Novo Integrated Sciences : Reports Fiscal 2022 Second Quarter Financial Results - Form 8-K

Novo Integrated Sciences Reports Fiscal 2022 Second Quarter Financial Results

Management expects Triple-digit Percentage Revenue Growth sequentially

for the Fiscal 2022 Third Quarter

BELLEVUE, Wash., April 13, 2022 - 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 quarter ended February 28, 2022.

Robert Mattacchione, Novo's CEO and Board Chairman, stated, "The 38.2% year-over-year revenue growth we experienced for the fiscal second quarter is directly related to the expansion of our essential and differentiated ecosystem for the delivery of healthcare related services and products. The Company projects "triple-digit" percentage revenue growth sequentially for the fiscal third quarter ending May 31, 2022 due to product and diagnostic technology sales. This projected acceleration in revenue growth in future quarters is directly related to the effects of commercializing our three-pillar model and crystalizes the Company's mission for a fully integrated healthcare ecosystem, with global reach, resulting in rapid growth and profitability."

Financial Highlights for the Period Ended February 28, 2022:

	●	Cash and cash equivalents were $15.9 million, total assets were $70.3 million, total liabilities were $25.8 million, and stockholders' equity was $44.5 million.
	●	Revenues were $2,869,223, representing an increase of $793,329, or 38.2%, from $2,075,894 for the same period in 2021 principally due to the acquisition of Acenzia, Inc. in June 2021 and Terragenx in November 2021. Acenzia's and Terragenx' revenue for the three months ended February 28, 2022 was $749,345 and $245,658, respectively. Revenue from healthcare services decreased by 9.7%, when comparing the revenue for the three months ended February 28, 2022 to the same period in 2021, primarily due to a surge of COVID-19 in the province of Ontario Canada, limiting clinic and eldercare patient-practitioner direct personal interaction.
	●	Operating costs were $3,337,030, representing an increase of $1,259,640, or 60.6%, from $2,077,390 for the same period in 2021 principally due to (i) an increase in legal and professional fees related to fund raising, and (ii) an increase in overhead expenses associated with the acquisitions of Acenzia, PRO-DIP, and Terragenx which was approximately $1,133,000. 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.
	●	Net loss attributed to Novo Integrated Sciences, Inc. was $4,805,167, representing an increase of $3,465,297, or 258.6%, from $1,339,870 for the same period in 2021 principally due to (i) an increase in interest expense, (ii) an increase in amortization of debt discounts, (iii) an increase in legal and professional fees related to fund raising, (iv) an increase in overhead expenses associated with the acquisitions of Acenzia, PRO-DIP, and Terragenx which was approximately $1,133,000, and (v) an increase in foreign currency transaction losses.
	●	On December 14, 2022, the Company completed a registered direct offering with accredited institutional investors, resulting in gross proceeds of $15 million to Novo.

Operational Milestones:

	●	Completed an amended and restated Master Facility License Agreement with LA Fitness in Canada.
	●	IoNovo Iodide and IoNovo for Kids Pure Iodine oral sprays granted Natural Product Number (NPN) by Health Canada.
	●	Signed an Asset Purchase Agreement with the shareholder of Poling Taddeo Hovius Physiotherapy Professional Corp. ("PTHPC"), a clinic-based physiotherapy, rehabilitative, and related ancillary services and products business known as Fairway Physiotherapy and Sports Injury Clinic in Ontario province Canada, to acquire all assets of PTHPC for a purchase price of $627,000 in exchange for an allotment of 156,750 restricted shares of the Company's common stock at $4.00 per share. The transaction closed on March 1, 2022.
	●	Signed a Share Exchange Agreement with the shareholder of 12858461 Canada Corp. ("1285"), a clinic-based physiotherapy and related ancillary services and products business in Ontario province Canada, to acquire 50.1% of 1285 for a purchase price of $68,000 in exchange for an allotment of 17,000 restricted shares of the Company's common stock at $4.00 per share. The transaction closed on March 1, 2022.

Operational Milestones Subsequent to End of Fiscal 2022 Second Quarter:

	●	Completed Acquisition of Clinical Consultants International LLC (CCI).
	●	As a result of CCI acquisition, Novo signed a memorandum of understanding with Boditech Med, a global point-of-care testing leader, to market and distribute in North America.
	●	PRO-DIP® issued U.S. Patent for oral pouch delivery system technology.

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.

Chris David, COO-President

Novo Integrated Sciences, Inc.

[e-mail]

[phone]

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of February 28, 2022 (unaudited) and August 31, 2021

		February 28,			August 31,
		2022			2021
		(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	15,943,997			$	8,293,162
Accounts receivable, net			1,251,973				1,468,429
Inventory			334,414				339,385
Other receivables, current portion			981,597				814,157
Prepaid expenses and other current assets			503,437				218,376
Total current assets			19,015,418				11,133,509
Property and equipment, net			6,157,621				6,070,291
Intangible assets, net			33,217,602				32,436,468
Right-of-use assets, net			2,348,391				2,543,396
Other receivables, net of current portion			522,062				692,738
Goodwill			9,058,936				9,081,879
TOTAL ASSETS		$	70,320,030			$	61,958,281
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable		$	1,105,707			$	1,449,784
Accrued expenses			1,199,274				1,129,309
Accrued interest (including amounts to related parties)			642,246				366,280
Government loans and notes payable, current portion			5,260,047				4,485,649
Convertible notes payable, net of discount of $302,550			1,572,450				-
Contingent liability			749,626				-
Due to related parties			473,367				478,920
Finance lease liability, current portion			17,533				23,184
Operating lease liability, current portion			533,535				530,797
Total current liabilities			11,553,785				8,463,923
Debentures, related parties			979,724				982,205
Notes payable, net of current portion			174,242				5,133,604
Convertible notes payable, net of discount of $6,943,704			9,722,962				-
Finance lease liability, net of current portion			10,854				16,217
Operating lease liability, net of current portion			1,866,858				2,057,805
Deferred tax liability			1,496,581				1,500,372
TOTAL LIABILITIES			25,805,006				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 February 28, 2022 and August 31, 2021, respectively
Common stock; $0.001par value; 499,000,000 shares authorized; 28,885,144 and 26,610,144 shares issued and outstanding at February 28, 2022 and August 31, 2021, respectively			28,885				26,610
Additional paid-in capital			60,691,723				54,579,396
Common stock to be issued (4,359,841 and 3,622,199 shares at February 28, 2022 and August 31, 2021)			10,409,457				9,236,607
Other comprehensive income			1,002,282				991,077
Accumulated deficit			(27,581,028	)			(20,969,274	)
Total Novo Integrated Sciences, Inc. stockholders' equity			44,551,319				43,864,416
Noncontrolling interest			(36,295	)			(60,261	)
Total stockholders' equity			44,515,024				43,804,155
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	70,320,030			$	61,958,281

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three and Six Months Ended February 28, 2022 and 2021 (unaudited)

		Three Months Ended			Six Months Ended
		February 28,			February 28,			February 28,			February 28,
		2022			2021			2022			2021
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenues		$	2,869,223			$	2,075,894			$	6,031,150			$	4,231,400
Cost of revenues			1,652,869				1,324,448				3,548,330				2,668,504
Gross profit			1,216,354				751,446				2,482,820				1,562,896
Operating expenses:
Selling expenses			26,370				602				26,538				1,845
General and administrative expenses			3,310,660				2,076,788				5,940,617				3,644,719
Total operating expenses			3,337,030				2,077,390				5,967,155				3,646,564
Loss from operations			(2,120,676	)			(1,325,944	)			(3,484,335	)			(2,083,668	)
Non operating income (expense)
Interest income			8,490				8,301				16,878				16,863
Interest expense			(1,226,182	)			(22,948	)			(1,294,912	)			(46,889	)
Amortization of debt discount			(1,463,022	)			-				(1,520,862	)			-
Foreign currency transaction losses			(66,814	)			-				(401,368	)			-
Total other income (expense)			(2,747,528	)			(14,647	)			(3,200,264	)			(30,026	)
Loss before income taxes			(4,868,204	)			(1,340,591	)			(6,684,599	)			(2,113,694	)
Income tax expense			-				-				-				-
Net loss		$	(4,868,204	)		$	(1,340,591	)		$	(6,684,599	)		$	(2,113,694	)
Net loss attributed to noncontrolling interest			(63,037	)			(721	)			(72,845	)			(2,354	)
Net loss attributed to Novo Integrated Sciences, Inc.		$	(4,805,167	)		$	(1,339,870	)		$	(6,611,754	)		$	(2,111,340	)
Comprehensive loss:
Net loss			(4,868,204	)			(1,340,591	)			(6,684,599	)			(2,113,694	)
Foreign currency translation gain			114,738				42,232				11,205				52,828
Comprehensive loss:		$	(4,753,466	)		$	(1,298,359	)		$	(6,673,394	)		$	(2,060,866	)
Weighted average common shares outstanding - basic and diluted			28,740,700				23,754,808				27,827,686				23,630,900
Net loss per common share - basic and diluted		$	(0.17	)		$	(0.06	)		$	(0.24	)		$	(0.09	)

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Three and Six Months Ended February 28, 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
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 loss			-				-				-				-				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

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended February 28, 2022 and 2021 (unaudited)

		Six Months Ended
		February 28,			February 28,
		2022			2021
		(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(6,684,599	)		$	(2,113,694	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			1,467,837				737,423
Fair value of vested stock options			198,562				22,215
Common stock issued for services			362,750				623,000
Operating lease expense			289,626				306,717
Amortization of debt discount			1,520,862				-
Foreign currency transaction losses			401,368				-
Changes in operating assets and liabilities:
Accounts receivable			213,125				353,649
Inventory			46,135				-
Prepaid expenses and other current assets			(285,444	)			(216,568	)
Accounts payable			(422,847	)			(938	)
Accrued expenses			(111,479	)			153,807
Accrued interest			277,075				5,867
Operating lease liability			(282,703	)			(301,250	)
Net cash used in operating activities			(3,009,732	)			(429,772	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(192,536	)			(618	)
Cash acquired with acquisition			29,291				-
Net cash used in investing activities			(163,245	)			(618	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments to related parties			(4,350	)			(82,723	)
Repayments of finance leases			(10,934	)			-
Repayments of notes payable			(4,415,000	)			-
Proceeds from the sale of common stock, net of offering costs			-				92,000
Proceeds from exercise of stock options			-				12,000
Proceeds from issuance of convertible notes, net			15,270,000				-
Net cash provided by financing activities			10,839,716				21,277
Effect of exchange rate changes on cash and cash equivalents			(15,904	)			39,832
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			7,650,835				(369,281	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			8,293,162				2,067,718
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	15,943,997			$	1,698,437
CASH PAID FOR:
Interest		$	1,294,912			$	32,936
Income taxes		$	-			$	-
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock to be issued for intangible assets		$	188,925			$	960,000
Common stock to be issued for acquisition		$	983,925			$	-