Novo Integrated Sciences Reports Record Revenue of $13.8 million in Fiscal 2022 Third Quarter

By: Novo Integrated Sciences, Inc. via Business Wire

July 14, 2022 at 16:05 PM EDT

Revenue Increased 382% Sequentially and 481% Year-to-Year for the Fiscal 2022 Third Quarter

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 third quarter ended May 31, 2022.

Robert Mattacchione, Novo’s CEO and Board Chairman, stated, “Novo achieved record revenue in the fiscal 2022 third quarter primarily driven by an increase in both proprietary and outsourced product sales. We believe that subsequent quarters will illustrate a further acceleration of market penetration for our product solutions, particularly when combined with the synergistic positive effect of both our existing and projected expansion of the Company’s service-oriented business units. The three pillars of the Company’s operating model are gaining traction particularly as we expand our line of product solutions and complete our acquisitional objectives.”

Financial Highlights for the Period Ended May 31, 2022:

Cash and cash equivalents were $12.6 million, total assets were $71.7 million, total liabilities were $27.3 million, and stockholders’ equity was $44.4 million.
Revenues were $13,851,883, representing an increase of $11,470,909, or 481.8%, from $2,380,974 for the same period in 2021 principally due to an increase in outsourced product sales and IoNovo Iodine which resulted in an increase in revenue of $9,730,236. Acenzia’s and Terragenx’s revenue for the three months ended May 31, 2022 was $645,588 and $1,275,690, respectively. Revenue from our healthcare services decreased by 7.6% when comparing the revenue for the three months ended May 31, 2022 to the same period in 2021 primarily due to a COVID-19 surge in Ontario province Canada and COVID-19 staffing related shortages limiting clinic and eldercare patient-practitioner direct personal interaction.
Operating costs for the three months ended May 31, 2022 were $3,611,628, representing an increase of $1,929,198, or 114.7%, from $1,682,430 for the same period in 2021. The increase in operating costs is principally due to the increase in overhead expenses associated with the operations of Acenzia, PRO-DIP, and Terragenx which was approximately $952,000 for the three months ended May 31, 2022. In subsequent quarters, this increase in overhead expenses associated with Acenzia, PRO-DIP, and Terragenx is projected to decrease as the Company integrates and consolidates operations. In addition, common stock issued for services increased by $276,828 for the three months ended May 31, 2022 compared to the same period in 2021. Also, an increase in legal and professional fees contributed to the increase in operating expenses.
Net loss attributed to Novo Integrated Sciences, Inc. for the three months ended May 31, 2022 was $3,810,054, representing an increase of $3,398,867, or 827%, from $411,187 for the same period in 2021. The increase in net loss is principally due to (i) an increase in overhead expenses associated with the operations of Acenzia, PRO-DIP, and Terragenx which was approximately $952,000 for the three months ended May 31, 2022, (ii) common stock issued for services of $314,000; (iii) an increase in interest expense and (iv) an increase in amortization of debt discounts.

Operational Milestones for the Fiscal 2022 Second Quarter:

Chief Medical Officer, Dr. Joseph M. Chalil, Selected as Top Physician of the Year by IAOTP for outstanding leadership, dedication, and innovation medical contributions.
Completed Acquisition of Clinical Consultants International LLC (CCI).
PRO-DIP® issued U.S. Patent for oral pouch delivery system technology.
Completed acquisition of 2 multi-disciplinary clinics in Ontario Canada.

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 multiple patient and consumer touchpoints for 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, diagnostic and therapeutic solutions, 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 Novo Healthnet Limited, Novo’s wholly owned subsidiary, 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. CONDENSED CONSOLIDATED BALANCE SHEETS As of May 31, 2022 (unaudited) and August 31, 2021

	May 31,			August 31,
	2022			2021
		(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	12,677,446		$	8,293,162
Accounts receivable, net		5,166,239			1,468,429
Inventory, net		645,063			339,385
Other receivables, current portion		1,209,137			814,157
Prepaid expenses and other current assets		380,800			218,376
Total current assets		20,078,685			11,133,509

Property and equipment, net		5,931,683			6,070,291
Intangible assets, net		32,192,858			32,029,499
Right-of-use assets, net		2,222,970			2,543,396
Other receivables, net of current portion		-			692,738
Goodwill		11,366,618			9,488,848
TOTAL ASSETS	$	71,792,814		$	61,958,281

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable	$	1,621,719		$	1,449,784
Accrued expenses		1,243,792			1,129,309
Accrued interest (including amounts to related parties)		961,823			366,280
Government loans and notes payable, current portion		5,260,056			4,485,649
Convertible notes payable, net of discount of $0		1,875,000			-
Contingent liability		750,860			-
Due to related parties		456,528			478,920
Finance lease liability, current portion		15,982			23,184
Operating lease liability, current portion		544,690			530,797
Total current liabilities		12,730,450			8,463,923

Debentures, related parties		981,337			982,205
Notes payable, net of current portion		158,645			5,133,604
Convertible notes payable, net of discount of $5,170,205		10,252,017			-
Finance lease liability, net of current portion		8,563			16,217
Operating lease liability, net of current portion		1,734,790			2,057,805
Deferred tax liability		1,499,045			1,500,372
TOTAL LIABILITIES		27,364,847			18,154,126

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 May 31, 2022 and August 31, 2021, respectively
Common stock; $0.001 par value; 499,000,000 shares authorized; 30,659,073 and 26,610,144 shares issued and outstanding at May 31, 2022 and August 31, 2021, respectively		30,659			26,610
Additional paid-in capital		64,620,878			54,579,396
Common stock to be issued (4,308,591 and 3,622,199 shares at May 31, 2022 and August 31, 2021)		10,096,332			9,236,607
Other comprehensive income		1,015,993			991,077
Accumulated deficit		(31,391,082	)		(20,969,274	)
Total Novo Integrated Sciences, Inc. stockholders’ equity		44,372,780			43,864,416
Noncontrolling interest		55,187			(60,261	)
Total stockholders’ equity		44,427,967			43,804,155
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	71,792,814		$	61,958,281

NOVO INTEGRATED SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the Three and Nine Months Ended May 31, 2022 and 2021 (unaudited)

	Three Months Ended						Nine Months Ended
	May 31,			May 31,			May 31,			May 31,
	2022			2021			2022			2021
	(unaudited)			(unaudited)			(unaudited)			(unaudited)

Revenues	$	13,851,883		$	2,380,974		$	19,883,033		$	6,612,374

Cost of revenues		11,443,001			1,100,516			14,991,331			3,769,020

Gross profit		2,408,882			1,280,458			4,891,702			2,843,354

Operating expenses:
Selling expenses		9,802			2,381			36,340			4,226
General and administrative expenses		3,601,826			1,680,049			9,542,443			5,324,768
Total operating expenses		3,611,628			1,682,430			9,578,783			5,328,994

Loss from operations		(1,202,746	)		(401,972	)		(4,687,081	)		(2,485,640	)

Non operating income (expense)
Interest income		8,355			8,402			25,233			25,265
Interest expense		(513,398	)		(21,701	)		(1,808,310	)		(68,590	)
Amortization of debt discount		(2,133,890	)		-			(3,654,752	)		-
Foreign currency transaction gains (losses)		97,654			-			(303,714	)		-
Total other income (expense)		(2,541,279	)		(13,299	)		(5,741,543	)		(43,325	)

Loss before income taxes		(3,744,025	)		(415,271	)		(10,428,624	)		(2,528,965	)

Income tax expense		-			-			-			-

Net loss	$	(3,744,025	)	$	(415,271	)	$	(10,428,624	)	$	(2,528,965	)

Net income (loss) attributed to noncontrolling interest		66,029			(4,084	)		(6,816	)		(6,438	)

Net loss attributed to Novo Integrated Sciences, Inc.	$	(3,810,054	)	$	(411,187	)	$	(10,421,808	)	$	(2,522,527	)

Comprehensive loss:
Net loss		(3,744,025	)		(415,271	)		(10,428,624	)		(2,528,965	)
Foreign currency translation gain		13,711			123,521			24,916			176,349
Comprehensive loss:	$	(3,730,314	)	$	(291,750	)	$	(10,403,708	)	$	(2,352,616	)

Weighted average common shares outstanding - basic and diluted		29,817,999			25,298,866			28,498,414			24,192,998

Net loss per common share - basic and diluted	$	(0.13	)	$	(0.02	)	$	(0.37	)	$	(0.10	)

NOVO INTEGRATED SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY For the Three and Nine Months Ended May 31, 2022 and 2021 (unaudited)
																	Total
					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, 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

Common stock for services		125,000		125		313,875			-			-			-			314,000			-			314,000
Common stock for conversion of convertible notes		623,929		624		1,247,225			-			-			-			1,247,849			-			1,247,849
Common stock for acquisition		800,000		800		1,703,200			-			-			-			1,704,000			-			1,704,000
Common stock to be issued for acquisitions		-		-		-			260,625			-			-			260,625			25,402			286,027
Issuance of common stock to be issued		225,000		225		573,525			(573,750	)		-			-			-			-			-
Fair value of stock options		-		-		91,330			-			-			-			91,330			-			91,330
Foreign currency translation gain		-		-		-			-			13,711			-			13,711			51			13,762
Net loss		-		-		-			-			-			(3,810,054	)		(3,810,054	)		66,029			(3,744,025	)

Balance, May 31, 2022		30,659,073	$	30,659	$	64,620,878		$	10,096,332		$	1,015,993		$	(31,391,082	)	$	44,372,780		$	55,187		$	44,427,967

Balance, August 31, 2020		23,466,236	$	23,466	$	44,905,454		$	-		$	1,199,696		$	(16,507,127	)	$	29,621,489		$	(49,859	)	$	29,571,630

Common stock issued for cash		21,905		22		91,978			-			-			-			92,000			-			92,000
Common stock issued for services		65,000		65		247,935			-			-			-			248,000			-			248,000
Foreign currency translation gain		-		-		-			-			10,596			-			10,596			(225	)		10,371
Net loss		-		-		-			-			-			(771,470	)		(771,470	)		(1,633	)		(773,103	)

Balance, November 30, 2020		23,553,141		23,553		45,245,367			-			1,210,292			(17,278,597	)		29,200,615			(51,717	)		29,148,898

Exercise of stock options		7,500		8		11,992			-			-			-			12,000			-			12,000
Common stock issued for intellectual property		240,000		240		875,760			-			-			-			876,000			-			876,000
Common stock to be issued for services rendered		-		-		-			375,000			-			-			375,000			-			375,000
Rounding due to stock split		957		1		(1	)		-			-			-			-			-			-
Fair value of vested stock options		-		-		22,215			-			-			-			22,215			-			22,215
Foreign currency translation gain		-		-		-			-			42,232			-			42,232			(965	)		41,267
Net loss		-		-		-			-			-			(1,339,870	)		(1,339,870	)		(721	)		(1,340,591	)

Balance, February 28, 2021		23,801,598		23,802		46,155,333			375,000			1,252,524			(18,618,467	)		29,188,192			(53,403	)		29,134,789

Common stock for services		100,000		100		374,900			(375,000	)		-			-			-			-			-
Common stock issued for acquisition		189,796		190		430,647			-			-			-			430,837			-			430,837
Common stock issued for services rendered		9,913		9		37,163			-			-			-			37,172			-			37,172
Common stock issued for cash, net of offering costs		2,388,050		2,388		7,233,192			-			-			-			7,235,580			-			7,235,580
Fair value of vested stock options		-		-		66,640			-			-			-			66,640			-			66,640
Foreign currency translation gain		-		-		-			-			123,521			-			123,521			(3,143	)		120,378
Net loss		-		-		-			-			-			(411,187	)		(411,187	)		(4,084	)		(415,271	)

Balance, May 31, 2021		26,489,357	$	26,489	$	54,297,875		$	-		$	1,376,045		$	(19,029,654	)	$	36,670,755		$	(60,630	)	$	36,610,125

NOVO INTEGRATED SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended May 31, 2022 and 2021 (unaudited)

	Nine Months Ended
	May 31,			May 31,
	2022			2021
	(unaudited)			(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(10,428,624	)	$	(2,528,965	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,349,434			1,118,925
Fair value of vested stock options		289,892			88,855
Common stock issued for services		676,750			660,172
Operating lease expense		418,188			467,864
Amortization of debt discount		3,654,752			-
Foreign currency transaction losses		303,714			-
Changes in operating assets and liabilities:
Accounts receivable		(3,650,069	)		543,213
Inventory		(263,539	)		-
Prepaid expenses and other current assets		(150,632	)		(143,590	)
Accounts payable		117,056			(97,659	)
Accrued expenses		(68,871	)		64,513
Accrued interest		598,904			7,455
Operating lease liability		(406,862	)		(460,063	)
Net cash used in operating activities		(6,559,907	)		(279,280	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(190,973	)		(201,369	)
Cash acquired from (paid for) acquisition		57,489			(10,000	)
Payment on other receivable		296,138			-
Amounts loaned for other receivables		-			(470,040	)
Net cash provided by (used in) investing activities		162,654			(681,409	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments to related parties		(21,932	)		(177,534	)
Repayments of finance leases		(14,797	)		-
Repayments of notes payable		(4,430,794	)		-
Proceeds from the sale of common stock, net of offering costs		-			7,327,580
Proceeds from exercise of stock options		-			12,000
Proceeds from issuance of convertible notes, net		15,270,000			-
Net cash provided by financing activities		10,802,477			7,162,046

Effect of exchange rate changes on cash and cash equivalents		(20,940	)		97,970

NET INCREASE IN CASH AND CASH EQUIVALENTS		4,384,284			6,299,327

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		8,293,162			2,067,718

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	12,677,446		$	8,367,045


CASH PAID FOR:
Interest	$	1,294,912		$	33,183
Income taxes	$	-		$	-

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock to be issued for intangible assets	$	188,925		$	876,000
Common stock to be issued for acquisitions	$	1,244,550		$	-
Common stock issued for acquisition	$	1,704,000		$	430,837
Conversion of convertible notes payable and accrued interest to common stock	$	1,247,849		$	-

View source version on businesswire.com: https://www.businesswire.com/news/home/20220714005789/en/

Contacts

Chris David, COO & President

Novo Integrated Sciences, Inc.

chris.david@novointegrated.com

(888) 512-1195