EX-99.1 2 ex99-1.htm

 

Exhibit 99.1

 

 

Novo Integrated Sciences Reports Fiscal Year 2024 Third Quarter Financial Results

 

BELLEVUE, Wash., July 19, 2024 - 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 third fiscal quarter ended May 31, 2024.

 

Robert Mattacchione, Novo’s CEO and Board Chairman, stated, “The Company’s fiscal year 2024 third quarter emphasized maximizing operational efficiencies for all business units. 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 May 31, 2024:

 

  Cash and cash equivalents were $1,539,771, total assets were $35,327,000, total liabilities were $25,663,779, and total stockholders’ equity was $9,956,134.
     
  Revenues were $3,151,851, representing a decrease of $141,082, or 4%, from $3,292,933 for the three months ended May 31, 2023. The decrease in revenue is principally due to a decrease in product sales. Acenzia’s and Terragenx’s revenue for the three months ended May 31, 2024 were $884,396 and $103,399, respectively. Despite a decrease in total revenue, revenue from our healthcare services increased by 8.1% when comparing the revenue for the three months ended May 31, 2024 to the three months ended May 31, 2023.
     
  Operating costs were $3,417,096, representing an increase of $672,584, or 25%, from $2,744,512 for the three months ended May 31, 2023. The increase in operating costs was primarily due to the inflationary impact on operating costs.
     
  Net loss attributed to the Company was $13,741,903, representing an increase of $12,244,573, or 818%, from $1,497,330 for the three months ended May 31, 2023. The increase in net loss of $12,244,573 is mainly attributed to the recognition of a $6,724,690 loss in the fair value of the derivative liability, loss from operations of $1,089,785, amortization of the debt discount of $ 2,748,793 and foreign currency exchange loss of $1,455,248 arising as a result of intercompany balance reconciliation.
     
  On April 5, 2024, the Company executed a $6.21 million Securities Purchase Agreement and Promissory Note with Streeterville Capital LLC (the “Streeterville Note”). The interest rate on the Streeterville Note is 10.9% and it has a 12-month maturity date. A portion of the proceeds from the Streeterville Note paid the balance owed on two notes, as follows:

 

  $3,228,774 (principal) and $30,571.28 (interest) on the 2023 $3.5 million Mast Hill note; and
     
  $82,761 (principal) and $1,552 (interest) on the 2023 $277,777 First Fire 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.

 

Twitter, LinkedIn, Facebook, Instagram, YouTube

 

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.

 

Contact

 

Chris David, COO-President

Novo Integrated Sciences, Inc.

chris.david@novointegrated.com

(888) 512-1195

 

 
 

 

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of May 31, 2024 (unaudited) and August 31, 2023

 

   May 31,   August 31, 
   2024   2023 
ASSETS          
           
Current Assets:          
Cash and cash equivalents  $1,539,771   $416,323 
Accounts receivable, net   2,251,528    1,467,028 
Inventory, net   1,112,068    1,106,983 
Other receivables, current portion   1,043,473    1,051,584 
Prepaid expenses and other current assets   214,436    346,171 
Total current assets   6,161,276    4,388,089 
           
Property and equipment, net   5,157,781    5,390,038 
Intangible assets, net   14,690,038    16,218,539 
Right-of-use assets, net   1,793,907    1,983,898 
Goodwill   7,523,998    7,582,483 
TOTAL ASSETS  $35,327,000   $35,563,047 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current Liabilities:          
Accounts payable  $3,894,602   $3,513,842 
Accrued expenses   1,332,485    1,233,549 
Accrued interest (including amounts to related parties)   450,795    382,666 
Government loans and notes payable, current portion   93,488    277,405 
Convertible notes payable, net of discount of $4,985,381   1,224,619    558,668 
Derivative liability   14,048,576     
Contingent liability   45,968    61,767 
Debentures, related parties   909,753    916,824 
Due to related parties   262,295    533,001 
Finance lease liability, net of current portion   4,336    11,744 
Operating lease liability, current portion   409,516    415,392 
Total current liabilities   22,676,433    7,904,858 
           
Government loans and notes payable, net of current portion   63,572    65,038 
Operating lease liability, net of current portion   1,534,078    1,693,577 
Deferred tax liability   1,389,696    1,400,499 
TOTAL LIABILITIES   25,663,779    11,063,972 
           
Commitments and contingencies        
           
STOCKHOLDERS’ EQUITY          
Novo Integrated Sciences, Inc.          
Convertible preferred stock; $0.001 par value; 1,000,000 shares authorized;
Nil shares issued and outstanding at May 31, 2024 and August 31, 2023
        
Common stock; $0.001 par value; 499,000,000 shares authorized;
19,054,523 and 15,759,325 shares issued and outstanding at May 31, 2024 and August 31, 2023, respectively
   19,055    15,760 
Additional paid-in capital   96,660,608    90,973,316 
Common stock to be issued (1,700 and 91,138 shares at May 31, 2024 and August 31, 2023)   25,500    1,217,293 
Other comprehensive (loss) income   1,452,386    (357,383)
Accumulated deficit   (88,201,415)   (67,033,041)
Total Novo Integrated Sciences, Inc. stockholders’ equity   9,956,134    24,815,945 
Noncontrolling interest   (292,913)   (316,870)
Total stockholders’ equity   9,663,221    24,499,075 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $35,327,000   $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 Nine Months Ended May 31, 2024 and 2023 (unaudited)

 

   Three Months Ended   Nine Months Ended 
   May 31,   May 31,   May 31,   May 31, 
   2024   2023   2024   2023 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
Revenues  $3,151,851   $3,292,933   $10,213,661   $9,268,722 
                     
Cost of revenues   2,254,958    1,978,839    6,048,664    5,244,192 
                     
Gross profit   896,893    1,314,094    4,164,997    4,024,530 
                     
Operating expenses:                    
Selling expenses   2,635    1,877    14,811    9,916 
General and administrative expenses   3,414,461    2,742,635    11,527,794    9,473,802 
Total operating expenses   3,417,096    2,744,512    11,542,605    9,483,718 
                     
Loss from operations   (2,520,203)   (1,430,418)   (7,377,608)   (5,459,188)
                     
Non operating income (expense)                    
Interest income   2,214    62,397    6,910    6,762 
Interest expense   (178,445)   (9,570)   (460,503)   (240,520)
Other expense   (3,431)       (964,368)    
Change in fair value of derivative liability   (6,724,690)       (5,765,822)    
Amortization of debt discount   (2,904,830)   (156,037)   (5,095,331)   (4,386,899)
Exchange currency (loss) gain   (1,406,915)   48,333    (1,485,861)   12,652 
Total other expense   (11,216,097)   (54,877)   (13,764,975)   (4,608,005)
                     
Loss before income taxes   (13,736,300)   (1,485,295)   (21,142,583)   (10,067,193)
                     
Income tax expense                
                     
Net loss  $(13,736,300)  $(1,485,295)  $(21,142,583)  $(10,067,193)
                     
Net income (loss) attributed to noncontrolling interest   5,603    12,035    25,791    (13,095)
                     
Net loss attributed to Novo Integrated Sciences, Inc.  $(13,741,903)  $(1,497,330)  $(21,168,374)  $(10,054,098)
                     
Comprehensive loss:                    
Net loss   (13,736,300)   (1,485,295)   (21,142,583)   (10,067,193)
Foreign currency translation gain (loss)   750,067    (120,357)   1,809,769    (738,022)
Comprehensive loss:  $(12,986,233)  $(1,605,652)  $(19,332,814)  $(10,805,215)
                     
Weighted average common shares outstanding - basic and diluted   18,685,979    14,360,058    17,688,692    8,583,229 
                     
Net loss per common share - basic and diluted  $(0.74)  $(0.10)  $(1.20)  $(1.17)

 

* 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 Nine Months Ended May 31, 2024 and 2023 (unaudited)

 

   Common Stock   Additional
Paid-in
   Common
Stock To
   Other
Comprehensive
   Accumulated   Total Novo
Stockholders’
   Noncontrolling   Total 
   Shares   Amount   Capital   Be Issued   Income   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 gain                   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 
                                              
Share issuance for convertible debt settlement   1,306,203    1,306    577,982                579,288        579,288 
Cancellation of agreement               (18,943)           (18,943)       (18,943)
Foreign currency translation gain                   949,005        949,005    (113)   948,892 
Net loss                       (13,741,903)   (13,741,903)   5,603    (13,736,300)
                                              
Balance, May 31, 2024   19,054,523   $19,055   $96,660,608   $25,500   $1,452,386   $(88,201,415)  $9,956,134   $(292,913)  $9,663,221 

 

 
 

 

   Common Stock   Additional
Paid-in
   Common
Stock To
   Other
Comprehensive
   Accumulated   Total Novo
Stockholders’
   Noncontrolling   Total 
   Shares   Amount   Capital   Be Issued   Income   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 
Exercise of warrants (Cashless Exercise)   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 
                                              
                                              
Share issuance for convertible debt settlement   107,594    108    100,170                100,278        100,278 
Exercise of warrants for cash   320,000    320    319,680                320,000        320,000 
Shares issued with convertible notes   95,500    96    90,037                90,132        90,132 
Value of warrants issued with convertible notes           93,811                93,811        93,811 
Beneficial conversion feature upon issuance of convertible debt           66,068                66,068        66,068 
Stock option expense           263,561                263,561        263,561 
Foreign currency translation loss                   (120,533)       (120,533)   176    (120,357)
Net loss                       (1,497,330)   (1,497,330)   12,035    (1,485,295)
                                              
Balance, May 31, 2023   14,485,756   $14,486   $89,379,961   $1,217,293   $(172,526)  $(63,872,587)  $26,566,627   $(275,343)  $26,291,284 

 

* 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 Nine Months Ended May 31, 2024 and 2023 (unaudited)

 

   Nine Months Ended 
   May 31,   May 31, 
   2024   2023 
   (unaudited)   (unaudited) 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(21,142,583)  $(10,067,193)
Adjustments for non-cash items:          
Depreciation and amortization   1,697,317    1,718,388 
Fair value of vested stock options   147,656    385,335 
Change in fair value of derivative liability   5,765,822     
Cashless exercise of warrants   1,323,398    1,421,583 
Common stock issued for services   1,195,400     
Operating lease expense   466,276    624,246 
Amortization of debt discount   5,095,331    4,386,899 
Foreign currency transaction losses   1,485,861    (12,652)
Changes in operating assets and liabilities:          
Accounts receivable   (797,692)   (308,907)
Inventory   (12,548)   (92,260)
Prepaid expenses and other current assets   130,015    333,724 
Accounts payable   408,067    154,542 
Accrued expenses   76,428    104,004 
Accrued interest   103,605    (67,634)
Operating lease liability   (466,276)   (594,618)
Net cash used in operating activities   (4,523,923)   (2,014,543)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property and equipment   (2,005)   (18,870)
Net cash used in investing activities   (2,005)   (18,870)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
(Repayments to) proceeds from related parties   (267,756)   (56,649)
Proceeds from notes payable   274    222,000 
Repayments of notes payable   (184,125)    
Repayments of finance leases   (7,350)   (6,435)
Proceeds from issuance of convertible notes, net   8,649,153    925,306 
Repayment of convertible notes   (3,311,536)   (3,033,888)
Proceeds from the sale of common stock, net of offering costs       1,795,000 
Proceeds from exercise of warrants   240,400    451,000 
Net cash provided by financing activities   5,119,060    296,334 
           
Effect of exchange rate changes on cash and cash equivalents   530,316    22,403 
           
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   1,123,448    (1,714,676)
           
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   416,323    2,178,687 
           
CASH AND CASH EQUIVALENTS, END OF PERIOD  $1,539,771   $464,011 
           
CASH PAID FOR:          
Interest  $190,491   $343,878 
Income taxes  $   $ 
           
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Common stock issued for convertible debt settlement  $1,610,883   $9,186,329 
Beneficial conversion feature upon issuance of convertible notes       66,068 
Debt discount recognized on derivative liability       1,390,380 
Debt discount recognized on convertible note       639,993 
Extinguishment of derivative liability due to conversion       1,390,380 
Common stock issued with convertible notes       173,095 
Warrants issued with convertible notes  $   $180,138 

 

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.