NVOS - Novo Integrated Sciences Reports Fiscal Year 2024 Second Quarter Financial Results

April, 15 2024 04:30 PM Novo Integrated Sciences Inc.

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 second fiscal quarter ended February 29, 2024.

Robert Mattacchione, Novo’s CEO and Board Chairman, stated, “The Company’s fiscal year 2024 second quarter period emphasized maximizing operational efficiencies pointed towards future cost savings and margin improvement. The Company continues to work with certain prospective financial partners to close previously announced non-traditional financing opportunities to raise foundational capital with repayment terms necessary to support and accelerate the further growth of Novo’s three-pillar business model. The Company remains committed to the commercialization of its proprietary product offerings and the expansion and delivery of its essential services and solutions for how non-catastrophic healthcare is delivered both now and in the future.”

Financial Highlights for the three-month period ended February 29, 2024:

Cash and cash equivalents were $651,747, total assets were $34,949,271, total liabilities were $13,058,987, and stockholders’ equity was $21,890,284.
Revenues were $3,170,592, representing an increase of $614,083, or 24%, from $2,556,509 for the three months ended February 28, 2023. The increase in revenue is principally due to an increase in product sales. Acenzia’s and Terragenx’s revenue for the three months ended February 29, 2024 were $884,396 and $103,399, respectively. Revenue from our healthcare services increased by 3.4% when comparing the revenue for the three months ended February 29, 2024 to the three months ended February 28, 2023.
Operating costs were $2,863,854, representing an increase of $106,141, or 4%, from $2,757,713 for the three months ended February 28, 2023. The increase in operating costs was principally due to higher fair value of stock options issued during the three months.
Net loss attributed to the Company for the three months ended February 29, 2024 was $2,746,128, representing a decrease of $1,875,227, or 41%, from $4,621,355 for the three months ended February 28, 2023. The decrease in net loss was principally due to the increase in gross profit and lower amount of other expenses.
On December 21, 2023, the total principal and interest of $449,535 owed on the $445,000 Mast Hill Fund, LP promissory note, dated June 20, 2023, was converted to 457,128 shares of the Company’s common stock and paid in full.

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 29, 2024 (unaudited) and August 31, 2023









February 29,


August 31,



2024


2023

ASSETS








Current Assets:








Cash and cash equivalents

$
651,747


$
416,323

Accounts receivable, net


2,153,914



1,467,028

Inventory, net


947,351



1,106,983

Other receivables


1,048,596



1,051,584

Prepaid expenses and other current assets


217,619



346,171

Total current assets


5,019,227



4,388,089










Property and equipment, net


5,246,241



5,390,038

Intangible assets, net


15,205,967



16,218,539

Right-of-use assets, net


1,916,900



1,983,898

Goodwill


7,560,936



7,582,483

TOTAL ASSETS

$
34,949,271


$
35,563,047










LIABILITIES AND STOCKHOLDERS’ EQUITY

















Current Liabilities:








Accounts payable

$
2,173,667


$
3,513,842

Accrued expenses


1,328,828



1,233,549

Accrued interest (including amounts to related parties)


477,480



382,666

Government loans and notes payable, current portion


93,488



277,405

Convertible notes payable, net of discount of $2,004,245


1,773,533



558,668

Derivative liability


2,312,921



–

Contingent liability


27,756



61,767

Debentures, related parties


914,219



916,824

Due to related parties


434,039



533,001

Finance lease liability


5,788



11,744

Operating lease liability, current portion


417,342



415,392

Total current liabilities


9,959,061



7,904,858










Government loans and notes payable, net of current portion


64,016



65,038

Operating lease liability, net of current portion


1,639,391



1,693,577

Deferred tax liability


1,396,519



1,400,499

TOTAL LIABILITIES


13,058,987



11,063,972










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 29, 2024 and August 31, 2023, respectively


–



–

Common stock; $0.001 par value; 499,000,000 shares authorized; 17,748,320 and 15,759,325 shares issued and outstanding at February 29, 2024 and August 31, 2023, respectively


17,749



15,760

Additional paid-in capital


96,082,626



90,973,316

Common stock to be issued (17,375 and 91,138 shares at February 29, 2024 and August 31, 2023)


44,443



1,217,293

Other comprehensive gain (loss)


503,381



(357,383
)
Accumulated deficit


(74,459,512
)


(67,033,041
)
Total Novo Integrated Sciences, Inc. stockholders’ equity


22,188,687



24,815,945

Noncontrolling interest


(298,403
)


(316,870
)
Total stockholders’ equity


21,890,284



24,499,075

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$
34,949,271


$
35,563,047

* The condensed consolidated balance sheets’ common stock amounts have been retroactively adjusted to account for the Company’s 1:10 reverse stock split, effective November 7, 2023.


NOVO INTEGRATED SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the Three and Six Months Ended February 29, 2024 and February 28, 2023 (unaudited)




























Three Months Ended


Six Months Ended



February 29,


February 28,


February 29,


February 28,



2024


2023


2024


2023














Revenues

$
3,170,592


$
2,556,509


$
7,061,810


$
5,975,789


















Cost of revenues


1,846,506



1,585,606



3,793,706



3,265,353


















Gross profit


1,324,086



970,903



3,268,104



2,710,436


















Operating expenses:
















Selling expenses


2,590



707



12,176



8,039

General and administrative expenses


2,861,264



2,757,006



8,113,333



6,731,167

Total operating expenses


2,863,854



2,757,713



8,125,509



6,739,206


















Loss from operations


(1,539,768
)


(1,786,810
)


(4,857,405
)


(4,028,770
)

















Non-operating income (expense)
















Interest income


2,477



2,243



4,696



4,524

Interest expense


(138,684
)


(123,866
)


(282,058
)


(291,109
)
Other expense


(308,763
)


—



(960,937
)


—

Change in fair value of derivative liability


373,339



—



958,868



—

Amortization of debt discount


(1,114,573
)


(2,740,349
)


(2,190,501
)


(4,230,862
)
Foreign currency transaction (loss) gain


(19,588
)


3,620



(78,946
)


(35,681
)
Total other expense


(1,205,792
)


(2,858,352
)


(2,548,878
)


(4,553,128
)

















Loss before income taxes


(2,745,560
)


(4,645,162
)


(7,406,283
)


(8,581,898
)

















Income tax expense


—



—



—



—


















Net loss

$
(2,745,560
)

$
(4,645,162
)

$
(7,406,283
)

$
(8,581,898
)

















Net income (loss) attributed to noncontrolling interest


568



(23,807
)


20,188



(25,130
)

















Net loss attributed to Novo Integrated Sciences, Inc.

$
(2,746,128
)

$
(4,621,355
)

$
(7,426,471
)

$
(8,556,768
)

















Comprehensive loss:
















Net loss


(2,745,560
)


(4,645,162
)


(7,406,283
)


(8,581,898
)
Foreign currency translation gain (loss)


750,067



(196,683
)


860,764



(617,665
)
Comprehensive loss:

$
(1,995,493
)

$
(4,841,845
)

$
(6,545,519
)

$
(9,199,563
)

















Weighted average common shares outstanding - basic and diluted


17,642,829



7,933,492



17,184,569



5,646,937


















Net loss per common share - basic and diluted

$
(0.16
)

$
(0.59
)

$
(0.43
)

$
(1.52
)

* The condensed consolidated statements of operations and comprehensive loss’s share and per share amounts have been retroactively adjusted to account for the Company’s 1:10 reverse stock split, effective November 7, 2023.


NOVO INTEGRATED SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY For the Three and Six Months Ended February 29, 2024 and February 28, 2023 (unaudited)

































Additional


Common


Other





Novo









Common Stock


Paid-in


Stock To


Comprehensive


Accumulated


Stockholders’


Noncontrolling


Total



Shares


Amount


Capital


Be Issued


Income (Loss)


Deficit


Equity


Interest


Equity

Balance, August 31, 2023


15,759,325


$
15,760


$
90,973,316


$
1,217,293


$
(357,383
)

$
(67,033,041
)

$
24,815,945


$
(316,870
)

$
24,499,075

Cashless exercise of warrants


245,802



246



1,323,152



–



–



–



1,323,398



–



1,323,398

Exercise of warrants for cash


240,400



240



240,160



–



–



–



240,400



–



240,400

Share issuance for convertible debt settlement


519,845



520



577,002



–



–



–



577,522



–



577,522

Issuance of common stock to be issued


73,767



74



1,172,776



(1,172,850
)


–



–



–



–



–

Common stock issued for services


424,080



424



1,194,976



–



–



–



1,195,400



–



1,195,400

Reverse stock split share rounding


27,973



28



(28
)


–



–



–



–



–



–

Foreign currency translation loss


–



–



–



–



110,895



–



110,895



(1,919
)


108,976

Net loss


–



–



–



–



–



(4,680,343
)


(4,680,343
)


19,620



(4,660,723
)
Balance, November 30, 2023


17,291,192


$
17,292


$
95,481,354


$
44,443


$
(246,488
)

$
(71,713,384
)

$
23,583,217


$
(299,169
)

$
23,284,048






































Share issuance for convertible debt settlement


457,128



457



453,616



–



–



–



454,073



–



454,073

Foreign currency translation gain


–



–



–



–



749,869



–



749,869



198



750,067

Fair value of stock options


–



–



147,656



–



–



–



147,656



–



147,656

Net loss


–



–



–



–



–



(2,746,128
)


(2,746,128
)


568



(2,745,560
)
Balance, February 29, 2024


17,748,320


$
17,749


$
96,082,626


$
44,443


$
503,381


$
(74,459,512
)

$
22,188,687


$
(298,403
)

$
21,890,284









Additional


Common


Other





Novo









Common Stock


Paid-in


Stock To


Comprehensive


Accumulated


Stockholders’


Noncontrolling


Total



Shares


Amount


Capital


Be Issued


Income (Loss)


Deficit


Equity


Interest


Equity

Balance, August 31, 2022


3,118,063


$
3,118


$
66,084,887


$
9,474,807


$
560,836


$
(53,818,489
)

$
22,305,159


$
(257,588
)

$
22,047,571

Common stock issued for cash, net of offering costs


400,000



400



1,794,600



–



–



–



1,795,000



–



1,795,000

Issuance of common stock to be issued


3,623



4



92,362



(92,366
)


–



–



–



–



–

Cashless exercise of warrants


467,399



467



1,138,583



–



–



–



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


3,989,085


$
3,989


$
69,171,319


$
9,382,441


$
143,828


$
(57,753,902
)

$
20,947,675


$
(262,885
)

$
20,684,790






































Share issuance for convertible debt settlement


9,310,940



9,311



9,076,740



–



–



–



9,086,051



–



9,086,051

Cashless exercise of warrants


115,935



116



282,417



–



–



–



282,533



–



282,533

Exercise of warrants for cash


131,000



131



130,869



–



–



–



131,000



–



131,000

Issuance of common stock to be issued


320,202



320



8,164,828



(8,165,148
)


–



–



–



–



–

Shares issued with convertible notes


95,500



96



82,868



–



–



–



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


13,962,662


$
13,963


$
88,446,635


$
1,217,293


$
(51,993
)

$
(62,375,257
)

$
27,250,640


$
(287,554
)

$
26,963,086

* The condensed consolidated statements of stockholders’ equity share amounts have been retroactively adjusted to account for the Company’s 1:10 reverse stock split, effective November 7, 2023.


NOVO INTEGRATED SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended February 29, 2024 and February 28, 2023 (unaudited)
















Six Months Ended



February 29,


February 28,



2024


2023








CASH FLOWS FROM OPERATING ACTIVITIES:








Net loss

$
(7,406,283
)

$
(8,581,898
)
Adjustments for non-cash items:








Depreciation and amortization


1,140,613



1,138,797

Fair value of vested stock options


147,656



121,774

Change in fair value of derivative liability


(958,868
)


—

Cashless exercise of warrants


1,323,398



1,421,583

Common stock issued for services


1,195,400



—

Operating lease expense


308,867



419,256

Amortization of debt discount


2,190,501



4,230,862

Foreign currency transaction losses


78,946



35,681

Changes in operating assets and liabilities:








Accounts receivable


(691,424
)


57,936

Inventory


157,116



(78,898
)
Prepaid expenses and other current assets


127,885



6,143

Accounts payable


(1,333,031
)


299,881

Accrued expenses


98,987



148,918

Accrued interest


63,151



28,226

Operating lease liability


(308,867
)


(405,082
)
Net cash used in operating activities


(3,865,953
)


(1,156,821
)









CASH FLOWS FROM FINANCING ACTIVITIES:








(Repayments to) proceeds from related parties


(64,837
)


6,138

Proceeds from notes payable


145



—

Repayments of notes payable


(184,475
)


—

Repayments of finance leases


(5,931
)


(4,299
)
Proceeds from issuance of convertible notes, net


3,314,153



445,235

Repayment of convertible notes


—



(2,977,778
)
Proceeds from the sale of common stock, net of offering costs


—



1,795,000

Proceeds from exercise of warrants


240,400



131,000

Net cash provided by (used in) financing activities


3,299,455



(604,704
)









Effect of exchange rate changes on cash and cash equivalents


801,922



192,576










NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


235,424



(1,568,949
)









CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


416,323



2,178,687










CASH AND CASH EQUIVALENTS, END OF PERIOD

$
651,747


$
609,738










CASH PAID FOR:








Interest

$
158,367


$
275,990

Income taxes

$
—


$
—










SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:








Common stock issued for convertible debt settlement

$
1,031,595


$
9,086,051

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20240415120487/en/

Chris David, COO-President
Novo Integrated Sciences, Inc.
chris.david@novointegrated.com
(888) 512-1195

Company Name:	Novo Integrated Sciences Inc.
Stock Symbol:	NVOS
Market:	OTC
Website:	novointegrated.com