Novo Integrated Sciences Reports Fiscal Year 2023 First Quarter Financial Results

BELLEVUE, Wash.–(BUSINESS WIRE)–$NVOS #AAPI–Novo Integrated Sciences, Inc. (NASDAQ:NVOS) (the “Company” or “Novo”), pioneering a holistic approach to patient-first health and wellness through a multidisciplinary healthcare ecosystem of multiple patient and consumer touchpoints for services and product innovation, today reported its financial results for the fiscal quarter ended November 30, 2022.

Robert Mattacchione, Novo’s CEO and Board Chairman, stated, “The Company remains committed to the commercialization of its proprietary product offerings and the expansion and delivery of its essential services and solutions of how non-catastrophic healthcare is delivered both now and in the future. The Company’s fiscal year 2023 first quarter period emphasized maximizing efficiencies pointed towards future cost savings and margin stability.”

Financial Highlights:

As of November 30, 2022, the Company’s cash and cash equivalents were $878 thousand, total assets were $38.2 million, total liabilities were $17.2 million, and stockholders’ equity was $20.9 million.

Revenues for the three months ended November 30, 2022 were $3,419,280, representing an increase of $257,353, or 8.1%, from $3,161,927 for the same period in 2021. The increase in revenue is principally due to an increase in outsourced product sales which resulted in an increase in revenue of $607,589. Acenzia’s and Terragenx’s revenue for the three months ended November 30, 2022 was $777,229 and $9,157, respectively. Revenues from our healthcare services decreased by 7.3% when comparing the revenues for the three months ended November 30, 2022 to the same period in 2021 primarily due to a COVID-19 surge in Ontario province Canada and COVID-19 staffing related shortages limiting clinic and eldercare patient-practitioner direct personal interaction.

Operating costs for the three months ended November 30, 2022 were $3,981,493, representing an increase of $1,351,368, or 51.4%, from $2,630,125 for the same period in 2021. The increase in operating costs is principally due to the increase in overhead expenses associated with the operations of Acenzia, PRO-DIP, and Terragenx which was approximately $902,756 for the three months ended November 30, 2022. In subsequent quarters, this increase in overhead expenses associated with Acenzia, PRO-DIP, and Terragenx is projected to decrease as the Company integrates and consolidates operations. Also, an increase in legal and professional fees contributed to the increase in operating expenses.

Net loss attributed to Novo Integrated Sciences, Inc. for the three months ended November 30, 2022 was $3,935,413, representing an increase of $2,128,826, or 117.8%, from $1,806,587 for the same period in 2021. The increase in net loss is principally due to (i) an increase in overhead expenses associated with the operations of Acenzia, PRO-DIP, and Terragenx which was approximately $902,756 for the three months ended November 30, 2022, (ii) an increase in interest expense, and (iii) an increase in amortization of debt discounts.

Operational Milestones:

The Company completed a registered offering which raised an aggregate of $2,000,000 with the sale of 4,000,000 units consisting of (i) 4,000,000 shares of the Company’s common stock, (ii) warrants with a three-year term to purchase 4,000,000 shares of common stock at an exercise price of $0.50 per share, and (iii) warrants with a five-year term to purchase 4,000,000 shares of common stock at an exercise price of $0.50 per share (the “Offering”).

The Company obtained certain waivers and amendments with respect to certain payment and warrant exercise pricing provisions for both the Hudson Bay Master Fund Ltd. and CVI Investments, Inc. aggregate $16.666m senior secured promissory notes.

About Novo Integrated Sciences, Inc.

Novo Integrated Sciences, Inc. is pioneering a holistic approach to patient-first health and wellness through a multidisciplinary healthcare ecosystem of services and product innovation. Novo offers an essential and differentiated solution to deliver, or intend to deliver, these services and products through the integration of medical technology, advanced therapeutics, and rehabilitative science.

We believe that “decentralizing” healthcare, through the integration of medical technology and interconnectivity, is an essential solution to the rapidly evolving fundamental transformation of how non-catastrophic healthcare is delivered both now and in the future. Specific to non-critical care, ongoing advancements in both medical technology and inter-connectivity are allowing for a shift of the patient/practitioner relationship to the patient’s home and away from on-site visits to primary medical centers with mass-services. This acceleration of “ease-of-access” in the patient/practitioner interaction for non-critical care diagnosis and subsequent treatment minimizes the degradation of non-critical health conditions to critical conditions as well as allowing for more cost-effective healthcare distribution.

The Company’s decentralized healthcare business model is centered on three primary pillars to best support the transformation of non-catastrophic healthcare delivery to patients and consumers:

First Pillar: Service Networks. Deliver multidisciplinary primary care services through (i) an affiliate network of clinic facilities, (ii) small and micro footprint sized clinic facilities primarily located within the footprint of box-store commercial enterprises, (iii) clinic facilities operated through a franchise relationship with the Company, and (iv) corporate operated clinic facilities.

Second Pillar: Technology. Develop, deploy, and integrate sophisticated interconnected technology, interfacing the patient to the healthcare practitioner thus expanding the reach and availability of the Company’s services, beyond the traditional clinic location, to geographic areas not readily providing advanced, peripheral based healthcare services, including the patient’s home.

Third Pillar: Products. Develop and distribute effective, personalized health and wellness product solutions allowing for the customization of patient preventative care remedies and ultimately a healthier population. The Company’s science-first approach to product innovation further emphasizes our mandate to create and provide over-the-counter preventative and maintenance care solutions.

Innovation through science combined with the integration of sophisticated, secure technology assures Novo Integrated Sciences of continued cutting-edge advancement in patient-first platforms.

For more information concerning Novo Integrated Sciences, please visit www.novointegrated.com.

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Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by words such as “believe,” “intend,” “expect,” “anticipate,” “plan,” “potential,” “continue” or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties are discussed in Novo’s filings with the Securities and Exchange Commission. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond Novo’s control which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects Novo’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity. Novo assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The contents of any website referenced in this press release are not incorporated by reference herein.

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of November 30, 2022 (unaudited) and August 31, 2022

 

 

 

November 30,

 

August 31,

 

 

2022

 

2022

 

 

(unaudited)

 

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

878,700

 

 

$

2,178,687

 

Accounts receivable, net

 

 

960,091

 

 

 

1,017,405

 

Inventory, net

 

 

1,010,115

 

 

 

879,033

 

Other receivables, current portion

 

 

1,053,437

 

 

 

1,085,335

 

Prepaid expenses and other current assets

 

 

554,978

 

 

 

571,335

 

Total current assets

 

 

4,457,321

 

 

 

5,731,795

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

5,563,829

 

 

 

5,800,648

 

Intangible assets, net

 

 

17,708,310

 

 

 

18,840,619

 

Right-of-use assets, net

 

 

2,423,519

 

 

 

2,673,934

 

Goodwill

 

 

7,595,844

 

 

 

7,825,844

 

TOTAL ASSETS

 

 

37,748,823

 

 

$

40,872,840

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,075,124

 

 

$

1,800,268

 

Accrued expenses

 

 

1,232,519

 

 

 

1,116,125

 

Accrued interest (including amounts to related parties)

 

 

434,521

 

 

 

454,189

 

Convertible notes payable, net of discount of $2,750,917

 

 

6,422,009

 

 

 

9,099,654

 

Derivative liability

 

 

1,390,380

 

 

 

 

Contingent liability

 

 

62,855

 

 

 

534,595

 

Due to related parties

 

 

417,718

 

 

 

478,897

 

Finance lease liability, current portion

 

 

8,737

 

 

 

8,890

 

Operating lease liability, current portion

 

 

521,358

 

 

 

582,088

 

Total current liabilities

 

 

12,565,221

 

 

 

14,074,706

 

 

 

 

 

 

 

 

Debentures, related parties

 

 

918,439

 

 

 

946,250

 

Government loans and notes payable, net of current portion

 

 

157,900

 

 

 

161,460

 

Finance lease liability, net of current portion

 

 

9,466

 

 

 

12,076

 

Operating lease liability, net of current portion

 

 

2,010,041

 

 

 

2,185,329

 

Deferred tax liability

 

 

1,402,966

 

 

 

1,445,448

 

TOTAL LIABILITIES

 

 

17,064,033

 

 

 

18,825,269

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Novo Integrated Sciences, Inc.

 

 

 

 

 

 

Convertible preferred stock; $0.001 par value; 1,000,000 shares authorized; 0 and 0 shares issued and outstanding at November 30, 2022 and August 31, 2022, respectively

 

 

 

 

 

 

Common stock; $0.001 par value; 499,000,000 shares authorized; 39,890,811 and 31,180,603 shares issued and outstanding at November 30, 2022 and August 31, 2022, respectively

 

 

39,891

 

 

 

31,181

 

Additional paid-in capital

 

 

69,135,417

 

 

 

66,056,824

 

Common stock to be issued (4,113,411 and 4,149,633 shares at November 30, 2022 and August 31, 2022)

 

 

9,382,441

 

 

 

9,474,807

 

Other comprehensive income

 

 

143,828

 

 

 

560,836

 

Accumulated deficit

 

 

(57,753,902

)

 

 

(53,818,489

)

Total Novo Integrated Sciences, Inc. stockholders’ equity

 

 

20,947,675

 

 

 

22,305,159

 

Noncontrolling interest

 

 

(262,885

)

 

 

(257,588

)

Total stockholders’ equity

 

 

20,684,790

 

 

 

22,047,571

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

37,748,823

 

 

$

40,872,840

 

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three Months Ended November 30, 2022 and 2021 (unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

 

November 30,

 

November 30,

 

 

2022

 

2021

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

Revenues

 

$

3,419,280

 

 

$

3,161,927

 

 

 

 

 

 

 

 

Cost of revenues

 

 

1,679,747

 

 

 

1,895,461

 

 

 

 

 

 

 

 

Gross profit

 

 

1,739,533

 

 

 

1,266,466

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Selling expenses

 

 

7,332

 

 

 

168

 

General and administrative expenses

 

 

3,974,161

 

 

 

2,629,957

 

Total operating expenses

 

 

3,981,493

 

 

 

2,630,125

 

 

 

 

 

 

 

 

Loss from operations

 

 

(2,241,960

)

 

 

(1,363,659

)

 

 

 

 

 

 

 

Non-operating income (expense)

 

 

 

 

 

 

Interest income

 

 

2,281

 

 

 

8,388

 

Interest expense

 

 

(167,243

)

 

 

(68,730

)

Amortization of debt discount

 

 

(1,490,513

)

 

 

(57,840

)

Foreign currency transaction losses

 

 

(39,301

)

 

 

(334,554

)

Total other income (expense)

 

 

(1,694,776

)

 

 

(452,736

)

 

 

 

 

 

 

 

Loss before income taxes

 

 

(3,936,736

)

 

 

(1,816,395

)

 

 

 

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(3,936,736

)

 

$

(1,816,395

)

 

 

 

 

 

 

 

Net loss attributed to noncontrolling interest

 

 

(1,323

)

 

 

(9,808

)

 

 

 

 

 

 

 

Net loss attributed to Novo Integrated Sciences, Inc.

 

$

(3,935,413

)

 

$

(1,806,587

)

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

Net loss

 

 

(3,936,736

)

 

 

(1,816,395

)

Foreign currency translation loss

 

 

(420,982

)

 

 

(104,388

)

Comprehensive loss:

 

$

(4,357,718

)

 

$

(1,920,783

)

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic and diluted

 

 

33,855,082

 

 

 

26,924,705

 

 

 

 

 

 

 

 

Net loss per common share – basic and diluted

 

$

(0.12

)

 

$

(0.07

)

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended November 30, 2022 and 2021 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

Common

 

Other

 

 

 

Novo

 

 

 

 

 

 

Common Stock

 

Paid-in

 

Stock To

 

Comprehensive

 

Accumulated

 

Stockholders’

 

Noncontrolling

 

Total

 

 

Shares

 

Amount

 

Capital

 

Be Issued

 

Income

 

Deficit

 

Equity

 

Interest

 

Equity

Balance, August 31, 2022

 

 

31,180,603

 

$

31,181

 

$

66,056,824

 

 

$

9,474,807

 

 

$

560,836

 

 

$

(53,818,489

)

 

$

22,305,159

 

 

$

(257,588

)

 

$

22,047,571

 

Units issued for cash, net of offering costs

 

 

4,000,000

 

 

4,000

 

 

1,791,000

 

 

 

 

 

 

 

 

 

 

 

 

1,795,000

 

 

 

 

 

 

1,795,000

 

Issuance of common stock to be issued

 

 

36,222

 

 

36

 

 

92,330

 

 

 

(92,366

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cashless exercise of warrants

 

 

4,673,986

 

 

4,674

 

 

1,134,376

 

 

 

 

 

 

 

 

 

 

 

 

1,139,050

 

 

 

 

 

 

1,139,050

 

Fair value of stock options

 

 

 

 

 

 

60,887

 

 

 

 

 

 

 

 

 

 

 

 

60,887

 

 

 

 

 

 

60,887

 

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

(417,008

)

 

 

 

 

 

(417,008

)

 

 

(3,974

)

 

 

(420,982

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,935,413

)

 

 

(3,935,413

)

 

 

(1,323

)

 

 

(3,936,736

)

Balance, November 30, 2022

 

 

39,890,811

 

$

39,891

 

$

69,135,417

 

 

$

9,382,441

 

 

$

143,828

 

 

$

(57,753,902

)

 

$

20,947,675

 

 

$

(262,885

)

 

$

20,684,790

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, August 31, 2021

 

 

26,610,144

 

$

26,610

 

$

54,579,396

 

 

$

9,236,607

 

 

$

991,077

 

 

$

(20,969,274

)

 

$

43,864,416

 

 

$

(60,261

)

 

$

43,804,155

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock for services

 

 

35,000

 

 

35

 

 

64,715

 

 

 

 

 

 

 

 

 

 

 

 

64,750

 

 

 

 

 

 

64,750

 

Common stock issued as collateral and held in escrow

 

 

2,000,000

 

 

2,000

 

 

(2,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock to be issued for purchase of Terragenx

 

 

 

 

 

 

 

 

 

983,925

 

 

 

 

 

 

 

 

 

983,925

 

 

 

97,311

 

 

 

1,081,236

 

Common stock to be issued for purchase of Mullin assets

 

 

 

 

 

 

 

 

 

188,925

 

 

 

 

 

 

 

 

 

188,925

 

 

 

 

 

 

188,925

 

Value of warrants issued with convertible notes

 

 

 

 

 

 

295,824

 

 

 

 

 

 

 

 

 

 

 

 

295,824

 

 

 

 

 

 

295,824

 

Fair value of stock options

 

 

 

 

 

 

154,135

 

 

 

 

 

 

 

 

 

 

 

 

154,135

 

 

 

 

 

 

154,135

 

Foreign currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

(103,533

)

 

 

 

 

 

(103,533

)

 

 

(855

)

 

 

(104,388

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,806,587

)

 

 

(1,806,587

)

 

 

(9,808

)

 

 

(1,816,395

)

Balance, November 30, 2021

 

 

28,645,144

 

$

28,645

 

$

55,092,070

 

 

$

10,409,457

 

 

$

887,544

 

 

$

(22,775,861

)

 

$

43,641,855

 

 

$

26,387

 

 

$

43,668,242

 

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended November 30, 2022 and 2021 (unaudited)

 

 

 

Three Months Ended

 

 

November 30,

 

November 30,

 

 

2022

 

2021

 

 

(unaudited)

 

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(3,936,736

)

 

$

(1,816,395

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

586,166

 

 

 

694,282

 

Fair value of vested stock options

 

 

60,887

 

 

 

154,135

 

Financing costs for debt extension

 

 

1,139,050

 

 

 

 

Common stock issued for services

 

 

 

 

 

64,750

 

Operating lease expense

 

 

209,846

 

 

 

163,879

 

Amortization of debt discount

 

 

1,490,513

 

 

 

57,840

 

Foreign currency transaction losses

 

 

39,301

 

 

 

334,554

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

28,174

 

 

 

(253,079

)

Inventory

 

 

(157,118

)

 

 

12,245

 

Prepaid expenses and other current assets

 

 

1,471

 

 

 

(47,335

)

Accounts payable

 

 

321,961

 

 

 

(55,056

)

Accrued expenses

 

 

149,945

 

 

 

82,933

 

Accrued interest

 

 

(9,232

)

 

 

9,481

 

Operating lease liability

 

 

(202,465

)

 

 

(161,337

)

Net cash used in operating activities

 

 

(278,237

)

 

 

(759,103

)

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchase of property and equipment

 

 

 

 

 

(120,397

)

Cash acquired with acquisition

 

 

 

 

 

29,291

 

Net cash used in investing activities

 

 

 

 

 

(91,106

)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Repayments to related parties

 

 

(48,480

)

 

 

(3,127

)

Repayments of finance leases

 

 

(2,763

)

 

 

(7,088

)

Repayment of convertible notes

 

 

(2,777,778

)

 

 

 

Proceeds from the sale of units, net of offering costs

 

 

1,795,000

 

 

 

 

Proceeds from issuance of convertible notes, net

 

 

 

 

 

1,410,000

 

Net cash (used in) provided by financing activities

 

 

(1,034,021

)

 

 

1,399,785

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

12,271

 

 

 

(41,984

)

 

 

 

 

 

 

 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

 

(1,299,987

)

 

 

507,592

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

2,178,687

 

 

 

8,293,162

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

878,700

 

 

$

8,800,754

 

 

 

 

 

 

 

 

CASH PAID FOR:

 

 

 

 

 

 

Interest

 

$

186,911

 

 

$

64,522

 

Income taxes

 

$

 

 

$

 

 

 

 

 

 

 

 

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

Debt discount recognized on derivative liability

 

$

1,390,380

 

 

$

 

Common stock to be issued for intangible assets

 

$

 

 

$

188,925

 

Common stock to be issued for acquisition

 

$

 

 

$

983,925

 

 

Contacts

Chris David, COO-President

Novo Integrated Sciences, Inc.

[email protected]
(888) 512-1195

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