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Novus Reports Record Year 2018 Results

- Insurance Broker Participation, Provider Engagement
- Drive Growth For 10th Consecutive Quarters

MIAMI, FL / ACCESSWIRE / March 25, 2019 / Novus Acquisition and Development, Corp. (OTC PINK: NDEV), through its wholly owned subsidiary WCIG Insurance Services, Inc., is a diversified insurance entity in health, liability, annuity and accident, and, the nation's first carrier/aggregator offering a cannabis health plan, today reported financial and operational results for its fourth quarter and year ended December 31, 2018.

Fourth Quarter 2018 and Year End 2018 Highlights:

  • Revenue increased 30% to $49,355 for the three months ended December 31, 2018, as compared to the three months ended December 31, 2017
  • Revenue increased 38% to $180,171 for the twelve months ended December 31, 2018, as compared to the twelve months ended December 31, 2017
  • 10 consecutive quarters of revenue growth
  • Demonstrated 38-53% profit margin pricing structure in its business model throughout the year of 2018
  • Net income decreased 14% to $18,794 for the three months ended December 31, 2018, as compared to the three months ended December 31, 2017, due to the investment in the Telemedicine platform
  • Net income increased 48% to $95,912 for the twelve months ended December 31, 2018, as compared to the twelve months ended December 31, 2017
  • No dilution to the total shares outstanding for this quarter, and no insider sales from management or directors
  • Shareholder equity remained strong with an increase to $1,395,552 at December 31, 2018, from $1,360,207 at December 31, 2017
  • Cash and Cash Equivalents increased to $115,173 at December 31, 2018, from $102,888 at December 31, 2017

10th Consecutive Quarters of Sequential Increase in Revenue:

Management Discussion and Analysis

Novus' Chief Executive Officer, Frank Labrozzi, commented, ''We continued our positive momentum in the fourth quarter with growth in all of our key performance indicators which resulted in growth in revenue to a quarterly record for Novus Cannabis MedPlan. With more and more medical cannabis cultivators, manufacturers and dispensaries opening in legalized medical states and the proliferation of CBD across the country, we continue to see growth in our Provider Network. These cannabis cultivators, manufacturers and dispensaries are experiencing increased competition, struggling to turn profits and seek differentiating factors to draw customers through their doors. As Novus continues to build bridges for those dispensaries that once turned down to participate in our Provider Network, these same entities are now seeing Novus' value by driving a customer base to their storefronts with higher than average monthly med purchases and gratuitous local advertising effort.''

Novus and Cannabis Industry Outlook

Marijuana legalization had a very good mid-term elections in November 2018. The big news came from Michigan, which became the first state in the Midwest to legalize cannabis for recreational purposes. And it appears to have won by a fairly big margin: With 87 percent of precincts reporting, the ''yes'' vote got 56% of the vote - topping the ''no'' vote by 12 percentage points.

There were also a couple of medical marijuana victories in Missouri and Utah. Both states went Republican in state races (particularly the Senate), yet they still showed solid support for legalizing medical pot. The winning measure in Missouri got 66% of the vote, and the initiative in Utah is so far, with 95 percent of precincts reporting, at 53%.

The one bit of bad news for legal marijuana came from North Dakota, where voters rejected an initiative that would have legalized cannabis for recreational purposes. That measure got less than 41% support.

But the North Dakota loss was widely expected. North Dakota is very conservative; it was always very unlikely to fully legalize pot before, say, liberal New York and New Jersey. The measure's chances were likely lowered further because it was very unusual: It would have legalized selling pot without any regulations, leaving it to the state's lawmakers to quickly enact rules instead. Typically, marijuana legalization measures at least set up a regulatory framework for sales.

In short, marijuana legalization got three major wins and an expected loss.

Beyond the midterm elections, 2018 has been a big year for marijuana legalization. California opened the world's biggest legal marijuana market, Vermont legalized marijuana possession (becoming the first state to do so through its legislature), and Canada became the world's first wealthy nation to fully legalize pot.

At the end of 2018, 10 states have legalized marijuana for recreational and medical uses, and 22 others have legalized only for medical purposes.

After a lengthy process through Congress, the President signed into law The Agriculture Improvement Act of 2018 (the 2018 Farm Bill) on Dec. 20, 2018. The bill replaces the Agriculture Improvement Act of 2014, which expired Sept. 30, 2018. Distributing more than $850 billion, the 2018 Farm Bill is an enormous piece of legislation that funds programs such as crop insurance, school lunches and the Supplemental Nutrition Assistance Program (SNAP), aka food stamps.

Integrated into the Farm Bill is the bipartisan-supported Hemp Farming Act of 2018. The act's inclusion is significant: industrial hemp and its derived products now are legal on a federal level, and states may choose how to move forward in this exciting new industry.

Spearheaded by Sen. Mitch McConnell (R-KY), The Hemp Farming Act federally legalizes the production of industrial hemp (defined as Cannabis sativa L. plants containing less than three-tenths of a percent of tetrahydrocannabinol (THC)). The low concentration of THC makes hemp unsuitable for marijuana production, which remains federally illegal.

The 2018 Farm Bill abolishes this inconsistent treatment by removing industrial hemp from the definition of ''marihuana'' in the CSA. In addition, THC contained in industrial hemp will be removed from the purview of the CSA, making clear that industrial hemp plants can be grown domestically as well as imported. This amendment to the CSA decriminalizes the production and use of hemp and its derived products that match the definition of industrial hemp, such as seed oil, CBD oil, fibers and paper.

Industrial hemp will not be entirely unregulated, however. The 2018 Farm Bill moves regulatory authority from the CSA and DEA to the Agricultural Marketing Act of 1946 (AMA) and the Department of Agriculture. The AMA authorizes and directs the Secretary of Agriculture to carry out programs to assist the production, transportation and marketing of crops. Now that the Hemp Farming Act of 2018 is law, hemp will be treated the same as any other legal crop by the Department of Agriculture, with a few caveats based on its previous status as a controlled substance and the potential for unscrupulous growers to cultivate strains with high THC levels.

As part of the amendment, State and Tribal governments can create their own regulatory framework for industrial hemp production. Those plans must include:

  • a practice to record and describe land on which hemp is grown;
  • a procedure for testing THC concentration;
  • a procedure for non-compliant product disposal; and
  • a procedure for enforcing regulations.

The plan may include anything that does not conflict with federal regulations.

Growth In 2018

The Company showed continued growth in fourth quarter of 2018 due to Facebook (FB) rejecting ads that contain the word ''cannabis'', this came on the heels of FB Federal Government inquiry on privacy of its users. This has subsided and now we can generate digital ads on FB along with our marketing mix to support the business model, is not solely reliant on FB and we have stepped up other avenues of marketing that have been responsive.

Agreement with Alloy Insurance Services, a new group provider to bundle Novus Cannabis MedPlan, expands footprint. Novus executed a bundling agreement with Alloy Insurance Services LLC, an entity that provides employee benefits and administration services for over 50,000 employees nationwide.

Plans to file as a Health Maintenance Organization (HMO) in the State of California.

Novus Cannabis MedPlan had a positive initial teleconference with the California Department of Managed Health Care (CDMH) regarding filing its Cannabis MedPlan as a Health Maintenance Organization (HMO). Additional follow up reviews and evaluations by CDMH beginning as early as January 2019.

Novus as an HMO will expand its breadth as health insurance carrier through its developed network of provider(s) such as:

· Physicians (for example, family doctors that write cannabis recommendations),
· Specialists (for example, oncologists and ophthalmologists that recommend cannabis) and,
· Med facilities (for example, clinics and cannabis dispensaries/cultivators)

Novus Cannabis MedPlan, once approved, will initiate as an HMO or at least specialty insurance carrier where it will agree to pay cannabis providers specific levels of compensation for a range of services they provide to its patient/members commencing in the State of California. In return for a monthly fee, or premium, patient/members are granted access to providers inside Novus' cannabis network at no additional cost.

The value add of this premium structure is three-fold:

· Patients: Reduce healthcare costs with likely reimbursement of cannabis meds and services for patient/members.
· Providers: As an HMO cannabis network provider benefits by supplying them with more patients.
· Employers: Growing interest in Novus Cannabis MedPlan by many Professional Employment Organizations that want to integrate THC and CBD Plans for their client base in an health insurance format.

Notable Accomplishments from 2018

The achievements are expected to be catalysts for accelerated growth in 2019.

a) Professional Employment Organization (PEO):
PEO's are companies that sell business insurance, employee benefits and administration services on the behalf of employers. During the third quarter of 2018, the emergence of interest from PEO's saw the value proposition of where they can generate revenue by bundling our cannabis health plans. Our current contract with Alloy Insurance Services targets 50,000 employees looking for alternative benefit plans. We expect to enter into similar contracts with additional PEO's making our future growth effort productive.

b) FinTech Alignment:
We contracted with Revolution Insurance Technologies (RIT), a Silicon Valley FinTech that owns a proprietary digital platform that integrates benefit packages from the world's top insurance carriers. This partnership assists insurance broker/agent to create customized packages from diverse carriers and bundle those products that meet the needs and price of the customer. To-date we have recruited 450 agencies/brokers/affiliates to educate and sell our cannabis health plans to the consumer and now with RIT, we send them to one platform that will assist them in efficiently adding our product in one bundled quote.

c) Increase CBD Enrollments Due The Popularity Of This Non Psychoactive Med:
In 2018, Novus experienced an increase by 20% of CBD enrollments. This was contributed to our contract with U.S. Hemp Wholesale, the country's leading CBD provider with channels of distribution from the country's top 20 CBD manufacturers that drop-ship to Novus' patient /member network.

The growth potential of CBD could be worth $20 billion by 2022. The future of CBD and its effectiveness is promising with the Federal Farm Bill that was signed into law before Christmas, permitting all states to cultivate hemp. On a regulatory level this is a complex issue since the new law eliminates hemp-derived products from its Schedule I status under the Controlled Substances Act but does not legalize CBD federally. The only exemption is GW Pharmaceutical's Epidiolex, a pharmaceutical grade of CBD. This action now plays a key part to controlling the barrier of entry for many new CBD products with the cost of research and development contributing to a stronger new market.

d) Challenges from State And Federal Regulators:
2018 reflected many challenges to Novus and the cannabis industry, particularly in the following areas:

  • Attorney General Jeff Sessions threatened to dissolve the Cole Memo
  • Local law enforcement shutting down numerous Michigan dispensaries, and
  • Dramatic increase of taxation by state regulators in certain townships in California

However, all three detriments proved to be short-term and resulted in more positive outcomes by the end of 2018. Sessions left office without making any impact on the Department of Justice to enforce marijuana prohibition.

In Michigan, we lost 40% of our in-network dispensaries due to new regulations imposed by the state shutting down many retail locations. However, the state has since issued an additional 50 new licenses for the opening of dispensaries in and around the Detroit area, and they are rapidly becoming in-network providers.

The California tax hike resulted in a positive favor for Novus with an increase of patient members enrollments by 5% in that state, showing that Novus has some resiliency to this adversity with the dexterity to adjust and adapt.

e) Expanding Co-Branding Contract:
Marketing our cannabis health plan continues to be challenging with strict federal and state rules as well as restrictive social media platform guidelines making it a constant task to procure new patient/members.

We overcame this obstacle by executing a contract with Enlighten, a well-known in-dispensary interactive advertising platform that educates the consumer at the point of sale with tailored offerings. Its technology platform is intended to increase revenue and awareness and keep customers engaged on Novus' suite of health plan packages. Adding this venue to our marketing and advertising mix is estimated to increase patient/ members this year. You're invited to review our revised benefits packages: http://bit.ly/2PjDvon.

Telemedicine Platform

Targeted for an April roll out Novus' telemedicine platform plays a very important role in healthcare to our patient members and is anticipated to be bring multi-revenue stream into the Company.

Telemedicine technology allows healthcare practitioners to consult with patients in real-time via telecommunications technology to evaluate, diagnose and treat patients remotely. Telemedicine is attracting attention globally and is seamlessly suitable for medical cannabis and traditional health insurance benefits.

Now patients can connect with Novus' online platform with a physician across U.S. and Canada from the convenience of their own digital device. Delivering what many patients require is autonomy, free medical cannabis certifications with connection to our in-network dispensaries that can recommended/procure appropriate med strains.

This amplifies Novus' business model with a much more tactical advantage in creating multiple revenue streams for Novus and their partnered providers, in areas of:

  • Free telemedicine for short- or long-term policy holders
  • Allow physician to access the platform at no cost
  • Remote prescribing
  • Allow patients direct access to dispensaries for fulfillment of meds
  • Give our 450 insurance agents /affiliates the sales capturing tool for individual and group sales
  • Access new patients in rural areas
  • Distributing medical cannabis information to practitioners and patients

Telehealth policy changes means multiple revenue sources for Novus:

  • Allow non-policy holders to gain access with signing up for a short-term plan
  • Collect revenue through the utilization of advertising dissemination
  • Expansion of primary care services
  • Mobile diagnostics and monitoring for a fee
  • Help physicians efficiently reach more patients across the country can increase revenue.

Novus Cannabis MedPlan business model is clearly the most unique niche in the cannabis industry that will only continue to grow. We invite you to review the following:

Financial Summary

Financial Results for the Three Months Ended December 31, 2018:
Revenue increased by 30% to $49,355 for the three months ended December 31, 2018, as compared to the three months ended December 31, 2017. The growth was primarily due to greater awareness and visibility of the Novus Cannabis MedPlan offering and increased number of strategic partners and dispensary providers. The improvement in key performance indicators (KPI) in the Company's in-house marketing efforts, resulted in a greater number of providers, patient members and lives covered.

Operating and Net income remained strong at $18,794 for the three months ended December 31, 2018. This represents a 38.1% operating profit margin for the three months ended December 31, 2018.

The Company's Balance Sheet remained strong with an increase in the cash balance to $115,173 and the Net Asset Value (NAV) of $1,395,552.

Financial Results for the Twelve Months Ended December 31, 2018:
Revenue increased by 38% to $180,171 for the twelve months ended December 31, 2018, as compared to the twelve months ended December 31, 2017. The growth was primarily due to greater awareness and visibility of the Novus Cannabis MedPlan offering and increased number of strategic partners and dispensary providers. The improvement in key performance indicators (KPI) in the Company's in-house marketing efforts, esulted in a great number of providers, broker/agency participation and coverage patient/ members.

Operating and Net income increased by 48% to $95,912 for the twelve months ended December 31, 2018, as compared to the twelve months ended December 31, 2017. This represents a 52.3% operating profit margin for the twelve months ended December 31, 2018.

Capital Structure, Shares Outstanding and Trading as of December 31, 2018:

  • No Convertible Notes
  • 98,733,624 common shares issued and outstanding
  • No sales of insider shares since the third quarter of 2015

We invite you to review the entire filing here: https://www.otcmarkets.com/stock/NDEV/filings

About Novus
Novus Acquisition & Development Corp. (NDEV), through its subsidiary WCIG Insurance, provides health insurance and related insurance solutions within the wellness and medical marijuana industries in states where legal programs exist. Novus has developed its infrastructure within many lines of the insurance business such as, health, property & casualty, life, accident and fixed annuities.

Novus medical cannabis benefits package will work as outside developers and will not cultivate, handle, transport grow, extract, dispense, put up for sale, put on the market, vend, deliver, supply, circulate, or trade cannabis or any substances that violate the United States law or the Controlled Substances Act, nor does it intend to do so in the future and will continue to follow state and federal laws. The statements made about specific products have not been evaluated by the United States Food and Drug Administration (FDA) and are not intended to diagnose, treat, cure or prevent disease. All information provided on these press releases or any information contained on or in any product label or packaging is for informational purposes only and is not intended as a substitute for advice from your physician or other health care professional. Once a push notification is competed the transaction is solely between the state-licensed dispensary and the registered patient.

The state laws are in conflict with the federal Controlled Substances Act. The current administration has effectively stated that it is not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state designated laws, allowing the use and distribution of medical marijuana. However, there is no guarantee that the current administration, nor any future administration, will not change this policy and decide to enforce the federal laws strongly. Any such change in the federal government's enforcement of current federal laws could cause significant financial changes to Novus Medical Group. While we do not intend to harvest, distribute or sell cannabis or cannabis related products, we may be harmed by a change in enforcement by federal or state governments.

Forward-Looking Statements
This release includes forward-looking statements, which are based on certain assumptions and reflects management's current expectations. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Some of these factors include: general global economic conditions; general industry and market conditions and growth rates; uncertainty as to whether our strategies and business plans will yield the expected benefits; increasing competition; availability and cost of capital; the ability to identify and develop and achieve commercial success; the level of expenditures necessary to maintain and improve the quality of services; changes in the economy; changes in laws and regulations, includes codes and standards, intellectual property rights, and tax matters; or other matters not anticipated; our ability to secure and maintain strategic relationships and distribution agreements. Novus disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact Information
Corporate:
Chairman and CEO
Frank Labrozzi
frank@ndev.biz
855-228-7355

Investors:
ir@novusmedicalgroup.com
917-658-7878

SOURCE: Novus Acquisition and Development, Corp.



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