Novo Integrated Sciences Reports 2023 Fiscal Year Financial Results

Rhea-AI Summary

Novo Integrated Sciences, Inc. (NVOS) reported financial results for the fiscal year ended August 31, 2023, emphasizing cost savings, margin stability, and commercialization of proprietary products. The company's cash position, with $416.3 thousand in cash and cash equivalents, focused on raising capital through non-dilutive structures. Revenues increased by 7% to $12,572,019, primarily due to an increase in product sales. Operating costs decreased by 55% to $13,505,877, resulting in a net loss of $13,214,552. The company issued $16,666,666 in senior secured convertible notes and entered into various operational milestones, including joint venture agreements and regulatory approvals.

Positive

• Revenues increased by 7% to $12,572,019, driven by an increase in product sales.
• Operating costs decreased by 55% to $13,505,877, leading to a net loss of $13,214,552, representing a 60% decrease from the previous year.
• The company regained compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market.

Negative

• The company's cash position is relatively low, with $416.3 thousand in cash and cash equivalents.
• The net loss for the year ended August 31, 2023, was $13,214,552.

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 providing services and product innovation, today reported its financial results for the fiscal year ended August 31, 2023.

Robert Mattacchione, the Company’s CEO and Board Chairman, stated, “The 2023 fiscal year emphasized maximizing efficiencies pointed toward future cost savings and margin stability. The Company remains committed to the commercialization of its proprietary product offerings and the expansion and delivery of its essential services and solutions to the rapidly evolving fundamental transformation of how non-catastrophic healthcare is delivered both now and in the future. Specific to increasing the Company’s cash position, management is primarily focused on raising capital through non-dilutive structures and solutions.”

Financial Info for the Fiscal Year Ended August 31, 2023:

• As of August 31, 2023, the Company’s cash and cash equivalents were $416.3 thousand, total assets were $35.56 million, total liabilities were $11.06 million, and stockholders’ equity was $24.81 million.
• Revenues for the year ended August 31, 2023 were $12,572,019, representing an increase of $834,082, or 7%, from $11,737,937 for the same period in 2022. The increase in revenue is principally due to an increase in product sales. Acenzia’s and Terragenx’s revenue for the year ended August 31, 2023 was $3,817,346 and $53,751, respectively. Revenue from our healthcare services decreased by 2%, when comparing the revenue for the year ended August 31, 2023 to the same period in 2022.
• Operating costs for the year ended August 31, 2023 were $13,505,877, representing a decrease of $16,320,038, or 55%, from $29,825,915 for the same period in 2022. The decrease in operating costs is principally due to (i) the decrease in overhead expenses associated with the operations of Acenzia, PRO-DIP, and Terragenx, and (ii) no further impairment of intangible assets and goodwill being recognized in the year ended August 31, 2023.
• Net loss attributed to Novo Integrated Sciences for the year ended August 31, 2023 was $13,214,552, representing a decrease of $19,634,663, or 60%, from $32,849,215 for the same period in 2022. The decrease in net loss was principally due to (i) a decrease in overhead expenses associated with the operations of Acenzia, PRO-DIP, and Terragenx which was approximately $4,902,925 for the year ended August 31, 2023, (ii) a decrease in interest expenses, and (iii) no further impairment of intangible assets and goodwill being recognized in the year ended August 31, 2023.
• On December 14, 2021, the Company issued two senior secured convertible notes payable for a total of $16,666,666 (the “$16.66m Notes”), with each note having a face amount of $8,333,333. During the year ended August 31, 2023, the Company made (i) cash payments in the aggregate amount of $3,001,442, principal and interest, and (ii) an aggregate of $8,429,225 in principal and interest was converted into 8,527,835 shares of common stock issued to the $16.66m Note holders.

Operational Milestones for the Fiscal Year Ended August 31, 2023:

• The Company and Farm 7 Group Inc., a Canada corporation (“F7”), entered into a joint venture agreement (the “JV Agreement”) relating to the development, administration, and arrangement of structured financing for the implementation and commencement of the Kenya Agricultural Cooperative Project, a Kenya centric agricultural project with finalized and executed uptake contracts for food-based agricultural goods on up to 9 million hectares with potential revenue up to $350,000,000. The JV Agreement, which has an initial term of 30 years, provides for the annual distribution of the net profits 75% to F7 and 25% to Novo.
• IoNovo Iodine and IoNovo for Kids Pure Iodine oral sprays granted a registration number and received regulatory approval by Turkey’s Ministry of Health as a dietary supplement determined to be safe, effective, of high quality, and eligible for sale in Turkey.
• The Company received court approval from the United States District Court for the Central District of California for the Purchase and Sale Agreement which provides for the Company to acquire a certain collection of 43 gemstones, 42 of which are certified by the Gemological Institute of America, known as the “Ophir Collection”, for $60,000,000.
• The Company entered into a Master Collaboration Agreement with Psychocare Health Pvt. Ltd. India (“PCHPL”), commencing a strategic initiative to introduce new products and state-of-the-art healthcare technologies to the Indian market, with plans to extend healthcare related products to the North American market, providing Novo with access to PCHPL’s over 500 India based franchisee distributors, and providing Novo with an opportunity to integrate into PCHPL's supply chain. This strategic move is expected to optimize manufacturing processes and enhance market access for Novo brands and products.

Corporate Highlights:

• Subsequent to the fiscal year end, Nasdaq informed the Company that it has regained compliance with the minimum bid price requirement as set forth under Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market.

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 . For more information on NHL, 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. CONSOLIDATED BALANCE SHEETS As of August 31, 2023 and 2022
		August 31,				August 31,
		2023				2022
ASSETS
Current Assets:
Cash and cash equivalents		$	416,323			$	2,178,687
Accounts receivable, net			1,467,028				1,017,405
Inventory, net			1,106,983				879,033
Other receivables			1,051,584				1,085,335
Prepaid expenses and other current assets			346,171				571,335
Total current assets			4,388,089				5,731,795
Property and equipment, net			5,390,038				5,800,648
Intangible assets, net			16,218,539				18,840,619
Right-of-use assets, net			1,983,898				2,673,934
Goodwill			7,582,483				7,825,844
TOTAL ASSETS		$	35,563,047			$	40,872,840
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	3,513,842			$	1,800,268
Accrued expenses			1,233,549				1,116,125
Accrued interest (including amounts to related parties)			382,666				454,189
Government loans and notes payable, current portion			277,405				-
Convertible notes payable, net of discount of $459,332			558,668				9,099,654
Contingent liability			61,767				534,595
Debentures, related parties, current portion			916,824				-
Due to related parties			533,001				478,897
Finance lease liability, current portion			11,744				8,890
Operating lease liability, current portion			415,392				582,088
Total current liabilities			7,904,858				14,074,706
Debentures, related parties, net of current portion			-				946,250
Government loans and notes payable, net of current portion			65,038				161,460
Finance lease liability, net of current portion			-				12,076
Operating lease liability, net of current portion			1,693,577				2,185,329
Deferred tax liability			1,400,499				1,445,448
TOTAL LIABILITIES			11,063,972				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 August 31, 2023 and August 31, 2022, respectively			-				-
Common stock; $0.001 par value; 499,000,000 shares authorized; 15,759,325 and 3,118,063 shares issued and outstanding at August 31, 2023 and August 31, 2022, respectively			15,760				3,118
Additional paid-in capital			90,973,316				66,084,887
Common stock to be issued (91,138 and 414,965 shares at August 31, 2023 and August 31, 2022)			1,217,293				9,474,807
Other comprehensive (loss) income			(357,383	)			560,836
Accumulated deficit			(67,033,041	)			(53,818,489	)
Total Novo Integrated Sciences, Inc. stockholders’ equity			24,815,945				22,305,159
Noncontrolling interest			(316,870	)			(257,588	)
Total stockholders’ equity			24,499,075				22,047,571
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	35,563,047			$	40,872,840

* The consolidated balance sheets’ common stock 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. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the Years Ended August 31, 2023 and 2022
		Years Ended
		August 31,				August 31,
		2023				2022
Revenues		$	12,572,019			$	11,737,937
Cost of revenues			7,619,304				6,938,699
Gross profit			4,952,715				4,799,238
Operating expenses:
Selling expenses			15,149				20,702
General and administrative expenses			13,490,728				14,364,639
Impairment of assets			-				14,083,531
Goodwill impairment			-				1,357,043
Total operating expenses			13,505,877				29,825,915
Loss from operations			(8,553,162	)			(25,026,677	)
Non-operating income (expense)
Interest income			9,027				169,088
Interest expense			(360,571	)			(1,594,275	)
Other income			607,589				-
Amortization of debt discount			(4,757,121	)			(5,973,973	)
Foreign currency transaction losses			(215,206	)			(641,643	)
Total other income (expense)			(4,716,282	)			(8,040,803	)
Loss before income taxes			(13,269,444	)			(33,067,480	)
Income tax expense (recovery)			-				(22,302	)
Net loss		$	(13,269,444	)		$	(33,045,178	)
Net loss attributed to noncontrolling interest			(54,892	)			(195,963	)
Net loss attributed to Novo Integrated Sciences, Inc.		$	(13,214,552	)		$	(32,849,215	)
Comprehensive loss:
Net loss			(13,269,444	)			(33,045,178	)
Foreign currency translation loss			(922,609	)			(431,605	)
Comprehensive loss:		$	(14,192,053	)		$	(33,476,783	)
Weighted average common shares outstanding - basic and diluted			10,165,548				2,913,263
Net loss per common share - basic and diluted		$	(1.30	)		$	(11.28	)

* The 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. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY For the Years Ended August 31, 2023 and 2022
		Common Stock								Additional Paid-in				Common Stock To				Other Comprehensive				Accumulated				Total Novo Stockholders’				Noncontrolling
		Shares				Amount				Capital				Be Issued				Income				Deficit				Equity				Interest				Total Equity
Balance, August 31, 2021			2,661,014			$	2,661			$	54,603,345			$	9,236,607			$	991,077			$	(20,969,274	)		$	43,864,416			$	(60,261	)		$	43,804,155
Common stock for services			75,000				75				1,329,675				-				-				-				1,329,750				-				1,329,750
Common stock issued as collateral and held in escrow			200,000				200				(200	)			-				-				-				-				-				-
Common stock for conversion of convertible notes			63,653				64				1,272,930				-				-				-				1,272,994				-				1,272,994
Common stock issued for acquisitions			80,000				80				1,703,920				-				-				-				1,704,000				-				1,704,000
Common stock to be issued for acquisitions			-				-				-				1,433,475				-				-				1,433,475				-				1,433,475
Value of warrants issued with convertible notes			-				-				5,553,290				-				-				-				5,553,290				-				5,553,290
Issuance of common stock to be issued			38,396				38				1,195,237				(1,195,275	)			-				-				-				-				-
Fair value of stock options			-				-				426,690				-				-				-				426,690				-				426,690
Foreign currency translation loss			-				-				-				-				(430,241	)			-				(430,241	)			(1,364	)			(431,605	)
Net loss			-				-				-				-				-				(32,849,215	)			(32,849,215	)			(195,963	)			(33,045,178	)
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
Units issued for cash, net of offering costs			400,000				400				1,794,600				-				-				-				1,795,000				-				1,795,000
Cashless exercise of warrants			583,334				583				1,421,000				-				-				-				1,421,583				-				1,421,583
Share issuance for convertible debt settlement			10,177,834				10,178				9,957,962				-				-				-				9,968,140				-				9,968,140
Exercise of warrants for cash			532,600				533				532,067				-				-				-				532,600				-				532,600
Shares issued with convertible notes			265,167				265				247,622				-				-				-				247,887				-				247,887
Value of warrants issued with convertible notes			-				-				257,994				-				-				-				257,994				-				257,994
Beneficial conversion feature upon issuance on convertible debt			-				-				164,046				-				-				-				164,046				-				164,046
Extinguishment of derivative liability due to conversion			-				-				1,390,380				-				-				-				1,390,380				-				1,390,380
Common stock for services			358,500				359				480,233				-				-				-				480,592				-				480,592
Issuance of common stock to be issued			323,827				324				8,257,190				(8,257,514	)			-				-				-				-				-
Fair value of stock options			-				-				385,335				-				-				-				385,335				-				385,335
Foreign currency translation loss			-				-				-				-				(918,219	)			-				(918,219	)			(4,390	)			(922,609	)
Net loss			-				-				-				-				-				(13,214,552	)			(13,214,552	)			(54,892	)			(13,269,444	)
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

* The consolidated statements of stockholder’s 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. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended August 31, 2023 and 2022
		Years Ended
		August 31,				August 31,
		2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(13,269,444	)		$	(33,045,178	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			2,302,754				3,019,253
Fair value of vested stock options			385,335				426,690
Financing costs for debt extension			1,421,583				-
Default payment and interest paid through common share issuance			205,349				-
Common stock issued for services			480,592				1,329,750
Operating lease expense			797,515				852,580
Amortization of debt discount			4,757,121				5,973,973
Foreign currency transaction losses			215,206				641,643
Impairment of assets			-				14,083,531
Other receivables write-off			-				299,672
Goodwill impairment			-				1,357,043
Changes in operating assets and liabilities:
Accounts receivable			(597,191	)			457,006
Inventory			(255,781	)			(527,397	)
Prepaid expenses and other current assets			210,382				(369,647	)
Accounts payable			1,770,589				283,234
Accrued expenses			153,598				38,743
Accrued interest			(58,066	)			101,353
Operating lease liability			(762,852	)			(806,394	)
Net cash used in operating activities			(2,243,315	)			(5,884,145	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(49,224	)			(190,168	)
Cash acquired with acquisition			-				57,489
Collection of other receivable			-				296,138
Net cash (used in) provided by investing activities			(49,224	)			163,459
CASH FLOWS FROM FINANCING ACTIVITIES:
Receipts from related parties			7,206				16,600
Proceeds from notes payable			222,780				-
Repayments of notes payable			(37,130	)			(10,591,115	)
Repayments of finance leases			(8,611	)			(18,435	)
Proceeds from issuance of convertible notes			1,285,903				15,270,000
Repayment of convertible notes			(3,033,888	)			(5,104,167	)
Proceeds from the sale of common stock, net of offering costs			1,795,000				-
Proceeds from exercise of warrants			532,600				-
Net cash provided by (used in) financing activities			763,860				(427,117	)
Effect of exchange rate changes on cash and cash equivalents			(233,685	)			33,328
NET DECREASE IN CASH AND CASH EQUIVALENTS			(1,762,364	)			(6,114,475	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR			2,178,687				8,293,162
CASH AND CASH EQUIVALENTS, END OF YEAR		$	416,323			$	2,178,687
CASH PAID FOR:
Interest		$	432,094			$	1,502,819
Income taxes		$	-			$	-
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for convertible debt		$	9,968,140			$	1,272,994
Common stock issued for acquisition		$	-			$	1,704,000
Warrants issued with convertible notes		$	257,994			$	5,553,290
Beneficial conversion feature upon issuance of convertible notes		$	164,046			$	-
Debt discount recognized on derivative liability		$	1,390,380			$	-
Extinguishment of derivative liability due to conversion		$	1,390,380			$	-
Debt discount recognized on convertible note		$	975,024			$	-
Common stock issued with convertible notes		$	247,887			$	-

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231214983120/en/

Chris David, COO-President

Novo Integrated Sciences, Inc.

chris.david@novointegrated.com

(888) 512-1195

Source: Novo Integrated Sciences, Inc.

FAQ

What were Novo Integrated Sciences, Inc.'s financial results for the fiscal year ended August 31, 2023?

Novo Integrated Sciences, Inc. reported revenues of $12,572,019, representing a 7% increase from the previous year, with a net loss of $13,214,552.

What is the cash position of Novo Integrated Sciences, Inc. as of August 31, 2023?

As of August 31, 2023, Novo Integrated Sciences, Inc.'s cash and cash equivalents were $416.3 thousand.

What joint venture agreements did Novo Integrated Sciences, Inc. enter into for the fiscal year ended August 31, 2023?

Novo Integrated Sciences, Inc. entered into a joint venture agreement with Farm 7 Group Inc. for the Kenya Agricultural Cooperative Project and a Master Collaboration Agreement with Psychocare Health Pvt. Ltd. India.

What regulatory approvals did Novo Integrated Sciences, Inc. receive for the fiscal year ended August 31, 2023?

Novo Integrated Sciences, Inc. received regulatory approval from Turkey’s Ministry of Health for IoNovo Iodine and IoNovo for Kids Pure Iodine oral sprays as a dietary supplement.