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Novo Integrated Sciences Reports Fiscal Year 2024 Second Quarter Financial Results

By: Novo Integrated Sciences, Inc. via Business Wire

April 15, 2024 at 16:30 PM EDT

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/

Contacts

Chris David, COO-President

Novo Integrated Sciences, Inc.

chris.david@novointegrated.com

(888) 512-1195

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