares, and seeking offers to buy Common Shares, only in jurisdictions
where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or any sale of the securities.
For
investors outside of the United States: Neither we nor the Selling Securityholder have done anything that would permit this offering
or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United
States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions
relating to this offering and the distribution of this prospectus outside of the United States.
Throughout
this prospectus, unless otherwise designated or the context requires otherwise, the terms “we”, “us”, the “Company”,
and “our” refer to Bruush Oral Care Inc. Unless the context requires otherwise, all references to our financial statements
mean the financial statements of our Company included herein.
Enforcement
of Civil Liabilities
We
are a company incorporated under the law of British Columbia, Canada. Some of our directors and officers, and some of the experts named
in this prospectus, are residents of Canada or
otherwise reside outside of the United States, and all or a substantial portion of their assets, and all or a substantial portion of
our assets, are located outside of the United States. We have appointed an agent for service of process in the United States, but it
may be difficult for shareholders who reside in the United States to effect service within the United States upon those directors, officers
and experts who are not residents of the United States. It may also be difficult for shareholders who reside in the United States to
realize in the United States upon judgments of courts of the United States predicated upon our civil liability and the civil liability
of our directors, officers and experts under the United States federal securities laws. There can be no assurance that U.S. investors
will be able to enforce against us, directors, officers or certain experts named herein who are residents of Canada or
other countries outside the United States, any judgments in civil and commercial matters, including judgments under the federal securities
laws.
Cautionary
Note Regarding Forward-Looking Statements
We
discuss in this prospectus our business strategy, market opportunity, capital requirements, product introductions and development
plans and the adequacy of our funding. These statements, and other statements contained in this prospectus, which are not
historical facts, are also forward-looking statements. In some cases, you can identify forward-looking statements by terminology
such as “may,” “will,” “could,” “should,” “expects,”
“anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates” or similar expressions that predict or indicate future events or
trends or that are not statements of historical matters.
Forward-looking
statements include, without limitation, our expectations concerning the outlook for our business, productivity, plans and goals for future
operational improvements and capital investments, operational performance, future market conditions or economic performance and developments
in the capital and credit markets and expected future financial performance, as well as any information concerning possible or assumed
future results of operations of the Company.
We
caution investors against placing undue reliance on forward-looking statements presented in this prospectus, or that we may make orally
or in writing from time to time, which are based on the beliefs of, assumptions made by, and information currently available to, us.
These forward-looking statements are based on assumptions, and the actual outcome will be affected by known and unknown risks,
trends, uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable,
they are not a guarantee of future performance, and some will inevitably prove to be incorrect. As a result, our actual future results
can be expected to differ from our expectations, and those differences may be material. Accordingly, investors should use caution in
relying on forward-looking statements, which are based only on known results and trends at the time they are made, to anticipate future
results or trends. Certain risks are discussed in this prospectus and also from time to time in our other filings with the U.S. Securities
and Exchange Commission (“SEC”). For additional information regarding risk factors that could affect the Company’s
projections, see the “Risk Factors” section in our Annual Report on Form 20-F for the year ended October 31, 2022 incorporated by reference herein, and as may be included from time-to-time
in our reports filed with the SEC which will be accessible at www.sec.gov, and which you are advised to consult.
This
prospectus and all subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly
qualified in their entirety by the cautionary statements contained or referred to in this section. The forward-looking statements speak
only as of the time of such statements and we do not undertake or plan to update or revise such forward-looking statements as more information
becomes available or to reflect changes in expectations, assumptions or results, except as and to the extent required by applicable securities
laws. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any
material adverse change in, one or more of the risk factors or risks and uncertainties referred to in our Annual Report on Form 20-F
for the year ended October 31, 2022 incorporated by reference in this prospectus, could materially and adversely affect our results of
operations, financial condition, liquidity, and our future performance.
Industry
Data and Forecasts
This
prospectus contains data related to the oral healthcare products industry in Canada and the United States. This industry data
includes projections that are based on a number of assumptions which have been derived from industry and government sources which we
believe to be reasonable. The oral healthcare products industry may not grow at the rate projected by industry data, or at all. The
failure of the industry to grow as anticipated is likely to have a material adverse effect on our business and the market price of
our Common Shares. In addition, the rapidly changing nature of the oral healthcare products industry and consumer preferences
subjects any projections or estimates relating to the growth prospects or future condition of our industries to significant
uncertainties. Furthermore, if any one or more of the assumptions underlying the industry data turns out to be incorrect, actual
results may, and are likely to, differ from the projections based on these assumptions.
INCORPORATION
OF DOCUMENTS BY REFERENCE
The
SEC allows us to “incorporate by reference” information we have previously filed with it into our registration statement
of which this prospectus is a part, which means that we can disclose important information to you by referring you to other documents.
The information incorporated by reference is considered to be part of this prospectus. We incorporate by reference into this prospectus
the documents listed below and any additional documents that we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act on or after the date we file this prospectus, except for information “furnished” to the SEC which is not deemed
filed and not incorporated in this prospectus until the termination of the offering of securities described herein.
We
hereby incorporate by reference the following documents and information:
|
● |
our
Annual Report on Form 20-F for the year ended October 31, 2022, filed on March 10, 2023; |
|
|
|
|
● |
our
Reports of Foreign Issuer on Form 6-K furnished to the SEC on March
21, 2023, March
21, 2023, March
22, 2023, May
12, 2023, June
23, 2023, July
31, 2023, August
23, 2023, September
7, 2023, September
14, 2023, October
5, 2023 and October 6, 2023. |
The
information relating to us contained in this prospectus does not purport to be comprehensive and should be read together with the information
contained in the documents incorporated or deemed to be incorporated by reference into this prospectus.
As
you read the above documents, you may find inconsistencies in information from one document to another. If you find inconsistencies between
the documents and this prospectus, you should rely on the statements made in the most recent document. All information appearing in this
prospectus is qualified in its entirety by the information and financial statements, including the notes thereto, contained in the documents
incorporated by reference herein.
Potential
investors, including any beneficial owner, may obtain a copy of any of the documents summarized herein (subject to certain restrictions
because of the confidential nature of the subject matter) or any of our SEC filings incorporated by reference herein without charge by
written or oral request directed to:
Bruush
Oral Care Inc.
Attention:
Aneil Manhas
128
West Hastings Street, Unit 210
Vancouver,
British Columbia V6B 1G8
Canada
(844)
427-8774
You
should rely only on the information contained or incorporated by reference in this prospectus or a prospectus supplement. We have not
authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus,
or such earlier date, that is indicated in this prospectus. Our business, financial condition, results of operations and prospects may
have changed since that date.
Prospectus
Summary
The
following summary highlights selected information contained elsewhere in this prospectus. This summary is not complete and does not contain
all the information you should consider before investing in our securities. You should carefully read this prospectus in its entirety
before investing in our securities, including the sections entitled “Risk Factors”, “Business” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes incorporated
by reference in our Annual Report on Form 20-F for the year ended October 31, 2022 and our Reports of Foreign Issuer on Form 6-K
furnished to the SEC on September 14, 2023 for the six months ended April 30, 2023.
Unless otherwise noted, the share and per
share information in this prospectus reflects a 1-for-25 reverse stock split of our outstanding Common Shares effective as of
August 1, 2023.
This
summary highlights certain information contained elsewhere in this prospectus. You should read this entire prospectus carefully, including
the “Risk Factors” and the financial statements and related notes incorporated by reference herein. This prospectus includes
forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.”
References to “we,” “our,” “Bruush,” and the “Company” refer to Bruush Oral Care Inc.
Our
Company
Overview
The
Company, incorporated under the Business Corporations Act of British Columbia on October 10, 2017 under the name “Bruush Oral Care
Inc.”, is on a mission to inspire confidence through brighter smiles and better oral health. Founded by Chief Executive Officer,
Aneil Manhas, a former investment banker and private equity investor turned entrepreneur, we are an oral care company that is disrupting
the space by reducing the barriers between consumers and access to premium oral care products because it is our belief that high-quality
oral care products should be more accessible. We are an e-commerce business with a product portfolio that currently consists of a sonic-powered
electric toothbrush kit and brush head refills. Through our website, consumers can purchase a Brüush starter kit (the “Brüush
Kit”), which includes: (i) the Brüush electric toothbrush (the “Brüush Toothbrush”); (ii) three brush heads;
(iii) a magnetic charging stand and USB power adapter; and (iv) a travel case. We also sell the brush heads separately which come in
a three-pack (the “Brüush Refill”) and can be purchased on a subscription basis, where the customer will automatically
receive a Brüush Refill every six months (the “Subscription”). We consider a Subscription to be active (an “Active
Subscription”) until it is either cancelled by the customer or terminated due to payment failure (for example, a lost or expired
credit card). Currently, we have almost 40,000 Active Subscriptions in our program. Later this year, we plan to expand
our portfolio with the launch of several new subscription-based consumable oral care products, including toothpaste, mouthwash, dental
floss, a whitening pen, as well as an electric toothbrush designed for kids.
Recent
Developments
October 2023 Private Placement
On October 2, 2023, Bruush Oral Care Inc. (the
“Company”) entered into a private placement transaction (the “October 2023 Private Placement”), pursuant to a
Securities Purchase Agreement (the “Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”)
with an institutional investor, Generating Alpha Ltd. (the “Purchaser”) for aggregate gross proceeds of $5,010,000, before
deducting fees to the placement agent and other expenses payable by the Company in connection with the October 2023 Private Placement.
EF Hutton, division of Benchmark Investments, LLC (“EF Hutton”) acted as the exclusive placement agent for the October 2023
Private Placement, which closed on October 2, 2023.
As part of the October 2023 Private Placement,
the Company will issue to the Purchaser 79,724 Common Shares, a prefunded common share purchase warrant (the “Prefunded Warrant”)
to purchase 7,181,146 Common Shares, and a common share purchase warrant (the “Warrant” and together with the Prefunded Warrant,
the “Warrants”) to purchase 8,350,000 Common Shares. The Warrants have a term of five years from the date of issuance and
an exercise price of $0.0001 per share.
To secure performance of the Company’s obligations
pursuant to the Agreement, the Company executed a Confession of Judgment (the “Confession of Judgment”), whereby the Company
confessed judgment in favor of the Purchaser in an amount equal to the fair market value of the common shares of the Company that the
Purchaser submitted an exercise notice under either the Pre-Funded Warrant or the Warrant.
The Company issued and sold the Warrant and Common Shares issuable upon exercise of the Warrants in reliance on the exemption from the
registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) provided by Section 4(a)(2) thereof
and Rule 506 thereunder.
In connection with the October 2023 Private Placement, the Company entered into a Waiver and Notice Letter with Target Capital 14, LLC
(“Target Capital”) (the “Waiver and Notice Letter”), whereby the Company requested that Target Capital waive certain
provisions of the securities purchase agreement between the Company and Target Capital, dated June 26, 2023 and the related convertible
note in the initial principal amount of $3,341,176 in exchange for the Company issuing to Target Capital a prefunded warrant to purchase
1,000,000 Common Shares (the “Waiver Warrant”).
The descriptions of the Agreement,
Registration Rights Agreement, Pre-Funded Warrant, Warrant, Confession of Judgment and Waiver set forth above are qualified in their
entirety by reference to the full text of those documents.
Credit
Support Share Agreement
On
August 25, 2023, the Company entered into a credit support fee agreement (the “Agreement”) with one of the Company’s
shareholders, Yaletown Bros Ventures Ltd. (“YBV”), pursuant to which YBV agreed to provide for the Company an irrevocable
standby letter of credit in the face amount of $2 million (the “Credit Support”). In consideration of the Credit Support,
the Company agreed to issue to YBV Common Shares, to be delivered as follows: (i) on September 25, 2023, a number of Common
Shares equal to the initial amount of the Credit Support divided by the closing price of the Common Shares on September 22,
2023, and (ii) if the provision of Credit Support is ongoing as of September 25, 2023, for every succeeding week, an amount equal to
20% of the initial amount of the Credit Support divided by the closing price of the Common Shares on the last trading day prior
to delivery of such Shares on each of October 3, 2023, October 10, 2023, October 17, 2023, and October 24, 2023.
Additionally,
the Company has agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) coving the
resale of any Common Shares issued under the Agreement as soon as reasonably practicable following the date of any issuance of
shares thereunder, but in no event prior to (i) 60 days following such issuance if such 60th date is following the
date of certain inducement letter entered into by the Company on August 22, 2023 (the “Inducement Effective Date”), or (ii)
if such 60th is not following Inducement Effective Date, on the earliest SEC filing date following the Inducement Effective
Date.
Reverse
Stock Split
On
August 1, 2023, the Company effected a 1-for-25 reverse stock split (the “Reverse Stock Split”) to comply with the Nasdaq’s
minimum bid price requirement. As a result of the Reverse Stock Split, every 25 Common Shares issued and outstanding were exchanged for
one Common Share. Immediately after the Reverse Stock Split became effective, the Company had approximately 511,368 Common Shares issued
and outstanding.
Inducement
Letter
As
previously reported on December 20, 2022, the Company entered into a $3 million private placement transaction, pursuant to which the
Company issued to certain investors (the “Holders”) Common Share purchase warrants (the “Existing Warrants”),
each warrant exercisable for one Common Share. On August 22, 2023, the Company issued an offer letter to the Holders (the “Inducement
Letter”), providing the Holders the opportunity to exercise for cash all or some of the Existing Warrants at an exercise price
of $3.33 per Common Share in consideration for the issuance to each exercising Holder of a new Common Share purchase warrant (the “New
Warrant”) exercisable at an exercise price of $3.33 per share for a number of Common Shares equal to 250% of the number of Common
Shares issued in connection with the Inducement Letter. The New Warrants are exercisable up to 5:00 P.M., New York City time, on June
9, 2028. In connection with the Inducement Letter, the Holders elected to exercise Existing Warrants for 633,026 Common Shares. As a
result of such exercise, New Warrants exercisable for an aggregate 1,582,566 Common Shares were issued.
June
2023 Private Placement
On
June 26, 2023, the Company completed its issuance of an unsecured convertible note with a principal aggregate amount of $3,341,176 (the
“June 2023 Note”) to the Selling Securityholder (the “June 2023 Private Placement”). The June 2023 Note will
mature on June 26, 2024 and, if any Event of Default occurs an interest rate equal to 20% per annum shall immediately accrue which shall
be paid in cash monthly to the Selling Securityholder until the Event of Default is cured. The conversion price in effect on any Conversion
Date shall be equal to (i) for the first nine (9) months following the date hereof, shall be $0.25, or $6.25 after giving effect to the
Reverse Stock Split, which amount may adjusted by mutual agreement by the parties; and (ii) following the nine (9) month anniversary
of the date hereof, 90% of the lowest closing price of the Company’s shares for the previous three (3) Trading Days prior to the
conversion date (the “Conversion Price”); provided, however, that such price shall in no event be less than $0.15, or $3.75
after giving effect to the Reverse Stock Split. Consequently, a maximum of 890,980 Common Shares are issuable by the Company upon conversion
of the June 2023 Note. The June 2023 Note contains customary and standard representations and warranties, and covenants.
In
connection with the issuance of the June 2023 Note, the Company entered into a securities purchase agreement and a registration rights
agreement with the Selling Securityholder and issued a common share purchase warrant to purchase 400,941 Common Shares (the “Purchase
Warrant”), with an Exercise Price of $0.001 or on a cashless basis, to the Selling Securityholder. Pursuant to the Registration
Rights Agreement, the Company must file a registration statement covering the resale of such number of shares equal to 200% of the number
of Common Shares issuable upon conversion of the June 2023 Note and the exercise of the Purchase Warrant, or a total of 2,583,842 Common
Shares. The June 2023 Private Placement was effected in reliance upon the exemption from the registration requirements of the Securities
Act of 1933, as amended (the “Securities Act”) provided by Section 4(a)(2) thereof and Rule 506 of Regulation
D thereunder.
March
2023 Promissory Note
On
March 20, 2023, the Company closed its issuance of an unsecured promissory note in the principal amount of $2,749,412 (the “Note”)
to the Selling Securityholder (the “March 2023 Note”). The March 2023 Note was issued at an original issue discount of 15%
and set to mature on July 18, 2023. On June 26, 2023, the Company and the Selling Securityholder entered into the June 2023 Note and
cancelled the March 23 Promissory Note in its entirety. As a result, the Company has no obligations pursuant to the March 2023 Note.
December
2022 Private Placement
On
December 9, 2022, the Company closed a private placement of 2,966,667 units not reflecting the Reverse Stock Split and 1,950,001 pre-funded
units not reflecting the Reverse Stock Split (the units and pre-funded units together, the “Units”) at a purchase price of
$0.60 per Unit not reflecting the Reverse Stock Split (the “December Private Placement”) for aggregate gross proceeds of
approximately $3 million, before deducting fees to the placement agent and other expenses payable by the Company. The December Private
Placement was effected in reliance upon the exemption from the registration requirements of the Securities Act provided by of Section 4(a)(2) thereof and Rule 506 of Regulation D thereunder.
Each
Unit is comprised of one Common Share (or pre-funded funded warrant) and one non-tradable warrant (each, a “December Warrant,”
and collectively, the “December Warrants”) exercisable for one Common Share at a price of $0.60 (not reflecting the
Reverse Stock Split) subject to adjustment. The December Warrants are exercisable for five and one-half (5.5) years from the date
of issuance. Each pre-funded warrant is exercisable by the holder for one Common Share at an exercise price of $0.001 per share.
The
Company intends to use the net proceeds from the December Private Placement for working capital, growth capital and other general
corporate purposes.
On
December 7, 2022, the Company entered into a Securities Purchase Agreement and Registration Rights Agreement with institutional investors
and into a Placement Agent Agreement with Aegis Capital Corp. (“Aegis”) as the exclusive placement agent in connection with
the December Private Placement. Pursuant to the Placement Agent Agreement, Aegis was paid a commission equal to 10.0% for the
placement of the securities sold at closing and 10.0% of the proceeds from the exercise of Warrants, and a non-accountable expense allowance
equal to 3.0% of the amount of securities sold at closing.
Pursuant
to the Registration Rights Agreement, the Company filed a registration statement on Form F-1 with the SEC to register the shares issuable
upon exercise of the Warrants for resale. The Registration Statement was declared effective on January 17, 2023.
Each
of the Company’s executive officers, directors and 10% or more shareholder entered into a lock-up agreement pursuant to which each
agreed not to sell or transfer any securities of the Company held by them for a period commencing on December 9, 2022 and ending ninety
(90) days thereafter, subject to limited exceptions.
Nasdaq
Notice
Minimum Bid Price Requirement
On
January 20, 2023, the Company received written notice (the “January 2023 Notice”) from the Nasdaq Stock Market, LLC (“Nasdaq”)
that, based on the closing bid price of the Common Shares for the last 30 consecutive trading days, the Company no longer complied
with the minimum bid price requirement for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5450(a)(1) requires
listed securities to maintain a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”), and Nasdaq Listing
Rule 5810(c)(3)(A) provides that a failure to meet the Minimum Bid Price Requirement exists if the deficiency continues for a period
of 30 consecutive trading days.
On July 20, 2023, Nasdaq notified the Company
that Nasdaq has determined that the Company’s securities will be delisted from Nasdaq in accordance with Listing Rules Listing
Rule 5450(a)(1), 5810(c)(3)(A) and 5550(b)(1) unless the Company appeals the delisting determination. On July 27, 2023, the Company appealed
such determination and requested a hearing. The hearing has been scheduled for September 21, 2023. To regain compliance, the closing
bid price of the Company’s common shares must meet or exceed $1.00 per share for a minimum of ten consecutive trading days during
this period.
On August 1, 2023, the Company effected the Reverse
Stock Split to comply with the Nasdaq’s minimum bid price requirement. As a result of the Reverse Stock Split, every 25 Common
Shares issued and outstanding were exchanged for one Common Share. Immediately after the Reverse Stock Split became effective,
the Company had approximately 511,368 Common Shares issued and outstanding. The Reverse Stock Split was primarily intended for
the Company to regain compliance with the Minimum Bid Requirement.
The
Company regained compliance with the Minimum Bid Price Requirement on August 15, 2023, by effecting the Reverse Stock Split on August
1, 2023 and the closing price per share of the Company’s common shares being at least $1.00 for 10 consecutive business days thereafter.
Minimum Stockholders’ Equity Requirement
On
March 16, 2023, the Company received written notice (the “March 2023 Notice”) from the Listing Qualifications Department
of the Nasdaq notifying the Company that, based on the Company’s stockholders’ equity as reported in the Company’s
Annual Report on Form 20-F for the fiscal year ended October 31, 2022 filed with the Securities and Exchange Commission on March 10,
2023, the Company did not meet the minimum stockholders’ equity requirement (“Minimum Stockholders’ Equity Requirement”),
or the alternatives of market value of listed securities or net income from continuing operations for continued listing of its securities
on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1) (the “Rule”).
The
March 2023 Notice has no immediate effect on the listing of the Company’s Common Shares or listing warrants on the Nasdaq
Capital Market. As provided in the Rule and in the March 2023 Notice, the Company had 45 calendar days to submit a plan to regain
compliance with the continued listing requirements under the Rule, and if the plan is accepted, Nasdaq can grant an extension of up to
180 days to evidence compliance. If the plan is not accepted, the Company would then be entitled to appeal to the Nasdaq Listing
Qualifications Panel and request a hearing.
To
regain compliance, the Company must meet one of the following alternatives: a minimum stockholders’ equity of $2.5 million, a minimum
of $35 million in the market value of listed securities or a minimum net income from continuing operations of $500,000, and the Company
must otherwise satisfy The Nasdaq Capital Market’s requirements for listing. The Company will consider various options available
to regain compliance and maintain the listing of its securities on Nasdaq. There can be no assurance that the
Company will be able to regain compliance with the Nasdaq Capital Market’s continued listing requirements or that Nasdaq will grant
the Company a further extension of time to regain compliance, if applicable.
The Company submitted a plan (the “Submission”)
to regain compliance with the Minimum Stockholders’ Equity Requirement on May 24, 2023, as supplemented with additional materials
on June 9, 2023. Based on the Submission, Nasdaq informed the Company on June 14, 2023 (the “Notice”) that it had granted
the Company an extension of time to regain compliance with the Rule. Under the terms of the extension, on or before September 12, 2023,
the Company must complete certain proposed financing transactions and opt for one of the two alternatives provided by Nasdaq to evidence
compliance with the Rule. If the Company fails to evidence compliance upon filing its periodic report for the period ended October 31,
2023 with the SEC and the Nasdaq, the Company may be subject to delisting. In the event the Company does not satisfy the terms set forth
in the Notice, Nasdaq will provide written notification to the Company that its securities will be delisted. At such time, the Company
may appeal such determination to the Panel.
On August 31, 2023, the Company received written
notice from Nasdaq notifying the Company that, following the July 2023 Notice and in accordance with Nasdaq Listing Rule 5810(c)(2)(A),
Nasdaq is no longer permitted to consider the Company’s Plan to regain compliance with the Minimum Stockholders’ Equity Requirement
and that the Panel, at a hearing scheduled for September 21, 2023, will consider the Company’s
appeal of the determination by Nasdaq to delist the Company’s securities.
On September 21, 2023, the Panel held on a hearing
to consider our appeal of Nasdaq’s determination that we were not in compliance with the minimum stockholders’ equity requirement
for continued listing and its determination to delisting our securities. At the hearing, we presented our plan for regaining and sustaining
compliance Nasdaq’s continued listing requirements. On October 2, 2023, the Company received a letter from the Nasdaq notifying
the Company that the Panel has granted an exception to the Company for continued listing on the Nasdaq, subject to the Company demonstrating
compliance with the Rule on or before December 31, 2023. The Panel reserves the right to reconsider the terms of this exception based
on any event, condition or circumstance that exists or develops that would, in the opinion of the Panel, make continued listing of the
Company’s securities on the Nasdaq inadvisable or unwarranted.
Audit Committee Requirement
On
May 8, 2023, the Company received written notice (the “May 2023 Notice”) from the Listing Qualifications Department of Nasdaq
notifying the Company that, as a result of the resignation of Brett Yormark from our board of directors and from the Audit Committee
of our board of directors, the Company is not in compliance with Nasdaq Listing Rule 5605, including Rule 5605(c)(2), which requires
the Audit Committee of our board of directors of a listed company to consist of at least three members, each of whom is an independent
director under the Nasdaq Listing Rules and who meets heightened independence standards for Audit Committee members. The Audit Committee
currently consists of two independent directors.
The
May 2023 Notice has no immediate effect on the listing of the Common Shares on Nasdaq. The May 2023 Notice states that, consistent with
Nasdaq Listing Rule 5605(c)(4), the Company is afforded a cure period to regain compliance until the earlier of (a) the
Company’s next annual shareholders’ meeting or April 12, 2024 and (b) October 9, 2023, if the next annual shareholders’
meeting is held before such date. The Company has not yet scheduled its annual shareholders’ meeting.
Implications
of Being an Emerging Growth Company and a Foreign Private Issuer
We
qualify as an “emerging growth company”, as defined in the US federal securities laws. An emerging growth company may take
advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. Upon the
effectiveness of the registration statement of which this prospectus forms a part, we will report under the Securities Exchange Act of
1934, as amended, or the Exchange Act, as a non-U.S. company with foreign private issuer status under the Exchange Act, and we will be
exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies. In addition, we will not be
required to file annual reports and financial statements with the SEC as promptly as U.S. domestic companies whose securities are registered
under the Exchange Act, and are not required to comply with Regulation FD, which restricts the selective disclosure of material information.
See “Risk Factors – We are an emerging growth company within the meaning of the Securities Act, and if we take advantage
of certain exemptions from disclosure requirements available to emerging growth companies, this could make it more difficult to compare
our performance with other public companies”.
Both
foreign private issuers and emerging growth companies are also exempt from certain executive compensation disclosure rules under the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Even if we no longer qualify as an emerging growth company, so long
as we remain a foreign private issuer, we will continue to be exempt from certain executive compensation
disclosures required of companies that are neither an emerging growth company nor a foreign private issuer. See “Risk Factors
– We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses”.
Corporate
Information
The
Company’s principal office is located at 128 West Hastings Street, Unit 210, Vancouver, British Columbia V6B 1G8. Our telephone
number is (844) 427-8774. The SEC maintains an Internet site (http://www.sec.gov) that makes available
reports and other information regarding issuers that file electronically with the SEC. The Company’s website address is
www.bruush.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus. Investors
should not rely on any such information in deciding whether to purchase our securities.
The
Offering
This
prospectus relates to the offer and sale from time to time of up to an aggregate of 3,583,842 Common Shares by the Selling Securityholder.
Securities
being offered |
|
The
Selling Securityholder is offering up to (i) 890,980 Common Shares issuable upon conversion of the June 2023 Note, (ii) 400,941 Common
Shares issuable upon exercise of the warrants issued in the June 2023 Private Placement, (iii) an additional 1,291,921 Common Shares
issuable pursuant to the June 2023 Private Placement, and (iv) 1,000,000 Common Shares issuable pursuant to the October 2023 Private
Placement. |
|
|
|
Common
Shares outstanding prior to this offering |
|
1,594,492
Common Shares. (1)(2) |
|
|
|
Common
Shares outstanding after this offering |
|
5,178,334
Common Shares. (1)(2)(3)(4) |
|
|
|
Use
of proceeds |
|
We
will not receive any proceeds from the sale of Common Shares by the Selling Securityholder. All of the net proceeds from the
sale of Common Shares will go to the Selling Securityholder as described below in the sections entitled “Selling Securityholder”
and “Plan of Distribution”. We have agreed to bear the expenses relating to the registration of the Common Shares
for the Selling Securityholder. |
|
|
|
Risk
factors |
|
Investing in our securities is highly speculative and involves a high degree of risk.
You should carefully consider the information set forth in the “Risk Factors” section in our Annual Report on Form 20-F for the year ended October 31, 2022 incorporated by reference herein before deciding to invest in our securities. |
|
|
|
Dividends |
|
We
do not anticipate paying dividends on our Common Shares for the foreseeable future. |
(1) |
Based
on 1,594,492 Common Shares outstanding as of September 12, 2023 after giving effect to the Reverse Stock Split. |
(2) |
Assumes
no exercise of any outstanding warrants or options, other than as described in footnote (3) below. |
(3) |
Assumes
the June 2023 Note is converted in full by the Selling Securityholder. |
(4) |
Excludes the Common Shares issuable upon exercise of the New Warrants. |
Capitalization
The
following table sets forth our cash and capitalization as of April 30, 2023.
You
should read the following table in conjunction with “Use of Proceeds” in this prospectus and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes, each as incorporated
by reference into this prospectus.
| |
As
of April
30, 2023 | |
Cash | |
$ | 194,321 | |
Loan payable | |
$ | 2,336,222 | |
Warrant derivative | |
| 1,107,775 | |
| |
| | |
Share capital | |
| 24,889,414 | |
Obligation to issue securities | |
| 283 | |
Reserves | |
| 1,905,507 | |
Accumulated deficit | |
| (31,970,826 | ) |
Total stockholders’ equity | |
| (5,175,622 | ) |
Total capitalization | |
$ | (1,731,625 | ) |
Outstanding
warrants are classified as financial liabilities in the table above and are included in the warrant derivative line on the Company’s
financial statements.
Dividend
Policy
Since
inception, we have not declared or paid any dividends on our Common Shares. We do not have any current plans to pay any such dividends
in the foreseeable future. We intend to retain most, if not all, of our available funds and any future earnings to operate and expand
our business. Because we do not anticipate paying any cash dividends on Common Shares in the foreseeable future, capital appreciation,
if any, will be your sole source of gains and you may never receive a return on your investment.
The
determination to pay dividends will be made at the discretion of our board of directors and may be based on a number of factors, including
our future operations and earnings, capital requirements and surplus, general financial condition, contractual and legal restrictions
and other factors that the board of directors may deem relevant.
Use
of Proceeds
The
Company will not receive any proceeds from the sale of Common Shares by the Selling Securityholder. All proceeds from the sale
of such shares will be paid directly to the Selling Securityholder.
SELLING
SECURITYHOLDER
The Common Shares being offered by the Selling Securityholder
consist of (i) 890,980 Common Shares issuable upon conversion in full of the June 2023 Note, (ii) 400,941 Common Shares issuable upon
exercise of Purchase Warrants, (iii) an additional 1,291,921 Common Shares issuable pursuant to the June 2023 Private Placement, and
(iv) 1,000,000 Common Shares issuable pursuant to the October 2023 Private Placement. For additional information regarding the issuance
of the Common Shares and the Note, see “Prospectus Summary – Recent Developments – March 2023 Private Placement”,
“Prospectus Summary – Recent Developments – June 2023 Private Placement” and “Prospectus Summary –
Recent Developments – October 2023 Private Placement”. We are registering the Common Shares in order to permit the Selling
Securityholder to offer the Common Shares for resale from time to time. Except as otherwise described in the footnotes to the table below
and for the ownership of the registered shares issued pursuant to the Security Purchase Agreements, neither the Selling Securityholder
nor any of the persons that control them has had any material relationships with us or our affiliates within the past three (3) years.
The
table below lists the Selling Securityholder and other information regarding the beneficial ownership (as determined under Section 13(d)
of the Exchange Act (and the rules and regulations thereunder) of the Common Shares by the Selling Securityholder.
The
second column lists the number of Common Shares beneficially owned by each of the Selling Securityholder before this offering
(including shares which the Selling Securityholder have the right to acquire within 60 days, including upon conversion of any convertible
securities).
The
third column lists the Common Shares that may be offered by the Selling Securityholder pursuant to this prospectus.
The
fourth and fifth columns list the number of Common Shares beneficially owned by the Selling Securityholder and its percentage
ownership after the offering (including shares which the Selling Securityholder has the right to acquire within 60 days, including upon
conversion of any convertible securities), assuming the sale of all of the shares offered by each Selling Securityholder pursuant to
this prospectus.
The
amounts and information set forth below are based upon information provided to us by the Selling Securityholder as of October 4,
2023, except as otherwise noted below. The Selling Securityholder may sell all or some of the Common Shares it is offering, and may sell,
unless indicated otherwise in the footnotes below, our Common Shares otherwise than pursuant to this prospectus. The tables below assume
the Selling Securityholder sells all of the shares offered by them in offerings pursuant to this prospectus, and do not acquire any additional
shares. We are unable to determine the exact number of shares that will actually be sold or when or if these sales will occur.
Selling Securityholder | |
Number of Shares Owned Before Offering | | |
Shares Offered Hereby (1) | | |
Number of Shares Owned After Offering (2) | | |
Percentage of Shares Beneficially Owned After Offering (2) | |
Target Capital 14 LLC (3) | |
| 0 | | |
| 3,583,842 | | |
| 0 | | |
| 0 | % |
TOTAL | |
| | | |
| | | |
| | | |
| | |
|
(1) |
Includes
(i) 890,980 Common Shares issuable upon conversion in full of the June 2023 Note, (ii) 400,941 Common Shares issuable upon exercise
of Purchase Warrants, (iii) an additional 1,291,921 Common Shares issuable pursuant to the June 2023 Private Placement, and (iv)
1,000,000 Common Shares issuable pursuant to the October 2023 Private Placement. |
|
(2) |
Assumes
that all securities registered within this offering will be sold. |
|
(3) |
Dmitriy
Shapiro is the managing member of Target Capital 14, LLC. Mr. Shapiro has voting control and investment discretion over securities
held by Target Capital 14, LLC. As such, Mr. Shapiro may be deemed to be the beneficial owner (as determined under Section 13(d)
of the Securities Exchange Act of 1934, as amended) of the securities held by Target Capital 14, LLC. The business address of Target
Capital 14, LLC is 144 Hillside Village, Rio Grande, PR 00745. |
Description
of COMMON SHARES
Common
Shares
The
following is a description of our Common Shares. You should read the material provisions of our Memorandum and Articles of Association
as incorporated by reference to Item 10B of our Annual Report on Form 20-F into this prospectus.
All
of our issued and outstanding Common Shares are fully paid and non-assessable. Our Common Shares are issuable in registered
form and are issued when registered in our register of members. Holders of Common Shares are entitled to one vote in respect of
each share held. The holders of Common Shares are entitled, out of any or all profits or surplus available for dividends, to receive,
when, as and if declared by the directors, those dividends as may be declared from time to time in respect of Common Shares. Common
Shares are not redeemable or retractable unless the board of directors determine otherwise, each holder of Common Shares will
not receive a certificate evidencing such shares. Holders of Common Shares may freely hold and vote their shares.
We
are authorized to issue an unlimited amount of Common Shares with no par value per share. Subject to the provisions of the Business
Corporations Act (British Columbia) (“Business Corporations Act”) and our articles regarding redemption and purchase of the
shares, the directors have general and unconditional authority to allot (with or without confirming rights of renunciation), grant options
over or otherwise deal with any unissued shares to such persons, at such times and on such terms and conditions as they may decide. Such
authority could be exercised by the directors to allot shares which carry rights and privileges that are preferential to the rights attaching
to common shares. No share may be issued at a discount except in accordance with the provisions of the Business Corporations Act and
the Nasdaq. The directors may refuse to accept any application for shares and may accept any application in whole or in part, for any
reason or for no reason.
On August 1, 2023, the Company effected the Reverse
Stock Split at a ratio of 1-for-25 to comply with the Nasdaq’s minimum bid price requirement. As a result of the Reverse Stock
Split, every 25 Common Shares issued and outstanding were exchanged for one Common Share. If any fractional common shares
are created as a result of the Consolidation, any fractional Common Share less than 0.50 will be cancelled and any fractional
Common Share greater than 0.50 will be rounded up to the nearest whole Common Share. Immediately after the Reverse Stock
Split became effective, the Company had approximately 511,368 Common Shares issued and outstanding.
Transfer
Agent and Registrar
Our
transfer agent and registrar is Endeavor Trust Corporation located at 702-777 Hornby Street, Vancouver, BC, V6Z 1S4. Their phone number
is (604) 559-8880.
Certain
Material Tax Considerations
The
following summary contains a description of some of the material Canadian and U.S. federal income tax consequences of the acquisition,
ownership and disposition of our Common Shares.
Certain
U.S. Federal Income Tax Considerations
The
following is a summary of the material U.S. federal income tax consequences to U.S. Holders (as defined below) of purchasing, owing and
disposing of shares of our Common Shares. This discussion is included for general informational purposes only, does not purport
to consider all aspects of U.S. federal income taxation that might be relevant to a U.S. Holder, and does not constitute, and is not,
a tax opinion for or tax advice to any particular U.S. Holder. The summary does not address any U.S. tax matters other than those specifically
discussed. The summary is based on the provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), existing
Treasury Regulations (including temporary regulations) issued thereunder, judicial decisions and administrative rulings and pronouncements
and other legal authorities, all as of the date hereof and all of which are subject to change, possibly with retroactive effect. Any
such change could alter the tax consequences described herein.
The
discussion below applies only to U.S Holders holding our Common Shares as capital assets within the meaning of Section 1221 of
the Code (generally, property held for investment), and does not address the tax consequences that may be relevant to U.S. Holders who,
in light of their particular circumstances, may be subject to special tax rules, including without limitation:
|
● |
insurance
companies, tax-exempt organizations, regulated investment companies, real estate investment trusts, brokers or dealers in securities
or foreign currencies, banks and other financial institutions, mutual funds, retirement plans, traders in securities that elect to
mark-to-market, certain former U.S. citizens or long-term residents; |
|
● |
U.S.
Holders that are classified for U.S. federal income tax purposes as partnerships and other pass-through entities and investors therein; |
|
● |
U.S.
Holders who hold shares as part of a hedge, straddle, constructive sale, conversion, or other integrated or risk-reduction transaction,
as “qualified small business stock,” within the meaning of Section 1202 of the Code or as Section 1244 stock for purposes
of the Code; |
|
● |
U.S.
Holders who hold shares through individual retirement or other tax-deferred accounts; |
|
● |
U.S.
Holders that have a functional currency other than the U.S. dollar; |
|
● |
U.S.
Holders who are subject to the alternative minimum tax provisions of the Code or the tax imposed by Section 1411 of the Code; |
|
● |
U.S.
Holders who acquire shares pursuant to any employee share option or otherwise as compensation; |
|
● |
U.S.
Holders required to accelerate the recognition of any item of gross income with respect to their holding of shares as a result of
such income being recognized on an applicable financial statement; or |
|
● |
U.S.
Holders who hold or held, directly or indirectly, or are treated as holding or having held under applicable constructive attribution
rules, 10% or more of our shares, measured by voting power or value. |
Any
such U.S. Holders should consult their own tax advisors.
For
purposes of this discussion, a “U.S. Holder” means a holder of our Common Shares that is or is treated, for U.S. federal
income tax purposes, as (i) an individual citizen or resident of the United States, (ii) a corporation (or other entity taxable as a
corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any State thereof or
the District of Columbia or any entity treated as such for U.S. federal income tax purposes, (iii) an estate the income of which is subject
to U.S. federal income taxation regardless of its source, or (iv) a trust (A) the administration over which a U.S. court exercises primary
supervision and all of the substantial decisions of which one or more U.S. persons have the authority to control, or (B) that has a valid
election in effect under the applicable Treasury Regulations to be treated as a U.S. person under the Code.
If
a partnership or other pass-through entity (including any entity or arrangement treated as such for purposes of U.S. federal income tax
law) holds our shares, the tax treatment of a partner of such partnership or member of such entity will generally depend upon the status
of the partner and the activities of the partnership. Partnerships and other pass-through entities holding our shares, and any person
who is a partner or member of such entities should consult their own tax advisors regarding the tax consequences of purchasing, owning
and disposing of the shares.
Passive
Foreign Investment Company Considerations
A
non-U.S. corporation will be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes, if, in
the case of any particular taxable year, either (i) 75% or more of its gross income for such taxable year consists of certain types of
“passive” income or (ii) 50% or more of the value of its assets (based on an average of the quarterly values of the assets)
during such taxable year is attributable to assets that produce or are held for the production of passive income. For this purpose, a
foreign corporation will be treated as owning its proportionate share of the assets and earning its proportionate share of the income
of any other non-U.S. corporation in which it owns, directly or indirectly, more than 25% (by value) of the stock. In the PFIC analysis,
cash is categorized as a passive asset, and the company’s un-booked intangibles associated with active business activities may
generally be classified as active assets. Passive income generally includes, among other things, dividends, interest, rents, royalties,
and gains from the disposition of passive assets.
Based
upon our current income and assets and projections as to the value of our Common Shares, we do not presently expect that we will
be classified as a PFIC for the 2023 taxable year or the foreseeable future. The determination of whether we will be or become a PFIC
will depend upon the composition of our income (which may differ from our historical results and current projections) and assets and
the value of its assets from time to time, including, in particular the value of its goodwill and other unbooked intangibles (which may
depend upon the market value of our Common Shares from time to time and may be volatile). It is also possible that the IRS may
challenge the classification or valuation of our assets, including goodwill and other unbooked intangibles, or the classification of
certain amounts received by us, including interest earnings, which may result in our being, or becoming classified as, a PFIC for the
2023 taxable year, or future taxable years.
The
determination of whether we will be or become a PFIC may also depend, in part, on how, and how quickly, we use liquid assets and the
cash proceeds of this offering or otherwise. If we were to retain significant amounts of liquid assets, including cash, the risk of being
classified as a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules and PFIC status
is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for
the 2023 taxable year or any future taxable year, and no opinion of counsel has or will be provided regarding our classification as a
PFIC. If we were classified as a PFIC for any year during which a holder held shares of our Common Shares, we generally would
continue to be treated as a PFIC for all succeeding years during which such holder held our shares. The discussion below under “—Dividends
Paid on Shares of Common Shares” and “—Sale or Other Disposition of Shares” is written on the basis that
we will not be classified as a PFIC for U.S. federal income tax purposes.
Dividends
Paid on Shares of Common Shares
We
have never paid dividends with respect to our Common Shares and we have no plan to do so in the foreseeable future. In the event
our dividend policy were to change, the following discussion addresses the U.S. tax consequences of any dividends we might distribute.
Subject to the PFIC rules described below, any cash distributions (including constructive distributions) paid with respect to the shares
of our Common Shares out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles,
will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by
the U.S. Holder. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, any
distribution will generally be treated as a “dividend” for U.S. federal income tax purposes. Under current law, a non-corporate
recipient of a dividend from a “qualified foreign corporation” will generally be subject to tax on the dividend income at
the lower applicable net capital gains rate rather than the marginal tax rates generally applicable to ordinary income, provided certain
holding period and other requirements are met.
A
non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the
preceding taxable year) will generally be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of
a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for
purposes of this provision and which includes an exchange of information program, or (ii) with respect to any dividend it pays on stock,
which is readily tradable on an established securities market in the United States. We believe we are eligible for the benefits of the
Convention Between the United States of America and Canada with Respect to Taxes on Income and Capital (or the United States-Canada income
tax treaty), which the Secretary of the Treasury of the United States has determined is satisfactory for this purpose and includes an
exchange of information program, in which case we would be treated as a qualified foreign corporation with respect to dividends paid
in respect of our Common Shares. U.S. Holders are urged to consult their tax advisors regarding the availability of the reduced
tax rate on dividends in their particular circumstances. Dividends received in respect of our Common Shares will not be
eligible for the dividends received deduction allowed to corporations.
Sale
or Other Disposition of Shares
Subject
to the PFIC rules discussed below, a U.S. Holder of our Common Shares will generally recognize capital gain or loss, if any, upon
the sale or other disposition of Common Shares and warrants in an amount equal to the difference between the amount realized upon
such sale or other disposition and the U.S. Holder’s adjusted tax basis in such shares. Any capital gain or loss will be long-term
capital gain or loss if the shares have been held for more than one year and will generally be United States source capital gain or loss
for United States foreign tax credit purposes. Long-term capital gains of non-corporate taxpayers are currently eligible for reduced
rates of taxation.
Disposition
of Foreign Currency
U.S.
Holders are urged to consult their tax advisors regarding the tax consequences of receiving, converting or disposing of any non-U.S.
currency received as dividends on our Common Shares.
Tax
on Net Investment Income
U.S.
Holders may be subject to an additional 3.8% Medicare tax on some or all of such U.S. Holder’s “net investment income”
as defined in Section 1411 of the Code. Net investment income generally includes income from the shares unless such income is derived
in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading
activities). You should consult your tax advisors regarding the effect this tax may have, if any, on your acquisition, ownership or disposition
of Common Shares.
Passive
Foreign Investment Company Rules
If
we are classified as a PFIC for any taxable year during which a U.S. Holder holds shares of our Common Shares, unless the holder
makes a mark-to-market election (as described below), the holder will, except as discussed below, be subject to special tax rules that
have a penalizing effect, regardless of whether we remain a PFIC, on (i) any “excess distribution” that we make to the holder
(which generally means any distribution paid during a taxable year to a holder that is greater than 125% of the average annual distributions
paid in the three preceding taxable years or, if shorter, the holder’s holding period for the shares), and (ii) any gain realized
on the sale or other disposition, including, under certain circumstances, a pledge, of our Common Shares.
Under
the PFIC rules:
|
● |
The
excess distribution and/or gain will be allocated ratably over the U.S. Holder’s holding period for the Common Shares; |
|
|
|
|
● |
Taxable
years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC, or a pre-PFIC
year, will be taxable as ordinary income; |
|
|
|
|
● |
The
amount of the excess distribution or gain allocated to the taxable year of the distribution or disposition; and any |
|
|
|
|
● |
The
amount of the excess distribution or gain allocated to each taxable year other than the taxable year of the distribution or disposition
or a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the individuals or corporations, and the
interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. |
If
we are a PFIC for any taxable year during which a U.S. Holder holds our Common Shares and any of our non-U.S. subsidiaries is
also a PFIC, such holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes
of the application of these rules. Each U.S. Holder is advised to consult its tax advisors regarding the application of the PFIC rules
to any of our subsidiaries.
As
an alternative to the foregoing rules, a U.S. Holder of “marketable stock” (as defined in the Code and the regulations) in
a PFIC may make a mark-to-market election with respect to such shares, provided that the shares “regularly traded” (as defined
in the Code and the regulations) on a national securities exchange, such as The Nasdaq Capital Market where we have applied for the shares
to be listed. No assurances may be given regarding whether our Common Shares will qualify or, if so qualified, will continue to
be qualified, as being “regularly traded” for purposes of the Code and the regulations. If a U.S. Holder makes a mark-to-market
election, such U.S. Holder will generally (i) include as ordinary income, for each taxable year that we are a PFIC, the excess, if any,
of the fair market value of Common Shares held at the end of the taxable year over the adjusted tax basis of such shares and (ii)
deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the shares over the fair market value of such shares held
at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market
election. The U.S. Holder’s tax basis in the Common Shares would be adjusted to reflect any income or loss resulting from
the mark-to-market election. If a U.S. Holder makes an effective mark-to-market election, in each year that we are a PFIC, any gain recognized
upon the sale or other disposition of Common Shares will be treated as ordinary income and loss will be treated as ordinary loss,
but only to the extent of the net amount previously included in income as a result of the mark-to-market election. U.S. Holders should
consult their tax advisors regarding the availability of a mark-to-market election with respect to such shares.
If
a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to be classified
as a PFIC, the holder will not be required to take into account the mark-to-market gain or loss described above during any period that
such corporation is not classified as a PFIC.
Because
a mark-to-market election cannot be made for any lower-tier PFICs that a PFIC may own, a U.S. Holder who makes a mark-to-market election
with respect to its holding of our Common Shares may continue to be subject to the general PFIC rules with respect to such holder’s
indirect interest in any of our non-U.S. subsidiaries that is classified as a PFIC.
We
do not intend to provide information necessary for any U.S. Holder to make a “qualified electing fund” election, which, if
available, would result in tax treatment different from the general tax treatment for PFICs described above. However, as described above
under “Passive Foreign Investment Company Considerations,” it is not presently expected that we will be classified as a PFIC
for the 2023 taxable year or the foreseeable future.
As
discussed above under “Dividends Paid on Shares of Common Shares,” dividends paid in respect of our Common Shares
will not be eligible for the reduced tax rate that applies to qualified dividend income if we are classified as a PFIC for either
the taxable year in which the dividend is paid or the preceding taxable year. In addition, if a U.S. Holder owns shares during any taxable
year that we are a PFIC, such holder must file an annual information return on Form 8621 with the IRS. Each U.S. Holder is urged to consult
its tax advisor concerning the U.S. federal income tax consequences of purchasing, holding, and disposing our Common Shares should
we be or become a PFIC, including the possibility of making a mark-to-market election and the unavailability of the qualified electing
fund election.
Information
reporting and backup withholding
Certain
U.S. Holders are required to report information to the IRS relating to interests in “specified foreign financial assets,”
including shares issued by a non-U.S. corporation, for any year in which the aggregate value of all specified foreign financial assets
exceeds fifty thousand dollars ($50,000) (or a higher U.S. dollar amount prescribed by the IRS), subject to certain exceptions (including
an exception for shares held in custodial accounts maintained with a United States financial institution). These rules also impose penalties
if a holder is required to submit such information to the IRS and fails to do so.
In
addition, U.S. Holders may be subject to information reporting to the IRS and backup withholding with respect to dividends on and proceeds
from the sale or other disposition of our Common Shares. Information reporting will apply to payments of such dividends and to
proceeds from such sale or other disposition by a paying agent within the United States to a holder, other than holders that are exempt
from information reporting and properly certify their exemption. A paying agent within the United States will be required to withhold
at the applicable statutory rate, currently 24%, in respect of any payments of dividends on, and the proceeds from the disposition of,
our Common Shares within the U.S. to a U.S. Holder (other than holders that are exempt from backup withholding and properly certify
their exemption) if the holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with applicable
backup withholding requirements. U.S. Holders who are required to establish their exempt status generally must provide a properly completed
IRS Form W-9.
Backup
withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a holder’s U.S. federal income
tax liability. A U.S. Holder generally may obtain a refund of any amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the IRS in a timely manner and furnishing any required information. Each U.S. Holder is advised to consult with
its tax advisor regarding the application of the United States information reporting rules to their particular circumstances.
This
summary is of a general nature only, is not exhaustive of all possible Canadian federal income tax considerations and is not intended
to be, nor should it be construed to be, legal or tax advice to any particular Holder. Accordingly, Holders should consult their own
tax advisors with respect to their particular circumstances.
Certain
Canadian Tax Considerations
The
following is a summary of the principal Canadian federal income tax considerations generally applicable to a purchaser who acquires shares
pursuant to this offering. This summary applies only to a purchaser who is a beneficial owner shares acquired pursuant to this offering
and who, for the purposes of the Income Tax Act (Canada) and the regulations thereunder (the “Tax Act”) and at all relevant
times: (i) deals at arm’s length with the company and is not affiliated with the company and (ii) holds the shares as capital property
(a “Holder”).
Our
Common Shares will generally be considered to be capital property of a Holder unless they are held in the course of carrying
on a business or were acquired in one or more transactions considered to be an adventure or concern in the nature of trade. A purchaser
who is resident in Canada for purposes of the Tax Act and whose shares might not otherwise qualify as capital property may be entitled
to make the irrevocable election provided by subsection 39(4) of the Tax Act to have the shares and every other “Canadian security”
(as defined in the Tax Act) owned by such purchaser in the taxation year of the election and in all subsequent taxation years deemed
to be capital property. Purchasers should consult their own tax advisors for advice as to whether an election under subsection 39(4)
of the Tax Act is available and/or advisable in their particular circumstances.
This
summary is not applicable to a Holder: (i) that is a “financial institution” within the meaning of section 142.2 of the Tax
Act; (ii) that is a “specified financial institution” as defined in the Tax Act; (iii) that has made a “functional
currency” reporting election under section 261 of the Tax Act to report its “Canadian tax results” in a currency other
than Canadian currency; (iv) an interest in which is, or for whom a share would be, a “tax shelter investment” for the purposes
of the Tax Act; or (v) that has entered or will enter into a “derivative forward agreement” or “synthetic disposition
arrangement”, as those terms are defined in the Tax Act, in respect of the shares. Such Holders should consult their own tax advisors.
This
summary does not address the possible application of the “foreign affiliate dumping” rules that may be applicable to a Holder
that is a corporation resident in Canada (for the purposes of the Tax Act) that is, or that becomes, or does not deal at arm’s
length for purposes of the Tax Act with a corporation resident in Canada that is or becomes, as part of a transaction or event or series
of transactions or events that includes the acquisition of shares, controlled by a non-resident corporation for purposes of the rules
in section 212.3 of the Tax Act.
This
summary is based upon: (i) the current provisions of the Tax Act in force as of the date hereof; (ii) all specific proposals to amend
the Tax Act that have been publicly announced by, or on behalf of, the Minister of Finance (Canada) and published in writing prior to
the date hereof (the “Proposed Amendments”); and (iii) counsel’s understanding of the current administrative policies
and assessing practices of the Canada Revenue Agency (CRA) published in writing and publicly available prior to the date hereof. No assurance
can be given that the Proposed Amendments will be enacted or otherwise implemented in their current form, if at all. Other than the Proposed
Amendments, this summary does not take into account or anticipate any changes in law, administrative policy or assessing practice, whether
by legislative, regulatory, administrative, governmental or judicial decision or action, nor does it take into account the tax laws of
any province or territory of Canada or of any jurisdiction outside of Canada.
Holders
Not Resident in Canada
This
portion of the summary is generally applicable to a Holder who, at all relevant times, for purposes of the Tax Act: (a) is not, and is
not deemed to be, resident in Canada; and (b) does not use or hold the shares in connection with carrying on a business in Canada (a
“Non-Resident Holder”). This portion of the summary does not apply to a Holder that carries on, or is deemed to carry on,
an insurance business in Canada and elsewhere or that is an “authorized foreign bank” (as defined in the Tax Act) and such
Holders should consult their own tax advisors.
Dividends
Dividends
paid or credited (or deemed to be paid or credited) by the Corporation to a Non-Resident Holder will be subject to Canadian withholding
tax at the rate of 25%, subject to any reduction in the rate of withholding to which the Non-Resident Holder is entitled under an applicable
income tax convention between Canada and the country in which the Non-Resident Holder is resident. For example, where a Non-Resident
Holder is a resident of the United States, is fully entitled to the benefits under the Canada-United States Tax Convention (1980), as
amended, and is the beneficial owner of the dividend, the applicable rate of Canadian withholding tax is generally reduced to 15%.
Dispositions
of Shares
A
Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain realized on a disposition or deemed disposition
of a share unless the share is, or is deemed to be, “taxable Canadian property” of the Non-Resident Holder for the purposes
of the Tax Act and the Non-Resident Holder is not entitled to an exemption under an applicable income tax convention between Canada and
the country in which the Non-Resident Holder is resident.
Generally,
a share will not constitute taxable Canadian property of a Non-Resident Holder provided that the shares are listed on a “designated
stock exchange” for the purposes of the Tax Act (which currently includes the Canadian Securities Exchange), unless at any time
during the 60-month period immediately preceding the disposition, (a) at least 25% of the issued shares of any class or series of the
capital stock of the company were owned by or belonged to any combination of: (i) the Non-Resident Holder, (ii) persons with whom the
Non-Resident Holder did not deal at arm’s length, and (iii) partnerships in which the Non-Resident Holder or a person described
in (ii) holds a membership interest directly or indirectly through one or more partnerships; and (b) at such time, more than 50% of the
fair market value of such shares was derived, directly or indirectly, from any combination of real or immovable property situated in
Canada, “Canadian resource property” (as defined in the Tax Act), “timber resource property” (as defined in the
Tax Act), or options in respect of, interests in, or for civil law rights in such properties, whether or not such property exists.
If
a Non-Resident Holder disposes (or is deemed to have disposed) of a share that is taxable Canadian property of that Non-Resident Holder,
and the Non-Resident Holder is not entitled to an exemption under an applicable income tax convention, the consequences described above
under the headings “Holders Resident in Canada — Dispositions of Shares” and “Holders Resident in Canada —
Taxable Capital Gains and Losses” will generally be applicable to such disposition. Such Non-Resident Holders should consult their
own tax advisors.
PLAN
OF DISTRIBUTION
We
are registering Common Shares issuable to Selling Securityholder to permit the resale by the Selling Securityholder from time
to time after the date of this prospectus. We will bear all fees and expenses incident to our obligation to register Common Shares
issuable to the Selling Securityholder.
The
Selling Securityholder and any of its pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their
respective Common Shares on The Nasdaq Stock Market or any other stock exchange, market or trading facility on which the Common
Shares are traded or in private transactions or a combination thereof. These sales may be at fixed or negotiated prices. The Selling
Securityholder and any of its pledgees, assignees and successors-in-interest may use any one or more of the following methods when selling
the Common Shares:
|
● |
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
|
● |
block
trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block
as principal to facilitate the transaction; |
|
● |
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
|
● |
an
exchange distribution in accordance with the rules of the applicable exchange; |
|
● |
privately
negotiated transactions; |
|
● |
settlement
of short sales entered into after the effective date of the registration statement of which this prospectus is a part; |
|
● |
broker-dealers
may agree with the selling security holder to sell a specified number of securities at a stipulated price per security; |
|
● |
through
the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
|
● |
a
combination of any such methods of sale; or |
|
● |
any
other method permitted pursuant to applicable law. |
The
Selling Securityholder may distribute the Common Shares of which it is the owner by means of a dividend or other form of distribution,
including in connection with a declaration of a dividend or distribution, reorganization, combination, consolidation and dissolution.
Broker-dealers
engaged by any selling Security Holder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Securityholder (or, if any broker-dealer acts as agent for the purchaser of the securities, from the purchaser)
in amounts to be negotiated, but the maximum amount of compensation to be received by any participating FINRA member may not exceed 8%.
We
are required to pay certain fees and expenses incurred by us incident to the registration of the Common Shares. The Security Holder
is responsible for any selling commissions and other expenses of sale of the securities.
Since
the Selling Securityholder may be deemed to be an “underwriter” within the meaning of the Securities Act, the deemed Selling
Securityholder will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition,
any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule
144 rather than under this prospectus. We have been informed by the Selling Securityholder that there is no underwriter or single coordinating
broker acting in connection with the proposed distribution of the Common Shares by the Selling Securityholder.
We
intend, but are not obligated, to keep this prospectus and the registration statement of which this prospectus forms a part effective
until the earlier to occur of (i) such time as Rule 144 or another similar exemption under the Securities Act is available for the sale
of all the Common Shares, without volume or manner of sale restrictions during a three month period without registration or (ii)
all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect.
The public resale of the securities will be sold only through registered or licensed brokers or dealers if required under applicable
state securities laws. In addition, in certain states, the public resale of the securities may not be sold unless they have been registered
or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is
complied with.
Pursuant
to applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the public resale of securities
may not simultaneously engage in market making activities with respect to the Common Shares for the applicable restricted period,
as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Securityholder will be subject to
applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing
of purchases and sales of Common Shares by any person. We will make copies of this prospectus available to the Selling Securityholder
and have informed the Selling Securityholder of the need to deliver a copy of this prospectus to each purchaser at or prior to the time
of the sale (including by compliance with Rule 172 under the Securities Act).
Legal
Matters
We
are being represented by Lucosky Brookman LLP with respect to certain matters as to the federal law of the United States of America and
the law of the State of New York. The validity of the Common Shares and other matters as to the law of Canada and the Province
of British Columbia will be passed upon for us by DuMoulin Black LLP.
Experts
The
audited financial statements of the Company as of October 31, 2022, October 31, 2021 and January 31, 2021 and for the year ended October
31, 2022, the nine-month period ended October 31, 2021 and the year ended January 31, 2021 filed with the SEC on March 10, 2023 and incorporated
into this prospectus by reference to the Annual Report on Form 20-F, have been audited by Dale Matheson Carr-Hilton LaBonte LLP, Chartered
Professional Accountants, as set forth in their report thereon (which contains an explanatory paragraph describing conditions that raise
substantial doubt about the Company’s ability to continue as a going concern as described in Note 1 to such financial statements)
appearing elsewhere herein and are included in reliance upon such report given on the authority of such firm as experts in accounting
and auditing.
Where
You Can Find More Information
This
prospectus is part of a registration statement we have filed with the SEC. This
prospectus does not contain all of the information contained in the registration statement. We have filed with the SEC an annual report
on Form 20-F and other documents as required. The rules and regulations of the SEC allow us to omit certain information from this prospectus
that is included in the Form 20-F. Statements made in this prospectus concerning the contents of any contract, agreement or other document
are summaries of all material information about the documents summarized but are not complete descriptions of all terms of these documents.
If we filed any of these documents as an exhibit to the registration statement, you may read the document itself for a complete description
of its terms.
You
may read and copy the registration statement, including the related exhibits and schedules, and any document we file with the SEC without
charge at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, DC 20549. You may also obtain copies of
the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Room 1580, Washington,
DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains an Internet
website that contains reports and other information regarding issuers that file electronically with the SEC. Our filings with the SEC
are also available to the public through the SEC’s website at https://www.sec.gov.
We
maintain a corporate website at www.bruush.com. Information contained in, or that can be accessed through, our website does not constitute
a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference. We will post
on our website any materials required to be so posted on such website under applicable corporate or securities laws and regulations.
3,583,842
COMMON SHARES
PROSPECTUS
[●],
2023
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
6. Indemnification of Directors and Officers.
The
Company’s articles provide, to the fullest extent permitted by the Canadian Business Corporations Act, Division 5 of Part 5, for
the right to indemnification of the directors and former directors of the Company, who was or is a party to or is threatened to be made
a party to, any threatened, or pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative,
by reason of fact that he/she is or was serving in such capacity.
In
this regard, investors should be aware of the position of the United States Securities and Exchange Commission respecting such indemnification,
which position is as follows: “Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”)
may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.”
Item
7. Recent Sales of Unregistered Securities.
On
December 3, 2021, the Company entered into a Securities Purchase Agreement with several investors, and a Security Agreement, in connection
with the issuance of promissory notes in the aggregate principate amount of up to $3,000,000 (the “December Notes”), convertible
into shares of common stock of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions
set forth in the December Notes, the issuance of Common Stock Purchase Warrants to purchase shares of Common Stock upon the terms and
subject to the limitations and conditions set forth in such warrants (the “Warrants”), and the issuance of shares of Common
Stock (the “Commitment Fee Shares”) pursuant to the Securities Purchase Agreement.
On
April 28, 2022, the Company entered into a second Securities Purchase Agreement with the same group of investors, and a Security Agreement,
in connection with the issuance of promissory notes in the aggregate principate amount of up to $1,650,000 (the “April Notes”),
convertible into Common Stock, upon the terms and subject to the limitations and conditions set forth in the April Notes, the issuance
of Common Stock Purchase Warrants to purchase shares of Common Stock upon the terms and subject to the limitations and conditions set
forth in such warrants (the “Warrants”), and the issuance of shares of Common Stock (the “Commitment Fee Shares”)
pursuant to the Securities Purchase Agreement.
On
December 7, 2022, the Company entered into a private placement (the “PIPE Financing”) pursuant to a Securities Purchase Agreement
(the “Securities Purchase Agreement”) and Registration Rights Agreement (the “Registration Rights Agreement”)
with institutional investors (“Purchasers”) for aggregate gross proceeds of approximately $3 million, before deducting fees
to the placement agent and other expenses payable by the Company. Aegis Capital Corp. is the exclusive placement agent in connection
with the offering. The Offering closed on December 9, 2022.
In
connection with the PIPE Financing, the Company issued 2,966,667 shares of common stock (not reflecting the Reverse Stock Split),
Common Warrants to purchase 4,916,668 shares of common stock (not reflecting the Reverse Stock Split), and Pre-Funded Warrants
to purchase 1,950,001 shares of common stock (not reflecting the Reverse Stock Split). The Common Warrants have a term of 5.5
years from the issuance date.
On June 26, 2023, the Company issued the June
2023 Note to the Selling Securityholder. The June 2023 Note will mature on June 26, 2024 and, if any Event of Default occurs an interest
rate equal to 20% per annum shall immediately accrue which shall be paid in cash monthly to the Selling Securityholder until the Event
of Default is cured. The conversion price in effect on any Conversion Date shall be equal to (i) for the first nine (9) months following
the date hereof, shall be $0.25, or $6.25 after giving effect to the Reverse Stock Split, which amount may adjusted by mutual
agreement by the parties; and (ii) following the nine (9) month anniversary of the date hereof, 90% of the lowest closing price of the
Company’s shares for the previous three (3) Trading Days prior to the conversion date (the “Conversion Price”); provided,
however, that such price shall in no event be less than $0.15, or $3.75 after giving effect to the Reverse Stock Split. The
June 2023 Note contains customary and standard representations and warranties, and covenants. In connection with the issuance of the
June 2023 Note, the Company entered into a securities purchase agreement and a registration rights agreement with the Selling Securityholder,
and issued a common stock purchase warrant to purchase 400,941 shares of Common Stock, with an Exercise Price of $0.001 or on
a cashless basis, to the Selling Securityholder. Pursuant to the Registration Rights Agreement, the Company must file a registration
statement covering the resale of such number of shares equal to 200% of the number of shares of Common Stock issuable upon conversion
of the June 2023 Note and the exercise of the Purchase Warrant, or a total of 2,583,842 shares of Common Stock.
On October 2, 2023, in connection with the October
2023 Private Placement, the company entered into a securities purchase agreement and registration rights agreement with an institutional
investor for aggregate gross proceeds of $5,010,000, before deducting fees to the placement agent and other expenses payable by the Company.
The October 2023 Private Placement closed on October 2, 2023. As part of the October 2023 Private Placement, the Company will issue 79,724
common shares of the Company, a prefunded common share purchase warrant (the “Prefunded Warrant”) to purchase 7,181,146 common
shares of the Company, and a common share purchase warrant (the “Warrant” and together with the Prefunded Warrant, the “Warrants”)
to purchase 8,350,000 common shares of the Company. The Warrants have a term of five years from the date of issuance.
As previously reported on December 20, 2022,
the Company entered into a $3 million private placement transaction, pursuant to which the Company issued to certain investors (the “Holders”)
Common Stock purchase warrants (the “Existing Warrants”), each warrant exercisable for one share of Common Stock. On August
22, 2023, the Company issued an offer letter to the Holders (the “Inducement Letter”), providing the Holders the opportunity
to exercise for cash all or some of the Existing Warrants at an exercise price of $3.33 per share of Common Stock in consideration for
the issuance to each exercising Holder of a new Common Stock purchase warrant (the “New Warrant”) exercisable at an exercise
price of $3.33 per share for a number of shares of Common Stock equal to 250% of the number of shares of Common Stock issued in connection
with the Inducement Letter. The New Warrants are exercisable up to 5:00 P.M., New York City time, on June 9, 2028. In connection with
the Inducement Letter, the Holders elected to exercise Existing Warrants for 633,026 shares of Common Stock. As a result of such exercise,
New Warrants exercisable for an aggregate 1,582,566 shares of Common Stock were issued.
Item
8. Exhibits and Financial Statement Schedules.
Exhibit
No. |
|
Description |
|
|
|
3.1 |
|
Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form F-1 filed with the SEC on July 26, 2022) |
|
|
|
3.2 |
|
By-laws
(incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form F-1 filed with the SEC on July
26, 2022) |
|
|
|
4.1 |
|
Form of Warrant, dated June 26, 2023, issued to Target Capital 14 LLC (incorporated herein by reference to Exhibit 4.8 of the Company’s Registration Statement on Form F-1 dated June 26, 2023) |
|
|
|
5.1* |
|
Opinion of DuMoulin Black LLP |
|
|
|
10.1 |
|
Endorsement Agreement by and between Kevin Hart Enterprises, Inc. and the Company dated October 29, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form F-1 filed with the SEC on July 29, 2022) |
|
|
|
10.2+ |
|
Omnibus Securities and Incentive Plan, effective June 29, 2022 + (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form F-1 filed with the SEC on July 26, 2022) |
|
|
|
10.3+ |
|
Employment Agreement between the Company and Aneil Manhas, dated July 28, 2022 (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form F-1 filed with the SEC on July 29, 2022) |
|
|
|
10.4+ |
|
Employment Agreement between the Company and Matthew Kavanagh dated February 8, 2022 (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form F-1 filed with the SEC on July 26, 2022) |
|
|
|
10.5+ |
|
Employment Agreement between the Company and Alan MacNevin, dated May 10, 2022 (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form F-1 filed with the SEC on July 26, 2022) |
|
|
|
10.6 |
|
Form
of Security Purchase Agreement, dated December 7, 2022 (incorporated herein by reference to Exhibit 10.1 of the Company’s Report
of Foreign Private Issuer on Form 6-K furnished to the SEC on December 20, 2022) |
|
|
|
10.7 |
|
Form of Securities Purchase Agreement, dated June 26, 2023, by and between Bruush Oral Care Inc. and Target Capital 14 LLC (incorporated herein by reference to Exhibit 10.7 of the Company’s Registration Statement on Form F-1 dated June 26, 2023) |
|
|
|
10.8 |
|
Form of Registration Rights Agreement, dated June 26, 2023, by and between Bruush Oral Care Inc. and Target Capital 14 LLC (incorporated herein by reference to Exhibit 10.8 of the Company’s Registration Statement on Form F-1 dated June 26, 2023) |
|
|
|
10.9 |
|
Form of Convertible Note, dated June 26, 2023, issued to Target Capital 14 LLC (incorporated herein by reference to Exhibit 10.9 of the Company’s Registration Statement on Form F-1 dated June 26, 2023) |
|
|
|
10.10 |
|
Inducement
Letter, by and between the Company and Holder, dated August 22, 2023 (incorporated herein by reference to Exhibit 10.1 of the Company’s
Report of Foreign Private Issuer on Form 6-K furnished to the SEC on August 23, 2023) |
|
|
|
10.11 |
|
Form
of New Warrant (incorporated herein by reference to Exhibit 10.2 of the Company’s Report of Foreign Private Issuer on Form
6-K furnished to the SEC on August 23, 2023) |
|
|
|
10.12 |
|
Securities Purchase Agreement dated October 2, 2023 (incorporated herein by reference to Exhibit 10.1 of the Company’s Report of Foreign Private Issuer on Form 6-K furnished to the SEC on October 6, 2023) |
|
|
|
10.13 |
|
Registration Rights Agreement dated October 2, 2023 (incorporated herein by reference to Exhibit 10.2 of the Company’s Report of Foreign Private Issuer on Form 6-K furnished to the SEC on October 6, 2023) |
|
|
|
10.14 |
|
Form of Pre-Funded Warrant (incorporated herein by reference to Exhibit 10.3 of the Company’s Report of Foreign Private Issuer on Form 6-K furnished to the SEC on October 6, 2023) |
|
|
|
10.15 |
|
Form of Warrant (incorporated herein by reference to Exhibit 10.4 of the Company’s Report of Foreign Private Issuer on Form 6-K furnished to the SEC on October 6, 2023) |
|
|
|
10.16 |
|
Confession of Judgment (incorporated herein by reference to Exhibit 10.5 of the Company’s Report of Foreign Private Issuer on Form 6-K furnished to the SEC on October 6, 2023) |
|
|
|
10.17 |
|
Waiver and Notice Letter |
|
|
|
10.18 |
|
Waiver Warrant |
|
|
|
14.1 |
|
Code of Ethics (incorporated by reference to Exhibit 14.1 to the Company’s Registration Statement on Form F-1 filed with the SEC on July 22, 2022) |
|
|
|
21.1 |
|
List of Subsidiaries of Registrant (incorporated by reference to Exhibit 21.1 to the Company’s Registration Statement on Form F-1 filed with the SEC on July 26, 2022) |
|
|
|
23.1 |
|
Consent
of Dale Matheson Carr-Hilton LaBonte LLP |
|
|
|
23.2 |
|
Consent of DuMoulin Black LLP (included in Exhibit 5.1) |
|
|
|
24.1 |
|
Power of Attorney (included as part of the signature page of the initial filing of the Registration Statement) |
|
|
|
99.1 |
|
Audit Committee Charter (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form F-1 filed with the SEC on July 22, 2022) |
|
|
|
99.2 |
|
Compensation Committee Charter (incorporated by reference to Exhibit 99.2 to the Company’s Registration Statement on Form F-1 filed with the SEC on July 22, 2022) |
|
|
|
99.3 |
|
Nominating and Corporate Governance Committee Charter (incorporated by reference to Exhibit 99.3 to the Company’s Registration Statement on Form F-1 filed with the SEC on July 22, 2022) |
|
|
|
99.4 |
|
Insider Trading Policy (incorporated by reference to Exhibit 99.6 to the Company’s Registration Statement on Form F-1 filed with the SEC on July 29, 2022) |
|
|
|
107* |
|
Filing Fee Table |
* |
Filed herewith |
+ |
Indicates
management contract or compensatory plan. |
Schedules:
None
Item
9. Undertakings.
The
undersigned Registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended.
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) (§ 230.424(b) of this chapter) if,
in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth
in the “Calculation of Registration Fee” table in the effective registration statement.
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
The
undersigned Registrant hereby undertakes that:
(1)
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time
it was declared effective.
(2)
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this registration statement on Form F-1 with the Securities and Exchange Commission and has duly caused
this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toronto, Province
of Ontario, Canada, on , 2023.
BRUUSH
ORAL CARE INC. |
|
|
|
|
By: |
/s/
Aneil Singh Manhas |
|
|
Aneil
Singh Manhas |
|
|
Chief
Executive Officer |
|
Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities
and on the dates indicated.
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/
Aneil Manhas |
|
Aneil
Manhas |
|
October
6, 2023 |
|
|
Chief
Executive Officer (Principal Executive Officer, Acting Principal Financial and Accounting Officer) |
|
|
|
|
|
|
|
/s/
Kia Besharat |
|
Kia
Besharat |
|
October
6, 2023 |
|
|
Director |
|
|
|
|
|
|
|
/s/
Robert Ward |
|
Robert
Ward |
|
October
6, 2023 |
|
|
Director |
|
|
SIGNATURE
OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Pursuant
to the Securities Act of 1933, the undersigned, the duly authorized representative in the United States of the registrant has signed
this registration statement or amendment thereto in the City and State of New York on October 6, 2023.
|
COGENCY
GLOBAL INC. |
|
|
|
|
By: |
/s/
Colleen A. De Vries |
|
Name: |
Colleen
A. De Vries |
|
Title: |
Senior
Vice-President Global Inc. |
Exhibit
5.1
|
DuMoulin
Black LLP
10th
Floor 595 Howe Street
Vancouver
BC Canada V6C 2T5
www.dumoulinblack.com
Telephone
No. (604) 687-1224
|
Client
File No. 5680-001
October
5, 2023
Bruush
Oral Care Inc.
128
West Hastings Street, Unit 210
Vancouver,
British Columbia V6B 1G8
Canada
Dear
Sirs/Mesdames:
Re: | Bruush
Oral Care Inc. (the “Company”) |
We
are British Columbia (the “Province”) securities counsel for the Company and are rendering this opinion in connection
with the filing of a registration statement on Form F-1, File No. 333-272942 (the “Registration Statement”) filed
by the Company under the United States Securities Act of 1933, as amended (the “Securities Act”), with respect
to the resale from time to time by the Selling Securityholder (as defined in the Registration Statement) of (i) 1,291,921 common shares
of the Company (the “Outstanding Shares”), (ii) 890,980 common shares of the Company (the “Convertible Note
Shares”) that may be issued upon exercise of a US$3,341,176 convertible note (the “Convertible Note”), (iii)
400,491 common shares of the Company (the “Pre-Funded Warrant Shares”) that may be issued upon exercise of 400,491
pre-funded common share purchase warrants of the Company (the “Pre-Funded Warrants”), and (iv) 1,000,000 common shares
of the Company (the “Waiver Warrant Shares”) that may be issued upon exercise of 1,000,000 pre-funded common share
purchase warrants of the Company (the “Waiver Warrants”) as further described in the Registration Statement.
For
the purposes of our opinion below, we have relied solely on:
(i) | a
certificate of an officer of the Company (the “Officer’s Certificate”)
dated the date hereof certifying, among other things: |
| (a) | the
issuance of the Outstanding Shares, Convertible Note, Pre-Funded Warrants, Waiver Warrants
and the receipt of full consideration for the Outstanding Shares; |
| (b) | the
Certificate of Incorporation, Notice of Articles and Articles of the Company; |
| (c) | copies
of the directors’ resolutions of the Company dated June 30, 2023, September 13, 2023,
and September 29, 2023 as amended on October 5, 2023, approving, among other things, the
issuance of the Outstanding Shares, Warrants, Pre-Funded Warrants, Waiver Warrants, Warrant
Shares, Waiver Warrant Shares and Pre-Funded Warrant Shares, which resolutions we have assumed
will be in full force and effect, at all relevant times; |
(ii) | the
Registration Statement; |
(iii) | original
and/or copies of the executed certificates representing the Convertible Note (the “Convertible
Note Certificate”); and |
(iv) | original
and/or copies of the executed certificate representing each of the certificated Pre-Funded
Warrants (the “Pre-Funded Warrant Certificate”) and Waiver Warrants (the
“Waiver Warrant Certificate”). |
Whenever
our opinion refers to shares of the Company whether issued or to be issued, as being “fully paid and non-assessable”,
such opinion indicates that the holder of such shares will not be liable to contribute any further amounts to the Company by virtue of
its status as a holder of such shares, either in order to complete payment for the shares or to generally satisfy claims of creditors
of the Company. No opinion is expressed as to actual receipt by the Company of the consideration for the issuance of such shares or as
to the adequacy of any consideration received.
We
have also examined and relied upon such other documents as we have deemed relevant and necessary as a basis for the opinions hereinafter
expressed. We have assumed the genuineness of all signatures, the legal capacity at all relevant times of any individual signing such
documents, the authenticity and completeness of all documents submitted to us as originals, the conformity to authentic original documents
of all documents submitted to us as certified or photostatic copies or facsimiles (including scanned copies provided by email), and the
authenticity of the originals of such certified or photostatic copies or facsimiles and the truth and accuracy of all corporate records
of the Company and certificates of officers provided to us by the Company.
We
are solicitors qualified to practice law in the Province only and we express no opinion as to the laws of any jurisdiction, or as to
any matters governed by the laws of any jurisdiction, other than the laws of the Province and the laws of Canada applicable therein.
The opinions herein are based on the laws of the Province and the laws of Canada applicable therein in effect on the date hereof.
The
opinions expressed below are given as of the date of this letter and are not prospective. We disclaim any obligation to advise the addressees
or any other person of any change in law or any fact which may come or be brought to our attention after the date of this letter.
Other
than our review of the Officer’s Certificate, we have not undertaken any special or independent investigation to determine the
existence or absence of any facts or circumstances on which our opinions herein are based, and no inference as to our knowledge of the
existence of such facts or circumstances should be drawn merely from our representation of the Company.
Based
and relying upon the foregoing, and subject to the assumptions and qualifications expressed above and below, we are of the opinion that:
1. | upon
conversion of the Convertible Note in accordance with the terms of the Convertible Note Certificate
and the issuance of the Outstanding Shares, the Outstanding Shares will be validly issued
as fully paid and non-assessable shares in the capital of the Company; |
2. | upon
the conversion of the Convertible Note and the issuance of the Convertible Note Shares in
accordance with the terms of the Convertible Note Certificate, the Convertible Note Shares
will be validly issued as fully paid and non-assessable shares in the capital of the Company; |
3. | upon
receipt by the Company of the exercise price in full for the Pre-Funded Warrant Shares and
the issuance of the Pre-Funded Warrant Shares in consideration for such exercise price in
accordance with the terms of the Pre-Funded Warrant Certificates, the Pre-Funded Warrant
Shares will be validly issued as fully paid and non-assessable shares in the capital of the
Company; and |
4. | upon
receipt by the Company of the exercise price in full for the Waiver Warrant Shares and the
issuance of the Waiver Warrant Shares in consideration for such exercise price in accordance
with the terms of the Waiver Warrant Certificates, the Waiver Warrant Shares will be validly
issued as fully paid and non-assessable shares in the capital of the Company. |
We
hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the
heading “Legal Matters” in the Registration Statement. In giving such consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations thereunder.
Yours
truly,
Exhibit
10.17
September
29, 2023
Sent
via Email
|
Re: |
Bruush
Oral Care, Inc. (“we” or the “Company”) Financing Waiver |
Dear
Mr. Shapiro,
Reference
is made to that certain Securities Purchase Agreement, dated as of June 26, 2023 (the “Purchase Agreement”), between
the Company and Target Capital 14, LLC (together with any of its successors and assigns, “Target”), pursuant to which
the Company issued to Target a Convertible Note, in the initial principal amount of $3,341,176.00 (the “Note”) and
a common stock purchase warrant to purchase 10,023,530 of the Company’s common shares, having no par value per share (the “Common
Shares”). As you are aware, the Company intends to close a private placement pursuant to which the Company shall sell Common
Shares and warrants to purchase Common Shares to an investor (the “Financing”).
Pursuant
to this letter agreement (this “Letter Agreement”), in respect of the Financing the Company is requesting Target’s
waiver of certain provisions of the Purchase Agreement and the Note, as follows, each of which shall not be effective unless and until
the Financing is consummated (for the avoidance of doubt such waivers shall be one time waivers only in respect of the Financing and
shall not be applicable to any subsequent transaction unless separately agreed among the Company and Target):
|
1. |
Waiver
of the limitation on issuing new securities in Section 6(h) of the Note; and |
|
|
|
|
2. |
Waiver
of the obligation of the Company to utilize fifty percent (50%) of the proceeds from any an equity financing to repay all or a portion
of the Note, set forth at the end of Section 6 of the Note. |
In
consideration of the foregoing the Company shall (i) issue a prefunded warrant (in the form attached hereto as Exhibit A, the
“Waiver Warrant”) to purchase 1,000,000 Common Shares to Target (the “Waiver Shares”), and (ii)
cause $2,000,000 from the proceeds of the Financing, to be deposited into and held an escrow account (the “Escrow Account”)
pursuant to the terms of an escrow agreement (in the form attached hereto as Exhibit A, the “Escrow Agreement”).
Upon the maturity date of the Note, the parties agree that if Target shall not have received proceeds from conversions of the Note in
aggregate amount, together with any amounts paid in cash by the Company, of at least $3,341,176.00 (the “Original Principal
Amount”), each of the Company and Target shall direct the Escrow Agent (as defined in the Escrow Agreement) to disburse from
the Escrow Account, an amount equal to the difference between the proceeds received in respect of any conversions and cash paid by the
Company and the Original Principal Amount, up to $2,000,000. If there is any disagreement among Target and the Company in respect of
the foregoing, each of Target and the Company agree that they will appoint a mutually acceptable third-party (the “Arbitrator”)
to (i) determine the amount to be distributed to Target from the Escrow Account, with the balance, if any, to revert to the Company,
and (ii) to direct the Escrow Agent to distribute the applicable amounts to each of Target and the Company. In furtherance of the foregoing,
within 30 days of the date hereof the Company agrees to either (i) cause the F-1 registration statement that has been filed to register
the Common Shares issuable under the Note to be amended to include the Waiver Shares, or (ii) to file a separate the F-1 registration
statement registering the Waiver Shares.
By
signing below, you hereby represent on behalf of Target that you agree to the above items.
This
Letter Agreement contains the entire understanding between and among the parties and supersedes any prior understandings and agreements
among them respecting the subject matter of this Letter Agreement. This Letter Agreement shall be governed by and construed in accordance
with the laws of the State of Arizona without regard to choice of law principles. In case any provision of this Letter Agreement shall
be held to be invalid, illegal or unenforceable, such provision shall be severable from the rest of this Letter Agreement, and the validity
legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
The
parties hereby consent and agree that if this Letter Agreement shall at any time be deemed by the parties for any reason insufficient,
in whole or in part, to carry out the true intent and spirit hereof or thereof, the parties will execute or cause to be executed such
other and further assurances and documents as in the reasonable opinion of the parties may be reasonably required in order more effectively
to accomplish the purposes of this Letter Agreement. By signing below, the parties hereto represent and agree that, prior to executing
this Letter Agreement, they have had the opportunity to consult with independent counsel concerning the terms of this Letter Agreement.
This
Letter Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including .pdf or any electronic
signature complying with the U.S. federal ESIGN Act of 2000, for example, www.docusign.com) or other transmission method and any counterpart
so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
Please
indicate confirmation of the terms provided herein by executing and returning this Letter Agreement in the space provided below.
[SIGNATURE
PAGE FOLLOWS]
Very
truly yours, |
|
|
|
|
BRUUSH
ORAL CARE, INC. |
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
Acknowledged
and Agreed: |
|
|
|
|
TARGET
CAPITAL 14, LLC |
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
[Signature
Page to Target Waiver]
EXHIBIT
B
FORM
OF WAIVER WARRANT
EXHIBIT
B
FORM
OF ESCROW AGREEMENT
Exhibit
10.18
NEITHER
THIS SECURITY NOR THE SECURITIES AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
PREFUNDED
COMMON SHARE PURCHASE WARRANT
BRUUSH
ORAL CARE, INC.
Warrant
Shares: 1,000,000
Date
of Issuance: September ___, 2023 (“Issuance Date”)
This
PREFUNDED COMMON SHARE PURCHASE WARRANT (the “Warrant”) certifies that, for value received to the Holder (as defined
below), Target Capital 14, LLC, an Arizona limited liability company (including any permitted and registered assigns, the “Holder”),
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after
the date of issuance hereof, BRUUSH ORAL CARE, INC., a corporation incorporated in British Columbia, Canada, with principal executive
offices located at 128 West Hastings Street, Unit 210 Vancouver, British Columbia V6B 1G8 (the “Company”), 1,000,000
Common Shares (the “Warrant Shares”) (whereby such number may be adjusted from time to time pursuant to the terms
and conditions of this Warrant) at the Exercise Price per share then in effect. This Warrant is issued by the Company as of the date
hereof in connection with that waiver and notice agreement, dated as of September __, 2023, by and among the Company and the Holder (the
“Waiver Agreement”).
For
purposes of this Warrant, the term “Exercise Price” shall mean $0.0001, subject to adjustment as provided herein,
and the term “Exercise Period” shall mean the period commencing on the Issuance Date and ending on 5:00 p.m. eastern
standard time on the five-year anniversary thereof. The amount of funds to be paid to the Company upon the exercise of this Warrant shall
be zero as this is a prefunded warrant which has been fully paid for.
1.
EXERCISE OF WARRANT.
(a)
Mechanics of Exercise. Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in
whole or in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached hereto as Exhibit
A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. The Holder shall not be required
to deliver the original Warrant in order to effect an exercise hereunder. Partial exercises of this Warrant resulting in issuance of
a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant
Shares issued hereunder in an amount equal to the applicable number of Warrant Shares issued. On or before the second Trading Day (the
“Warrant Share Delivery Date”) following the date on which the Holder sent the Exercise Notice to the Company or the
Company’s transfer agent together with the Exercise Notice, the “Exercise Delivery Documents”), the Company
shall (or direct its transfer agent to) issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a
certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Common Shares
to which the Holder is entitled pursuant to such exercise (or deliver such Common Shares in electronic format if requested by the Holder).
Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of
record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates
evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise and the number of Warrant Shares represented
by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company
shall as soon as practicable and in no event later than three Business Days after any exercise and at its own expense, issue a new Warrant
(in accordance with Section 6) representing the right to issue the number of Warrant Shares issuable immediately prior to such exercise
under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.
If
the Company fails to cause its transfer agent to transmit to the Holder the respective Common Shares by the respective Warrant Share
Delivery Date, then the Holder will have the right to rescind such exercise in Holder’s sole discretion in addition to all other
rights and remedies at law, under this Warrant, or otherwise, and such failure shall also be deemed a material breach of this Warrant
and the Agreement.
(b)
No Fractional Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment
pursuant hereto. All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining
whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance
of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction
a sum in cash equal to the product resulting from multiplying the then-current fair market value of a Warrant Share by such fraction.
(c)
Holder’s Exercise Limitations. Notwithstanding anything to the contrary contained herein, the Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 1 or otherwise,
to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s affiliates (the “Affiliates”), and any other Persons acting as a group together with the
Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of
the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Common Shares beneficially
owned by the Holder and Attribution Parties shall include the number of Common Shares issuable upon exercise of this Warrant with respect
to which such determination is being made, but shall exclude the number of Common Shares which would be issuable upon (i) exercise of
the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties
and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without
limitation, any other Common Share Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence,
for purposes of this Section 1(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Holder is solely responsible for any schedules
required to be filed in accordance therewith. In addition, a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section
1(c), in determining the number of outstanding Common Shares, a Holder may rely on the number of outstanding Common Shares as reflected
in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by the Company or the Company’s transfer agent setting forth the
number of Common Shares outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm
orally and in writing to the Holder the number of Common Shares then outstanding. In any case, the number of outstanding Common Shares
shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder
or its Affiliates or Attribution Parties since the date as of which such number of outstanding Common Shares was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of Common Shares outstanding at the time of the respective calculation hereunder.
The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
(d)
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to cause the Company’s transfer agent to transmit to the Holder the Warrant Shares in accordance
with the provisions of this Warrant (including but not limited to Section 1(a) above pursuant to an exercise on or before the respective
Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or
otherwise) or the Holder’s brokerage firm otherwise purchases, Common Shares to deliver in satisfaction of a sale by the Holder
of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A)
pay in cash to the Holder, within one (1) business day of Holder’s request, the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the Common Shares so purchased exceeds (y) the product of (1) the
number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate
the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise
shall be deemed rescinded) or deliver to the Holder within one (1) business day of Holder’s request the number of Common Shares
that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the
Holder purchases, or effectuates a cashless exercise hereunder for, Common Shares having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of Common Shares with an aggregate sale price giving rise to such purchase obligation of
$10,000, under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver Common Shares upon exercise of the Warrant as required pursuant to the terms hereof.
2.
ADJUSTMENTS. The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:
(a)
Distribution of Assets. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire
its assets) to holders of Common Shares, by way of return of capital or otherwise (including without limitation any distribution of cash,
stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar
transaction (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:
(i)
any Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of
Common Shares entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Exercise Price by a fraction (i) the numerator of which shall be the Closing Sale Price of the Common
Shares on the Trading Day immediately preceding such record date minus the value of the Distribution (as determined in good faith by
the Company’s Board of Directors) applicable to one Common Share, and (ii) the denominator of which shall be the Closing Sale Price
of the Common Shares on the Trading Day immediately preceding such record date; and
(ii)
the number of Warrant Shares shall be increased to a number of shares equal to the number of Common Shares obtainable immediately prior
to the close of business on the record date fixed for the determination of holders of Common Shares entitled to receive the Distribution
multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i); provided, however, that in the event
that the Distribution is of shares of common stock of a company (other than the Company) whose common stock is traded on a national securities
exchange or a national automated quotation system (“Other Shares of Common Stock”), then the Holder may elect to receive
a warrant to have issued Other Shares of Common Stock in lieu of an increase in the number of Warrant Shares, the terms of which shall
be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of Other Shares of Common
Stock that would have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant immediately prior
to such record date and with an aggregate exercise price equal to the product of the amount by which the exercise price of this Warrant
was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i) and the number of Warrant
Shares calculated in accordance with the first part of this clause (ii).
(b)
Anti-Dilution Adjustments to Exercise Price. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant
is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or
announce any offer, sale, grant or any option to purchase or other disposition) any Common Shares or securities entitling any person
or entity (which, for purposes of clarification, shall not include an Common Shares issued to the Holder pursuant to (i) any other security
of the Company currently held by Holder, (ii) any other security of the Company issued to Holder on or after the Issuance Date, or (iii)
any other agreement entered into between the Company and Holder) to acquire Common Shares (upon conversion, exercise or otherwise), at
an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such issuances
collectively, a “Dilutive Issuance”) (if the holder of the Common Shares or Common Share Equivalents so issued shall
at any time, whether by operation of purchase price adjustments, elimination of an applicable floor price for any reason in the future
(including but not limited to the passage of time or satisfaction of certain condition(s)), reset provisions, floating conversion, exercise
or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be
entitled or potentially entitled to receive Common Shares at an effective price per share which is less than the Exercise Price at any
time while such Common Shares or Common Share Equivalents are in existence, such issuance shall be deemed to have occurred for less than
the Exercise Price on such date of the Dilutive Issuance (regardless of whether the Common Shares or Common Share Equivalents are (i)
subsequently redeemed or retired by the Company after the date of the Dilutive Issuance or (ii) actually converted or exercised at such
Base Share Price), then the Exercise Price shall be reduced at the option of the Holder and only reduced to equal the Base Share Price.
The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Shares or Common Share
Equivalents subject to this Section 2(b), indicating therein the applicable issuance price, or applicable reset price, exchange price,
conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether
or not the Company provides a Dilutive Issuance Notice pursuant to this Section 2(b), upon the occurrence of any Dilutive Issuance, after
the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless
of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.
(c)
Subdivision or Combination of Common Shares. If the Company at any time on or after the issuance date of this Warrant (“Issuance
Date”), subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding Common
Shares into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced
and the number of Warrant Shares will be proportionately increased. Any adjustment under this section shall become effective at the close
of business on the date the subdivision or combination becomes effective. Each such adjustment of the Exercise Price shall be calculated
to the nearest one-hundredth of a cent. Such adjustment shall be made successively whenever any event covered by this section shall occur.
3.
FUNDAMENTAL TRANSACTIONS. If, at any time while this Warrant is outstanding, (i) the Company effects any merger of the Company
with or into another entity and the Company is not the surviving entity (such surviving entity, the “Successor Entity”),
(ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender
offer or exchange offer (whether by the Company or by another individual or entity, and approved by the Company) is completed pursuant
to which holders of Common Shares are permitted to tender or exchange their Common Shares for other securities, cash or property and
the holders of at least 50% of the Common Shares accept such offer, or (iv) the Company effects any reclassification of the Common Shares
or any compulsory share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities,
cash or property (other than as a result of a subdivision or combination of Common Shares) (in any such case, a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive the number of
Common Shares of the Successor Entity or of the Company and any additional consideration (the “Alternate Consideration”)
receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of
the number of Common Shares for which this Warrant is exercisable immediately prior to such event (disregarding any limitation on exercise
contained herein solely for the purpose of such determination). For purposes of any such exercise, the determination of the Exercise
Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable
in respect of one Common Share in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders
of Common Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder
shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any Successor Entity in such Fundamental Transaction shall
issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant
into Alternate Consideration.
4.
NON-CIRCUMVENTION. The Company covenants and agrees that it will not, by amendment of its certificate of incorporation, bylaws
or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities,
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at
all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of
the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any Common Shares receivable
upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and non-assessable Common Shares upon the exercise of this Warrant,
and (iii) shall, for so long as this Warrant is outstanding, have authorized and reserved, free from preemptive rights, ten times the
number of Common Shares into which the Warrants are then exercisable into to provide for the exercise of the rights represented by this
Warrant (without regard to any limitations on exercise).
5.
WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, this Warrant, in and of itself, shall
not entitle the Holder to any voting rights or other rights as a stockholder of the Company. In addition, nothing contained in this Warrant
shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.
6.
REISSUANCE.
(a)
Lost, Stolen or Mutilated Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as
to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof),
issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
(b)
Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such
new Warrant shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which
is the same as the Issuance Date.
7.
NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given
in accordance with the notice provisions contained in the Purchase Agreement (as defined in the Waiver Agreement). The Company shall
provide the Holder with prompt written notice (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable
detail, the calculation of such adjustment and (ii) at least 20 days prior to the date on which the Company closes its books or takes
a record (A) with respect to any dividend or distribution upon the Common Shares, (B) with respect to any grants, issuances or sales
of any stock or other securities directly or indirectly convertible into or exercisable or exchangeable for Common Shares or other property,
pro rata to the holders of Common Shares or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution
or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice
being provided to the Holder.
8.
TRANSFER. This Warrant shall be binding upon the Company and its successors and assigns, and shall inure to be the benefit of
the Holder and its successors and assigns. Notwithstanding anything to the contrary herein, the rights, interests or obligations of the
Company hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior signed
written consent of the Holder, which consent may be withheld at the sole discretion of the Holder (any such assignment or transfer shall
be null and void if the Company does not obtain the prior signed written consent of the Holder). This Warrant or any of the severable
rights and obligations inuring to the benefit of or to be performed by Holder hereunder may be assigned by Holder to a third party, in
whole or in part, without the need to obtain the Company’s consent thereto. Any transferee of all or a portion of this Warrant
shall succeed to the rights and benefits of the initial Holder of this Warrant and the Securities Purchase Agreement.
9.
AMENDMENT AND WAIVER. The terms of this Warrant may be amended or waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and the Holder.
10.
GOVERNING LAW. This Warrant shall be deemed executed, delivered and performed in New York, New York. This Warrant shall be solely
and exclusively governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts
of laws. The parties hereby warrant and represent that the selection of Laws of the State of New York as the sole and exclusive governing
law under this Warrant (i) has a reasonable nexus to each of the parties and to the transactions contemplated by the Warrant; and (ii)
does not offend any public policy of the New York, or of any other jurisdiction. The Company irrevocably and exclusively consents to
and expressly agrees that binding arbitration in New York, New York conducted by the Arbitrator Conflict Resolution Centre shall be their
sole and exclusive remedy for any dispute arising out of or relating to this Warrant, Agreement, Irrevocable Instructions or any other
agreement between the parties, the Company’s transfer agent or the relationship of the parties or their affiliates, and that the
arbitration shall be conducted via telephone or teleconference. If the Arbitrator is not available, a different arbitrator or law firm
in New York shall be chosen by the Lender and agreed upon by the Company. Company covenants and agrees to provide written notice to Lender
via email prior to bringing any action or arbitration action against the Company’s transfer agent or any action against any person
or entity that is not a party to this Agreement that is related in any way to this Agreement or any of the Exhibits under this Agreement
or any transaction contemplated herein or therein, and further agrees to timely notify Lender to any such action. Company acknowledges
that the governing law and venue provisions set forth in this Agreement are material terms to induce Lender to enter into the Waiver
Agreement and that but for Company’s agreements set forth in this section, Lender would not have entered into the Waiver Agreement.
In the event that the Lender needs to take action to protect their rights under the Loan, the Lender may commence action in any jurisdiction
needed with the understanding that the Agreement shall still be solely and exclusively construed and enforced in accordance with, and
all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed solely and exclusively
by the internal laws of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of New York
or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the New York.
11.
ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions
contained herein.
12.
CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:
(a)
“Nasdaq” means www.Nasdaq.com.
(b)
“Closing Sale Price” means, for any security as of any date, (i) the last closing trade price for such security on
the Principal Market, as reported by Nasdaq, or, if the Principal Market begins to operate on an extended hours basis and does not designate
the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as reported by Nasdaq, or (ii)
if the foregoing does not apply, the last trade price of such security in the over-the-counter market for such security as reported by
Nasdaq, or (iii) if no last trade price is reported for such security by Nasdaq, the average of the bid and ask prices of any market
makers for such security as reported by the OTC Markets. If the Closing Sale Price cannot be calculated for a security on a particular
date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination
or other similar transaction during the applicable calculation period.
(c)
“Common Shares” means the common shares of the Company, no par value, and any other class of securities into which
such securities may hereafter be reclassified or changed.
(d)
“Common Share Equivalents” means any securities of the Company that would entitle the holder thereof to acquire at
any time Common Shares, including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.
(e)
“Person” and “Persons” means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or any department or agency
thereof.
(g)
“Principal Market” means the primary national securities exchange on which the Common Shares are then traded.
(h)
“Trading Day” means (i) any day on which the Common Shares are listed or quoted and traded on its Principal Market,
(ii) if the Common Shares are not then listed or quoted and traded on any national securities exchange, then a day on which trading occurs
on any over-the-counter markets, or (iii) if trading does not occur on the over-the-counter markets, any Business Day.
*
* * * * * *
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the Issuance Date set forth above.
BRUUSH
ORAL CARE, INC.
By: |
|
|
Name:
|
Aneil
Singh Manhas |
|
Title:
|
Chief
Executive Officer |
|
EXHIBIT
A
EXERCISE
NOTICE
(To
be executed by the registered holder to exercise this Prefunded Common Share Purchase Warrant)
|
1. |
The
Undersigned holder hereby exercises the right to have
issued _________________ of the Common Shares (“Warrant Shares”) of BRUUSH ORAL CARE, INC., a corporation incorporated
in British Columbia, Canada, the “Company”), evidenced by the attached copy of the Prefunded Common Share Purchase Warrant
A (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth
in the Warrant. |
|
2. |
Delivery of Warrant Shares.
The Company shall deliver to the holder __________________ Warrant Shares in accordance with the terms of the Warrant. |
|
|
|
(Print
Name of Registered Holder) |
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
EXHIBIT
B
ASSIGNMENT
OF WARRANT
(To
be signed only upon authorized transfer of the Warrant)
For
Value Received, the undersigned hereby sells, assigns,
and transfers unto ____________________ the right to purchase _______________ Common Shares of BRUUSH ORAL CARE, INC., to which
the Common Share Purchase Warrant relates and appoints ____________________, as attorney-in-fact, to transfer said right on the books
of BRUUSH ORAL CARE, INC. with full power of substitution and re-substitution in the premises. By accepting such transfer, the
transferee has agreed to be bound in all respects by the terms and conditions of the within Warrant.
|
|
|
(Signature)
* |
|
|
|
|
|
(Name)
|
|
|
|
|
|
(Address) |
|
|
|
|
|
(Social
Security or Tax Identification No.) |
*
The signature on this Assignment of Warrant must correspond to the name as written upon the face of the Common Share Purchase Warrant
in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership,
trust or other entity, please indicate your position(s) and title(s) with such entity.
Exhibit
23.1
October 6, 2023
Bruush
Oral Care Inc.
We
consent to the incorporation by reference in this Registration Statement on Amendment No. 4 to Form F-1 of our report dated March
10, 2023, relating to the financial statements as of October 31, 2022, 2021 and January 31, 2021, and for the 12-months ended October
31, 2022. 9-months ended October 31, 2021 and 12-months ended January 31, 2021 of Bruush Oral Care Inc., appearing in its Annual Report
on Form 20-F for the year ended October 31, 2022.
We also consent to the reference to us under the heading “Experts”
in the Registration Statement.
/s/
DMCL
DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
Exhibit
107
Calculation
of Filing Fee Tables
FORM
F-1
(Form
Type)
Bruush
Oral Care Inc.
(Exact
Name of Registrant as Specified in its Charter)
Table
1: Securities to Be Registered and Carry Forward Securities
Security
Type |
|
Security
Class Title |
|
Fee
Calculation or Carry Forward Rule |
|
|
Amount
to Be Registered |
|
|
Proposed
Maximum Offering Price Per Unit (1) |
|
|
Proposed
Maximum
Aggregate Offering Price (1) |
|
|
Fee
Rate |
|
|
Amount
of Registration Fee (1)(2) |
|
Securities
to Be Registered |
|
Common Stock
underlying Convertible Notes |
|
457(o) |
|
|
|
890,980 |
|
|
|
|
|
|
|
908,799.60 |
(3) |
|
$ |
0.00011020 |
|
|
$ |
100.15 |
|
|
|
Common
Stock underlying
Warrants
to purchase Common Stock |
|
457(o) |
|
|
|
1,692,862 |
|
|
|
— |
|
|
|
1,726,719.24 |
(3) |
|
|
0.00011020 |
|
|
|
190.28 |
|
|
|
Common Stock underlying
Pre-Funded Warrant |
|
457(o) |
|
|
|
1,000,000 |
|
|
|
- |
|
|
|
1,020,000 |
(3) |
|
|
0.00011020 |
|
|
|
112.40 |
|
Total
Offering Amounts |
|
|
|
— |
|
|
$ |
3,655,518.84
|
|
|
|
0.00011020
|
|
|
$ |
402.83 |
|
Total Fees Previously Paid |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
2,206.73 |
|
Total Fee Offsets |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,803.90) |
|
Net Fee Due |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
0 |
|
(1) |
Calculated pursuant to
Rule 457(o) based on an estimate of the proposed maximum aggregate offering price of the securities registered hereunder to be sold
by the registrant. |
(2) |
Pursuant to Rule 416 under
the Securities Act, the shares of Common Stock registered hereby also include an indeterminate number of additional shares of Common
Stock as may from time to time become issuable by reason of stock splits, stock dividends, recapitalizations or other similar transactions. |
(3) |
In accordance with Rule
457(c) under the Securities Act, the aggregate offering price for the shares to be sold by the Selling Securityholders is calculated
based on a price of $1.02, the closing price reported on The Nasdaq Stock Market for October 4, 2023. |
Bruush Oral Care (NASDAQ:BRSH)
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