Financial Results for the three months ended March 31, 2020

The Company recorded a net loss after tax of $2,833,246 (loss per share of $0.02) for the three months ended March 31, 2020 compared to a net loss after tax of $1,179,198 (loss per share of $0.01) for the three months ended March 31, 2019.

Revenue and Cost of Sales

For the three months ended March 31, 2020, the Company recorded revenue of $10,120 and cost of sales of $3,854 compared to revenue of $107,955 and cost of sales of $49,123 for the three months ended March 31, 2019. The decrease in revenue was mainly due to delays in signing and executing commercial agreements directly or indirectly related to COVID-19. Although the Company has implemented business continuity measures to mitigate the impact of COVID-19 on our operations, the global economic slowdown has impacted a number of our partners (including shutdown of some of their offices), which resulted in significant project delays.

Operating Expenses

Operating expenses for the three months ended March 31, 2020 (“Q1 2020”) was $2,648,237 compared to $1,740,805 for the three months ended March 31, 2019 (“Q1 2019”). The increase in operating expenses was due to the increases in general and administrative expenses, research and development expenses, and intellectual and patent expenses as compared to Q1 2019. The increase was offset by the decrease of share-based compensation expenses and depreciation expenses. The increase in general and administrative expenses is primarily due to increases in occupancy costs as a result of the lab and office expansion and build-out of the GMP facility, increase in personnel costs resulting from the increase in compensation, as well as the increase in professional and regulatory fees due to the change in year-end and investor relation activities compared to Q1 2019. Research and development expenses increased primarily due to the expansion of the Company’s scientific team and the acquisition of Xellera Therapeutics Limited which was completed in June 2019.   

Liquidity and Outstanding Share Capital

As at March 31, 2020, the Company had cash and cash equivalents of $16,119,530. As at May 19, 2020, there were 188,640,774 common shares issued and outstanding, and 8,611,123 common shares issuable upon the exercise of outstanding stock options at an exercise price range from $0.32 to $0.50 per share and the issuance of 120,000 vested restricted share units.

Results of Annual General Meeting

Novoheart is pleased to announce the results of its annual general meeting of shareholders held on April 29, 2020. Shareholders elected eight directors to the Company’s board, being Dr. Ronald Li, Dr. Camie Chan, Victor Chang, Ricky Chiu, Allen Ma, Dr. Katherine Ngan, Roger Ngan and James Topham.

The shareholders also approved all other matters proposed, including the appointment of BDO Limited as auditors of the Company for the ensuing year, the re-approval of the Company’s stock option plan and the approval of the Company’s amended restricted share unit plan ( the “amended RSU Plan”), pursuant to which 5,659,223 shares are reserved for issuance.  In combination, all share compensation arrangements of the Company, including the amended RSU Plan, will not exceed 10% of the issued and outstanding Common Shares. The amended RSU Plan has been accepted by the TSX-V.

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