Science

Novo Integrated Sciences Reports First Quarter Financial Results


BELLEVUE, Wash.–()–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, 2021.

Robert Mattacchione, Novo’s CEO and Board Chairman, stated, “We are pleased with the 47% revenue growth year-over-year. Subsequent to the quarter, we strengthened our balance sheet with the completion of a registered direct offering, resulting in gross proceeds of $15 million to Novo, to support the continued strategic investment in our decentralized, multidisciplinary healthcare ecosystem of multiple patient and consumer touchpoints for services and product innovation. We intend to launch NovoConnect by March 31, 2022. NovoConnect is a patient-first healthcare mobile application focused on providing a robust digital based offering of services and products, alongside a secure patient chart that empowers the patient to have direct control of their health and wellness. We look forward to closing our U.S. pharmacy acquisitions, further expanding our patient touch points and multiplying our annual gross revenue by an expected 400%. In addition, Novo anticipates expansion into international jurisdictions, beyond the U.S. and Canada during the current fiscal year, providing an extended broad physical base for our global virtual solutions.”

Financial Highlights:

  • As of November 30, 2021, the Company’s cash and cash equivalents were $8.8 million, total assets were $63.9 million, total liabilities were $20.3 million, and stockholders’ equity was $43.7 million.
  • Revenues for the three months ended November 30, 2021 were $3.16 million, representing an increase of $1 million, or 46.7%, from $2.16 million for the same period in 2020. The increase in revenue is principally due to the acquisition of Acenzia, Inc. in June 2021. Acenzia’s revenue for the three months ended November 30, 2021 was $981,852.
  • Operating costs for the three months ended November 30, 2021 were $2,630,125, representing an increase of $1,060,951, or 67.6%, from $1,569,174 for the same period in 2020. The increase in operating costs is principally due to the temporary increase in overhead expenses associated with the acquisitions of Acenzia, PRO-DIP, and Terragenx which was approximately $808,000 for the three months ended November 30, 2021. In subsequent quarters, this temporary increase in overhead expenses associated with Acenzia, PRO-DIP, and Terragenx is projected to decrease significantly as the Company integrates and consolidates operations.
  • Net loss attributed to Novo Integrated Sciences, Inc. for the three months ended November 30, 2021 was $1,806,587, representing an increase of $1,035,117, or 134.2%, from $771,470 for the same period in 2020. The increase in net loss is principally due (i) an increase in foreign currency transaction losses, and (ii) a temporary increase in overhead expenses associated with the acquisitions of Acenzia, PRO-DIP, and Terragenx which was approximately $808,000 for the three months ended November 30, 2021. In subsequent quarters, this temporary increase in overhead expenses associated with Acenzia, PRO-DIP, and Terragenx is projected to decrease significantly as the Company integrates and consolidates operations.
  • Subsequent to the quarter end, the Company completed a registered direct offering with accredited institutional investors, resulting in gross proceeds of $15 million to Novo.

Operational Milestones:

  • Acquired 91% of Terragenx and the intellectual property portfolio, in an all-share transaction priced at $3.35 per share, for the unique formulation and manufacturing capability to produce a water-soluble iodine micro-nutrient that is FDA and Health Canada approved for over-the-counter and e-commerce distribution.
  • Established a 50/50 joint venture company, MiTelemed+, with EK-Tech Solutions Inc. to operate, support, and expand access and functionality of EK-Tech’s enhanced proprietary Telehealth platform (“iTelemed”). MiTelemed+, through the iTelemed platform, allows Novo to offer the patient and the practitioner a sophisticated and enhanced telehealth interaction. Through the interface of sophisticated peripheral based diagnostic tools operated by skilled support workers in the patient’s remote location, the practitioner’s ability and comfort to provide a uniquely comprehensive evaluation, diagnosis, and treatment solution is dramatically elevated.

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 multiple patient and consumer touchpoints for 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. For more information on Novo Healthnet Limited, Novo’s wholly owned subsidiary, please visit www.novohealthnet.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, 2021 (unaudited) and August 31, 2021

 

 

 

November 30,

 

August 31,

 

 

2021

 

2021

 

 

(unaudited)

 

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,800,754

 

 

$

8,293,162

 

Accounts receivable, net

 

 

1,696,211

 

 

 

1,468,429

 

Inventory

 

 

364,147

 

 

 

339,385

 

Other receivables, current portion

 

 

1,118,264

 

 

 

814,157

 

Prepaid expenses and other current assets

 

 

263,199

 

 

 

218,376

 

Total current assets

 

 

12,242,575

 

 

 

11,133,509

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

6,096,534

 

 

 

6,070,291

 

Intangible assets, net

 

 

33,821,915

 

 

 

32,436,468

 

Right-of-use assets, net

 

 

2,446,736

 

 

 

2,543,396

 

Other receivables, net of current portion

 

 

370,833

 

 

 

692,738

 

Goodwill

 

 

8,955,694

 

 

 

9,081,879

 

TOTAL ASSETS

 

$

63,934,287

 

 

$

61,958,281

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,314,939

 

 

$

1,449,784

 

Accrued expenses

 

 

1,376,848

 

 

 

1,129,309

 

Accrued interest (principally to related parties)

 

 

370,488

 

 

 

366,280

 

Government loans and notes payable, current portion

 

 

9,674,981

 

 

 

4,485,649

 

Convertible notes payable, net of discount of $702,984

 

 

1,172,016

 

 

 

 

Contingent liability

 

 

741,083

 

 

 

 

Due to related parties

 

 

469,199

 

 

 

478,920

 

Finance lease liability, current portion

 

 

18,921

 

 

 

23,184

 

Operating lease liability, current portion

 

 

514,568

 

 

 

530,797

 

Total current liabilities

 

 

15,653,043

 

 

 

8,463,923

 

 

 

 

 

 

 

 

Debentures, related parties

 

 

968,558

 

 

 

982,205

 

Notes payable, net of current portion

 

 

172,698

 

 

 

5,133,604

 

Finance lease liability, net of current portion

 

 

12,982

 

 

 

16,217

 

Operating lease liability, net of current portion

 

 

1,979,239

 

 

 

2,057,805

 

Deferred tax liability

 

 

1,479,525

 

 

 

1,500,372

 

TOTAL LIABILITIES

 

 

20,266,045

 

 

 

18,154,126

 

 

 

 

 

 

 

 

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, 2021 and August 31, 2021, respectively

 

 

 

 

 

 

Common stock; $0.001 par value; 499,000,000 shares authorized; 28,645,144 and 26,610,144 shares issued and outstanding at November 30, 2021 and August 31, 2021, respectively

 

 

28,645

 

 

 

26,610

 

Additional paid-in capital

 

 

55,092,070

 

 

 

54,579,396

 

Common stock to be issued (4,359,841 and 3,622,199 shares at November 30, 2021 and August 31, 2021)

 

 

10,409,457

 

 

 

9,236,607

 

Other comprehensive income

 

 

887,544

 

 

 

991,077

 

Accumulated deficit

 

 

(22,775,861

)

 

 

(20,969,274

)

Total Novo Integrated Sciences, Inc. stockholders’ equity

 

 

43,641,855

 

 

 

43,864,416

 

Noncontrolling interest

 

 

26,387

 

 

 

(60,261

)

Total stockholders’ equity

 

 

43,668,242

 

 

 

43,804,155

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

63,934,287

 

 

$

61,958,281

 

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three Months Ended November 30, 2021 and 2020 (unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

 

November 30,

 

November 30,

 

 

2021

 

2020

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

Revenues

 

$

3,161,927

 

 

$

2,155,506

 

 

 

 

 

 

 

 

Cost of revenues

 

 

1,895,461

 

 

 

1,344,056

 

 

 

 

 

 

 

 

Gross profit

 

 

1,266,466

 

 

 

811,450

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Selling expenses

 

 

168

 

 

 

1,243

 

General and administrative expenses

 

 

2,629,957

 

 

 

1,567,931

 

Total operating expenses

 

 

2,630,125

 

 

 

1,569,174

 

 

 

 

 

 

 

 

Loss from operations

 

 

(1,363,659

)

 

 

(757,724

)

 

 

 

 

 

 

 

Non operating income (expense)

 

 

 

 

 

 

Interest income

 

 

8,388

 

 

 

8,562

 

Interest expense

 

 

(68,730

)

 

 

(23,941

)

Amortization of debt discount

 

 

(57,840

)

 

 

 

Foreign currency transaction losses

 

 

(334,554

)

 

 

 

Total other income (expense)

 

 

(452,736

)

 

 

(15,379

)

 

 

 

 

 

 

 

Loss before income taxes

 

 

(1,816,395

)

 

 

(773,103

)

 

 

 

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,816,395

)

 

$

(773,103

)

 

 

 

 

 

 

 

Net loss attributed to noncontrolling interest

 

 

(9,808

)

 

 

(1,633

)

 

 

 

 

 

 

 

Net loss attributed to Novo Integrated Sciences, Inc.

 

$

(1,806,587

)

 

$

(771,470

)

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

Net loss

 

 

(1,816,395

)

 

 

(773,103

)

Foreign currency translation (loss) gain

 

 

(103,533

)

 

 

10,596

 

Comprehensive loss:

 

$

(1,919,928

)

 

$

(762,507

)

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic and diluted

 

 

26,924,705

 

 

 

23,508,353

 

 

 

 

 

 

 

 

Net loss per common share – basic and diluted

 

$

(0.07

)

 

$

(0.03

)

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended November 30, 2021 and 2020 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 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

 

Balance, August 31, 2020

 

 

23,466,236

 

 

$

23,466

 

 

$

44,905,454

 

 

$

 

 

$

1,199,696

 

 

$

(16,507,127

)

 

$

29,621,489

 

 

$

(49,859

)

 

$

29,571,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

 

21,905

 

 

 

22

 

 

 

91,978

 

 

 

 

 

 

 

 

 

 

 

 

92,000

 

 

 

 

 

 

92,000

 

Common stock issued for services

 

 

65,000

 

 

 

65

 

 

 

247,935

 

 

 

 

 

 

 

 

 

 

 

 

248,000

 

 

 

 

 

 

248,000

 

Foreign currency translation gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,596

 

 

 

 

 

 

10,596

 

 

 

(225

)

 

 

10,371

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(771,470

)

 

 

(771,470

)

 

 

(1,633

)

 

 

(773,103

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, November 30, 2020

 

 

23,553,141

 

 

$

23,553

 

 

$

45,245,367

 

 

$

 

 

$

1,210,292

 

 

$

(17,278,597

)

 

$

29,200,615

 

 

$

(51,717

)

 

$

29,148,898

 

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended November 30, 2021 and 2020 (unaudited)

 

 

Three Months Ended

 

 

November 30,

 

November 30,

 

 

2021

 

2020

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(1,816,395

)

 

$

(773,103

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

694,282

 

 

 

357,924

 

Fair value of vested stock options

 

 

154,135

 

 

 

 

Common stock issued for services

 

 

64,750

 

 

 

248,000

 

Operating lease expense

 

 

163,879

 

 

 

149,379

 

Amortization of debt discount

 

 

57,840

 

 

 

 

Foreign currency transaction losses

 

 

334,554

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(253,079

)

 

 

274,577

 

Inventory

 

 

12,245

 

 

 

 

Prepaid expenses and other current assets

 

 

(47,335

)

 

 

(300,743

)

Accounts payable

 

 

(55,056

)

 

 

8,552

 

Accrued expenses

 

 

82,933

 

 

 

31,067

 

Accrued interest

 

 

9,481

 

 

 

2,858

 

Operating lease liability

 

 

(161,337

)

 

 

(146,614

)

Net cash used in operating activities

 

 

(759,103

)

 

 

(148,103

)

 

 

 

 

 

 

 

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

 

 

(3,127

)

 

 

(48,389

)

Repayments of finance leases

 

 

(7,088

)

 

 

 

Proceeds from the sale of common stock, net of offering costs

 

 

 

 

 

92,000

 

Proceeds from issuance of convertible notes, net

 

 

1,410,000

 

 

 

 

Net cash provided by financing activities

 

 

1,399,785

 

 

 

43,611

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(41,984

)

 

 

7,165

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

507,592

 

 

 

(97,327

)

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

8,293,162

 

 

 

2,067,718

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

8,800,754

 

 

$

1,970,391

 

 

 

 

 

 

 

 

CASH PAID FOR:

 

 

 

 

 

 

Interest

 

$

64,522

 

 

$

19,642

 

Income taxes

 

$

 

 

$

 

 

 

 

 

 

 

 

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

Common stock to be issued for intangible assets

 

$

188,925

 

 

$

 

Common stock to be issued for acquisition

 

$

983,925

 

 

$

 

 





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