Novo Integrated Sciences Reports Fiscal Year 2023 Second Quarter Financial Results

26 May 2023
www.businesswire.com
Financial Statement
BELLEVUE, Wash.--(BUSINESS WIRE)--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 February 28, 2023.
Robert Mattacchione, Novo’s CEO and Board Chairman, stated, “During the fiscal year 2023 second quarter period, the Company paid a total of $9,086,050 to certain note holders upon conversion of their notes. Additionally, the Company announced the signing of agreements for an unsecured, non-dilutive 15-year debt instrument, with a principal sum of $70,000,000, which provides for the Company to receive net proceeds of approximately $55,000,000 after fees. In today’s environment of tight capital markets and expensive capital raises, this cash infusion is consequential and will provide the Company with the foundational capital and repayment terms required to support and accelerate the further implementation and growth of Novo’s three-pillar business model.”
Financial Highlights for the three month period ended February 28, 2023:
Cash and cash equivalents were $609,738, total assets were $36.5 million, total liabilities were $9.5 million, and stockholders’ equity was $27.2 million.
Revenues were $2,556,509, representing a decrease of $312,714, or 11%, from $2,869,223 for the same period in 2022. The decrease in revenue is principally due to the decrease in outsourced product sales and IoNovo Iodine. Acenzia’s and Terragenx’s revenue for the three months ended February 28, 2023 was $458,920 and $32,167, respectively. Revenue from our healthcare services increased by 9% when comparing the revenue for the three months ended February 28, 2022.
Operating costs were $2,757,713, representing a decrease of $579,317, or 17%, from $3,337,030 for the same period in 2022. The decrease in operating costs is principally due to the decrease in overhead expenses and depreciation and amortization.
Net loss attributed to Novo Integrated Sciences, Inc. for the three months ended February 28, 2023 was $4,621,355, representing a decrease of $183,812, or 4%, from $4,805,167 for the same period in 2022. The decrease in net loss is principally due to the decrease in operating expenses.
On February 23, 2023, the Company issued a $573,000 promissory note (12% per annum interest rate) and completed the related Securities Purchase Agreement with Mast Hill Fund, L.P. for gross proceeds of $515,700. The Company granted 5-year warrants with an exercise price of $0.25 per share and issued 955,000 restricted shares to Mast Hill Fund, L.P.
On April 26, 2023, the Company entered into a securities purchase agreement with RC Consulting Group LLC in favor of SCP Tourbillion Monaco or registered assigns pursuant to which the Company issued an unsecured 15-year promissory note to the RC Noteholder (the “RC Note”) with a maturity date of April 26, 2038, in the principal sum of $70,000,000, which amount represents the $57,000,000 purchase price plus a yield (non-compounding) of 1.52% (zero coupon) per annum from April 26, 2023 until the same becomes due and payable as provided in the RC Note.
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 February 28, 2023 (unaudited) and August 31, 2022
February 28,
August 31,
2023
2022
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$
609,738
$
2,178,687
Accounts receivable, net
923,556
1,017,405
Inventory, net
925,107
879,033
Other receivables
1,045,619
1,085,335
Prepaid expenses and other current assets
546,604
571,335
Total current assets
4,050,624
5,731,795
Property and equipment, net
5,449,163
5,800,648
Intangible assets, net
17,199,620
18,840,619
Right-of-use assets, net
2,250,442
2,673,934
Goodwill
7,539,469
7,825,844
TOTAL ASSETS
$
36,489,318
$
40,872,840
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
$
2,040,073
$
1,800,268
Accrued expenses
1,222,832
1,116,125
Accrued interest (including amounts to related parties)
469,308
454,189
Government loans and notes payable, current portion
92,050
-
Convertible notes payable, net of discount of $307,623
421,489
9,099,654
Contingent liability
62,388
534,595
Due to related parties
468,749
478,897
Debentures, related parties, current portion
911,623
-
Finance lease liability, current portion
15,938
8,890
Operating lease liability, current portion
473,628
582,088
Total current liabilities
6,178,078
14,074,706
Debentures, related parties, net of current portion
-
946,250
Government loans and notes payable, net of current portion
64,977
161,460
Finance lease liability, net of current portion
-
12,076
Operating lease liability, net of current portion
1,890,624
2,185,329
Deferred tax liability
1,392,553
1,445,448
TOTAL LIABILITIES
9,526,232
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 February 28, 2023 and August 31, 2022, respectively
-
-
Common stock; $0.001 par value; 499,000,000 shares authorized; 139,626,576 and 31,180,603 shares issued and outstanding at February 28, 2023 and August 31, 2022, respectively
139,626
31,181
Additional paid-in capital
88,320,971
66,056,824
Common stock to be issued (911,392 and 4,149,633 shares at February 28, 2023 and August 31, 2022)
1,217,293
9,474,807
Other comprehensive (loss) income
(51,993
)
560,836
Accumulated deficit
(62,375,257
)
(53,818,489
)
Total Novo Integrated Sciences, Inc. stockholders’ equity
27,250,640
22,305,159
Noncontrolling interest
(287,554
)
(257,588
)
Total stockholders’ equity
26,963,086
22,047,571
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
36,489,318
$
40,872,840
NOVO INTEGRATED SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the Three and Six Months Ended February 28, 2023 and 2022 (unaudited)
Three Months Ended
Six Months Ended
February 28,
February 28,
February 28,
February 28,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
$
2,556,509
$
2,869,223
$
5,975,789
$
6,031,150
Cost of revenues
1,585,606
1,652,869
3,265,353
3,548,330
Gross profit
970,903
1,216,354
2,710,436
2,482,820
Operating expenses:
Selling expenses
707
26,370
8,039
26,538
General and administrative expenses
2,757,006
3,310,660
6,731,167
5,940,617
Total operating expenses
2,757,713
3,337,030
6,739,206
5,967,155
Loss from operations
(1,786,810
)
(2,120,676
)
(4,028,770
)
(3,484,335
)
Non-operating income (expense)
Interest income
2,243
8,490
4,524
16,878
Interest expense
(123,866
)
(1,226,182
)
(291,109
)
(1,294,912
)
Amortization of debt discount
(2,740,349
)
(1,463,022
)
(4,230,862
)
(1,520,862
)
Foreign currency transaction gain (loss)
3,620
(66,814
)
(35,681
)
(401,368
)
Total other income (expense)
(2,858,352
)
(2,747,528
)
(4,553,128
)
(3,200,264
)
Loss before income taxes
(4,645,162
)
(4,868,204
)
(8,581,898
)
(6,684,599
)
Income tax expense
-
-
-
-
Net loss
$
(4,645,162
)
$
(4,868,204
)
$
(8,581,898
)
$
(6,684,599
)
Net loss attributed to noncontrolling interest
(23,807
)
(63,037
)
(25,130
)
(72,845
)
Net loss attributed to Novo Integrated Sciences, Inc.
(4,621,355
)
$
(4,805,167
)
(8,556,768
)
$
(6,611,754
)
Comprehensive loss:
Net loss
(4,645,162
)
(4,868,204
)
(8,581,898
)
(6,684,599
)
Foreign currency translation (loss) gain
(196,683
)
115,093
(617,665
)
10,705
Comprehensive loss:
$
(4,841,845
)
$
(4,753,111
)
$
(9,199,563
)
$
(6,673,894
)
Weighted average common shares outstanding - basic and diluted
79,334,919
28,740,700
56,469,365
27,827,686
Net loss per common share - basic and diluted
$
(0.06
)
$
(0.17
)
$
(0.15
)
$
(0.24
)
NOVO INTEGRATED SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three and Six Months Ended February 28, 2023 and 2022 (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
Share issuance for convertible debt settlement
93,109,398
93,110
8,992,941
-
-
-
9,086,051
-
9,086,051
Cashless exercise of warrants
1,159,348
1,159
281,374
-
-
-
282,533
-
282,533
Exercise of warrants for cash
1,310,000
1,310
129,690
-
-
-
131,000
-
131,000
Issuance of common stock to be issued
3,202,019
3,201
8,161,947
(8,165,148
)
-
-
-
-
-
Shares issued with convertible notes
955,000
955
82,008
-
-
-
82,963
-
82,963
Value of warrants issued with convertible notes
-
-
86,327
-
-
-
86,327
-
86,327
Fair value of stock options
-
-
60,887
-
-
-
60,887
-
60,887
Extinguishment of derivative liability due to conversion
-
-
1,390,380
-
-
-
1,390,380
-
1,390,380
Foreign currency translation loss
-
-
-
-
(195,821
)
-
(195,821
)
(862
)
(196,683
)
Net loss
-
-
-
-
-
(4,621,355
)
(4,621,355
)
(23,807
)
(4,645,162
)
Balance, February 28, 2023
139,626,576
$
139,626
$
88,320,971
$
1,217,293
$
(51,993
)
$
(62,375,257
)
$
27,250,640
$
(287,554
)
$
(26,963,086
)
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
Common stock for services
240,000
240
297,760
-
-
-
298,000
-
298,000
Value of warrants issued with convertible notes
-
-
5,257,466
-
-
-
5,257,466
-
5,257,466
Fair value of stock options
-
-
44,427
-
-
-
44,427
-
44,427
Foreign currency translation gain
-
-
-
-
114,738
-
114,738
355
115,093
Net loss
-
-
-
-
-
(4,805,167
)
(4,805,167
)
(63,037
)
(4,868,204
)
Balance, February 28, 2022
28,885,144
$
28,885
$
60,691,723
$
10,409,457
$
1,002,282
$
(27,581,028
)
$
44,551,319
$
(36,295
)
$
44,515,024
NOVO INTEGRATED SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended February 28, 2023 and 2022 (unaudited)
Six Months Ended
February 28,
February 28,
2023
2022
(unaudited)
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(8,581,898
)
$
(6,684,599
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
1,138,797
1,467,837
Fair value of vested stock options
121,774
198,562
Common stock issued for services
-
362,750
Financing costs for debt extension
1,421,583
-
Operating lease expense
419,256
289,626
Amortization of debt discount
4,230,862
1,520,862
Foreign currency transaction losses
35,681
401,368
Changes in operating assets and liabilities:
Accounts receivable
57,936
213,125
Inventory
(78,898
)
46,135
Prepaid expenses and other current assets
6,143
(285,444
)
Accounts payable
299,881
(422,847
)
Accrued expenses
148,918
(111,479
)
Accrued interest
28,226
277,075
Operating lease liability
(405,082
)
(282,703
)
Net cash used in operating activities
(1,156,821
)
(3,009,732
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment
-
(192,536
)
Cash acquired with acquisition
-
29,291
Net cash used in investing activities
-
(163,245
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayments to) related parties
6,138
(4,350
)
Repayments of finance leases
(4,299
)
(10,934
)
Repayments of notes payable
-
(4,415,000
)
Proceeds from the sale of common stock, net of offering costs
1,795,000
-
Proceeds from exercise of warrants
131,000
-
Repayment of convertible notes
(2,977,778
)
-
Proceeds from issuance of convertible notes, net
445,235
15,270,000
Net cash (used in) provided by financing activities
(604,704
)
10,839,716
Effect of exchange rate changes on cash and cash equivalents
192,576
(15,904
)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(1,568,949
)
7,650,835
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
2,178,687
8,293,162
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
609,738
$
15,943,997
CASH PAID FOR:
Interest
$
275,990
$
1,294,912
Income taxes
$
-
$
-
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for convertible debt settlement
$
9,086,051
$
-
Common stock to be issued for intangible assets
$
-
$
188,925
Common stock to be issued for acquisition
$
-
$
983,925
Debt discount recognized on derivative liability
$
1,390,380
$
-
Debt discount recognized on convertible note
$
297,055
$
-
Extinguishment of derivative liability due to conversion
$
1,390,380
$
-
Common stock issued with convertible notes
$
82,963
$
-
Warrants issued with convertible notes
$
86,327
$
-
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