0001493152-19-005137.txt : 20190411 0001493152-19-005137.hdr.sgml : 20190411 20190411080108 ACCESSION NUMBER: 0001493152-19-005137 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 65 CONFORMED PERIOD OF REPORT: 20190228 FILED AS OF DATE: 20190411 DATE AS OF CHANGE: 20190411 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Novo Integrated Sciences, Inc. CENTRAL INDEX KEY: 0001138978 STANDARD INDUSTRIAL CLASSIFICATION: ENGINES & TURBINES [3510] IRS NUMBER: 593691650 FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-109118 FILM NUMBER: 19742866 BUSINESS ADDRESS: STREET 1: 11120 NE 2ND STREET STREET 2: SUITE 200 CITY: BELLEVUE STATE: WA ZIP: 98004 BUSINESS PHONE: (206) 617-9797 MAIL ADDRESS: STREET 1: 11120 NE 2ND STREET STREET 2: SUITE 200 CITY: BELLEVUE STATE: WA ZIP: 98004 FORMER COMPANY: FORMER CONFORMED NAME: TURBINE TRUCK ENGINES INC DATE OF NAME CHANGE: 20010420 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended February 28, 2019

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______, 20___, to _____, 20___.

 

Commission File Number 333-109118

 

Novo Integrated Sciences, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada   59-3691650
(State or Other Jurisdiction of
Incorporation or Organization)
  (I.R.S. Employer
Identification Number)

 

11120 NE 2nd Street, Suite 200

Bellevue, Washington

  98004
(Address of Principal Executive Offices)   (Zip Code)

 

(206) 617-9797

(Registrant’s Telephone Number, Including Area Code)

 

N/A

(Former name or former address, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “accelerated filer,” “large accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [X] Smaller reporting company [X]
Emerging growth company [  ]     

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes [  ] No [X]

 

There were 223,164,283 shares of the Registrant’s $0.001 par value common stock outstanding as of April 8, 2019.

 

 

 

   

 

 

Novo Integrated Sciences, Inc.

 

Contents

 

PART I – FINANCIAL INFORMATION 3
     
Item 1. Financial Statements 3
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation 16
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
     
Item 4. Controls and Procedures 24
     
PART II – OTHER INFORMATION 24
     
Item 1. Legal Proceedings 24
     
Item 1A. Risk Factors 24
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 24
     
Item 3. Defaults Upon Senior Securities 25
     
Item 4. Mine Safety Disclosures 25
     
Item 5. Other Information 25
     
Item 6. Exhibits 26
     
Signatures 27

 

 2 
 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of February 28, 2019 (unaudited) and August 31, 2018 

 

   February 28, 2019   August 31, 2018 
   (unaudited)      
ASSETS          
Current Assets:          
Cash and cash equivalents  $2,373,936   $675,705 
Accounts receivable, net   1,378,894    1,337,545 
Other receivables, current portion   586,734    393,821 
Prepaid expenses and other current assets   163,323    161,838 
Total current assets   4,502,887    2,568,909 
           
Property and equipment, net   427,195    400,321 
Intangible assets   22,358,567    - 
Other receivables, net of current portion   87,354    57,352 
Acquisition deposits   1,104,985    1,112,404 
Goodwill   600,084    604,113 
TOTAL ASSETS  $29,081,072   $4,743,099 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current Liabilities:          
Accounts payable  $1,254,234   $1,307,599 
Accrued expenses   254,667    383,998 
Accrued interest (principally to related parties)   181,740    156,121 
Due to related parties   966,102    1,116,261 
Notes payable, current portion   379,800    382,350 
Total current liabilities   3,036,543    3,346,329 
           
Debentures, related parties   1,215,837    1,224,000 
TOTAL LIABILITIES   4,252,380    4,570,329 
           
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, 2019 and August 31, 2018          
Common stock; $0.001par value; 499,000,000 shares authorized; 223,048,205 and 207,881,743 shares issued and outstanding at February 28, 2019 and August 31, 2018   223,048    207,882 
Additional paid-in capital   35,047,853    10,053,683 
Other comprehensive income   1,165,795    1,139,815 
Accumulated deficit   (11,570,906)   (11,199,989)
Total Novo Integrated Sciences, Inc. stockholders’ equity   24,865,790    201,391 
Noncontrolling interest   (37,098)   (28,621)
Total stockholders’ equity   24,828,692    172,770 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $29,081,072   $4,743,099 

 

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

 

 3 
 

 

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three and Six Months Ended February 28, 2019 and 2018 (unaudited)

 

   Three Months Ended   Six Months Ended 
   February 28, 2019   February 28, 2018   February 28, 2019   February 28, 2018 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
Revenues  $2,200,410   $2,145,919   $4,512,032   $4,399,656 
                     
Cost of revenues   1,320,740    1,307,596    2,748,823    2,715,289 
                     
Gross profit   879,670    838,323    1,763,209    1,684,367 
                     
Operating expenses:                    
Selling expenses   4,016    30,601    29,239    68,740 
General and administrative expenses   954,341    1,934,479    2,028,009    2,914,754 
Total operating expenses   958,357    1,965,080    2,057,248    2,983,494 
                     
Loss from operations   (78,687)   (1,126,757)   (294,039)   (1,299,127)
                     
Non operating income (expense)                    
Interest income   4,294    160    9,383    211 
Interest expense   (48,587)   (304,132)   (94,908)   (438,285)
Total other income (expense)   (44,293)   (303,972)   (85,525)   (438,074)
                     
Loss before income taxes   (122,980)   (1,430,729)   (379,564)   (1,737,201)
                     
Income tax expense   -    (54,216)   -    - 
                     
Net loss  $(122,980)  $(1,376,513)  $(379,564)  $(1,737,201)
                     
Net loss attributed to noncontrolling interest   (3,479)   (1,956)   (8,647)   (5,356)
                     
Net loss attributed to Novo Integrated Sciences, Inc.  $(119,501)  $(1,374,557)  $(370,917)  $(1,731,845)
                     
Comprehensive loss:                    
Net loss   (122,980)   (1,376,513)   (379,564)   (1,737,201)
Foreign currency translation gain (loss)   27,765    (211,528)   25,980    (87,341)
Comprehensive loss:  $(95,215)  $(1,588,041)  $(353,584)  $(1,824,542)
                     
Weighted average common shares outstanding - basic and diluted   214,281,342    206,091,162    211,094,982    203,953,457 
                     
Net loss per common share - basic and diluted  $(0.00)  $(0.01)  $(0.00)  $(0.01)

 

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

 

 4 
 

 

NOVO INTEGRATED SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended February 28, 2019 and 2018 (unaudited)

 

   Six Months Ended 
   February 28, 2019   February 28, 2018 
   (unaudited)   (unaudited) 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(379,564)  $(1,737,201)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   46,474    32,719 
Fair value of vested stock options   70,846    1,109,416 
Changes in operating assets and liabilities:          
Accounts receivable   (50,152)   (250,133)
Prepaid expenses and other current assets   (2,541)   30,326 
Accounts payable   (44,730)   80,084 
Accrued expenses   (126,470)   (43,843)
Accrued interest   26,597    303,699 
Net cash used in operating activities   (459,540)   (474,933)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of furniture and equipment   (75,947)   (43,431)
Amounts loaned for other receivables   (225,924)   (39,215)
Net cash used in investing activities   (301,871)   (82,646)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Repayments to related parties   (142,376)   (263,403)
Proceeds from the sale of common stock   2,579,923    - 
Payments on notes payable   -    (7,108)
Net cash provided by (used in) financing activities   2,437,547    (270,511)
           
Effect of exchange rate changes on cash and cash equivalents   22,095    (31,880)
           
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   1,698,231    (859,970)
           
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   675,705    1,896,572 
           
CASH AND CASH EQUIVALENTS, END OF PERIOD  $2,373,936   $1,036,602 
           
CASH PAID FOR:          
Interest  $69,289   $128,098 
Income taxes  $-   $- 
           
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Common stock issued for intangible assets  $22,358,567   $- 

 

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

 

 5 
 

 

NOVO INTEGRATED SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended February 28, 2019 and 2018 (unaudited)

 

Note 1 - Organization and Basis of Presentation

 

Organization and Line of Business

 

Novo Integrated Sciences, Inc. (“Novo Integrated”) was incorporated in Delaware on November 27, 2000, under the name Turbine Truck Engines, Inc. On February 20, 2008, the Company was re-domiciled to the State of Nevada. Effective July 12, 2017, the Company’s name was changed to Novo Integrated Sciences, Inc. When used herein, the terms the “Company,” “we,” “us” and “our” refer to Novo Integrated and its consolidated subsidiaries.

 

Through Novo Healthnet Limited (“NHL”), our wholly owned Canadian subsidiary, we deliver multi-disciplinary primary healthcare to over 400,000 patients annually through our 15 corporate-owned clinics and a contracted network of 97 affiliate clinics and 222 eldercare centric homes located across Canada. Our team of practitioners and staff are trained for assessment, diagnosis, treatment, pain management, rehabilitation and primary prevention. Our specialized services and products include physiotherapy, chiropractic care, occupational therapy, eldercare, laser therapeutics, massage therapy, acupuncture, chiropody, neurological functions, kinesiology, concussion management and baseline testing, women’s pelvic health, sports medicine therapy, assistive devices and private personal training. We do not provide primary care medical services, none of our employees practices primary care medicine, and our services do not require a medical or nursing license.

 

As we continue to build our health science platform of services and products through the integration of technology and rehabilitative science, one component of our lateral business growth strategy includes developing business units centered on the direct control of the grow, extraction, manufacturing and distribution processes for hemp and medical cannabidiol products. Additionally, we continue to expand on our patient care philosophy of maintaining an on-going continuous connection with our patient community, beyond the traditional confines of a clinic, by extending oversight of patient diagnosis, care and monitoring, directly into the patient’s home, through various mobile telemedicine and diagnostic tools.

 

Since inception and through May 9, 2017, our activities and business operations were limited to raising capital, organizational matters and the implementation of our business plan related to research, development, testing and commercialization of various alternative energy technologies.

 

On April 25, 2017 (the “Effective Date”), the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) by and between (i) the Company; (ii) NHL; (iii) ALMC-ASAP Holdings Inc. (“ALMC”); (iv) Michael Gaynor Family Trust (the “MGFT”); (v) 1218814 Ontario Inc. (“1218814”); and (vi) Michael Gaynor Physiotherapy Professional Corp. (“MGPP,” and together with ALMC, MGFT and 1218814, the “NHL Shareholders”). Pursuant to the terms of the Share Exchange Agreement, the Company agreed to acquire from the NHL Shareholders all of the shares of both common and preferred stock of NHL, held by the NHL Shareholders, in exchange for the issuance by the Company to the NHL Shareholders of shares of the Company’s common stock, such that following the closing of the Share Exchange Agreement, the NHL Shareholders would own 167,797,406 restricted shares of Company common stock, representing 85% of the issued and outstanding Company common stock, calculated including all granted and issued options or warrants to acquire the Company common stock as of the Effective Date, but to exclude shares of Company common stock that are subject to a then-current Regulation S offering that was undertaking by the Company (the “Exchange”).

 

On May 9, 2017, the Exchange closed and, as a result, NHL became a wholly owned subsidiary of Novo Integrated Sciences, Inc.

 

The Exchange was accounted for as a reverse acquisition under the purchase method of accounting since NHL obtained control of Novo Integrated Sciences, Inc. Accordingly, the Exchange was recorded as a recapitalization of NHL, with NHL being treated as the continuing entity. The historical financial statements presented are the financial statements of NHL. The Exchange was treated as a recapitalization and not as a business combination; therefore, no pro forma information is disclosed. At the closing date of the Exchange, the net assets of the legal acquirer, Novo Integrated Sciences, Inc., were $6,904.

 

 6 
 

 

The unaudited consolidated financial statements are prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The information furnished herein reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management, are necessary to fairly state the Company’s financial position, the results of its operations, and cash flows for the periods presented. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) were omitted pursuant to such rules and regulations. The results of operations for the six months ended February 28, 2019 are not necessarily indicative of the results for the year ending August 31, 2019.

 

Basis of Presentation

 

The accompanying consolidated financial statements were prepared in conformity with U.S. GAAP. The Company’s Canadian subsidiaries’ functional currency is the Canadian Dollar (“CAD” or “CAD$”); however, the accompanying consolidated financial statements were translated and presented in United States Dollars (“$” or “USD”).

 

Foreign Currency Translation

 

The accounts of the Company’s Canadian subsidiaries are maintained in CAD. The accounts of these subsidiaries are translated into USD in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830, Foreign Currency Transaction, with the CAD as the functional currency. According to Topic 830, all assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, Comprehensive Income. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement of operations and comprehensive income. The following table details the exchange rates used for the respective periods:

 

   February 28, 2019   February 28, 2018   August 31, 2018 
Period end: CAD to USD exchange rate  $0.7596   $0.7808   $0.7647 
Average period: CAD to USD exchange rate  $0.7578   $0.7959      

 

Note 2 – Summary of Significant Accounting Policies

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, NHL, Novo Healthnet Rehab Limited, Novo Assessments Inc., and an 80% interest in Novo Healthnet Kemptville Centre, Inc., a Back on Track Physiotherapy and Health Centre clinic operated by NHL. All of the Company’s subsidiaries are incorporated under the laws of the Province of Ontario, Canada. All intercompany transactions have been eliminated.

 

 7 
 

 

Noncontrolling Interest

 

The Company follows FASB ASC Topic 810, Consolidation, which governs the accounting for and reporting of non-controlling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance.

 

The net income (loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive income (loss).

 

Cash Equivalents

 

For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly liquid debt instruments with original maturities of three months or less.

 

Accounts Receivable

 

Accounts receivable are recorded, net of allowance for doubtful accounts and sales returns. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentration, customer credit worthiness, current economic trends and changes in customer payment patterns to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Delinquent account balances are written-off after management has determined that the likelihood of collection is not probable and known bad debts are written off against the allowance for doubtful accounts when identified. As of February 28, 2019 and August 31, 2018, the allowance for uncollectible accounts receivable was $473,585 and $464,527, respectively.

 

Property and Equipment

 

Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the declining balance method for substantially all assets with estimated lives as follows:

 

  Leasehold improvements 5 years
  Clinical equipment 5 years
  Computer equipment 3 years
  Office equipment 5 years
  Furniture and fixtures 5 years

 

Long-Lived Assets

 

The Company applies the provisions of ASC Topic 360, Property, Plant, and Equipment, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review at February 28, 2019 and August 31, 2018, the Company believes there was no impairment of its long-lived assets.

 

 8 
 

 

Intangible Assets

 

The Company’s intangible assets consist of land use rights and a software license which will be amortized over 50 and 7 years, respectively. Amortization will begin when the assets are fully placed in service. The Company will perform a test for impairment annually. The land use rights and the software license intangible assets were acquired in January and February, 2019, respectively. Therefore, the first annual impairment test will be performed as of August 31, 2019.

 

Goodwill

 

Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. Under accounting requirements, goodwill is not amortized but is subject to annual impairment tests. At February 28, 2019, the Company recorded goodwill of $379,800 and $220,284, respectively, related to its acquisition of Apka Health, Inc. during the fiscal year ended August 31, 2017 and Executive Fitness Leaders during the fiscal year ended August 31, 2018. As of August 31, 2018, the Company performed the required impairment review. Based on its review, the Company believes there was no impairment of its goodwill.

 

Acquisition Deposits

 

The Company has signed letters of understanding with two potential acquisition candidates which include refundable acquisition deposits totaling $1,104,985 and $1,112,404 at February 28, 2019 and August 31, 2018, respectively.

 

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, advances to suppliers, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities.

 

FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

  Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
     
  Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
     
  Level 3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement.

 

The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging.

 

As of February 28, 2019 and August 31, 2018, respectively, the Company did not identify any assets and liabilities required to be presented on the balance sheet at fair value.

 

Revenue Recognition

 

Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company on March 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606. As sales are and have been primarily from providing healthcare services, and the Company has no significant post-delivery obligations, this new standard did not result in a material recognition of revenue on the Company’s accompanying consolidated financial statements for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition.

 

 9 
 

 

Revenue from providing healthcare services are recognized under Topic 606 in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration and includes the following elements:

 

  executed contracts with the Company’s customers that it believes are legally enforceable;
  identification of performance obligations in the respective contract;
  determination of the transaction price for each performance obligation in the respective contract;
  allocation the transaction price to each performance obligation; and
  recognition of revenue only when the Company satisfies each performance obligation.

 

These five elements, as applied to healthcare services, the Company’s sole revenue category, is summarized below:

 

  Healthcare services - gross service revenue is recorded in the accounting records at the time the service is provided on an accrual basis at the provider’s established rates, regardless of whether the provider expects to collect that amount. The Company reserves a provision for contractual adjustment and discounts that are deducted from gross service revenue. The Company reports revenues net of any sales, use and value added taxes.

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.

 

Stock-Based Compensation

 

The Company records stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.

 

Basic and Diluted Earnings Per Share

 

Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS assumes that all dilutive securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There were 10,095,000 options/warrants outstanding as of February 28, 2019. Due to the net loss incurred, potentially dilutive instruments would be anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for all periods presented.

 

 10 
 

 

Foreign Currency Transactions and Comprehensive Income

 

U.S. GAAP generally requires recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. The functional currency of the Company’s Canadian subsidiaries is the CAD. Translation gains of $1,165,795 and $1,139,815 at February 28, 2019 and August 31, 2018, respectively, are classified as an item of other comprehensive income in the stockholders’ equity section of the balance sheet.

 

Statement of Cash Flows

 

Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rates. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.

 

Recent Accounting Pronouncements

 

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its financial statements.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company adopted this ASU beginning on March 1, 2018 and used the modified retrospective method of adoption. The adoption of this ASU did not have a material impact on the Company’s financial statements and disclosures.

 

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

 

Note 3 – Related Party Transactions

 

Due to related parties

 

Amounts loaned to the Company by stockholders and officers of the Company are non-interest bearing and payable upon demand. At February 28, 2019 and August 31, 2018, the amount due to related parties was $966,102 and $1,116,261, respectively.

 

 11 
 

 

On January 31, 2018, a related party converted $813,125 of outstanding principal and accrued interest into 1,976,483 shares of the Company’s common stock. The per share price used for the conversion of this loan was $0.4114 which was determined based on the average price of the five (5) trading days immediately preceding the date of conversion with a 10% premium added to the calculated per share price.

 

Note 4 – Accounts Receivables, net

 

Accounts receivables, net at February 28, 2019 and August 31, 2018 consisted of the following:

 

   February 28, 2019   August 31, 2018 
Trade receivables  $1,610,117   $1,564,180 
Amounts earned but not billed   242,362    237,892 
    1,852,479    1,802,072 
Allowance for doubtful accounts   (473,585)   (464,527)
Accounts receivable, net  $1,378,894   $1,337,545 

 

Note 5 – Other Receivables

 

Other receivables at February 28, 2019 and August 31, 2018 consisted of the following:

 

   February 28, 2019   August 31, 2018 
Notes receivable dated April 1, 2015 and amended on May 23, 2017; accrued interest at 8% per annum; secured by certain assets; due March 1, 2019  $284,849   $286,763 
           
Advance to corporation; non-interest bearing; unsecured; due no later than November 18, 2020   30,384    30,588 
           
Advance to corporation; accrues interest at 12% per annum; unsecured; due September 2019   75,960    76,470 
           
Advance to corporation; accrues interest at 10% per annum; unsecured; due May 1, 2022   56,970    57,352 
           
Advance to corporation; accrues interest at 10% per annum after the first 60 days; unsecured; due February 7, 2020   225,924    - 
Total other receivables   674,087    451,173 
Current portion   (586,733)   (393,821)
Long-term portion  $87,354   $57,352 

 

Note 6 – Property and Equipment

 

Property and equipment at February 28, 2019 and August 31, 2018 consisted of the following:

 

   February 28, 2019   August 31, 2018 
Leasehold Improvements  $433,756   $372,010 
Clinical equipment   276,954    269,741 
Computer equipment   22,485    22,636 
Office equipment   27,382    24,658 
Furniture and fixtures   39,356    39,620 
    799,933    728,665 
Accumulated depreciation   (372,738)   (328,344)
Total  $427,195   $400,321 

 

 12 
 

 

Depreciation expense for the six months ended February 28, 2019 and 2018 was $46,474 and $32,719, respectively.

 

Note 7 – Intangible Assets

 

Intangible assets at February 28, 2019 and August 31, 2018 consisted of the following:

 

   February 28, 2019   August 31, 2018 
Land use rights  $21,600,000   $        - 
Software license   758,567    - 
    22,358,567    - 
Accumulated amortization   -    - 
Total  $22,358,567   $- 

 

There was no amortization expense during the six months ended February 28, 2019 and 2018.

 

Note 8 – Accrued Expenses

 

Accrued expenses at February 28, 2019 and August 31, 2018 consisted of the following:

 

   February 28, 2019   August 31, 2018 
Accrued liabilities  $131,422   $266,123 
Accrued payroll   89,637    106,761 
Other   33,608    11,114 
   $254,667   $383,998 

 

Note 9 – Notes Payable

 

Notes payable at February 28, 2019 and August 31, 2018 consisted of the following:

 

   February 28, 2019   August 31, 2018 
Notes payable issued in connection with purchase of assets; accrues interest at 0% per annum; due on March 27, 2019.  $379,800   $382,350 
    379,800    382,350 
Current portion   (379,800)   (382,350)
Long-term portion  $-   $- 

 

Note 10 – Debentures, related parties

 

On September 30, 2013, the Company issued five debentures totaling CAD$6,402,512 ($4,968,990 at November 30, 2017) in connection with the acquisition of certain business assets. The holders of the debentures are current stockholders, officers and/or affiliates of the Company. The debentures are secured by all the assets of the Company, accrue interest at 8% per annum and were originally due on September 30, 2016. On December 2, 2017, the debenture holders agreed to extend the due date to September 30, 2019.

 

 13 
 

 

On January 31, 2018, the debenture holders converted 75% of the debenture value of $3,894,809 plus accrued interest of $414,965 into 10,475,872 shares of the Company’s common stock. The per share price used for the conversion of each debenture was $0.4114 which was determined based on the average price of the five (5) trading days immediately preceding the date of conversion with a 10% premium added to the calculated per share price. At February 28, 2019, the amount of debentures outstanding was $1,215,837.

 

Note 11 – Stockholders’ Deficit

 

Convertible preferred stock

 

The Company has authorized 1,000,000 shares of $0.001 par value convertible preferred stock. At February 28, 2019 and August 31, 2018 there were 0 and 0 convertible preferred shares issued and outstanding, respectively.

 

Common stock

 

The Company has authorized 499,000,000 shares of $0.001 par value common stock. At February 28, 2019 and August 31, 2018 there were 223,048,205 and 207,881,743 common shares issued and outstanding, respectively.

 

During the six months ended February 28, 2019, the Company issued:

 

  2,708,113 restricted shares of common stock for cash proceeds of $2,579,923
     
  12,000,000 restricted shares of common stock as consideration for the Assignment, to the Company, of a Joint Venture Agreement with a value of $21,600,000 based on the closing share price of $1.80 on the execution date of the Closing Certificate
     
  458,349 restricted shares of common stock as consideration for a Licensing Agreement based on a per share price of $1.655 with a value of $758,567.

 

Stock options/warrants

 

On September 8, 2015, the Company adopted the 2015 Incentive Compensation Plan (the “2015 Plan”), which authorizes the issuance of up to 5,000,000 shares of common stock to employees, officers, directors or independent consultants of the Company, provided that no person can be granted shares under the 2015 Plan for services related to raising capital or promotional activities. As of February 28, 2019, 4,987,500 shares were available under the 2015 Plan for future grants, awards, options or share issuances. However, because the shares issuable under the 2015 Plan or issuable upon conversion of awards granted under the 2015 Plan are no longer registered under the Securities Exchange Act of 1934, as amended, the Company does not intend to issue any additional grants under the 2015 Plan.

 

On January 16, 2018, the Company adopted the Novo Integrated Sciences, Inc. 2018 Incentive Plan (the “2018 Plan”). Under the 2018 Plan, 10,000,000 shares of common stock are authorized for issuance to employees, non-employees, directors and key consultants to the Company or its subsidiaries. The 2018 Plan authorizes equity-based and cash-based incentives for participants. There were 9,875,000 shares available for award at February 28, 2019 under the 2018 Plan.

 

The following is a summary of stock option/warrant activity:

 

           Weighted     
       Weighted   Average     
   Options/   Average   Remaining   Aggregate 
   Warrants   Exercise   Contractual   Intrinsic 
   Outstanding   Price   Life   Value 
Outstanding, August 31, 2018   10,030,000    0.30    4.56   $7,045,500 
Granted   75,000    0.95           
Forfeited   (10,000)   2.00           
Exercised   -                
Outstanding, February 28, 2019   10,095,000    0.30    4.08   $13,106,250 
Exercisable, February 28, 2019   10,095,000   $0.30    4.08   $13,106,250 

 

 14 
 

 

The exercise price for options/warrants outstanding at February 28, 2019:

 

Outstanding and Exercisable
 Number of      
 Options/    Exercise 
 Warrants    Price 
 5,500,000   $0.16 
 1,000,000    0.32 
 50,000    0.33 
 120,000    0.40 
 2,000,000    0.42 
 100,000    0.50 
 1,000,000    0.62 
 250,000    0.80 
 75,000    0.95 
 10,095,000      

 

For options granted during the fiscal year ending August 31, 2019 where the exercise price equaled the stock price at the date of the grant, the weighted-average fair value of such options was $0.94 and the weighted-average exercise price of such options/warrants was $0.95. No options were granted during the fiscal year ending August 31, 2019 where the exercise price was less than the stock price at the date of grant or the exercise price was greater than the stock price at the date of grant.

 

For options granted during the fiscal year ended August 31, 2018 where the exercise price equaled the stock price at the date of the grant, the weighted-average fair value of such options was $0.39 and the weighted-average exercise price of such options/warrants was $0.40. No options were granted during the fiscal year ended August 31, 2018 where the exercise price was less than the stock price at the date of grant or the exercise price was greater than the stock price at the date of grant.

 

The fair value of the stock options is being amortized to stock option expense over the vesting period. The Company recorded stock option expense of $70,846 and $1,109,416 during the six months ended February 28, 2019 and 2018, respectively. At February 28, 2019, the unamortized stock option expense was $0.

 

The assumptions used in calculating the fair value of options granted during the current fiscal year ending August 31, 2019 using the Black-Scholes option-pricing model for options granted, through February 28, 2019, are as follows:

 

Risk-free interest rate   2.78%
Expected life of the options   3.5 years 
Expected volatility   294%
Expected dividend yield   0%

 

Note 12 – Commitments and Contingencies

 

Litigation

 

The Company is party to certain legal proceedings from time to time incidental to the conduct of its business. These proceedings could result in fines, penalties, compensatory or treble damages or non-monetary relief. The nature of legal proceedings is such that the Company cannot assure the outcome of any particular matter, and an unfavorable ruling or development could have a materially adverse effect on our consolidated financial position, results of operations and cash flows in the period in which a ruling or settlement occurs. However, based on information available to the Company’s management to date, the Company’s management does not expect that the outcome of any matter pending against the Company is likely to have a materially adverse effect on the Company’s consolidated financial position as of February 28, 2019, results of operations, cash flows or liquidity of the Company.

 

Leases

 

The Company leases its office space and certain facilities under long-term operating leases expiring through fiscal year 2023. Rent expense under these leases was $498,237 and $409,350 for the six months ended February 28, 2019 and 2018, respectively.

 

Note 13 – Subsequent Events

 

On April 3, 2019, the Company sold 116,078 restricted shares of common stock to an accredited investor for a purchase price of $149,740.

 

 15 
 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), provide a safe harbor for forward-looking statements made by or on behalf of the Company. The Company and its representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this report and other filings with the Securities and Exchange Commission (“SEC”) and in our reports and presentations to stockholders or potential stockholders. In some cases forward-looking statements can be identified by words such as “believe,” “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 can be found in the Part I, Item 1A, “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2018.

 

Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, it is not possible to foresee or identify all factors that could have a material effect on the future financial performance of the Company. The forward-looking statements in this report are made on the basis of management’s assumptions and analyses, as of the time the statements are made, in light of their experience and perception of historical conditions, expected future developments and other factors believed to be appropriate under the circumstances.

 

Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q and the information incorporated by reference in this report to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.

 

Overview of the Company

 

Through Novo Healthnet Limited (“NHL”), our wholly owned Canadian subsidiary, we deliver multi-disciplinary primary healthcare to over 400,000 patients annually through our 15 corporate-owned clinics and a contracted network of 97 affiliate clinics and 222 eldercare centric homes located across Canada. Our team of practitioners and staff are trained for assessment, diagnosis, treatment, pain management, rehabilitation and primary prevention. Our specialized services and products include physiotherapy, chiropractic care, occupational therapy, eldercare, laser therapeutics, massage therapy, acupuncture, chiropody, neurological functions, kinesiology, concussion management and baseline testing, women’s pelvic health, sports medicine therapy, assistive devices and private personal training. We do not provide primary care medical services, none of our employees practices primary care medicine, and our services do not require a medical or nursing license.

 

As we continue to build our health science platform of services and products through the integration of technology and rehabilitative science, one component of our lateral business growth strategy includes developing business units centered on the direct control of the grow, extraction, manufacturing and distribution processes for hemp and medical cannabidiol products. Additionally, we continue to expand on our patient care philosophy of maintaining an on-going continuous connection with our patient community, beyond the traditional confines of a clinic, by extending oversight of patient diagnosis, care and monitoring, directly into the patient’s home, through various mobile telemedicine and diagnostic tools.

 

 16 
 

 

Our strict adherence to public regulatory standards, as well as self-imposed standards of excellence, have allowed us to navigate with ease through the industry’s licensing and regulatory framework. Compliant treatment, data and administrative protocols are managed through a team of highly-trained, certified healthcare and administrative professionals. We and our affiliates provide service to the Canadian property and casualty insurance industry, resulting in a regulated framework governed by the Financial Services Commission of Ontario. All of our services and those of our affiliates are regulated by the various professional associations related to the clinical professionals contracted or employed by us. In 2013, NHL received its accreditation from the Commission on Accreditation of Rehabilitation Facilities (“CARF”). Currently, NHL is undergoing the CARF re-accreditation process.

 

When used herein, the terms the “Company,” “we,” “us” and “our” refer to Novo Integrated Sciences, Inc. and its consolidated subsidiaries.

 

Recent Developments

 

Cloud DX Inc. License Agreement

 

On February 26, 2019, we entered into a Software License Agreement (the “Cloud DX License”) with Cloud DX Inc. (“Cloud DX”) pursuant to which Cloud DX agreed to sell, and NHL agreed to purchase, a fully paid up, perpetual license, with 5-year conditional exclusivity, for the Cloud DX Bundled Pulsewave PAD-1A USB Blood Pressure Device, up-to-date product releases and Licensed Software Products (the “Licensed Software”) to include the:

 

  Cloud DX Connected Health web portal for clinical users,
  Cloud DX Connected Health mobile app,
  Cloud DX Connected Health Windows app, and
  Cloud DX Connected Health MacOS app.

 

Pursuant to the terms of the Cloud DX License, Cloud DX also agreed to sell, and NHL agreed to purchase, 4,000 fully functional Pulsewave PAD 1A USB blood pressure monitor devices bundled with the perpetual license discussed above (the “Bundled Devices”).

 

The Cloud DX License granted to NHL and its majority-owned subsidiaries, holding companies, divisions and affiliates, other than physiotherapy clinics owned and operated by Closing The Gap Healthcare Inc., the right to use and sub-license the Licensed Software and re-sell the Bundled Devices pursuant to the terms of the Cloud DX License in the physical therapy clinic marketplace in North America in exchange for the purchase price as set forth below:

 

  Upon the closing, the Company issued 458,349 restricted shares of its common stock having a value (as calculated as set forth in the Cloud DX License) of CAD$1,000,000 (approximately $758,567 as of February 26, 2019), and
     
  Cloud DX will invoice CAD$250,000 (approximately $189,642 as of February 26, 2019) to NHL based on the following deliverables, and paid on the following schedule:

 

Cloud DX deliverable   Novo payment (terms: Net 15)
Heart Friendly Program launches in Clinic #1   CAD$50,000 (approximately $37,929 as of February 26, 2019)
Novo-branded Android app delivered as APK file   CAD$35,000 (approximately $26,550 as of February 26, 2019)
Novo-branded Clinical portal website delivered   CAD$35,000 (approximately $26,550 as of February 26, 2019)
Pulsewave PAD-1A devices – 1st delivery   CAD$20,000 (approximately $15,171 as of February 26, 2019)
Marketing services / materials delivered   CAD$25,000 (approximately $18,964 as of February 26, 2019)
Cloud DX hires dedicated Novo support FTE   CAD$85,000 (approximately $64,478 as of February 26, 2019)

 

 17 
 

 

Pulse Rx Inc. Share Purchase and Exchange Agreement

 

On February 20, 2019, we entered into a Share Purchase and Exchange Agreement (the “SPEA”) with Pulse Rx Inc. (“Pulse Rx”) and the Pulse Rx Stockholders (as hereinafter defined), pursuant to which Pulse Rx will become a wholly owned subsidiary of NHL.

 

Pursuant to the terms of the SPEA, on March 15, 2019 (the “Escrow Closing Date”), the holders of Pulse Rx Class A common shares (the “Pulse Class A Stockholders”) will endorse for transfer all of their Pulse Rx Class A common shares in our favor and deliver them to the escrow agent. The purchase price for the Pulse Rx Class A common shares is CAD$10.00 and the condition precedent that up to CAD$6,000,000 loan is arranged by us and advanced to Pulse Rx (the “Loan”) to discharge payables and restructure debt as provided in the SPEA.

 

In addition, on the terms and subject to the conditions set forth in the SPEA, on the Escrow Closing Date, the holders of Pulse Rx Class B common shares (the “Pulse Class B Stockholders” and together with the Pulse Class A Stockholders, the “Pulse Rx Stockholders”) will endorse for transfer all of their Pulse Rx Class B common shares in favor of NHL and deliver them to the escrow agent. In exchange for the Pulse Rx Class B common shares, on the Escrow Closing Date, NHL will issue in favor of the Pulse Class B Stockholders exchangeable preferred shares (the “NHL Exchangeable Shares”), which shares can only be utilized for the purpose of exchange for restricted shares of Company common stock and will be delivered to the escrow agent. The Company will allot in favor of the Pulse Class B Stockholders $4,546,013 worth of restricted shares of the Company’s common stock, based on a per share price of $1.7975, or 2,529,076 shares of Company common stock. The transactions described in this paragraph are referred to herein as the “Exchange”.

 

The closing of the transactions contemplated under the SPEA will occur upon our advancing the Loan funds to Pulse Rx, and the mutual delivery of the Pulse Rx Class A common shares, the Pulse Rx Class B common shares, and the NHL Exchangeable Shares held by the escrow agent to the respective parties by April 15, 2019 (the “Closing Date”). Notwithstanding the foregoing, the Closing Date will be accelerated by the earlier availability to us of the Loan funds, which availability will immediately trigger an earlier Closing Date, to be effected within 10 business days thereof. At the closing:

 

  The escrow agent will deliver the NHL Exchangeable Shares to the Pulse Class B Stockholders and the Pulse Rx Class A common shares and the Pulse Rx Class B common shares to NHL.
     
  We will have caused the Loan funds to be advanced to Pulse Rx such that they may be disbursed pursuant to the terms of the SPEA.

 

The Exchange is intended to qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.

 

Assignment of Joint Venture Agreement

 

On January 7, 2019, 2478659 Ontario Ltd. (“247”) and Kainai Cooperative (“Kainai”) entered into a Joint Venture Agreement (the “Joint Venture Agreement”) for the purpose of developing, managing and arranging for financing of greenhouse and farming projects involving hemp and cannabis cash crops on Kainai related lands, and developing additional infrastructure projects creating jobs and food supply to local communities. On January 8, 2019, we and 247 entered into an Agreement of Transfer and Assignment, pursuant to which 247 agreed to sell, assign and transfer to the Company all rights, contracts, contacts and any and all other assets related in any way to the Joint Venture Agreement. Pursuant to the terms of the Joint Venture Agreement, as assigned to us, the parties will work in a joint venture relationship with the Company providing the finance, development and operation of the project, including sales, and Kainai providing the land and approvals for the development of the projects.

 

The joint venture will distribute to the Company and Kainai all net proceeds after debt and principal servicing and repayment allocation, as well as operating capital allotment, on a ratio equal to 80% to the Company and 20% to Kainai.

 

 18 
 

 

The Joint Venture Agreement has an initial term of 50 years and Kainai may renew the Joint Venture Agreement within five years of the expiry of the initial term upon mutual agreement.

 

In January 2019, pursuant to the terms of the Joint Venture Agreement, we issued 12,000,000 restricted common shares to 247 with a value of $21,600,000.

 

CannaPiece Group Inc. Share Exchange Agreement, as Amended, & Subscriptions

 

On December 18, 2018, we entered into a Share Exchange Agreement (the “SEA”) with CannaPiece Group Inc. (“CannaPiece”).

 

Pursuant to the terms of the SEA, CannaPiece agreed that it would issue to NHL shares representing 25% of CannaPiece’s outstanding shares, which shares are valued at CAD$25,000,000 ($18,672,500) in the aggregate, based on an agreed pre-revenue, post-licensing valuation of CannaPiece in the amount of CAD$100,000,000 ($74,690,000).

 

In exchange for the issuance of the CannaPiece shares to NHL, the Company agreed to issue to CannaPiece CAD$25,000,000 ($18,672,500) worth of Company restricted common stock. The number of shares of Company common stock to be issued will be based on a per share price of $0.92, as determined by establishing the 30-trading day closing average ($1.15 per share) on October 10, 2018, the execution date of the binding letter of intent between the parties, with a 20% discount to the determined average.

 

In addition, CannaPiece agreed to execute one or more subscription agreements for Company common stock with an aggregate value of CAD$5,000,000 (approximately $3,734,500) (the “Investment”) no later than January 7, 2019. CannaPiece’s obligation is independent of the closing of the exchange. The parties agreed that the per share price for the subscription agreements will be $0.92 per share, determined by establishing the 30-trading day closing average ($1.15 per share) on October 10, 2018, the execution date of the binding letter of intent among the parties, with a 20% discount to the determined average. Of this aggregate subscription amount, $501,929 was paid prior to execution of the SEA. In addition, on December 18, 2018, the Company accepted a $1,867,250 subscription agreement from CannaPiece for 2,029,620 shares of the Company’s restricted common stock, resulting in an effective price per share of $0.92.

 

We have the right to appoint one board member, with voting rights, to CannaPiece’s board of directors, and CannaPiece has the right to appoint one board member, with voting rights, to the Company’s Board of Directors. As of the closing, the Company and CannaPiece will take such actions as required to expand the size of each board of directors such that the Company and CannaPiece can each appoint one member to the other party’s board of directors.

 

The parties also agreed that the Company’s shares issued to CannaPiece and the CannaPiece shares issued to NHL pursuant to the terms of the SEA will be held in escrow until the earlier of the termination date (June 1, 2019, as the same may be amended by the parties) or the date on which CannaPiece receives approved Licensed Producer Status under the Cannabis Act (Canada) and its associated regulations.

 

The SEA may be terminated in certain circumstances including, among others, by the mutual written consent of the parties; and by us, or by CannaPiece, if certain closing conditions have not been met by June 1, 2019.

 

The parties have agreed to extend the delivery date of the Investment to April 30, 2019.

 

For the three months ended February 28, 2019 compared to the three months ended February 28, 2018

 

Revenues for the three months ended February 28, 2019 were $2,200,410, representing an increase of $54,491, or 2.5%, from $2,145,919 for the same period in 2018. The increase in revenue is due to the opening of a new clinic in September 2018 and the relocation of certain clinics, during the summer of 2018, allowing the Company to sell additional services to customers as a result of more spacious facilities.

 

 19 
 

 

Cost of revenues for the three months ended February 28, 2019 were $1,320,740, representing an increase of $13,144, or 1.0%, from $1,307,596 for the same period in 2018. The increase in cost of revenues is principally due the increase in revenue. Cost of revenues as a percentage of revenue was 60.0% for the three months ended February 28, 2019 and 60.9% for same period in 2018. The decrease in cost of revenues as a percentage of revenue is principally due to slightly lower costs.

 

Operating costs for the three months ended February 28, 2019 were $958,357, representing a decrease of $1,006,723, or 51.2%, from $1,965,080 for the same period in 2018. The decrease in operating costs is attributed to a decrease in stock-based compensation of $966,751 and a decrease in professional fees.

 

Interest expense for the three months ended February 28, 2019 was $48,587, representing a decrease of $255,545, or 84.0%, from $304,132 for the same period in 2018. The decrease is due to less debt outstanding as a result of approximately $5.1 million of related party debt being converted to common stock in January 2018.

 

Net loss for the three months ended February 28, 2019 was $122,980, representing a decrease of $1,253,533, or 91.1%, from $1,376,513 for the same period in 2018. The decrease in net loss is due to the reasons described above.

 

For the six months ended February 28, 2019 compared to the six months ended February 28, 2018

 

Revenues for the six months ended February 28, 2019 were $4,512,032, representing an increase of $112,376, or 2.6%, from $4,399,656 for the same period in 2018. The increase in revenue is due to us being able to sell additional services to customers as a result of the acquisition of Executive Fitness Leaders in December 2017, the opening of a new clinic in September 2018, and the relocation of certain clinics during the summer of 2018 to more spacious facilities.

 

Cost of revenues for the six months ended February 28, 2019 were $2,748,823, representing an increase of $33,534, or 1.2%, from $2,715,289 for the same period in 2018. The increase in cost of revenues is principally due to the increase in revenue. Cost of revenues as a percentage of revenue was 60.9% for the six months ended February 28, 2019 and 61.7% for same period in 2018. The decrease in cost of revenues as a percentage of revenue is principally due to slightly lower costs.

 

Operating costs for the six months ended February 28, 2019 were $2,057,248, representing a decrease of $926,246, or 31.0%, from $2,983,494 for the same period in 2018. The decrease in operating costs is attributed to a decrease in stock-based compensation of $1,038,570 offset by an increase in payroll and rental fees.

 

Interest expense for the six months ended February 28, 2019 was $94,908, representing a decrease of $343,377, or 78.3%, from $438,285 for the same period in 2018. The decrease is due to less debt outstanding as a result of approximately $5.1 million of related party debt being converted to common stock in January 2018.

 

Net loss for the six months ended February 28, 2019 was $379,564, representing a decrease of $1,357,637, or 78.2%, from $1,737,201 for the same period in 2018. The decrease in net loss is due to the reasons described above.

 

Liquidity and Capital Resources

 

As shown in the accompanying financial statements, for the six months ended February 28, 2019, the Company had a net loss of $379,564.

 

During the six months ended February 28, 2019, the Company used cash in operating activities of $459,540 compared to $474,933 for the same period in 2018. The principal reason for the decrease is the decrease in net loss incurred during the six months ended February 28, 2019 as compared to the same period in 2018, changes in non-cash expenses of depreciation and stock-based compensation and changes in working capital accounts during the six months ended February 28, 2019 compared to the same period in 2018.

 

During the six months ended February 28, 2019, the Company used cash in investing activities of $301,871 compared to $82,646 for the same period in 2018. The principal reason for the change is the increase of amounts loaned for other receivables and of investment in leasehold improvements during the six months ended February 28, 2019 compared to the same period in 2018.

 

 20 
 

 

 

During the six months ended February 28, 2019, the Company generated cash of $2,437,547 from financing activities compared to cash used in financing activities of $270,511 for the same period in 2018. The principal reason for the change is the sale of shares of common stock for $2,579,923 during the six months ended February 28, 2019, and the decrease of repayments of amounts due to related parties of $121,027. During the six months ended February 28, 2018 there were no sales of shares of common stock.

 

On November 16, 2018, the Company accepted a $30,000 subscription agreement from an accredited investor residing outside the United States for the sale of 17,647 shares of restricted common stock, resulting in an effective price per share of $1.70. The shares were issued on November 20, 2018.

 

Also on November 16, 2018, the Company accepted a $501,929 subscription agreement from an accredited investor residing outside the United States for the sale of 545,575 shares of restricted common stock, resulting in an effective price per share of $0.92. The shares were issued on November 20, 2018.

 

On December 18, 2018, the Company accepted a $1,867,250 subscription agreement from an accredited investor residing outside the United States for the sale of 2,029,620 shares of restricted common stock, resulting in an effective price per share of $0.92. The shares were issued on December 20, 2018.

 

On January 15, 2019, the Company accepted a $180,744 subscription agreement from an accredited investor residing outside the United States for the sale of 115,271 shares of restricted common stock, resulting in an effective price per share of $1.57. The shares were issued on January 18, 2019.

 

On April 3, 2019, the Company accepted a $149,740 subscription agreement from an accredited investor residing outside the United States for the sale of 116,078 shares of restricted common stock, resulting in an effective price per share of $1.29. The shares were issued on April 5, 2019.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Policies and Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

We believe that the following critical policies affect our more significant judgments and estimates used in preparation of our financial statements.

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

 21 
 

 

Noncontrolling Interest

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation, which governs the accounting for and reporting of non-controlling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance.

 

The net income (loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive income (loss).

 

Revenue Recognition

 

Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company on March 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606. As sales are and have been primarily from providing healthcare services, and the Company has no significant post-delivery obligations, this new standard did not result in a material recognition of revenue on the Company’s accompanying consolidated financial statements for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition.

 

Revenue from providing healthcare services are recognized under Topic 606 in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration and includes the following elements:

 

  executed contracts with the Company’s customers that it believes are legally enforceable;
  identification of performance obligations in the respective contract;
  determination of the transaction price for each performance obligation in the respective contract;
  allocation the transaction price to each performance obligation; and
  recognition of revenue only when the Company satisfies each performance obligation.

 

 22 
 

 

These five elements, as applied to healthcare services, the Company’s sole revenue category, is summarized below:

 

  Healthcare services - gross service revenue is recorded in the accounting records at the time the services are provided on an accrual basis at the provider’s established rates, regardless of whether the provider expects to collect that amount. The Company reserves a provision for contractual adjustment and discounts that are deducted from gross service revenue. The Company reports revenues net of any sales, use and value added taxes.

 

Stock-Based Compensation

 

The Company records stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.

 

Basic and Diluted Earnings Per Share

 

Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS assumes that all dilutive securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

 

Foreign Currency Transactions and Comprehensive Income

 

U.S. GAAP generally requires recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. The functional currency of the Company’s Canadian subsidiaries is the Canadian dollar. Translation gains (losses) are classified as an item of other comprehensive income in the stockholders’ equity section of the balance sheet.

 

New Accounting Pronouncements

 

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its financial statements.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company adopted this ASU beginning on March 1, 2018 and used the modified retrospective method of adoption. The adoption of this ASU did not have a material impact on the Company’s financial statements and disclosures.

 

 23 
 

 

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

 

Recent accounting pronouncements issued by the FASB, the American Institute of Certified Public Accountants and the SEC did not or are not believed by management to have a material effect on the Company’s financial statements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

The Company’s Chief Executive Officer and Principal Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of February 28, 2019. Based upon such evaluation, the Chief Executive Officer and Principal Financial Officer have concluded that, as of February 28, 2019, the Company’s disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 of the Exchange Act that occurred during the fiscal quarter ended February 28, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

Except as set forth herein, as of the date of this Quarterly Report on Form 10-Q, there are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we are a party or which our property is the subject. In addition, none of our officers, directors, affiliates or 5% stockholders (or any associates thereof) is a party adverse to us, or has a material interest adverse to us, in any material proceeding.

 

ITEM 1A. RISK FACTORS

 

Not required for smaller reporting companies.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On December 18, 2018, the Company sold 2,029,620 restricted shares of common stock to an accredited investor for a purchase price of $1,867,250. The shares were issued on December 20, 2018.

 

On January 15, 2019, the Company sold 115,271 restricted shares of common stock to an accredited investor for a purchase price of $180,744. The shares were issued on January 18, 2019.

 

In January 2019, the Company issued 12,000,000 restricted shares of common stock to 247 pursuant to the terms of the Joint Venture Agreement. The shares had a value of $21,600,000.

 

 24 
 

 

On February 26, 2019, the Company issued 458,349 restricted shares of its common stock to Cloud DX in connection with entry into a software license agreement. Such shares had a value of CAD$1,000,000 (approximately $758,567 as of February 26, 2019).

 

The above sales were made pursuant to an exemption from registration as set forth in Regulation S under the Securities Act. The issuances involved an offer and sale of securities outside the United States. The offers and sales were made in offshore transactions and no directed selling efforts were made by the issuer, a distributor, their affiliates or any persons acting on their behalf.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

There have been no defaults in any material payments during the covered period.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

(a) None.

 

(b) There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors since the Company last provided disclosure in response to the requirements of Item 407(c)(3) of Regulation S-K.

 

 25 
 

 

ITEM 6. EXHIBITS

 

Exhibit
Number
  Description of Document
     
10.1   Share Exchange Agreement dated December 18, 2018 by and among the registrant, Novo Healthnet Limited and CannaPiece Group Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on December 21, 2018).
     
10.2   Amendment No. 1 to Share Exchange Agreement dated January 7, 2019 by and between the registrant, Novo Healthnet Limited and CannaPiece Group, Inc. (incorporated by reference to Exhibit 10.5 to the registrant’s Quarterly Report on Form 10-Q filed on January 11, 2019).
     
10.3   Letter Agreement effective January 7, 2019 by and between the registrant and Activa Clinics. (incorporated by reference to Exhibit 10.6 to the registrant’s Quarterly Report on Form 10-Q filed on January 11, 2019).
     
10.4   Agreement of Transfer and Assignment dated January 8, 2019 by and between the registrant and 2478659 Ontario Ltd. (incorporated by reference to Exhibit 10.7 to the registrant’s Quarterly Report on Form 10-Q filed on January 11, 2019).
     
10.5   Amendment No. 2 to Share Exchange Agreement dated January 31, 2019 by and between the registrant, Novo Healthnet Limited and CannaPiece Group, Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on February 6, 2019).
     
10.6   Letter of Intent dated February 4, 2019 among the registrant, Novo Healthnet Limited and Pulse Rx Inc. (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed on February 6, 2019).
     
10.7   Share Purchase and Exchange Agreement dated February 20, 2019 by and among the registrant, Novo Healthnet Limited, Pulse Rx Inc. and the shareholders of Pulse Rx Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on February 26, 2019).
     
10.8   Software License Agreement dated February 26, 2019 by and among Novo Integrated Sciences, Inc., Novo Healthnet Limited and Cloud DX Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on March 5, 2019).
     
10.9   Letter Agreement dated February 27, 2019 by and among Novo Integrated Sciences, Inc., Novo Healthnet Limited and Activa Clinics (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed on March 5, 2019).
     
10.10   Amendment No. 3, dated February 27, 2019, to Share Exchange Agreement dated December 18, 2018, as amended, by and among Novo Integrated Sciences, Inc., Novo Healthnet Limited and CannaPiece Group Inc. (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed on March 5, 2019).
     
31.1   Rule 13a-14(a) Certification of Principal Executive Officer.
     
31.2   Rule 13a-14(a) Certification of Principal Financial Officer.
     
32.1   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Principal Executive Officer and Principal Financial Officer.
     
101.INS   XBRL Instance Document
     
101.SCH   XBRL Taxonomy Extension Schema Document
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase
     
101.LAB   XBRL Taxonomy Extension Labels Linkbase
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase

 

 26 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereto duly authorized:

 

  NOVO INTEGRATED SCIENCES, INC.
     
Dated: April 11, 2019 By: /s/ Robert Mattacchione
    Robert Mattacchione
    Chief Executive Officer
     
  By: /s/ Klara Radulyne
    Klara Radulyne
    Principal Financial Officer

 

 27 
 

 

EX-31.1 2 ex31-1.htm

 

EXHIBIT 31.1

 

CERTIFICATIONS

 

I, Robert Mattacchione, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended February 28, 2019 of Novo Integrated Sciences, Inc.; and
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; and
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
     
  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: April 11, 2019 By: /s/ Robert Mattacchione
    Robert Mattacchione
    Chief Executive Officer (principal executive officer)

 

   

 

 

EX-31.2 3 ex31-2.htm

 

EXHIBIT 31.2

 

CERTIFICATIONS

 

I, Klara Radulyne, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended February 28, 2019 of Novo Integrated Sciences, Inc.; and
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; and
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
     
  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: April 11, 2019 By: /s/ Klara Radulyne
    Klara Radulyne
    Principal Financial Officer

 

   

 

 

EX-32.1 4 ex32-1.htm

 

EXHIBIT 32.1

 

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Novo Integrated Sciences, Inc. (the “Company”) on Form 10-Q for the quarter ended February 28, 2019 as filed with the Securities and Exchange Commission (the “Report”), I, Robert Mattacchione, Chief Executive Officer of the Company, and I, Klara Radulyne, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Date: April 11, 2019 /s/ Robert Mattacchione
 

Robert Mattacchione, Chief Executive Officer

(principal executive officer)

   
  /s/ Klara Radulyne
 

Klara Radulyne, Principal Financial Officer

(principal financial officer)

 

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

 

   

 

 

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Subsequent Events Use of Estimates Principles of Consolidation Noncontrolling Interest Cash Equivalents Accounts Receivable Property and Equipment Long-Lived Assets Intangible Assets Goodwill Acquisition Deposits Fair Value of Financial Instruments Revenue Recognition Income Taxes Stock-Based Compensation Basic and Diluted Earnings Per Share Foreign Currency Transactions and Comprehensive Income Statement of Cash Flows Recent Accounting Pronouncements Schedule of Foreign Currency Translation, Exchange Rate Used Schedule of Estimated Useful Lives of Assets Schedule of Accounts Receivables, Net Schedule of Other Receivables Schedule of Property and Equipment Schedule of Intangible Assets Schedule of Accrued Expenses Schedule of Notes Payable Schedule of Stock Option and Warrant Activity Schedule of Options and Warrants Outstanding and Exercisable Schedule of Fair Value of Options Granted by Using Valuation Assumptions Statement [Table] Statement [Line Items] State country name Date of incorporation Number of restricted shares of common stock Percentage of common stock issued and outstanding Common stock issued in connection with reverse merger transaction Foreign currency exchange rate Equity method investment, ownership percentage Allowance for uncollectible accounts receivable Impairment of its long-lived assets Intangible asset, useful life amortized over term Refundable acquisition deposits Potentially dilutive common stock options and warrants outstanding, shares Translation gains Property and equipment, estimated lives Related party debt, converted amount Debt converted, shares issued Debt conversion, description Debt conversion price Trade receivables Amounts earned but not billed Accounts receivable, gross Allowance for doubtful accounts Accounts receivable, net Total other receivables Current portion Long-term portion Percentage of interest accrued per annum Notes receivable due date Depreciation expense Property and equipment, gross Accumulated depreciation Total Amortization expense Intangible assets, gross Accumulated amortization Total Accrued liabilities Accrued payroll Other Accrued expenses Notes payable Current portion Long-term portion Percentage of interest accrued per annum Notes payable, due date Debentures, outstanding Debt interest rate Debt due date Debt extended due date Percentage of debt converted Accrued interest Number of restricted shares issued Proceeds from issuance of restricted shares Shares issued price per share Number of common stock shares issued Number of shares issued for granted Stock options granted weighted-average grant date fair value Stock options/warrants weighted-average exercise price Stock option expense Unamortized stock option expense Options/Warrants Outstanding, Beginning Balance Options/Warrants Outstanding, Granted Options/Warrants Outstanding, Forfeited Options/Warrants Outstanding, Exercised Options/Warrants Outstanding, Ending Balance Options/Warrants Outstanding, Exercisable Weighted Average Exercise Price, Outstanding, Beginning Balance Weighted Average Exercise Price, Granted Weighted Average Exercise Price, Forfeited Weighted Average Exercise Price, Outstanding, Ending Balance Weighted Average Exercise Price, Exercisable Weighted Average Remaining Contractual Life, Outstanding, Beginning Balance Weighted Average Remaining Contractual Life, Outstanding, Ending Balance Weighted Average Remaining Contractual Life, Exercisable Aggregate Intrinsic Value, Outstanding, Beginning Balance Aggregate Intrinsic Value, Outstanding, Ending Balance Aggregate Intrinsic Value, Exercisable Number of Options/Warrants, Outstanding Number of Options/Warrants, Outstanding, Exercise Price Number of Options/Warrants, Exercisable Number of Options/Warrants, Exercisable, Exercise Price Risk-free interest rate Expected life of the options Expected volatility Expected dividend yield Operating leases expiration date Rent expense Number of restricted shares sold Purchase price of restricted shares Acquisition deposits [Policy Text Block] Advance to Corporation One [Mermber] Advance to Corporation Two [Mermber] Apka Health, Inc. [Member] Average Period [Member] CAD [Member] Clinical Equipment [Member] Debentures, related parties disclosure [Text Block] Executive Fitness Leaders [Member] Exercise Price Range Eight [Member] Exercise Price Range Five [Member] Exercise Price Range Four [Member] Exercise Price Range Nine [Member] Exercise Price Range One [Member] Exercise Price Range Seven [Member] Exercise Price Range Six [Member] Exercise Price Range Three [Member] Exercise Price Range Two [Member] Five Debentures [Member] NHL [Member] Noncontrolling interest disclosure [Policy Text Block] Notes Receivable Dated April 1, 2015 and May 23, 2017 [Member] Novo Healthnet Kemptville Centre, Inc [Member] Period End [Member] Schedule of estimated useful lives of assets [Table Text Block] Schedule of other receivables [Table Text Block] Share Exchange Agreement [Member] Statement of cash flows disclosure [Policy Text Block] Turbine Truck Engines, Inc [Member] Turbine Truck Engines, Inc One [Member] 2018 Incentiven Plan [Member] 2015 Incentive Compensation Plan [Member] Debentures [Member] Accounts receivables, net [Text Block] Percentage of common stock issued and outstanding. Advance to Corporation Three [Member] CannaPiece Group Inc. [Member] August 31, 2019 [Member] Exercise Price Range Ten [Member] Trade receivables. Restricted Common Stock [Member] January 2019 [Member] Subscription Agreements [Member] Notes Payable [Member] Common stock issued for intangible assets. Software License [Member] Land Use Rights [Member] Advance to Corporation Four [Member] Debt extended due date. Joint Venture Agreement [Member] Licensing Agreement [Member] Weighted average remaining contractual term for option awards outstanding, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. Operating leases expiration date. Accredited Investor [Member] Assets, Current Assets Liabilities, Current Liabilities Stockholders' Equity Attributable to Parent Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest Liabilities and Equity Gross Profit Operating Expenses Operating Income (Loss) Other Nonoperating Expense Nonoperating Income (Expense) Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest Net Income (Loss) Attributable to Parent Increase (Decrease) in Accounts Receivable Increase (Decrease) in Prepaid Expense and Other Assets Increase (Decrease) in Accounts Payable Increase (Decrease) in Accrued Liabilities Net Cash Provided by (Used in) Operating Activities Payments to Acquire Property, Plant, and Equipment Payments for (Proceeds from) Loans Receivable Net Cash Provided by (Used in) Investing Activities Repayments of Related Party Debt Repayments of Notes Payable Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) Property, Plant and Equipment, Policy [Policy Text Block] Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block] Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] Accounts Receivable, Gross, Current Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment Debt Instrument, Interest Rate During Period Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value EX-101.PRE 10 nvos-20190228_pre.xml XBRL PRESENTATION FILE XML 11 R1.htm IDEA: XBRL DOCUMENT v3.19.1
Document and Entity Information - shares
6 Months Ended
Feb. 28, 2019
Apr. 08, 2019
Document And Entity Information    
Entity Registrant Name Novo Integrated Sciences, Inc.  
Entity Central Index Key 0001138978  
Document Type 10-Q  
Document Period End Date Feb. 28, 2019  
Amendment Flag false  
Current Fiscal Year End Date --08-31  
Entity Filer Category Non-accelerated Filer  
Entity Small Business Flag true  
Entity Emerging Growth Company false  
Entity Ex Transition Period false  
Entity Common Stock, Shares Outstanding   223,164,283
Trading Symbol NVOS  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2019  
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.19.1
Condensed Consolidated Balance Sheets - USD ($)
Feb. 28, 2019
Aug. 31, 2018
Current Assets:    
Cash and cash equivalents $ 2,373,936 $ 675,705
Accounts receivable, net 1,378,894 1,337,545
Other receivables, current portion 586,734 393,821
Prepaid expenses and other current assets 163,323 161,838
Total current assets 4,502,887 2,568,909
Property and equipment, net 427,195 400,321
Intangible assets 22,358,567
Other receivables, net of current portion 87,354 57,352
Acquisition deposits 1,104,985 1,112,404
Goodwill 600,084 604,113
TOTAL ASSETS 29,081,072 4,743,099
Current Liabilities:    
Accounts payable 1,254,234 1,307,599
Accrued expenses 254,667 383,998
Accrued interest (principally to related parties) 181,740 156,121
Due to related parties 966,102 1,116,261
Notes payable, current portion 379,800 382,350
Total current liabilities 3,036,543 3,346,329
Debentures, related parties 1,215,837 1,224,000
TOTAL LIABILITIES 4,252,380 4,570,329
Commitments and contingencies
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, 2019 and August 31, 2018
Common stock; $0.001par value; 499,000,000 shares authorized; 223,048,205 and 207,881,743 shares issued and outstanding at February 28, 2019 and August 31, 2018 223,048 207,882
Additional paid-in capital 35,047,853 10,053,683
Other comprehensive income 1,165,795 1,139,815
Accumulated deficit (11,570,906) (11,199,989)
Total Novo Integrated Sciences, Inc. stockholders' equity 24,865,790 201,391
Noncontrolling interest (37,098) (28,621)
Total stockholders' equity 24,828,692 172,770
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 29,081,072 $ 4,743,099
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.19.1
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Feb. 28, 2019
Aug. 31, 2018
Statement of Financial Position [Abstract]    
Convertible preferred stock, par value $ 0.001 $ 0.001
Convertible preferred stock, shares authorized 1,000,000 1,000,000
Convertible preferred stock, shares issued 0 0
Convertible preferred stock, shares outstanding 0 0
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 499,000,000 499,000,000
Common stock, shares issued 223,048,205 207,881,743
Common stock, shares outstanding 223,048,205 207,881,743
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.19.1
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Feb. 28, 2019
Feb. 28, 2018
Feb. 28, 2019
Feb. 28, 2018
Income Statement [Abstract]        
Revenues $ 2,200,410 $ 2,145,919 $ 4,512,032 $ 4,399,656
Cost of revenues 1,320,740 1,307,596 2,748,823 2,715,289
Gross profit 879,670 838,323 1,763,209 1,684,367
Operating expenses:        
Selling expenses 4,016 30,601 29,239 68,740
General and administrative expenses 954,341 1,934,479 2,028,009 2,914,754
Total operating expenses 958,357 1,965,080 2,057,248 2,983,494
Loss from operations (78,687) (1,126,757) (294,039) (1,299,127)
Non operating income (expense)        
Interest income 4,294 160 9,383 211
Interest expense (48,587) (304,132) (94,908) (438,285)
Total other income (expense) (44,293) (303,972) (85,525) (438,074)
Loss before income taxes (122,980) (1,430,729) (379,564) (1,737,201)
Income tax expense (54,216)
Net loss (122,980) (1,376,513) (379,564) (1,737,201)
Net loss attributed to noncontrolling interest (3,479) (1,956) (8,647) (5,356)
Net loss attributed to Novo Integrated Sciences, Inc. (119,501) (1,374,557) (370,917) (1,731,845)
Comprehensive loss:        
Net loss (122,980) (1,376,513) (379,564) (1,737,201)
Foreign currency translation gain (loss) 27,765 (211,528) 25,980 (87,341)
Comprehensive loss $ (95,215) $ (1,588,041) $ (353,584) $ (1,824,542)
Weighted average common shares outstanding - basic and diluted 214,281,342 206,091,162 211,094,982 203,953,457
Net loss per common share - basic and diluted $ (0.00) $ (0.01) $ (0.00) $ (0.01)
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.19.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Feb. 28, 2019
Feb. 28, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (379,564) $ (1,737,201)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation 46,474 32,719
Fair value of vested stock options 70,846 1,109,416
Changes in operating assets and liabilities:    
Accounts receivable (50,152) (250,133)
Prepaid expenses and other current assets (2,541) 30,326
Accounts payable (44,730) 80,084
Accrued expenses (126,470) (43,843)
Accrued interest 26,597 303,699
Net cash used in operating activities (459,540) (474,933)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchase of furniture and equipment (75,947) (43,431)
Amounts loaned for other receivables (225,924) (39,215)
Net cash used in investing activities (301,871) (82,646)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Repayments to related parties (142,376) (263,403)
Proceeds from the sale of common stock 2,579,923
Payments on notes payable (7,108)
Net cash provided by (used in) financing activities 2,437,547 (270,511)
Effect of exchange rate changes on cash and cash equivalents 22,095 (31,880)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,698,231 (859,970)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 675,705 1,896,572
CASH AND CASH EQUIVALENTS, END OF PERIOD 2,373,936 1,036,602
CASH PAID FOR:    
Interest 69,289 128,098
Income taxes
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:    
Common stock issued for intangible assets $ 22,358,567
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.19.1
Organization and Basis of Presentation
6 Months Ended
Feb. 28, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Basis of Presentation

Note 1 - Organization and Basis of Presentation

 

Organization and Line of Business

 

Novo Integrated Sciences, Inc. (“Novo Integrated”) was incorporated in Delaware on November 27, 2000, under the name Turbine Truck Engines, Inc. On February 20, 2008, the Company was re-domiciled to the State of Nevada. Effective July 12, 2017, the Company’s name was changed to Novo Integrated Sciences, Inc. When used herein, the terms the “Company,” “we,” “us” and “our” refer to Novo Integrated and its consolidated subsidiaries.

 

Through Novo Healthnet Limited (“NHL”), our wholly owned Canadian subsidiary, we deliver multi-disciplinary primary healthcare to over 400,000 patients annually through our 15 corporate-owned clinics and a contracted network of 97 affiliate clinics and 222 eldercare centric homes located across Canada. Our team of practitioners and staff are trained for assessment, diagnosis, treatment, pain management, rehabilitation and primary prevention. Our specialized services and products include physiotherapy, chiropractic care, occupational therapy, eldercare, laser therapeutics, massage therapy, acupuncture, chiropody, neurological functions, kinesiology, concussion management and baseline testing, women’s pelvic health, sports medicine therapy, assistive devices and private personal training. We do not provide primary care medical services, none of our employees practices primary care medicine, and our services do not require a medical or nursing license.

 

As we continue to build our health science platform of services and products through the integration of technology and rehabilitative science, one component of our lateral business growth strategy includes developing business units centered on the direct control of the grow, extraction, manufacturing and distribution processes for hemp and medical cannabidiol products. Additionally, we continue to expand on our patient care philosophy of maintaining an on-going continuous connection with our patient community, beyond the traditional confines of a clinic, by extending oversight of patient diagnosis, care and monitoring, directly into the patient’s home, through various mobile telemedicine and diagnostic tools.

 

Since inception and through May 9, 2017, our activities and business operations were limited to raising capital, organizational matters and the implementation of our business plan related to research, development, testing and commercialization of various alternative energy technologies.

 

On April 25, 2017 (the “Effective Date”), the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) by and between (i) the Company; (ii) NHL; (iii) ALMC-ASAP Holdings Inc. (“ALMC”); (iv) Michael Gaynor Family Trust (the “MGFT”); (v) 1218814 Ontario Inc. (“1218814”); and (vi) Michael Gaynor Physiotherapy Professional Corp. (“MGPP,” and together with ALMC, MGFT and 1218814, the “NHL Shareholders”). Pursuant to the terms of the Share Exchange Agreement, the Company agreed to acquire from the NHL Shareholders all of the shares of both common and preferred stock of NHL, held by the NHL Shareholders, in exchange for the issuance by the Company to the NHL Shareholders of shares of the Company’s common stock, such that following the closing of the Share Exchange Agreement, the NHL Shareholders would own 167,797,406 restricted shares of Company common stock, representing 85% of the issued and outstanding Company common stock, calculated including all granted and issued options or warrants to acquire the Company common stock as of the Effective Date, but to exclude shares of Company common stock that are subject to a then-current Regulation S offering that was undertaking by the Company (the “Exchange”).

 

On May 9, 2017, the Exchange closed and, as a result, NHL became a wholly owned subsidiary of Novo Integrated Sciences, Inc.

 

The Exchange was accounted for as a reverse acquisition under the purchase method of accounting since NHL obtained control of Novo Integrated Sciences, Inc. Accordingly, the Exchange was recorded as a recapitalization of NHL, with NHL being treated as the continuing entity. The historical financial statements presented are the financial statements of NHL. The Exchange was treated as a recapitalization and not as a business combination; therefore, no pro forma information is disclosed. At the closing date of the Exchange, the net assets of the legal acquirer, Novo Integrated Sciences, Inc., were $6,904.

 

The unaudited consolidated financial statements are prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The information furnished herein reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management, are necessary to fairly state the Company’s financial position, the results of its operations, and cash flows for the periods presented. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) were omitted pursuant to such rules and regulations. The results of operations for the six months ended February 28, 2019 are not necessarily indicative of the results for the year ending August 31, 2019.

 

Basis of Presentation

 

The accompanying consolidated financial statements were prepared in conformity with U.S. GAAP. The Company’s Canadian subsidiaries’ functional currency is the Canadian Dollar (“CAD” or “CAD$”); however, the accompanying consolidated financial statements were translated and presented in United States Dollars (“$” or “USD”).

 

Foreign Currency Translation

 

The accounts of the Company’s Canadian subsidiaries are maintained in CAD. The accounts of these subsidiaries are translated into USD in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830, Foreign Currency Transaction, with the CAD as the functional currency. According to Topic 830, all assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, Comprehensive Income. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement of operations and comprehensive income. The following table details the exchange rates used for the respective periods:

 

    February 28, 2019     February 28, 2018     August 31, 2018  
Period end: CAD to USD exchange rate   $ 0.7596     $ 0.7808     $ 0.7647  
Average period: CAD to USD exchange rate   $ 0.7578     $ 0.7959          

XML 17 R7.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies
6 Months Ended
Feb. 28, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, NHL, Novo Healthnet Rehab Limited, Novo Assessments Inc., and an 80% interest in Novo Healthnet Kemptville Centre, Inc., a Back on Track Physiotherapy and Health Centre clinic operated by NHL. All of the Company’s subsidiaries are incorporated under the laws of the Province of Ontario, Canada. All intercompany transactions have been eliminated.

 

Noncontrolling Interest

 

The Company follows FASB ASC Topic 810, Consolidation, which governs the accounting for and reporting of non-controlling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance.

 

The net income (loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive income (loss).

 

Cash Equivalents

 

For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly liquid debt instruments with original maturities of three months or less.

 

Accounts Receivable

 

Accounts receivable are recorded, net of allowance for doubtful accounts and sales returns. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentration, customer credit worthiness, current economic trends and changes in customer payment patterns to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Delinquent account balances are written-off after management has determined that the likelihood of collection is not probable and known bad debts are written off against the allowance for doubtful accounts when identified. As of February 28, 2019 and August 31, 2018, the allowance for uncollectible accounts receivable was $473,585 and $464,527, respectively.

 

Property and Equipment

 

Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the declining balance method for substantially all assets with estimated lives as follows:

 

  Leasehold improvements 5 years
  Clinical equipment 5 years
  Computer equipment 3 years
  Office equipment 5 years
  Furniture and fixtures 5 years

 

Long-Lived Assets

 

The Company applies the provisions of ASC Topic 360, Property, Plant, and Equipment, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review at February 28, 2019 and August 31, 2018, the Company believes there was no impairment of its long-lived assets.

 

Intangible Assets

 

The Company’s intangible assets consist of land use rights and a software license which will be amortized over 50 and 7 years, respectively. Amortization will begin when the assets are fully placed in service. The Company will perform a test for impairment annually. The land use rights and the software license intangible assets were acquired in January and February, 2019, respectively. Therefore, the first annual impairment test will be performed as of August 31, 2019.

 

Goodwill

 

Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. Under accounting requirements, goodwill is not amortized but is subject to annual impairment tests. At February 28, 2019, the Company recorded goodwill of $379,800 and $220,284, respectively, related to its acquisition of Apka Health, Inc. during the fiscal year ended August 31, 2017 and Executive Fitness Leaders during the fiscal year ended August 31, 2018. As of August 31, 2018, the Company performed the required impairment review. Based on its review, the Company believes there was no impairment of its goodwill.

 

Acquisition Deposits

 

The Company has signed letters of understanding with two potential acquisition candidates which include refundable acquisition deposits totaling $1,104,985 and $1,112,404 at February 28, 2019 and August 31, 2018, respectively.

 

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, advances to suppliers, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities.

 

FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

  Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
     
  Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
     
  Level 3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement.

 

The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging.

 

As of February 28, 2019 and August 31, 2018, respectively, the Company did not identify any assets and liabilities required to be presented on the balance sheet at fair value.

 

Revenue Recognition

 

Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company on March 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606. As sales are and have been primarily from providing healthcare services, and the Company has no significant post-delivery obligations, this new standard did not result in a material recognition of revenue on the Company’s accompanying consolidated financial statements for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition.

 

Revenue from providing healthcare services are recognized under Topic 606 in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration and includes the following elements:

 

  executed contracts with the Company’s customers that it believes are legally enforceable;
  identification of performance obligations in the respective contract;
  determination of the transaction price for each performance obligation in the respective contract;
  allocation the transaction price to each performance obligation; and
  recognition of revenue only when the Company satisfies each performance obligation.

 

These five elements, as applied to healthcare services, the Company’s sole revenue category, is summarized below:

 

  Healthcare services - gross service revenue is recorded in the accounting records at the time the service is provided on an accrual basis at the provider’s established rates, regardless of whether the provider expects to collect that amount. The Company reserves a provision for contractual adjustment and discounts that are deducted from gross service revenue. The Company reports revenues net of any sales, use and value added taxes.

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.

 

Stock-Based Compensation

 

The Company records stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.

 

Basic and Diluted Earnings Per Share

 

Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS assumes that all dilutive securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There were 10,095,000 options/warrants outstanding as of February 28, 2019. Due to the net loss incurred, potentially dilutive instruments would be anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for all periods presented.

 

Foreign Currency Transactions and Comprehensive Income

 

U.S. GAAP generally requires recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. The functional currency of the Company’s Canadian subsidiaries is the CAD. Translation gains of $1,165,795 and $1,139,815 at February 28, 2019 and August 31, 2018, respectively, are classified as an item of other comprehensive income in the stockholders’ equity section of the balance sheet.

 

Statement of Cash Flows

 

Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rates. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.

 

Recent Accounting Pronouncements

 

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its financial statements.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company adopted this ASU beginning on March 1, 2018 and used the modified retrospective method of adoption. The adoption of this ASU did not have a material impact on the Company’s financial statements and disclosures.

 

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.19.1
Related Party Transactions
6 Months Ended
Feb. 28, 2019
Related Party Transactions [Abstract]  
Related Party Transactions

Note 3 – Related Party Transactions

 

Due to related parties

 

Amounts loaned to the Company by stockholders and officers of the Company are non-interest bearing and payable upon demand. At February 28, 2019 and August 31, 2018, the amount due to related parties was $966,102 and $1,116,261, respectively.

 

On January 31, 2018, a related party converted $813,125 of outstanding principal and accrued interest into 1,976,483 shares of the Company’s common stock. The per share price used for the conversion of this loan was $0.4114 which was determined based on the average price of the five (5) trading days immediately preceding the date of conversion with a 10% premium added to the calculated per share price.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.19.1
Accounts Receivables, Net
6 Months Ended
Feb. 28, 2019
Receivables [Abstract]  
Accounts Receivables, Net

Note 4 – Accounts Receivables, net

 

Accounts receivables, net at February 28, 2019 and August 31, 2018 consisted of the following:

 

    February 28, 2019     August 31, 2018  
Trade receivables   $ 1,610,117     $ 1,564,180  
Amounts earned but not billed     242,362       237,892  
      1,852,479       1,802,072  
Allowance for doubtful accounts     (473,585 )     (464,527 )
Accounts receivable, net   $ 1,378,894     $ 1,337,545  

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.19.1
Other Receivables
6 Months Ended
Feb. 28, 2019
Receivables [Abstract]  
Other Receivables

Note 5 – Other Receivables

 

Other receivables at February 28, 2019 and August 31, 2018 consisted of the following:

 

    February 28, 2019     August 31, 2018  
Notes receivable dated April 1, 2015 and amended on May 23, 2017; accrued interest at 8% per annum; secured by certain assets; due March 1, 2019   $ 284,849     $ 286,763  
                 
Advance to corporation; non-interest bearing; unsecured; due no later than November 18, 2020     30,384       30,588  
                 
Advance to corporation; accrues interest at 12% per annum; unsecured; due September 2019     75,960       76,470  
                 
Advance to corporation; accrues interest at 10% per annum; unsecured; due May 1, 2022     56,970       57,352  
                 
Advance to corporation; accrues interest at 10% per annum after the first 60 days; unsecured; due February 7, 2020     225,924       -  
Total other receivables     674,087       451,173  
Current portion     (586,733 )     (393,821 )
Long-term portion   $ 87,354     $ 57,352  

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.19.1
Property and Equipment
6 Months Ended
Feb. 28, 2019
Property, Plant and Equipment [Abstract]  
Property and Equipment

Note 6 – Property and Equipment

 

Property and equipment at February 28, 2019 and August 31, 2018 consisted of the following:

 

    February 28, 2019     August 31, 2018  
Leasehold Improvements   $ 433,756     $ 372,010  
Clinical equipment     276,954       269,741  
Computer equipment     22,485       22,636  
Office equipment     27,382       24,658  
Furniture and fixtures     39,356       39,620  
      799,933       728,665  
Accumulated depreciation     (372,738 )     (328,344 )
Total   $ 427,195     $ 400,321  

 

Depreciation expense for the six months ended February 28, 2019 and 2018 was $46,474 and $32,719, respectively.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.19.1
Intangible Assets
6 Months Ended
Feb. 28, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets

Note 7 – Intangible Assets

 

Intangible assets at February 28, 2019 and August 31, 2018 consisted of the following:

 

    February 28, 2019     August 31, 2018  
Land use rights   $ 21,600,000     $         -  
Software license     758,567       -  
      22,358,567       -  
Accumulated amortization     -       -  
Total   $ 22,358,567     $ -  

 

There was no amortization expense during the six months ended February 28, 2019 and 2018.

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.19.1
Accrued Expenses
6 Months Ended
Feb. 28, 2019
Payables and Accruals [Abstract]  
Accrued Expenses

Note 8 – Accrued Expenses

 

Accrued expenses at February 28, 2019 and August 31, 2018 consisted of the following:

 

    February 28, 2019     August 31, 2018  
Accrued liabilities   $ 131,422     $ 266,123  
Accrued payroll     89,637       106,761  
Other     33,608       11,114  
    $ 254,667     $ 383,998  

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.19.1
Notes Payable
6 Months Ended
Feb. 28, 2019
Debt Disclosure [Abstract]  
Notes Payable

Note 9 – Notes Payable

 

Notes payable at February 28, 2019 and August 31, 2018 consisted of the following:

 

    February 28, 2019     August 31, 2018  
Notes payable issued in connection with purchase of assets; accrues interest at 0% per annum; due on March 27, 2019.   $ 379,800     $ 382,350  
      379,800       382,350  
Current portion     (379,800 )     (382,350 )
Long-term portion   $ -     $ -  

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.19.1
Debentures, Related Parties
6 Months Ended
Feb. 28, 2019
Debt Disclosure [Abstract]  
Debentures, Related Parties

Note 10 – Debentures, related parties

 

On September 30, 2013, the Company issued five debentures totaling CAD$6,402,512 ($4,968,990 at November 30, 2017) in connection with the acquisition of certain business assets. The holders of the debentures are current stockholders, officers and/or affiliates of the Company. The debentures are secured by all the assets of the Company, accrue interest at 8% per annum and were originally due on September 30, 2016. On December 2, 2017, the debenture holders agreed to extend the due date to September 30, 2019.

 

On January 31, 2018, the debenture holders converted 75% of the debenture value of $3,894,809 plus accrued interest of $414,965 into 10,475,872 shares of the Company’s common stock. The per share price used for the conversion of each debenture was $0.4114 which was determined based on the average price of the five (5) trading days immediately preceding the date of conversion with a 10% premium added to the calculated per share price. At February 28, 2019, the amount of debentures outstanding was $1,215,837.

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.19.1
Stockholders' Deficit
6 Months Ended
Feb. 28, 2019
Equity [Abstract]  
Stockholders' Deficit

Note 11 – Stockholders’ Deficit

 

Convertible preferred stock

 

The Company has authorized 1,000,000 shares of $0.001 par value convertible preferred stock. At February 28, 2019 and August 31, 2018 there were 0 and 0 convertible preferred shares issued and outstanding, respectively.

 

Common stock

 

The Company has authorized 499,000,000 shares of $0.001 par value common stock. At February 28, 2019 and August 31, 2018 there were 223,048,205 and 207,881,743 common shares issued and outstanding, respectively.

 

During the six months ended February 28, 2019, the Company issued:

 

  2,708,113 restricted shares of common stock for cash proceeds of $2,579,923
     
  12,000,000 restricted shares of common stock as consideration for the Assignment, to the Company, of a Joint Venture Agreement with a value of $21,600,000 based on the closing share price of $1.80 on the execution date of the Closing Certificate
     
  458,349 restricted shares of common stock as consideration for a Licensing Agreement based on a per share price of $1.655 with a value of $758,567.

 

Stock options/warrants

 

On September 8, 2015, the Company adopted the 2015 Incentive Compensation Plan (the “2015 Plan”), which authorizes the issuance of up to 5,000,000 shares of common stock to employees, officers, directors or independent consultants of the Company, provided that no person can be granted shares under the 2015 Plan for services related to raising capital or promotional activities. As of February 28, 2019, 4,987,500 shares were available under the 2015 Plan for future grants, awards, options or share issuances. However, because the shares issuable under the 2015 Plan or issuable upon conversion of awards granted under the 2015 Plan are no longer registered under the Securities Exchange Act of 1934, as amended, the Company does not intend to issue any additional grants under the 2015 Plan.

 

On January 16, 2018, the Company adopted the Novo Integrated Sciences, Inc. 2018 Incentive Plan (the “2018 Plan”). Under the 2018 Plan, 10,000,000 shares of common stock are authorized for issuance to employees, non-employees, directors and key consultants to the Company or its subsidiaries. The 2018 Plan authorizes equity-based and cash-based incentives for participants. There were 9,875,000 shares available for award at February 28, 2019 under the 2018 Plan.

 

The following is a summary of stock option/warrant activity:

 

                Weighted        
          Weighted     Average        
    Options/     Average     Remaining     Aggregate  
    Warrants     Exercise     Contractual     Intrinsic  
    Outstanding     Price     Life     Value  
Outstanding, August 31, 2018     10,030,000       0.30       4.56     $ 7,045,500  
Granted     75,000       0.95                  
Forfeited     (10,000 )     2.00                  
Exercised     -                          
Outstanding, February 28, 2019     10,095,000       0.30       4.08     $ 13,106,250  
Exercisable, February 28, 2019     10,095,000     $ 0.30       4.08     $ 13,106,250  

 

The exercise price for options/warrants outstanding at February 28, 2019:

 

Outstanding and Exercisable
  Number of          
  Options/       Exercise  
  Warrants       Price  
  5,500,000     $ 0.16  
  1,000,000       0.32  
  50,000       0.33  
  120,000       0.40  
  2,000,000       0.42  
  100,000       0.50  
  1,000,000       0.62  
  250,000       0.80  
  75,000       0.95  
  10,095,000          

 

For options granted during the fiscal year ending August 31, 2019 where the exercise price equaled the stock price at the date of the grant, the weighted-average fair value of such options was $0.94 and the weighted-average exercise price of such options/warrants was $0.95. No options were granted during the fiscal year ending August 31, 2019 where the exercise price was less than the stock price at the date of grant or the exercise price was greater than the stock price at the date of grant.

 

For options granted during the fiscal year ended August 31, 2018 where the exercise price equaled the stock price at the date of the grant, the weighted-average fair value of such options was $0.39 and the weighted-average exercise price of such options/warrants was $0.40. No options were granted during the fiscal year ended August 31, 2018 where the exercise price was less than the stock price at the date of grant or the exercise price was greater than the stock price at the date of grant.

 

The fair value of the stock options is being amortized to stock option expense over the vesting period. The Company recorded stock option expense of $70,846 and $1,109,416 during the six months ended February 28, 2019 and 2018, respectively. At February 28, 2019, the unamortized stock option expense was $0.

 

The assumptions used in calculating the fair value of options granted during the current fiscal year ending August 31, 2019 using the Black-Scholes option-pricing model for options granted, through February 28, 2019, are as follows:

 

Risk-free interest rate     2.78 %
Expected life of the options     3.5 years  
Expected volatility     294 %
Expected dividend yield     0 %

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.19.1
Commitments and Contingencies
6 Months Ended
Feb. 28, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 12 – Commitments and Contingencies

 

Litigation

 

The Company is party to certain legal proceedings from time to time incidental to the conduct of its business. These proceedings could result in fines, penalties, compensatory or treble damages or non-monetary relief. The nature of legal proceedings is such that the Company cannot assure the outcome of any particular matter, and an unfavorable ruling or development could have a materially adverse effect on our consolidated financial position, results of operations and cash flows in the period in which a ruling or settlement occurs. However, based on information available to the Company’s management to date, the Company’s management does not expect that the outcome of any matter pending against the Company is likely to have a materially adverse effect on the Company’s consolidated financial position as of February 28, 2019, results of operations, cash flows or liquidity of the Company.

 

Leases

 

The Company leases its office space and certain facilities under long-term operating leases expiring through fiscal year 2023. Rent expense under these leases was $498,237 and $409,350 for the six months ended February 28, 2019 and 2018, respectively.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.19.1
Subsequent Events
6 Months Ended
Feb. 28, 2019
Subsequent Events [Abstract]  
Subsequent Events

Note 13 – Subsequent Events

 

On April 3, 2019, the Company sold 116,078 restricted shares of common stock to an accredited investor for a purchase price of $149,740.

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Feb. 28, 2019
Accounting Policies [Abstract]  
Use of Estimates

Use of Estimates

 

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Principles of Consolidation

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, NHL, Novo Healthnet Rehab Limited, Novo Assessments Inc., and an 80% interest in Novo Healthnet Kemptville Centre, Inc., a Back on Track Physiotherapy and Health Centre clinic operated by NHL. All of the Company’s subsidiaries are incorporated under the laws of the Province of Ontario, Canada. All intercompany transactions have been eliminated.

Noncontrolling Interest

Noncontrolling Interest

 

The Company follows FASB ASC Topic 810, Consolidation, which governs the accounting for and reporting of non-controlling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance.

 

The net income (loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive income (loss).

Cash Equivalents

Cash Equivalents

 

For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly liquid debt instruments with original maturities of three months or less.

Accounts Receivable

Accounts Receivable

 

Accounts receivable are recorded, net of allowance for doubtful accounts and sales returns. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentration, customer credit worthiness, current economic trends and changes in customer payment patterns to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Delinquent account balances are written-off after management has determined that the likelihood of collection is not probable and known bad debts are written off against the allowance for doubtful accounts when identified. As of February 28, 2019 and August 31, 2018, the allowance for uncollectible accounts receivable was $473,585 and $464,527, respectively.

Property and Equipment

Property and Equipment

 

Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the declining balance method for substantially all assets with estimated lives as follows:

 

  Leasehold improvements 5 years
  Clinical equipment 5 years
  Computer equipment 3 years
  Office equipment 5 years
  Furniture and fixtures 5 years

Long-Lived Assets

Long-Lived Assets

 

The Company applies the provisions of ASC Topic 360, Property, Plant, and Equipment, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review at February 28, 2019 and August 31, 2018, the Company believes there was no impairment of its long-lived assets.

Intangible Assets

Intangible Assets

 

The Company’s intangible assets consist of land use rights and a software license which will be amortized over 50 and 7 years, respectively. Amortization will begin when the assets are fully placed in service. The Company will perform a test for impairment annually. The land use rights and the software license intangible assets were acquired in January and February, 2019, respectively. Therefore, the first annual impairment test will be performed as of August 31, 2019.

Goodwill

Goodwill

 

Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. Under accounting requirements, goodwill is not amortized but is subject to annual impairment tests. At February 28, 2019, the Company recorded goodwill of $379,800 and $220,284, respectively, related to its acquisition of Apka Health, Inc. during the fiscal year ended August 31, 2017 and Executive Fitness Leaders during the fiscal year ended August 31, 2018. As of August 31, 2018, the Company performed the required impairment review. Based on its review, the Company believes there was no impairment of its goodwill.

Acquisition Deposits

Acquisition Deposits

 

The Company has signed letters of understanding with two potential acquisition candidates which include refundable acquisition deposits totaling $1,104,985 and $1,112,404 at February 28, 2019 and August 31, 2018, respectively.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, advances to suppliers, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities.

 

FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

  Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
     
  Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
     
  Level 3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement.

 

The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging.

 

As of February 28, 2019 and August 31, 2018, respectively, the Company did not identify any assets and liabilities required to be presented on the balance sheet at fair value.

Revenue Recognition

Revenue Recognition

 

Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company on March 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606. As sales are and have been primarily from providing healthcare services, and the Company has no significant post-delivery obligations, this new standard did not result in a material recognition of revenue on the Company’s accompanying consolidated financial statements for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition.

 

Revenue from providing healthcare services are recognized under Topic 606 in a manner that reasonably reflects the delivery of its services to customers in return for expected consideration and includes the following elements:

 

  executed contracts with the Company’s customers that it believes are legally enforceable;
  identification of performance obligations in the respective contract;
  determination of the transaction price for each performance obligation in the respective contract;
  allocation the transaction price to each performance obligation; and
  recognition of revenue only when the Company satisfies each performance obligation.

 

These five elements, as applied to healthcare services, the Company’s sole revenue category, is summarized below:

 

  Healthcare services - gross service revenue is recorded in the accounting records at the time the service is provided on an accrual basis at the provider’s established rates, regardless of whether the provider expects to collect that amount. The Company reserves a provision for contractual adjustment and discounts that are deducted from gross service revenue. The Company reports revenues net of any sales, use and value added taxes.

Income Taxes

Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.

Stock-Based Compensation

Stock-Based Compensation

 

The Company records stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.

Basic and Diluted Earnings Per Share

Basic and Diluted Earnings Per Share

 

Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS assumes that all dilutive securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There were 10,095,000 options/warrants outstanding as of February 28, 2019. Due to the net loss incurred, potentially dilutive instruments would be anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for all periods presented.

Foreign Currency Transactions and Comprehensive Income

Foreign Currency Transactions and Comprehensive Income

 

U.S. GAAP generally requires recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. The functional currency of the Company’s Canadian subsidiaries is the CAD. Translation gains of $1,165,795 and $1,139,815 at February 28, 2019 and August 31, 2018, respectively, are classified as an item of other comprehensive income in the stockholders’ equity section of the balance sheet.

Statement of Cash Flows

Statement of Cash Flows

 

Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rates. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its financial statements.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company adopted this ASU beginning on March 1, 2018 and used the modified retrospective method of adoption. The adoption of this ASU did not have a material impact on the Company’s financial statements and disclosures.

 

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

XML 30 R20.htm IDEA: XBRL DOCUMENT v3.19.1
Organization and Basis of Presentation (Tables)
6 Months Ended
Feb. 28, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Foreign Currency Translation, Exchange Rate Used

The following table details the exchange rates used for the respective periods:

 

    February 28, 2019     February 28, 2018     August 31, 2018  
Period end: CAD to USD exchange rate   $ 0.7596     $ 0.7808     $ 0.7647  
Average period: CAD to USD exchange rate   $ 0.7578     $ 0.7959          

XML 31 R21.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies (Tables)
6 Months Ended
Feb. 28, 2019
Accounting Policies [Abstract]  
Schedule of Estimated Useful Lives of Assets

Depreciation of property and equipment is provided using the declining balance method for substantially all assets with estimated lives as follows:

 

  Leasehold improvements 5 years
  Clinical equipment 5 years
  Computer equipment 3 years
  Office equipment 5 years
  Furniture and fixtures 5 years
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.19.1
Accounts Receivables, Net (Tables)
6 Months Ended
Feb. 28, 2019
Receivables [Abstract]  
Schedule of Accounts Receivables, Net

Accounts receivables, net at February 28, 2019 and August 31, 2018 consisted of the following:

 

    February 28, 2019     August 31, 2018  
Trade receivables   $ 1,610,117     $ 1,564,180  
Amounts earned but not billed     242,362       237,892  
      1,852,479       1,802,072  
Allowance for doubtful accounts     (473,585 )     (464,527 )
Accounts receivable, net   $ 1,378,894     $ 1,337,545  

XML 33 R23.htm IDEA: XBRL DOCUMENT v3.19.1
Other Receivables (Tables)
6 Months Ended
Feb. 28, 2019
Receivables [Abstract]  
Schedule of Other Receivables

Other receivables at February 28, 2019 and August 31, 2018 consisted of the following:

 

    February 28, 2019     August 31, 2018  
Notes receivable dated April 1, 2015 and amended on May 23, 2017; accrued interest at 8% per annum; secured by certain assets; due March 1, 2019   $ 284,849     $ 286,763  
                 
Advance to corporation; non-interest bearing; unsecured; due no later than November 18, 2020     30,384       30,588  
                 
Advance to corporation; accrues interest at 12% per annum; unsecured; due September 2019     75,960       76,470  
                 
Advance to corporation; accrues interest at 10% per annum; unsecured; due May 1, 2022     56,970       57,352  
                 
Advance to corporation; accrues interest at 10% per annum after the first 60 days; unsecured; due February 7, 2020     225,924       -  
Total other receivables     674,087       451,173  
Current portion     (586,733 )     (393,821 )
Long-term portion   $ 87,354     $ 57,352  

XML 34 R24.htm IDEA: XBRL DOCUMENT v3.19.1
Property and Equipment (Tables)
6 Months Ended
Feb. 28, 2019
Property, Plant and Equipment [Abstract]  
Schedule of Property and Equipment

Property and equipment at February 28, 2019 and August 31, 2018 consisted of the following:

 

    February 28, 2019     August 31, 2018  
Leasehold Improvements   $ 433,756     $ 372,010  
Clinical equipment     276,954       269,741  
Computer equipment     22,485       22,636  
Office equipment     27,382       24,658  
Furniture and fixtures     39,356       39,620  
      799,933       728,665  
Accumulated depreciation     (372,738 )     (328,344 )
Total   $ 427,195     $ 400,321  

XML 35 R25.htm IDEA: XBRL DOCUMENT v3.19.1
Intangible Assets (Tables)
6 Months Ended
Feb. 28, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Intangible Assets

Intangible assets at February 28, 2019 and August 31, 2018 consisted of the following:

 

    February 28, 2019     August 31, 2018  
Land use rights   $ 21,600,000     $         -  
Software license     758,567       -  
      22,358,567       -  
Accumulated amortization     -       -  
Total   $ 22,358,567     $ -  

XML 36 R26.htm IDEA: XBRL DOCUMENT v3.19.1
Accrued Expenses (Tables)
6 Months Ended
Feb. 28, 2019
Payables and Accruals [Abstract]  
Schedule of Accrued Expenses

Accrued expenses at February 28, 2019 and August 31, 2018 consisted of the following:

 

    February 28, 2019     August 31, 2018  
Accrued liabilities   $ 131,422     $ 266,123  
Accrued payroll     89,637       106,761  
Other     33,608       11,114  
    $ 254,667     $ 383,998  

XML 37 R27.htm IDEA: XBRL DOCUMENT v3.19.1
Notes Payable (Tables)
6 Months Ended
Feb. 28, 2019
Debt Disclosure [Abstract]  
Schedule of Notes Payable

Notes payable at February 28, 2019 and August 31, 2018 consisted of the following:

 

    February 28, 2019     August 31, 2018  
Notes payable issued in connection with purchase of assets; accrues interest at 0% per annum; due on March 27, 2019.   $ 379,800     $ 382,350  
      379,800       382,350  
Current portion     (379,800 )     (382,350 )
Long-term portion   $ -     $ -  

XML 38 R28.htm IDEA: XBRL DOCUMENT v3.19.1
Stockholders' Deficit (Tables)
6 Months Ended
Feb. 28, 2019
Equity [Abstract]  
Schedule of Stock Option and Warrant Activity

The following is a summary of stock option/warrant activity:

 

                Weighted        
          Weighted     Average        
    Options/     Average     Remaining     Aggregate  
    Warrants     Exercise     Contractual     Intrinsic  
    Outstanding     Price     Life     Value  
Outstanding, August 31, 2018     10,030,000       0.30       4.56     $ 7,045,500  
Granted     75,000       0.95                  
Forfeited     (10,000 )     2.00                  
Exercised     -                          
Outstanding, February 28, 2019     10,095,000       0.30       4.08     $ 13,106,250  
Exercisable, February 28, 2019     10,095,000     $ 0.30       4.08     $ 13,106,250  

Schedule of Options and Warrants Outstanding and Exercisable

The exercise price for options/warrants outstanding at February 28, 2019:

 

Outstanding and Exercisable
  Number of          
  Options/       Exercise  
  Warrants       Price  
  5,500,000     $ 0.16  
  1,000,000       0.32  
  50,000       0.33  
  120,000       0.40  
  2,000,000       0.42  
  100,000       0.50  
  1,000,000       0.62  
  250,000       0.80  
  75,000       0.95  
  10,095,000          

Schedule of Fair Value of Options Granted by Using Valuation Assumptions

The assumptions used in calculating the fair value of options granted during the current fiscal year ending August 31, 2019 using the Black-Scholes option-pricing model for options granted, through February 28, 2019, are as follows:

 

Risk-free interest rate     2.78 %
Expected life of the options     3.5 years  
Expected volatility     294 %
Expected dividend yield     0 %

XML 39 R29.htm IDEA: XBRL DOCUMENT v3.19.1
Organization and Basis of Presentation (Details Narrative) - USD ($)
6 Months Ended
Apr. 25, 2017
Feb. 28, 2019
Number of restricted shares of common stock   2,708,113
Common stock issued in connection with reverse merger transaction   $ 6,904
Turbine Truck Engines, Inc [Member]    
State country name   Delaware
Date of incorporation   Nov. 27, 2000
Turbine Truck Engines, Inc One [Member]    
State country name   State of Nevada
Date of incorporation   Feb. 20, 2008
NHL [Member] | Share Exchange Agreement [Member]    
Number of restricted shares of common stock 167,797,406  
Percentage of common stock issued and outstanding 85.00%  
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.19.1
Organization and Basis of Presentation - Schedule of Foreign Currency Translation, Exchange Rate Used (Details) - CAD [Member]
Feb. 28, 2019
Aug. 31, 2018
Feb. 28, 2018
Period End [Member]      
Foreign currency exchange rate 0.7596 0.7647 0.7808
Average Period [Member]      
Foreign currency exchange rate 0.7578 0.7959
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
6 Months Ended 12 Months Ended
Feb. 28, 2019
Aug. 31, 2018
Aug. 31, 2017
Allowance for uncollectible accounts receivable $ 473,585 $ 464,527  
Impairment of its long-lived assets 0 0  
Goodwill 600,084 604,113  
Refundable acquisition deposits $ 1,104,985 1,112,404  
Potentially dilutive common stock options and warrants outstanding, shares 10,095,000    
Translation gains $ 1,165,795 1,139,815  
Apka Health, Inc. [Member]      
Goodwill     $ 379,800
Executive Fitness Leaders [Member]      
Goodwill   $ 220,284  
Land Use Rights [Member]      
Intangible asset, useful life amortized over term 50 years    
Software License [Member]      
Intangible asset, useful life amortized over term 7 years    
Novo Healthnet Kemptville Centre, Inc. [Member]      
Equity method investment, ownership percentage 80.00%    
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives of Assets (Details)
6 Months Ended
Feb. 28, 2019
Leasehold Improvements [Member]  
Property and equipment, estimated lives 5 years
Clinical Equipment [Member]  
Property and equipment, estimated lives 5 years
Computer Equipment [Member]  
Property and equipment, estimated lives 3 years
Office Equipment [Member]  
Property and equipment, estimated lives 5 years
Furniture and Fixtures [Member]  
Property and equipment, estimated lives 5 years
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.19.1
Related Party Transactions (Details Narrative) - USD ($)
Jan. 31, 2018
Feb. 28, 2019
Aug. 31, 2018
Related Party Transactions [Abstract]      
Due to related parties   $ 966,102 $ 1,116,261
Related party debt, converted amount $ 813,125    
Debt converted, shares issued 1,976,483    
Debt conversion, description The per share price used for the conversion of this loan was $0.4114 which was determined based on the average price of the five (5) trading days immediately preceding the date of conversion with a 10% premium added to the calculated per share price.    
Debt conversion price $ 0.4114    
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.19.1
Accounts Receivables, Net - Schedule of Accounts Receivables, Net (Details) - USD ($)
Feb. 28, 2019
Aug. 31, 2018
Receivables [Abstract]    
Trade receivables $ 1,610,117 $ 1,564,180
Amounts earned but not billed 242,362 237,892
Accounts receivable, gross 1,852,479 1,802,072
Allowance for doubtful accounts (473,585) (464,527)
Accounts receivable, net $ 1,378,894 $ 1,337,545
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.19.1
Other Receivables - Schedule of Other Receivables (Details) - USD ($)
Feb. 28, 2019
Aug. 31, 2018
Total other receivables $ 674,087 $ 451,173
Current portion (586,734) (393,821)
Long-term portion 87,354 57,352
Notes Receivable Dated April 1, 2015 and May 23, 2017 [Member]    
Total other receivables 284,849 286,763
Advance to Corporation One [Member]    
Total other receivables 30,384 30,588
Advance to Corporation Two [Member]    
Total other receivables 75,960 76,470
Advance to Corporation Three [Member]    
Total other receivables 56,970 57,352
Advance to Corporation Four [Member]    
Total other receivables $ 225,924
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.19.1
Other Receivables - Schedule of Other Receivables (Details) (Parenthetical)
6 Months Ended 12 Months Ended
Feb. 28, 2019
Aug. 31, 2018
Notes Receivable Dated April 1, 2015 and May 23, 2017 [Member]    
Percentage of interest accrued per annum 8.00% 8.00%
Notes receivable due date Mar. 01, 2019 Mar. 01, 2019
Advance to Corporation One [Member]    
Notes receivable due date Nov. 18, 2020 Nov. 18, 2020
Advance to Corporation Two [Member]    
Percentage of interest accrued per annum 12.00% 12.00%
Notes receivable due date Sep. 30, 2019 Sep. 30, 2019
Advance to Corporation Three [Member]    
Percentage of interest accrued per annum 10.00% 10.00%
Notes receivable due date May 01, 2022 May 01, 2022
Advance to Corporation Four [Member]    
Percentage of interest accrued per annum 10.00% 10.00%
Notes receivable due date Feb. 07, 2020 Feb. 07, 2020
XML 47 R37.htm IDEA: XBRL DOCUMENT v3.19.1
Property and Equipment (Details Narrative) - USD ($)
6 Months Ended
Feb. 28, 2019
Feb. 28, 2018
Property, Plant and Equipment [Abstract]    
Depreciation expense $ 46,474 $ 32,719
XML 48 R38.htm IDEA: XBRL DOCUMENT v3.19.1
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)
Feb. 28, 2019
Aug. 31, 2018
Property and equipment, gross $ 799,933 $ 728,665
Accumulated depreciation (372,738) (328,344)
Total 427,195 400,321
Leasehold Improvements [Member]    
Property and equipment, gross 433,756 372,010
Clinical Equipment [Member]    
Property and equipment, gross 276,954 269,741
Computer Equipment [Member]    
Property and equipment, gross 22,485 22,636
Office Equipment [Member]    
Property and equipment, gross 27,382 24,658
Furniture and Fixtures [Member]    
Property and equipment, gross $ 39,356 $ 39,620
XML 49 R39.htm IDEA: XBRL DOCUMENT v3.19.1
Intangible Assets (Details Narrative) - USD ($)
6 Months Ended
Feb. 28, 2019
Feb. 28, 2018
Goodwill and Intangible Assets Disclosure [Abstract]    
Amortization expense
XML 50 R40.htm IDEA: XBRL DOCUMENT v3.19.1
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($)
Feb. 28, 2019
Aug. 31, 2018
Intangible assets, gross $ 22,358,567
Accumulated amortization
Total 22,358,567
Land Use Rights [Member]    
Intangible assets, gross 21,600,000
Software License [Member]    
Intangible assets, gross $ 758,567
XML 51 R41.htm IDEA: XBRL DOCUMENT v3.19.1
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($)
Feb. 28, 2019
Aug. 31, 2018
Payables and Accruals [Abstract]    
Accrued liabilities $ 131,422 $ 266,123
Accrued payroll 89,637 106,761
Other 33,608 11,114
Accrued expenses $ 254,667 $ 383,998
XML 52 R42.htm IDEA: XBRL DOCUMENT v3.19.1
Notes Payable - Schedule of Notes Payable (Details) - USD ($)
Feb. 28, 2019
Aug. 31, 2018
Notes payable $ 379,800 $ 382,350
Current portion (379,800) (382,350)
Long-term portion
Notes Payable [Member]    
Notes payable $ 379,800 $ 382,350
XML 53 R43.htm IDEA: XBRL DOCUMENT v3.19.1
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) - Notes Payable [Member]
6 Months Ended 12 Months Ended
Feb. 28, 2019
Aug. 31, 2018
Percentage of interest accrued per annum 0.00% 0.00%
Notes payable, due date Mar. 27, 2019 Mar. 27, 2019
XML 54 R44.htm IDEA: XBRL DOCUMENT v3.19.1
Debentures, Related Parties (Details Narrative)
Jan. 31, 2018
USD ($)
$ / shares
shares
Dec. 02, 2017
Sep. 30, 2013
CAD ($)
Feb. 28, 2019
USD ($)
Aug. 31, 2018
USD ($)
Nov. 30, 2017
USD ($)
Debentures, outstanding       $ 1,215,837 $ 1,224,000  
Accrued interest       $ 181,740 $ 156,121  
Debt converted, shares issued | shares 1,976,483          
Debt conversion price | $ / shares $ 0.4114          
Debt conversion, description The per share price used for the conversion of this loan was $0.4114 which was determined based on the average price of the five (5) trading days immediately preceding the date of conversion with a 10% premium added to the calculated per share price.          
Five Debentures [Member]            
Debentures, outstanding           $ 4,968,990
Debt interest rate     8.00%      
Debt due date     Sep. 30, 2016      
Debt extended due date   Sep. 30, 2019        
Five Debentures [Member] | CAD [Member]            
Debentures, outstanding     $ 6,402,512      
Debentures [Member]            
Debentures, outstanding $ 3,894,809          
Percentage of debt converted 75.00%          
Accrued interest $ 414,965          
Debt converted, shares issued | shares 10,475,872          
Debt conversion price | $ / shares $ 0.4114          
Debt conversion, description The per share price used for the conversion of each debenture was $0.4114 which was determined based on the average price of the five (5) trading days immediately preceding the date of conversion with a 10% premium added to the calculated per share price.          
XML 55 R45.htm IDEA: XBRL DOCUMENT v3.19.1
Stockholders' Deficit (Details Narrative) - USD ($)
6 Months Ended 12 Months Ended
Jan. 16, 2018
Sep. 08, 2015
Feb. 28, 2019
Feb. 28, 2018
Aug. 31, 2018
Convertible preferred stock, shares authorized     1,000,000   1,000,000
Convertible preferred stock, par value     $ 0.001   $ 0.001
Convertible preferred stock, shares issued     0   0
Convertible preferred stock, shares outstanding     0   0
Common stock, shares authorized     499,000,000   499,000,000
Common stock, par value     $ 0.001   $ 0.001
Common stock, shares issued     223,048,205   207,881,743
Common stock, shares outstanding     223,048,205   207,881,743
Number of restricted shares issued     2,708,113    
Proceeds from issuance of restricted shares     $ 2,579,923    
Shares issued price per share     $ 1.655    
Stock options granted weighted-average grant date fair value         $ 0.39
Stock options/warrants weighted-average exercise price         $ 0.40
Stock option expense     $ 70,846 $ 1,109,416  
Unamortized stock option expense     $ 0    
August 31, 2019 [Member]          
Stock options granted weighted-average grant date fair value     $ 0.94    
Stock options/warrants weighted-average exercise price     $ 0.95    
2015 Incentive Compensation Plan [Member]          
Number of shares issued for granted     4,987,500    
2015 Incentive Compensation Plan [Member] | Maximum [Member]          
Number of common stock shares issued   5,000,000      
2018 Incentiven Plan [Member]          
Number of common stock shares issued 10,000,000        
Number of shares issued for granted     9,875,000    
Joint Venture Agreement [Member]          
Number of restricted shares issued     12,000,000    
Proceeds from issuance of restricted shares     $ 21,600,000    
Shares issued price per share     $ 1.80    
Licensing Agreement [Member]          
Number of restricted shares issued     458,349    
Proceeds from issuance of restricted shares     $ 758,567    
Shares issued price per share     $ 1.655    
XML 56 R46.htm IDEA: XBRL DOCUMENT v3.19.1
Stockholders' Deficit - Schedule of Stock Option and Warrant Activity (Details)
6 Months Ended
Feb. 28, 2019
USD ($)
$ / shares
shares
Equity [Abstract]  
Options/Warrants Outstanding, Beginning Balance 10,030,000
Options/Warrants Outstanding, Granted 75,000
Options/Warrants Outstanding, Forfeited (10,000)
Options/Warrants Outstanding, Exercised
Options/Warrants Outstanding, Ending Balance 10,095,000
Options/Warrants Outstanding, Exercisable 10,095,000
Weighted Average Exercise Price, Outstanding, Beginning Balance | $ / shares $ 0.30
Weighted Average Exercise Price, Granted | $ / shares 0.95
Weighted Average Exercise Price, Forfeited | $ / shares 2.00
Weighted Average Exercise Price, Outstanding, Ending Balance | $ / shares 0.30
Weighted Average Exercise Price, Exercisable | $ / shares $ 0.30
Weighted Average Remaining Contractual Life, Outstanding, Beginning Balance 4 years 6 months 21 days
Weighted Average Remaining Contractual Life, Outstanding, Ending Balance 4 years 29 days
Weighted Average Remaining Contractual Life, Exercisable 4 years 29 days
Aggregate Intrinsic Value, Outstanding, Beginning Balance | $ $ 7,045,500
Aggregate Intrinsic Value, Outstanding, Ending Balance | $ 13,106,250
Aggregate Intrinsic Value, Exercisable | $ $ 13,106,250
XML 57 R47.htm IDEA: XBRL DOCUMENT v3.19.1
Stockholders' Deficit - Schedule of Options and Warrants Outstanding and Exercisable (Details)
Feb. 28, 2019
$ / shares
shares
Number of Options/Warrants, Outstanding 10,095,000
Number of Options/Warrants, Exercisable 10,095,000
Exercise Price Range One [Member]  
Number of Options/Warrants, Outstanding 5,500,000
Number of Options/Warrants, Outstanding, Exercise Price | $ / shares $ 0.16
Number of Options/Warrants, Exercisable 5,500,000
Number of Options/Warrants, Exercisable, Exercise Price | $ / shares $ 0.16
Exercise Price Range Two [Member]  
Number of Options/Warrants, Outstanding 1,000,000
Number of Options/Warrants, Outstanding, Exercise Price | $ / shares $ 0.32
Number of Options/Warrants, Exercisable 1,000,000
Number of Options/Warrants, Exercisable, Exercise Price | $ / shares $ 0.32
Exercise Price Range Three [Member]  
Number of Options/Warrants, Outstanding 50,000
Number of Options/Warrants, Outstanding, Exercise Price | $ / shares $ 0.33
Number of Options/Warrants, Exercisable 50,000
Number of Options/Warrants, Exercisable, Exercise Price | $ / shares $ 0.33
Exercise Price Range Four [Member]  
Number of Options/Warrants, Outstanding 120,000
Number of Options/Warrants, Outstanding, Exercise Price | $ / shares $ 0.40
Number of Options/Warrants, Exercisable 120,000
Number of Options/Warrants, Exercisable, Exercise Price | $ / shares $ 0.40
Exercise Price Range Five [Member]  
Number of Options/Warrants, Outstanding 2,000,000
Number of Options/Warrants, Outstanding, Exercise Price | $ / shares $ 0.42
Number of Options/Warrants, Exercisable 2,000,000
Number of Options/Warrants, Exercisable, Exercise Price | $ / shares $ 0.42
Exercise Price Range Six [Member]  
Number of Options/Warrants, Outstanding 100,000
Number of Options/Warrants, Outstanding, Exercise Price | $ / shares $ 0.50
Number of Options/Warrants, Exercisable 100,000
Number of Options/Warrants, Exercisable, Exercise Price | $ / shares $ 0.50
Exercise Price Range Seven [Member]  
Number of Options/Warrants, Outstanding 1,000,000
Number of Options/Warrants, Outstanding, Exercise Price | $ / shares $ 0.62
Number of Options/Warrants, Exercisable 1,000,000
Number of Options/Warrants, Exercisable, Exercise Price | $ / shares $ 0.62
Exercise Price Range Eight [Member]  
Number of Options/Warrants, Outstanding 250,000
Number of Options/Warrants, Outstanding, Exercise Price | $ / shares $ 0.80
Number of Options/Warrants, Exercisable 250,000
Number of Options/Warrants, Exercisable, Exercise Price | $ / shares $ 0.80
Exercise Price Range Nine [Member]  
Number of Options/Warrants, Outstanding 75,000
Number of Options/Warrants, Outstanding, Exercise Price | $ / shares $ 0.95
Number of Options/Warrants, Exercisable 75,000
Number of Options/Warrants, Exercisable, Exercise Price | $ / shares $ 0.95
XML 58 R48.htm IDEA: XBRL DOCUMENT v3.19.1
Stockholders' Deficit - Schedule of Fair Value of Options Granted by Using Valuation Assumptions (Details)
6 Months Ended
Feb. 28, 2019
Equity [Abstract]  
Risk-free interest rate 2.78%
Expected life of the options 3 years 6 months
Expected volatility 294.00%
Expected dividend yield 0.00%
XML 59 R49.htm IDEA: XBRL DOCUMENT v3.19.1
Commitments and Contingencies (Details Narrative) - USD ($)
6 Months Ended
Feb. 28, 2019
Feb. 28, 2018
Commitments and Contingencies Disclosure [Abstract]    
Operating leases expiration date 2023  
Rent expense $ 498,237 $ 409,350
XML 60 R50.htm IDEA: XBRL DOCUMENT v3.19.1
Subsequent Events (Details Narrative) - USD ($)
6 Months Ended
Apr. 03, 2019
Feb. 28, 2019
Number of restricted shares sold   2,708,113
Purchase price of restricted shares   $ 2,579,923
Subsequent Event [Member] | Accredited Investor [Member]    
Number of restricted shares sold 116,078  
Purchase price of restricted shares $ 149,740  
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