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What changed in INVO Fertility, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of INVO Fertility, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+560 added−314 removedSource: 10-K (2024-04-16) vs 10-K (2023-04-17)

Top changes in INVO Fertility, Inc.'s 2023 10-K

560 paragraphs added · 314 removed · 189 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

53 edited+148 added−43 removed47 unchanged
Biggest changeWhile any portion of each February Debenture remains outstanding, if the Company receives cash proceeds of more than $2,000,000 (the “Minimum Threshold”) in the aggregate from any source or series of related or unrelated sources, the February Investors shall have the right in their sole discretion to require the Company to immediately apply up to 50% of all proceeds received by the Company above the Minimum Threshold to repay the outstanding amounts owed under the February Debentures. 5 The Company entered into a Registration Rights Agreement (the “February RRA”) with the February Investor that signed its purchase agreement on February 3, 2023 (the “Feb 3 Investor”).
Biggest changeWhile any portion of the FirstFire Note is outstanding, if the Company receives cash proceeds of more than $1,500,000 from any source or series of related or unrelated sources, or more than $1,000,000 from any public offering (the “Minimum Threshold”), the Company shall, within one (1) business day of Company’s receipt of such proceeds, inform FirstFire of such receipt, following which FirstFire shall have the right in its sole discretion to require the Company to immediately apply up to 100% of all proceeds received by the Company above the Minimum Threshold to repay the outstanding amounts owed under the FirstFire Note.
In the United States, infertility, according to the American Society of Reproductive Medicine (2017), affects an estimated 10%-15% of the couples of childbearing-age. According to the Centers for Disease Control (“CDC”), there are approximately 6.7 million women with impaired fertility.
In the United States, infertility affects an estimated 10%-15% of the couples of childbearing-age, according to the American Society of Reproductive Medicine (2017). According to the Centers for Disease Control (“CDC”), there are approximately 6.7 million women with impaired fertility.
Many of the countries we are targeting either do not have a formal approval process of their own or will rely on either FDA clearance or the European approval, the CE mark – although many of these countries do require specific registration processes in order to list the INVOcell and make it available for sale.
Many of the countries we are targeting either do not have a formal approval process of their own or will rely on either FDA clearance or the European approval, the CE mark – although many of these countries also require specific registration processes in order to list the INVOcell and make it available for sale.
The federal laws and many state laws generally apply only to entities or individuals that provide items or services for which payment may be made under a government healthcare program. These include laws that prohibit: ● the payment or receipt of anything of value in exchange for referrals of business ( e.g.
The federal laws and many state laws generally apply only to entities or individuals that provide items or services for which payment may be made under a government healthcare program. These include laws that prohibit the following: ● the payment or receipt of anything of value in exchange for referrals of business ( e.g.
Our portfolio of U.S. registered trademarks includes: ● Registration Nos. 6146631 and 3757982 for INVOCELL ● Registration No. 4009827 for INVO ● Registration No. 4009828 for INVO BIOSCIENCE We also have pending U.S. applications to register the trademark Life Begins Within (App. No. 90803801).
Our portfolio of U.S. registered trademarks includes the following: ● Registration Nos. 6146631 and 3757982 for INVOCELL ● Registration No. 4009827 for INVO ● Registration No. 4009828 for INVO BIOSCIENCE We also have pending U.S. applications to register the trademark Life Begins Within (App. No. 90803801).
Wisconsin Fertility is comprised of (a) a medical practice, Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/a Wisconsin Fertility Institute (“WFRSA”), and (b) a laboratory services company, Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company (“FLOW”).
WFI is comprised of (a) a medical practice, Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/a Wisconsin Fertility Institute (“WFRSA”), and (b) a laboratory services company, Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company (“FLOW”).
In the ordinary course of our business as a Business Associate, and soon with INVO Centers, as a Covered Entity, we may use, collect, and store sensitive data, including protected health information (“PHI”).
In the ordinary course of our business as a Business Associate, and with INVO Centers, as a Covered Entity, we may use, collect, and store sensitive data, including protected health information (“PHI”).
Investment in Joint Ventures and Partnerships As part of our commercialization strategy, we entered into a number of joint ventures and partnerships designed to establish new INVO Centers. 10 The following table sets forth a list of our current joint venture arrangements: Affiliate Name Country Percent (%) Ownership HRCFG INVO, LLC United States 50 % Bloom Invo, LLC United States 40 % Positib Fertility, S.A. de C.V.
Investment in Joint Ventures and Partnerships As part of our commercialization strategy, we entered into a number of joint ventures and partnerships designed to establish new INVO Centers. 15 The following table sets forth a list of our current joint venture arrangements: Affiliate Name Country Percent (%) Ownership HRCFG INVO, LLC United States 50 % Bloom Invo, LLC United States 40 % Positib Fertility, S.A. de C.V.
April 2021 1-year Completed Sudan Quality Medicines, Cosmetics & Medical Equipment Import Sept 2020 1-year In process Ethiopia Quality Medicines, Cosmetics & Medical Equipment Import Sept 2020 1-year In process Uganda Quality Medicines, Cosmetics & Medical Equipment Import Sept 2020 1-year Not required Nigeria G-Systems Limited Sept 2020 5-year Completed Iran Tasnim Behboud Dec 2020 1-year Completed Sri Lanka Alsonic Limited July 2021 1-year In process China Onesky Holdings Limited May 2022 5-year In process (a) Our Mexico JV.
April 2021 1-year Completed Sudan Quality Medicines, Cosmetics & Medical Equipment Import Sept 2020 1-year In process Ethiopia Quality Medicines, Cosmetics & Medical Equipment Import Sept 2020 1-year In process Uganda Quality Medicines, Cosmetics & Medical Equipment Import Sept 2020 1-year Not required Nigeria G-Systems Limited Sept 2020 5-year Completed Iran Tasnim Behboud Dec 2020 1-year Completed Sri Lanka Alsonic Limited July 2021 1-year On hold China Onesky Holdings Limited May 2022 5-year In process (a) Our Mexico JV.
Sales and Marketing Our approach to market is focused on identifying partners within targeted geographic regions that we believe can best support our efforts to expand access to advanced fertility treatment for the large number of underserved infertile people hoping to have a baby.
INVOcell Sales and Marketing Our approach to marketing INVOcell is focused on identifying partners within targeted geographic regions that we believe can best support our efforts to expand access to advanced fertility treatment for the large number of underserved infertile people hoping to have a baby.
Please refer to all such information when reading this Annual Report on Form 10-K. All information is as of December 31, 2022, unless otherwise indicated. For a description of the risk factors affecting or applicable to our business, see “Risk Factors,” below.
Please refer to all such information when reading this Annual Report on Form 10-K. All information is as of December 31, 2023, unless otherwise indicated. For a description of the risk factors affecting or applicable to our business, see “Risk Factors,” below.
Every country has different regulatory and registration requirements, and we have begun or completed registrations in a number of countries.
Every country has different country-specific regulatory and registration requirements, and we have begun or completed registrations in a number of countries.
Nasdaq Listing Rule 5550(b)(1) requires companies listed on The Nasdaq Capital Market to maintain stockholders’ equity of at least $2,500,000 (the “Stockholders’ Equity Requirement). In our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, we reported stockholders’ equity of $1,287,224, which is below the Stockholders’ Equity Requirement for continued listing.
Nasdaq Listing Rule 5550(b)(1) (the “Equity Rule”) requires companies listed on The Nasdaq Capital Market to maintain stockholders’ equity of at least $2,500,000 (the “Stockholders’ Equity Requirement”). In our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, we reported stockholders’ equity of $1,287,224, which is below the Stockholders’ Equity Requirement for continued listing.
If at any time before July 10, 2023, the closing bid price of our common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that we have achieved compliance with the minimum bid price requirement, and the matter would be resolved.
If at any time before July 10, 2023, the closing bid price of our common stock closed at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq would provide written notification that we have achieved compliance with the minimum bid price requirement, and the matter would be resolved.
Competition The fertility treatment regimens that the INVOcell and IVC procedure compete with when infertile people, in conjunction with their physician, are choosing the treatment method include drug-only stimulation, IUI, and conventional IVF. The fertility industry is highly competitive and characterized by long-standing well-entrenched procedures as well as technological improvements.
The fertility treatment regimens with whom the INVOcell and IVC procedure compete when infertile people, in conjunction with their physician, are choosing the treatment method include drug-only stimulation, IUI, and conventional IVF. The fertility industry is highly competitive and characterized by long-standing well-entrenched procedures as well as technological improvements.
The March Warrants (and the shares of Common Stock issuable upon the exercise of the Private Warrants) were not registered under the Securities Act and were offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.
The March Warrant (and the shares of common stock issuable upon the exercise of the Private Warrants) was not registered under the Securities Act and was offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.
The IVC procedure is currently being offered at several IVF clinics at a price range of $5,000 - $11,000 per cycle and from $4,500 to $7,000 at the existing INVO Centers, thereby making it more affordable than conventional IVF (which tends to average $12,000 to $17,000 per cycle or higher). 9 Improved efficiency providing for greater capacity and improved access to care and geographic availability .
The IVC procedure is currently being offered at several IVF clinics at a price range of $5,000 - $11,000 per cycle and from $4,500 to $7,000 at the existing INVO Centers, thereby making it more affordable than conventional IVF (which tends to average $11,000 to $15,000 per cycle or higher). 14 Improved efficiency providing for greater capacity and improved access to care and geographic availability .
If we do not regain compliance prior to July 10, 2023, then Nasdaq may grant us a second 180 calendar day period to regain compliance, provided we (i) meets the continued listing requirement for market value of publicly-held shares and all other initial listing standards for The Nasdaq Capital Market, other than the minimum closing bid price requirement, and (ii) notifies Nasdaq of its intent to cure the deficiency within such second 180 calendar day period, by effecting a reverse stock split, if necessary.
If we did not regain compliance prior to July 10, 2023, then Nasdaq may grant us a second 180 calendar day period to regain compliance, provided we (i) meet the continued listing requirement for market value of publicly-held shares and all other initial listing standards for The Nasdaq Capital Market, other than the minimum closing bid price requirement, and (ii) notify Nasdaq of its intent to cure the deficiency within such second 180 calendar day period, by effecting a reverse stock split, if necessary.
With our CE marking, we have the necessary regulatory authority to distribute our product, after registration, in the European Economic Area (i.e., Europe, Australia, and New Zealand). In addition, we will have the ability to market in various parts of the Middle East, Asia and South America.
With our CE marking, we have the necessary regulatory authority to distribute our product, after registration, in the European Economic Area (i.e., the Europe Union, the European Free Trade Association, Australia, and New Zealand). In addition, we will have the ability to market in various parts of the Middle East, Asia and South America.
Our flagship product is INVOcell, a revolutionary medical device that allows fertilization and early embryo development to take place in vivo within the woman’s body. This treatment solution is the world’s first intravaginal culture technique for the incubation of oocytes and sperm during fertilization and early embryo development.
INVOcell: Our proprietary technology, INVOcell®, is a revolutionary medical device that allows fertilization and early embryo development to take place in vivo within the woman’s body. This treatment solution is the world’s first intravaginal culture technique for the incubation of oocytes and sperm during fertilization and early embryo development.
Notice Regarding Failure to Maintain Minimum Bid Price On January 11, 2023, we received a letter from the staff (the “Staff”) of Nasdaq listing qualifications group indicating that, based upon the closing bid price of our common stock for the last 30 consecutive business days, we were not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing under Nasdaq Listing Rule 5550(a)(2).
Notice Regarding Failure to Maintain Minimum Bid Price On January 11, 2023, we received a letter from the Staff indicating that, based upon the closing bid price of our common stock for the last 30 consecutive business days, we were not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing under the Price Rule.
Our website address is included in this Annual Report as an inactive textual reference only. 12
Our website address is included in this Annual Report as an inactive textual reference only. 17
The notice has no immediate effect on the listing of our common stock, and our common stock will continue to trade on The Nasdaq Capital Market under the symbol “INVO.” In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided an initial period of 180 calendar days, or until July 10, 2023, to regain compliance with the minimum bid price requirement.
The notice had no immediate effect on the listing of our common stock, and our common stock continued to trade on The Nasdaq Capital Market under the symbol “INVO.” In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial period of 180 calendar days, or until July 10, 2023, to regain compliance with the minimum bid price requirement.
(INVO Bioscience, Inc., together with its subsidiaries, is referred to in this document as “we”, “us”, “INVO Bioscience”, “INVO,” or the “Company”), incorporates by reference certain information from parts of other documents filed with the Securities and Exchange Commission (“SEC”). The SEC allows us to disclose important information by referring to it in that manner.
(INVO Bioscience, Inc., together with its subsidiaries, is referred to in this document as “we”, “us”, “INVO Bioscience”, “INVO”, or the “Company”), incorporates by reference certain information from parts of other documents filed with the SEC. The SEC allows us to disclose important information by referring to it in that manner.
The March Warrants are immediately exercisable upon issuance, will expire eight years from the date of issuance, and in certain circumstances may be exercised on a cashless basis. On March 27, 2023, the Company closed the offering, raising gross proceeds of approximately $3 million before deducting placement agent fees and other offering expenses payable by the Company.
The March Warrant is immediately exercisable upon issuance, will expire eight years from the date of issuance, and in certain circumstances may be exercised on a cashless basis. On March 27, 2023, we closed the RD Offering and March Warrant Placement, raising gross proceeds of approximately $3 million before deducting placement agent fees and other offering expenses payable by us.
We are subject to regulation in each of the foreign countries where our products are sold. Many of the regulations applicable to our products in such countries are similar to those of the FDA. The national health or regulatory organizations of certain countries require that our products be qualified before they can be marketed in those countries.
Many of the regulations applicable to our products in such countries are similar to those of the FDA. The national health or regulatory organizations of certain countries require that our products be qualified before they can be marketed in those countries.
A Convertible Note may not be converted and shares of common stock may not be issued under the Convertible Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the Company’s outstanding ordinary shares.
The FirstFire Note may not be converted and Conversion Shares may not be issued under the FirstFire Note if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 4.99% of the outstanding common stock.
In addition, the Shareholders agreed that the Mexico JV will be our exclusive distributor in Mexico. The Shareholders also agreed not to compete directly or indirectly with the Mexico JV in Mexico.
In addition, the Shareholders agreed that the Mexico JV will be our exclusive distributor in Mexico. The Shareholders also agreed not to compete directly or indirectly with the Mexico JV in Mexico. The Mexico JV opened to patients on November 1, 2021.
This technique, designated as “IVC”, provides patients a more connected and intimate experience at a more affordable cost in comparison to in vitro fertilization (“IVF”), the other advanced ART treatment. The IVC procedure can deliver comparable results to IVF and is a significantly more effective treatment than intrauterine insemination (“IUI”).
This technique, designated as “IVC”, provides patients with a more natural, intimate, and more affordable experience in comparison to other ART treatments. We believe the IVC procedure can deliver comparable results at a lower cost than traditional IVF and is a significantly more effective treatment than intrauterine insemination (“IUI”).
The securities to be issued in the registered direct offering (priced at the marked under Nasdaq rules) were offered pursuant to the Company’s shelf registration statement on Form S-3 (File 333-255096) (the “Shelf Registration Statement”), initially filed by the Company with the SEC under the Securities Act of 1933, as amended (the “Securities Act”), on April 7, 2021 and declared effective on April 16, 2021.
The securities to be issued in the RD Offering (priced at the marked under Nasdaq rules) were offered pursuant to our shelf registration statement on Form S-3 (File 333-255096), initially filed by us with the SEC under the Securities Act, on April 7, 2021 and declared effective on April 16, 2021.
The Company may prepay the February Debentures at any time in whole or in part by paying a sum of money equal to 105% of the principal amount to be redeemed, together with accrued and unpaid interest.
The Company may prepay the FirstFire Note at any time in whole or in part by paying a sum of money equal to 110% of the sum of the principal amount to be redeemed plus the accrued and unpaid interest. Future Proceeds .
The responsibilities of INVO CTR include providing certain funding to the Alabama JV and providing access to and being the exclusive provider of the INVOcell to the Alabama JV. INVO CTR will also perform all required, industry-specific compliance and accreditation functions, and product documentation for product registration. The Alabama JV opened to patients on August 9, 2021.
INVO CTR will also perform all required, industry-specific compliance and accreditation functions, and product documentation for product registration. The Alabama JV opened to patients on August 9, 2021.
While we continue selling the INVOcell directly to IVF clinics and via distributors and other partners around the world, we have transitioned INVO from being a medical device company to one that is mostly focused on providing fertility services. Ferring On November 12, 2018, we entered into a U.S. Distribution Agreement (the “Ferring Agreement”) with Ferring International Center S.A.
While we continue selling the INVOcell directly to IVF clinics and via distributors and other partners around the world, we have transitioned INVO from being a medical device company to one that is mostly focused on providing fertility services. International Distribution Agreements We have entered into exclusive distribution agreements for a number of international markets.
Additionally, as of the date of the Notice, we did not meet either of the alternative Nasdaq continued listing standards under the Nasdaq Listing Rules, market value of listed securities of at least $35 million, or net income of $500,000 from continuing operations in the most recently completed fiscal year, or in two of the three most recently completed fiscal years. 7 The Notice has no immediate effect on the listing of our common stock and our common stock continues to trade on The Nasdaq Capital Market under the symbol “INVO” subject to our compliance with the other continued listing requirements.
Additionally, as of the date of the notice, we did not meet either of the alternative Nasdaq continued listing standards under the Nasdaq Listing Rules, market value of listed securities of at least $35 million, or net income of $500,000 from continuing operations in the most recently completed fiscal year, or in two of the three most recently completed fiscal years.
We have been cleared to sell the INVOcell in the United States since November 2015 after receiving de novo class II clearance from the FDA.
We have been cleared to sell the INVOcell in the United States since November 2015 after receiving de novo class II clearance from the FDA. We also received 510k clearance in 2023 for an expanded use of INVOcell related to the incubation time.
The Pre-Funded Warrants are exercisable upon issuance and will remain exercisable until all of the Pre-Funded Warrants are exercised in full.
The Pre-Funded Warrant is exercisable upon issuance and will remain exercisable until all of the shares underlying the Pre-Funded Warrant are exercised in full. All Pre-Funded Warrants were exercised by the investor in June 2023.
Notices from Nasdaq of Failure to Satisfy Continued Listing Rules. Notice Regarding Non-Compliance with Minimum Stockholders’ Equity On November 23, 2022, we received notice (the “Stockholders’ Equity Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) advising us that we were not in compliance with the minimum stockholders’ equity requirement for continued listing on The Nasdaq Capital Market.
We used $383,879 in proceeds to repay a portion of the convertible debenture issued in February 2023 and the remainder of the proceeds were used for working capital and general corporate purposes. 12 Notices from Nasdaq of Failure to Satisfy Continued Listing Rules Notice Regarding Non-Compliance with Minimum Stockholders’ Equity On November 23, 2022, we received notice from The Nasdaq Stock Market LLC (“Nasdaq”) advising us that we were not in compliance with the minimum stockholders’ equity requirement for continued listing on The Nasdaq Capital Market.
FLOW provides WFRSA with related laboratory services. 6 March 2023 Registered Direct Offering On March 23, 2023, INVO entered into a securities purchase agreement (the “March Purchase Agreement”) with a certain institutional investor, pursuant to which the Company agreed to issue and sell to such investor (i) in a registered direct offering, 1,380,000 shares (the “March Shares”) of Common Stock, and pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 2,300,000 shares of Common Stock, at an exercise price of $0.01 per share, and (ii) in a concurrent private placement, common stock purchase warrants (the “March Warrants”), exercisable for an aggregate of up to 5,520,000 shares of Common Stock, at an exercise price of $0.63 per share.
March 2023 Registered Direct Offering On March 23, 2023, INVO entered into a securities purchase agreement (the “March Purchase Agreement”) with a certain institutional investor, pursuant to which we agreed to issue and sell to such investor (i) in a registered direct offering (the “RD Offering”), 69,000 shares of common stock, and a pre-funded warrant (the “Pre-Funded Warrant”) to purchase up to 115,000 shares of common stock, at an exercise price of $0.20 per share, and (ii) in a concurrent private placement (the “March Warrant Placement”), a common stock purchase warrant (the “March Warrant”), exercisable for an aggregate of up to 276,000 shares of common stock, at an exercise price of $12.60 per share.
On January 18, 2023, we received a letter from Nasdaq under which it stated that based on our submission that Nasdaq has determined to grant us an extension of time to regain compliance with Nasdaq Listing Rule 5550(b) until May 22, 2023.
We submitted our plan within the prescribed time and, on January 18, 2023, we received a letter from Nasdaq stating that based on our submission that Nasdaq had determined to grant us an extension of time to regain compliance with the Equity Rule until May 22, 2023.
The laboratory equipment needed to perform an IVF cycle is expensive and requires ongoing costs as compared to what is required for an IVC cycle. As a result, we also believe INVOcell and the IVC procedure enable a clinic and its laboratory to be more efficient as compared to conventional IVF.
As a result, we also believe INVOcell and the IVC procedure enable a clinic and its laboratory to be more efficient as compared to conventional IVF.
WFRSA owns, operates and manages the Clinic’s fertility practice that provides direct treatment to patients focused on fertility, gynecology and obstetrics care and surgical procedures, and employs physicians and other healthcare providers to deliver such services and procedures.
WFRSA owns, operates, and manages WFI’s fertility practice that provides direct treatment to patients focused on fertility, gynecology, and obstetrics care and surgical procedures, and employs physicians and other healthcare providers to deliver such services and procedures. FLOW provides WFRSA with related laboratory services. INVO purchased the non-medical assets of WFRSA and one hundred percent of FLOW’s membership interests.
Based on preliminary 2020 data from the CDC’s National ART Surveillance System, approximately 326,000 IVF cycles were performed at 449 IVF centers, leaving the U.S. with a large, underserved patient population, similar to most markets around the world.
Based on 2021 data from the CDC’s National ART Surveillance System, approximately 413,000 IVF cycles were performed at 453 IVF centers, leaving the U.S. with a large, underserved patient population, similar to most markets around the world. As part of its expanded corporate expansion efforts, the Company has incorporated an acquisition strategy to the business.
Pursuant to the Notice, Nasdaq gave us 45 calendar days, or until January 7, 2023, to submit to Nasdaq a plan to regain compliance. If our plan is accepted, Nasdaq may grant an extension of up to 180 calendar days from the date of the Notice to evidence compliance.
Pursuant to the notice, Nasdaq gave us 45 calendar days, or until January 7, 2023, to submit to Nasdaq a plan to regain compliance.
The name of the joint venture LLC is HRCFG INVO, LLC (the “Alabama JV”). The responsibilities of HRCFG’s principals include providing clinical practice expertise, performing recruitment functions, providing all necessary training, and providing day-to-day management of the clinic.
The responsibilities of HRCFG’s principals include providing clinical practice expertise, performing recruitment functions, providing all necessary training, and providing day-to-day management of the clinic. The responsibilities of INVO CTR include providing certain funding to the Alabama JV and providing access to and being the exclusive provider of the INVOcell to the Alabama JV.
The sellers have the option to take all or a portion of the final three installments in shares of INVO common stock valued at $6.25, $9.09, and $14.29, for the second, third, and final installments, respectively.
The remaining three installments of $2.5 million each will be paid on the subsequent three anniversaries of closing. The sellers have the option to take all or a portion of the final three installments in shares of INVO common stock valued at $125.00, $181.80, and $285.80, for the second, third, and final installments, respectively.
Our commercialization strategy is focused on the opening of dedicated “INVO Centers” offering the INVOcell and IVC procedure (with three centers in North America now operational) and the acquisition of existing IVF clinics, in addition to continuing to sell our technology solution into existing fertility clinics.
Our commercial strategy is primarily focused on operating fertility-focused clinics, which includes the opening of dedicated “INVO Centers” offering the INVOcell® and IVC procedure (with three centers in North America now operational) and the acquisition of US-based, profitable in vitro fertilization (“IVF”) clinics (with the first acquired in August 2023).
The Company We are a commercial-stage fertility company dedicated to expanding the assisted reproductive technology (“ART”) marketplace by making fertility care accessible and inclusive to people around the world. Our primary mission is to implement new medical technologies aimed at increasing the availability of affordable, high-quality, patient-centered fertility care.
The Company We are a healthcare services fertility company dedicated to expanding the assisted reproductive technology (“ART”) marketplace by making fertility care more accessible and inclusive to people around the world.
Mexico 33 % Ginekalix INVO Bioscience LLC Skopje Republic of North Macedonia 50 % The following table sets forth a list of our current partnership arrangements: Partner Country Partnership Split Lyfe Medical United States 40 % Alabama JV Agreement On March 10, 2021, INVO CTR entered into a limited liability company agreement with HRCFG, LLC (“HRCFG”) to form a joint venture for the purpose of establishing an INVO Center in Birmingham, Alabama.
Mexico 33 % Alabama JV Agreement On March 10, 2021, our wholly owned subsidiary, INVO Centers, LLC (“INVO CTR”) entered into a limited liability company agreement with HRCFG, LLC (“HRCFG”) to form a joint venture for the purpose of establishing an INVO Center in Birmingham, Alabama. The name of the joint venture LLC is HRCFG INVO, LLC (the “Alabama JV”).
Competitive Advantages We believe that the INVOcell, and the IVC procedure it enables, have the following key advantages: Lower cost than IVF with equivalent efficacy . The IVC procedure can be offered for less than IVF due to lower cost of supplies, labor, capital equipment and general overhead.
Competitive Advantages of INVOcell While our commercial efforts have expanded to clinic services within the ART market, we also continue to believe that our INVOcell device, and the IVC procedure it enables, have the following key advantages: Lower cost than IVF with equivalent efficacy .
The proceeds were used for working capital and general corporate purposes.
We are using the remaining proceeds from the August 2023 Offering for working capital and general corporate purposes.
Recent Developments January and March 2023 Convertible Note and Warrant Financings In January and March 2023, we sold unsecured convertible notes of the Company in the aggregate original principal amount of $410,000 (the “Convertible Notes”) with a fixed conversion prices of $0.50 (for the $275,000 of January 2023 Notes) and $0.60 (for the $135,000 of March 2023 Notes) and (ii) 5-year warrants (the “Note Warrants”) to purchase 387,500 shares of the Company’s common stock at an exercise price of $1.00 (subject to adjustments) (the “Note and Warrant Private Placement”).
The Convertible Notes were issued with fixed conversion prices of $10.00 (for the $275,000 issued in January 2023) and $12.00 (for the $135,000 issued in March 2023) and (ii) 5-year warrants (the “Q1 2023 Warrants”) to purchase 19,375 shares of common stock at an exercise price of $20.00.
Employees As of December 31, 2022, we had fifteen full time and one part time employee. We also engage consultants to further support our operations.
The data supporting the expanded 5-day incubation clearance demonstrated improved patient outcomes. Employees As of December 31, 2023, we had twenty-five full time and five part time employees, of which thirteen full time and five part time employees were employed by our wholly owned subsidiary for operations at WFI. We also engage consultants to further support our operations.
Execution of Definitive Agreements to Acquire the Wisconsin Fertility Institute On March 16, 2023, INVO, through Wood Violet Fertility LLC, a Delaware limited liability company (“Wood Violet”) and wholly owned subsidiary of INVO Centers LLC, a Delaware company (“INVO CTR”) wholly-owned by INVO, entered into binding purchase agreements to acquire Wisconsin Fertility Institute (“Wisconsin Fertility”) for a combined purchase price of $10 million.
Wisconsin Fertility Institute Acquisition On August 10, 2023, INVO, through Wood Violet Fertility LLC, a Delaware limited liability company (“WVF”) and wholly owned subsidiary of INVO CTR, consummated its acquisition of WFI for a combined purchase price of $10 million, of which $2.5 million was paid on the closing date (net cash paid was $2,150,000 after a $350,000 holdback) plus assumption of the inter-company loan owed by WFRSA (as defined below) in the amount of $528,756.
Removed
Interest on the Convertible Notes accrues at a rate of ten percent (10%) per annum and is payable at the holder’s option either in cash or in shares of the Company’s common stock at the conversion price set forth in the Convertible Notes on December 31, 2023, unless converted earlier.
Added
We also continue to engage in the sale and distribution of our INVOcell technology solution into existing independently owned and operated fertility clinics. While the INVOcell remains important to our efforts, our commercial and corporate development strategy has expanded to focus more broadly on providing ART services in general through our emphasis on clinic-based operations.
Removed
All amounts due under the Convertible Notes are convertible at any time after the issuance date, in whole or in part (subject to rounding for fractional shares), at the option of the holders into the Company’s common stock at a fixed conversion price for the Notes as described above. 4 Upon any issuance by the Company of any of its equity securities in an underwritten offering, including Common Stock, for cash consideration, indebtedness or a combination thereof after the date hereof (a “Subsequent Equity Financing”), each holder shall have the option to convert the outstanding principal and accrued but unpaid interest of its Convertible Note into the number of fully paid and non-assessable shares of securities issued in the Subsequent Equity Financing equal to the product of unpaid principal, together with the balance of unpaid and accrued interest and other amounts payable hereunder, divided by the price per share paid by the investors in the Subsequent Equity Financing multiplied by 80%, provided however, that any conversion shall only be allowed if the Subsequent Equity Financing conversion price is equal to or greater than the Minimum Price (as defined in the Convertible Notes) including an appropriate allocation any warrants offered.
Added
We anticipate furthering these activities with a focus on the acquisition of existing IVF clinics as well as on the opening of dedicated “INVO Centers” offering the INVOcell and IVC procedure. Acquisitions: On August 10, 2023, we consummated the first acquisition of an existing IVF clinic, the Wisconsin Fertility Institute (“WFI”).
Removed
The Company may prepay the Convertible Notes at any time in whole or in part by paying a s sum of money equal to 100% of the principal amount to be redeemed, together with accrued and unpaid interest.
Added
As an established and profitable clinic, the closing of the WFI acquisition more than tripled the Company’s current annual revenues and became a major part of the Company’s clinic-based operations. The acquisition is accelerating the transformation of INVO to a healthcare services company and immediately added scale and positive cash flow to the operations.
Removed
The Company entered into a registration rights agreement with the holders of and of even date with the Convertible Notes (the “Note RRA”).
Added
It also complements the Company’s existing new-build INVO Center efforts. The Company expects to continue to pursue additional acquisitions of established and profitable existing fertility clinics as part of its ongoing strategy to accelerate overall growth.
Removed
Pursuant to the terms of Note RRA, if the Company determines to register any of its securities, either for its own account or the account of a security holder or holders, other than (i) a registration relating solely to employee benefit plans on Form S-8 (or any successor form) or (ii) a registration relating solely to a Commission Rule 145 transaction on Form S-4 (or any successor form), the Company will include in such registration, and in any underwriting involved therein, the shares underlying the Convertible Notes and Note Warrants delivered pursuant to the Note and Warrant Purchase Agreements, subject to, in the case of an underwritten registration, the discretion of the managing underwriter to reduce any or all piggyback registration shares if in its good faith judgment such inclusion would affect the successful marketing of the underwritten offering.
Added
Unlike IVF where the oocytes and sperm develop into embryos in an expensive laboratory incubator, the INVOcell allows fertilization and early embryo development to take place in the woman’s body.
Removed
February 2023 Convertible Debentures On February 3, and February 17, 2023, the Company entered into securities purchase agreements (the “February Purchase Agreements”) with accredited investors (the “February Investors”) for the purchase of (i) convertible debentures of the Company in the aggregate original principal amount of $500,000 (the “February Debentures”) for a purchase price of $450,000, (ii) warrants (the “February Warrant”) to purchase 250,000 shares (the “February Warrant Shares”) of the Company’s common stock par value $0.0001 per share (“Common Stock”) at an exercise price of $0.75 per share, and (iii) 83,333 shares of Common Stock (the “February Commitment Shares”) issued as an inducement for issuing the Debentures.
Added
The IVC procedure can provide benefits, including the following: ● Reducing expensive and time-consuming lab procedures, helping clinics and doctors to increase patient capacity and reduce costs; ● Providing a natural, stable incubation environment; ● Offering a more personal, intimate experience in creating a baby; and ● Reducing the risk of errors and wrong embryo transfers.
Removed
The proceeds, net of placement agent and legal fees, are being used for working capital and general corporate purposes. Pursuant to the February Debentures, interest on the February Debentures accrues at a rate of eight percent (8%) per annum and is payable at maturity, one year from the date of the February Debentures.
Added
In both current utilization of the INVOcell, and in clinical studies, the IVC procedure has demonstrated equivalent pregnancy success and live birth rates as IVF.
Removed
All amounts due under the February Debentures are convertible at any time after the issuance date, in whole or in part, at the option of the February Investors into Common Stock at an initial price of $0.52 per share.
Added
Recent Developments NAYA Biosciences Merger Agreement On October 22, 2023, the Company, INVO Merger Sub Inc., a wholly owned subsidiary of the Company and a Delaware corporation (“Merger Sub”), and NAYA Biosciences, Inc., a Delaware corporation (“NAYA”), entered into an Agreement and Plan of Merger, as amended on October 25, 2023 (the “Merger Agreement”).
Removed
This conversion price is subject to adjustment for stock splits, combinations or similar events and anti-dilution provisions, among other adjustments and is subject to a floor price.
Added
Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge (the “Merger”) with and into NAYA, with NAYA continuing as the surviving corporation and a wholly owned subsidiary of the Company.
Removed
Pursuant to the terms of February RRA, the Company has agreed to file with the SEC an initial registration statement on Form S-3 (or Form S-1 if S-3 is not available) covering the resale of all of the securities acquired by the Feb 3 Investor under its February Purchase Agreement.
Added
At the effective time and as a result of the Merger, each share of Class A common stock, par value $0.000001 per share, of NAYA (the “NAYA common stock”) outstanding immediately prior to the effective time of the Merger, other than certain excluded shares held by NAYA as treasury stock or owned by the Company or Merger Sub, will be converted into the right to receive 7.33333 (subject to adjustment as set forth in the Merger Agreement) shares of a newly designated series of common stock, par value $0.0001 per share, of the Company which shall be entitled to ten (10) votes per each share (“Company Class B common stock”) for a total of approximately 18,150,000 shares of the Company (together with cash proceeds from the sale of fractional shares, the “Merger Consideration”).
Removed
The filing of such initial registration statement is to occur within 90 days of February 3, 2023.
Added
Immediately following the effective time of the Merger, Dr.
Removed
On March 31, 2023, having received notice from the February Investor that signed its purchase agreement on February 17, 2023 (the “Feb 17 Investor”) requesting repayment of its February Debenture, the Company paid the Feb 17 Investor $170,000, including interest and the prepayment premium.
Added
Daniel Teper, NAYA’s current chairman and chief executive officer, will be named chairman and chief executive officer of the Company, and the board of directors will be comprised of at least nine (9) directors, of which (i) one shall be Steven Shum, INVO’s current chief executive officer, and (ii) eight shall be identified by NAYA, of which seven (7) shall be independent directors. 4 The completion of the Merger is subject to satisfaction or waiver of certain customary mutual closing conditions, including (1) the adoption of the Merger Agreement by the stockholders of the Company and NAYA, (2) the absence of any injunction or other order issued by a court of competent jurisdiction or applicable law or legal prohibition prohibiting or making illegal the consummation of the Merger, (3) the completion of due diligence, (4) the completion of a private sale of the Company’s preferred stock at a price per share of $5.00 per share, in a private offering resulting in an amount equal to at least $2,000,000 of gross proceeds to INVO in the aggregate, plus an additional amount as may be required prior to closing of the Merger to be determined in good faith by the parties to adequately support INVO’s fertility business activities per an agreed forecast of INVO, as well as for a period of twelve (12) months post-Closing including a catch-up on INVO’s past due accrued payables still outstanding (the “Interim PIPE”), (5) the aggregate of the liabilities of the Company, excluding certain specified liabilities, shall not exceed $5,000,000, (6) the receipt of waivers from any and all holders of warrants (and any other similar instruments) to securities of the Company, with respect to any fundamental transaction rights such warrant holders may have under any such warrants, (7) the continued listing of the Company common stock on NASDAQ through the effective time of the Merger and the approval for listing on NASDAQ of the shares of the Company common stock to be issued in connection with the Merger, the interim private offering, and a private offering of shares of Company common stock at a target price of $5.00 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Company common stock) resulting in sufficient cash available for the Company for one year of operations, as estimated by NAYA, (8) the effectiveness of a registration statement on Form S-4 to be filed by the Company pursuant to which the shares of Company common stock to be issued in connection with the Merger will be registered with the SEC, and the absence of any stop order suspending such effectiveness or proceeding for the purpose of suspending such effectiveness being pending before or threatened by the SEC, and (9) the Company shall have received customary lock-up Agreement from certain Company stockholders.
Removed
After such payment, the principal due the Feb 17 Investor under its debenture was reduced from $200,000 to $39,849. On April 3, 2023, having received notice from the Feb 3 Investor requesting repayment of its February Debenture, the Company paid the Feb 3 Investor $213,879, including interest and the prepayment premium.
Added
The obligation of each party to consummate the Merger is also conditioned upon (1) the other party having performed in all material respects its obligations under the Merger Agreement and (2) the other party’s representations and warranties in the Merger Agreement being true and correct (subject to certain materiality qualifiers); provided, however, that these conditions, other than with respects to certain representations and warranties, will be deemed waived by the Company upon the closing of the interim private offering.
Removed
After such payment, the principal due the Feb 3 Investor under its debenture was reduced from $300,000 to $100,000.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

52 edited+68 added−19 removed188 unchanged
Biggest changeAdditionally, if Nasdaq does not grant us an extension or if a favorable decision is not be obtained from a hearings panel, or the Panel, after the hearing, our common stock would be delisted from Nasdaq. ● The significant number of common shares registered for resale pursuant to the registration statements described under Recent Developments in Item 1, could adversely affect the trading price of our common shares. ● Our shares of common stock are thinly traded, and the price may not reflect our value; there can be no assurance that there will be an active market for our shares now or in the future. ● We do not expect to pay any dividends to shareholders. ● Our revenue and operating results could fluctuate significantly from quarter to quarter, which may cause our stock price to decline. ● We may have difficulty raising the necessary capital to fund operations and the Wisconsin Fertility acquisition because of the thin market and market price volatility for our shares of common stock. ● Shareholders may be diluted significantly through our efforts to obtain financing and from issuance of additional shares of our common stock, including such issuances of shares for services. ● Failure to comply with internal control attestation requirements could lead to loss of public confidence in our consolidated financial statements and negatively impact our stock price. 13 Risks Related to our Financial Condition and our Need For Additional Capital Our financial situation creates doubt whether we will continue as a going concern.
Biggest changeDuring this period, if the Company does not maintain compliance with the Equity rule, then we will not be permitted additional time to regain compliance and would be delisted. ● Our shares of common stock are thinly traded, and the price may not reflect our value; there can be no assurance that there will be an active market for our shares now or in the future. ● We do not expect to pay any dividends to shareholders. ● Our revenue and operating results could fluctuate significantly from quarter to quarter, which may cause our stock price to decline. ● We may have difficulty raising the necessary capital to fund operations and the required $7.5 million in additional payments for the Wisconsin Fertility acquisition because of the thin market and market price volatility for our shares of common stock. ● Shareholders may be diluted significantly through our efforts to obtain financing and from issuance of additional shares of our common stock, including such issuances of shares for services. ● Failure to comply with internal control attestation requirements could lead to loss of public confidence in our consolidated financial statements and negatively impact our stock price. 18 Risks Related to our Financial Condition and our Need For Additional Capital Our financial situation creates doubt whether we will continue as a going concern.
In the United States, there has been a trend of consolidation among healthcare facilities and purchasers of medical devices, allowing such purchasers to limit the number of suppliers from whom they purchase medical products. As result, it is unknown whether such purchasers will decide to stop purchasing our products or demand discounts on our prices.
In the United States, there has been a trend of consolidation among healthcare facilities and purchasers of medical devices, allowing such purchasers to limit the number of suppliers from whom they purchase medical products. As a result, it is unknown whether such purchasers will decide to stop purchasing our products or demand discounts on our prices.
If we are found in violation of applicable laws or regulations, we could suffer severe consequences that would have a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and stock price, including: ● suspension or termination of our participation in federal healthcare programs; ● criminal or civil liability, fines, damages or monetary penalties for violations of healthcare fraud and abuse laws, including the federal False Claims Act, CMPL, and AKS; ● repayment of amounts received in violation of law or applicable payment program requirements, and related monetary penalties; ● mandated changes to our practices or procedures that materially increase operating expenses; ● imposition of corporate integrity agreements that could subject us to ongoing audits and reporting requirements as well as increased scrutiny of our business practices; ● termination of various relationships or contracts related to our business; and ● harm to our reputation which could negatively affect our business relationships, decrease our ability to attract or retain patients and physicians, decrease access to new business opportunities and impact our ability to obtain financing, among other things.
If we are found in violation of applicable laws or regulations, we could suffer severe consequences that would have a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and stock price, including the following: ● suspension or termination of our participation in federal healthcare programs; ● criminal or civil liability, fines, damages or monetary penalties for violations of healthcare fraud and abuse laws, including the federal False Claims Act, CMPL, and AKS; ● repayment of amounts received in violation of law or applicable payment program requirements, and related monetary penalties; ● mandated changes to our practices or procedures that materially increase operating expenses; ● imposition of corporate integrity agreements that could subject us to ongoing audits and reporting requirements as well as increased scrutiny of our business practices; ● termination of various relationships or contracts related to our business; and ● harm to our reputation which could negatively affect our business relationships, decrease our ability to attract or retain patients and physicians, decrease access to new business opportunities and impact our ability to obtain financing, among other things.
Our operations outside the United States are subject to special risks and restrictions, including, without limitation: fluctuations in currency values and foreign-currency exchange rates; exchange control regulations; changes in local political or economic conditions; governmental pricing directives; import and trade restrictions; import or export licensing requirements and trade policy; restrictions on the ability to repatriate funds; and other potentially detrimental domestic and foreign governmental practices or policies affecting U.S. companies doing business abroad, including the U.S.
Our operations outside the United States are subject to special risks and restrictions, including, without limitation, the following: fluctuations in currency values and foreign-currency exchange rates; exchange control regulations; changes in local political or economic conditions; governmental pricing directives; import and trade restrictions; import or export licensing requirements and trade policy; restrictions on the ability to repatriate funds; and other potentially detrimental domestic and foreign governmental practices or policies affecting U.S. companies doing business abroad, including the U.S.
Moreover, if we cannot obtain adequate coverage for and reimbursement of the cost of our products, we cannot provide assurance that patients will be willing to incur the full cost of INVOcell and the IVC procedure. Third-party payers, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs.
Moreover, if we cannot obtain adequate coverage for and reimbursement of the cost of our products, we cannot provide assurance that patients will be willing to incur the full cost of INVOcell and the IVC procedure. 28 Third-party payers, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs.
There can be no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or additional financing through private placements, public offerings and/or bank financing necessary to support our working capital requirements.
There can be no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or additional financing through private placements, public offerings and/or bank financings necessary to support our working capital requirements.
The proposed acquisition of Wisconsin Fertility may present challenges to management, including the integration of the operations, and personnel of INVO and Wisconsin Fertility and special risks, including possible unanticipated liabilities, unanticipated integration costs and diversion of management attention. We cannot assure you that we will successfully integrate or profitably manage Wisconsin Fertility’s businesses.
The acquisition of Wisconsin Fertility may present challenges to management, including the integration of the operations, and personnel of INVO and Wisconsin Fertility and special risks, including possible unanticipated liabilities, unanticipated integration costs and diversion of management attention. We cannot assure you that we will successfully integrate or profitably manage Wisconsin Fertility’s businesses.
We will experience additional risks associated with international sales, including: ● political and economic instability; ● export controls; ● changes in international legal and regulatory requirements; ● United States and foreign government policy changes affecting the product marketability; and ● changes in tax laws, duties and tariffs.
We will experience additional risks associated with international sales, including the following: ● political and economic instability; ● export controls; ● changes in international legal and regulatory requirements; ● United States and foreign government policy changes affecting the product marketability; and ● changes in tax laws, duties and tariffs.
Delays in receipt of, or failure to obtain clearances for any product modifications or future products we may develop would result in delayed or no realization of revenue from such products and the viability of our INVO Centers, and in substantial additional costs, which could decrease our profitability. 19 In addition, we are required to continue to comply with applicable FDA and other regulatory requirements following de novo classification or clearance.
Delays in receipt of, or failure to obtain clearances for any product modifications or future products we may develop would result in delayed or no realization of revenue from such products and the viability of our INVO Centers, and in substantial additional costs, which could decrease our profitability. 26 In addition, we are required to continue to comply with applicable FDA and other regulatory requirements following de novo classification or clearance.
Our limited operating history may make it difficult for management to provide effective insight into future activities, marketing costs, and customer acquisition and retention. This could lead to INVO missing targets for the achievement of profitability, which could negatively affect the value of your investment. 15 Our existing INVO Centers were established as joint ventures with medical partners.
Our limited operating history may make it difficult for management to provide effective insight into future activities, marketing costs, and customer acquisition and retention. This could lead to INVO missing targets for the achievement of profitability, which could negatively affect the value of your investment. 22 Our existing INVO Centers were established as joint ventures with medical partners.
However, Rule 144 is unavailable for the resale of securities issued by an issuer that is a shell company or that has been at any time previously a shell company.
Rule 144 is unavailable for the resale of securities issued by an issuer that is a shell company or that has been at any time previously a shell company.
Any of these factors could have a material adverse effect on our business, results of operations and financial condition. From 2011 through 2022, we sold products in certain international markets mainly through independent distributors, and we anticipate maintaining a similar sales strategy along with our recent joint venture activity for the foreseeable future.
Any of these factors could have a material adverse effect on our business, results of operations and financial condition. From 2011 through 2023, we sold products in certain international markets mainly through independent distributors, and we anticipate maintaining a similar sales strategy along with our recent joint venture activity for the foreseeable future.
Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations. Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.
Even if we believe we have raised or generated sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations. Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.
We cannot, however, prevent a physician from using the INVOcell off-label, when in the physician’s independent professional medical judgement, he or she deems it appropriate. There may be increased risk of injury to patients if physicians attempt to use the INVOcell off-label, or the INVOcell may not be as effective, which could harm our reputation.
We cannot, however, prevent a physician from using the INVOcell off-label, when in the physician’s independent professional medical judgement, the physician deems it appropriate. There may be increased risk of injury to patients if physicians attempt to use the INVOcell off-label, or the INVOcell may not be as effective, which could harm our reputation.
In the United States the FDA, and other federal, state and local authorities, implement various regulations that subject us to civil and criminal penalties, including cessation of operations and recall of products distributed, in the event we fail to comply. Any such actions could severely curtail our sales and business reputation.
In the United States the FDA, and other federal, state and local authorities, implement various regulations that subject us to civil and criminal penalties, including cessation of operations and recall of products distributed, if we fail to comply. Any such actions could severely curtail our sales and business reputation.
Furthermore, any claim asserted against us could generate costly legal fees, consume management’s time and resources, and adversely affect our reputation and business, regardless of the merit or eventual outcome of such claim. 17 There are inherent risks specific to the provision of fertility and ART services.
Furthermore, any claim asserted against us could generate costly legal fees, consume management’s time and resources, and adversely affect our reputation and business, regardless of the merit or eventual outcome of such claim. 24 There are inherent risks specific to the provision of fertility and ART services.
Furthermore, the healthcare laws and regulations applicable to us may be amended or interpreted in a manner that could have a material adverse effect on our business, financial condition, cash flows and results of operations. 22 Recent economic trends could adversely affect our financial performance.
Furthermore, the healthcare laws and regulations applicable to us may be amended or interpreted in a manner that could have a material adverse effect on our business, financial condition, cash flows and results of operations. 30 Recent economic trends could adversely affect our financial performance.
Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. 25 We do not expect to pay any dividends to shareholders.
Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. 32 We do not expect to pay any dividends to shareholders.
Failure to comply with the laws and regulations that affect our global operations could have an adverse effect on our business, financial condition or results of operations. 16 Failure to comply with the United States Foreign Corrupt Practices Act or similar laws could subject us to penalties and other adverse consequences.
Failure to comply with the laws and regulations that affect our global operations could have an adverse effect on our business, financial condition or results of operations. 23 Failure to comply with the United States Foreign Corrupt Practices Act or similar laws could subject us to penalties and other adverse consequences.
Code § 22-1-11(a)) contain prohibitions that are analogous to the federal False Claims Act. Alabama law also includes an anti-kickback provision (Ala. Code § 22-1-11(c)) that is analogous to the federal AKS. 21 The Georgia Patient Self-Referral Act of 1993 (Ga.
Code § 22-1-11(a)) contain prohibitions that are analogous to the federal False Claims Act. Alabama law also includes an anti-kickback provision (Ala. Code § 22-1-11(c)) that is analogous to the federal AKS. 29 The Georgia Patient Self-Referral Act of 1993 (Ga.
Such economic changes could negatively impact infertile people’s ability to pay for fertility treatment around the world. 18 We anticipate that eventually international sales will account for a meaningful part of our revenue.
Such economic changes could negatively impact infertile people’s ability to pay for fertility treatment around the world. 25 We anticipate that eventually international sales will account for a meaningful part of our revenue.
In order to obtain the authorization to affix the CE mark to products, a manufacturer must certify that its product complies with the applicable directive, which may include a requirement to obtain certification that its processes and products meet certain European quality standards. 20 In May 2017, the EU adopted Regulation (EU) 2017/745 (“MDR”), which will repeal and replace the MDD with effect from May 26, 2021.
To obtain the authorization to affix the CE mark to products, a manufacturer must certify that its product complies with the applicable directive, which may include a requirement to obtain certification that its processes and products meet certain European quality standards. 27 In May 2017, the EU adopted Regulation (EU) 2017/745 (“MDR”), which will repeal and replace the MDD with effect from May 26, 2021.
If we are unable to maintain any of these joint ventures, or if they are not successful, our business could be adversely affected. ● Our business is subject to significant competition. ● We are subject to risks associated with doing business globally. ● We need to manage growth in operations, and we may not be successful in implementing our growth strategy. ● Our products incorporate intellectual property rights developed by us that may be difficult to protect or may be found to infringe on the rights of others. ● We may be forced to defend our intellectual property rights from infringement through expensive legal action. ● We face potential liability as a provider of a medical device.
If we are unable to maintain any of these joint ventures, or if they are not successful, our business could be adversely affected. ● Our business is subject to significant competition. ● We are subject to risks associated with doing business globally. ● We need to manage growth in operations, and we may not be successful in implementing our growth strategy. ● We may not be successful at pursuing our acquisition strategy. ● We may not be successful at managing clinics. ● Our products incorporate intellectual property rights developed by us that may be difficult to protect or may be found to infringe on the rights of others. ● We may be forced to defend our intellectual property rights from infringement through expensive legal action. ● We face potential liability as a provider of a medical device.
The Notice has no immediate effect on the listing of our common stock and our common stock continues to trade on The Nasdaq Capital Market under the symbol “INVO” subject to our compliance with the other continued listing requirements.
The Notice had no immediate effect on the listing of our common stock and our common stock continues to trade on The Nasdaq Capital Market under the symbol “INVO” subject to our compliance with the other continued listing requirements.
If we close our acquisition of Wisconsin Fertility and fail to make the required $7.5 million in additional payments, our business would be adversely affected.
If we fail to make the required $7.5 million in additional payments required in our acquisition of Wisconsin Fertility, our business would be adversely affected.
Failure to obtain this necessary capital when needed may force us to delay, limit or terminate operations. ● Even if we can raise additional funding, we may be required to do so on terms that are dilutive to you. ● Our potential acquisition of the Wisconsin Fertility Institute may not close. ● We may not be able to successfully integrate the Wisconsin Fertility Institute into INVO Bioscience and achieve the benefits expected to result from the acquisition. ● If we close our acquisition of the Wisconsin Fertility Institute and fail to make the required $7.5 million in additional payments, our business would be adversely affected. ● We may incur debt financing to provide the cash proceeds necessary to acquire the Wisconsin Fertility Institute.
Failure to obtain this necessary capital when needed may force us to delay, limit or terminate operations. ● Even if we can raise additional funding, we may be required to do so on terms that are dilutive to you. ● Our potential merger with NAYA Biosciences, Inc. may not close. ● We may not be able to successfully integrate NAYA and the Company and achieve the benefits expected to result from the merger. ● We may not be able to successfully integrate the Wisconsin Fertility Institute into INVO Bioscience and achieve the benefits expected to result from the acquisition. ● If we fail to make the required $7.5 million in additional payments for the Wisconsin Fertility acquisition, our business would be adversely affected. ● We may incur debt financing to provide the cash proceeds necessary to make the required $7.5 million in additional payments for the Wisconsin Fertility acquisition.
Since our inception, we have not generated significant revenue. Our results from year-to-year and from quarter-to-quarter have, and are expected to continue to, vary significantly based on ordering cycles of distributors and partners. As a result, we expect period-to-period comparisons of our operating results may not be meaningful as an indication of our future performance for any future period.
Our results from year-to-year and from quarter-to-quarter have, and are expected to continue to, vary significantly based on ordering cycles of distributors and partners. As a result, we expect period-to-period comparisons of our operating results may not be meaningful as an indication of our future performance for any future period.
In the event such international patients are unable to afford the associated increase costs, international doctors and clinics may not be able to offer the INVOcell and IVC procedure.
If such international patients are unable to afford the associated increase costs, international doctors and clinics may not be able to offer the INVOcell and IVC procedure.
In the event our manufacturer is unable to produce an adequate supply of products at appropriate quality levels, our growth could be limited, and our business may be harmed.
If our manufacturer is unable to produce an adequate supply of products at appropriate quality levels, our growth could be limited, and our business may be harmed.
From the inception of our consolidated subsidiary BioXcell Inc. on January 5, 2007, through December 31, 2022, we had an accumulated net loss of $49.4 million. We have a limited operating history and are essentially an early-stage operation.
From the inception of our consolidated subsidiary BioXcell Inc. on January 5, 2007, through December 31, 2023, we had an accumulated net loss of $57.8 million. We have a limited operating history and are essentially an early-stage operation.
Such issuances may also serve to enhance existing management’s ability to control us as the shares may be issued to our officers, directors, new employees, or other related parties. 26 We are subject to the reporting requirements of U.S. federal securities laws, which can be expensive.
Such issuances may also serve to enhance existing management’s ability to control us as the shares may be issued to our officers, directors, new employees, or other related parties. 33 We are subject to the reporting requirements of U.S. federal securities laws, and complying with these reporting requirements can be expensive.
As a result, a loss of public confidence in our financial controls and the reliability of our consolidated financial statements may develop ultimately negatively impacting our stock price and our ability to raise additional capital when and as needed. Item 1B. Unresolved Staff Comments. None.
As a result, a loss of public confidence in our financial controls and the reliability of our consolidated financial statements may develop ultimately negatively impacting our stock price and our ability to raise additional capital when and as needed.
Following closing of our pending acquisition of Wisconsin Fertility, if consummated, we would be required to make additional payments of approximately $7.5 million, which payments are secured the sellers having a lien on the assets purchased to acquire Wisconsin Fertility.
Following closing of our acquisition of the Wisconsin Fertility business, we are required to make additional payments of approximately $7.5 million, which payments are secured the sellers having a lien on the assets purchased to acquire Wisconsin Fertility.
From the inception of our consolidated subsidiary BioXcell Inc. on January 5, 2007, through December 31, 2022, we had an accumulated net loss of $49.4 million.
From the inception of our consolidated subsidiary BioXcell Inc. on January 5, 2007, through December 31, 2023, we had an accumulated net loss of $57.5 million.
Our articles of incorporation and applicable Nevada law provide for the indemnification of our directors, officers, employees. The foregoing indemnification obligations could result in us incurring substantial expenditures to cover the costs of settlement or damage awards against directors, officers and employees, which we may be unable to recoup.
The foregoing indemnification obligations could result in us incurring substantial expenditures to cover the costs of settlement or damage awards against directors, officers and employees, which we may be unable to recoup.
There is no assurance that future dividends will be paid to stockholders. In the event dividends are paid to stockholders, there is no assurance with respect to the amount of any such dividend. Our revenue and operating results could fluctuate significantly from quarter to quarter, which may cause our stock price to decline.
There is no assurance that future dividends will be paid to stockholders. If dividends are paid to stockholders, there is no assurance with respect to the amount of any such dividend. Our revenue and operating results could fluctuate significantly from quarter to quarter, which may cause our stock price to decline. Since our inception, we have not generated significant revenue.
We may have difficulty raising the necessary capital to fund operations and the Wisconsin Fertility acquisition because of the thin market and market price volatility for our shares of common stock. Throughout 2022, there has been a thin market for our shares, and the market price for our shares has been volatile.
We may have difficulty raising the necessary capital to fund operations and the required $7.5 million in additional payments for the Wisconsin Fertility acquisition because of the thin market and market price volatility for our shares of common stock. Throughout 2023, there has been a thin market for our shares, and the market price for our shares has been volatile.
In the event a distributor fails to meet annual sales goals, we may be required to obtain a replacement distributor, which may be costly and difficult to identify. Additionally, a change in our distributors may increase costs, and create a substantial disruption in our operations resulting loss of revenue.
If a distributor fails to meet annual sales goals, we may be required to obtain a replacement distributor, which may be costly and difficult to identify. Additionally, a change in our distributors may increase costs and create a substantial disruption in our operations, resulting in loss of revenue. We are susceptible to cybersecurity breaches and cyber-related fraud.
We will be required to expend significant resources to obtain regulatory approvals or clearances of our products, and there may be delays and uncertainty in obtaining those approvals or clearances. ● If third-party payers do not provide adequate coverage and reimbursement for INVOcell and the IVC procedure, we may be unable to generate significant revenue. ● We are subject to risks relating to federal and state healthcare fraud, waste, and abuse laws. ● We are subject to requirements of the Health Insurance Portability and Accountability Act of 1996, the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH Act”), and related implementing regulations (together, “HIPAA”), and failure to comply, including through a breach of protected health information (“PHI”) could materially harm our business. ● We have been notified by Nasdaq of our failure to comply with certain continued listing requirements and, if we are unable to regain compliance with all applicable continued listing requirements and standards of Nasdaq, our common stock could be delisted from Nasdaq.
We will be required to expend significant resources to obtain regulatory approvals or clearances of our products, and there may be delays and uncertainty in obtaining those approvals or clearances. ● If third-party payers do not provide adequate coverage and reimbursement for INVOcell and the IVC procedure, we may be unable to generate significant revenue. ● We are subject to risks relating to federal and state healthcare fraud, waste, and abuse laws. ● We are subject to requirements of the Health Insurance Portability and Accountability Act of 1996, the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH Act”), and related implementing regulations (together, “HIPAA”), and failure to comply, including through a breach of protected health information (“PHI”) could materially harm our business. ● We may be subject to risks related to changes in laws regarding abortion, which can affect how a fertility clinic must treat and handle embryos ● We have been notified by Nasdaq that the Company will be subject to Mandatory Panel Monitoring until November 22, 2024.
We do not expect that our current cash position will be sufficient to fund our current operations for the next 12 months and we do not have sufficient funds to consummate our acquisition of the Wisconsin Fertility Institute.
We do not expect that our current cash position will be sufficient to fund our current operations for the next 12 months.
While we have no intention of issuing shares of preferred stock at the present time, we may seek to raise capital through the sale of our securities and may issue shares of preferred stock in connection with a particular investment. Any issuance of shares of preferred stock could adversely affect the rights of holders of our common stock.
While we have no intention of issuing additional shares of preferred stock at the present time other than through existing contractual commitments, we may seek to raise capital through the sale of our securities and may issue shares of preferred stock in connection with a particular investment.
In the event that we are unable to consummate our acquisition of Wisconsin Fertility, it will have a material adverse effect on our business, financial condition and results of operation. 14 We may not be able to successfully integrate Wisconsin Fertility into INVO and achieve the benefits expected to result from the acquisition.
In the event that the Merger is not consummated, it will have a material adverse effect on the business, financial condition and results of operations of the Company and NAYA. We may not be able to successfully integrate NAYA and the Company and achieve the benefits expected to result from the Merger.
We may incur debt financing to provide the cash proceeds necessary to acquire Wisconsin Fertility. If we were unable to service any such debt, our business would be adversely affected. In order to finance our proposed acquisition of Wisconsin Fertility, we may look to secure debt financing.
We may incur debt additional financing to provide the cash proceeds necessary to make the required $7.5 million in additional payments for the Wisconsin Fertility acquisition. If we were unable to service any such debt, our business would be adversely affected.
On January 18, 2023, we received a letter from Nasdaq under which it stated that based on our submission that Nasdaq has determined to grant us an extension of time to regain compliance with Nasdaq Listing Rule 5550(b) until May 22, 2023.
We submitted our plan within the prescribed time and, on January 18, 2023, we received a letter from Nasdaq stating that based on our submission that Nasdaq had determined to grant us an extension of time to regain compliance with the Equity Rule until May 22, 2023.
Risks Related to Our Common Stock We have been notified by Nasdaq of our failure to comply with certain continued listing requirements and, if we are unable to regain compliance with all applicable continued listing requirements and standards of Nasdaq, our common stock could be delisted from Nasdaq.
Risks Related to Our Common Stock If we are unable to maintain compliance with all applicable continued listing requirements and standards of Nasdaq, our common stock will be delisted from Nasdaq. Our common stock is currently listed on Nasdaq.
Risks Related to Our Industry We are subject to significant domestic and international governmental regulation. Our business is heavily regulated domestically in the United States and internationally.
There is no guarantee that we can continue to protect our systems from breach. Unauthorized access, loss, or dissemination could also disrupt our operations. Risks Related to Our Industry We are subject to significant domestic and international governmental regulation. Our business is heavily regulated domestically in the United States and internationally.
Pursuant to the Stockholders’ Equity Notice, Nasdaq gave us 45 calendar days, or until January 7, 2023, to submit to Nasdaq a plan to regain compliance. If our plan is accepted, Nasdaq may grant an extension of up to 180 calendar days from the date of the Notice to evidence compliance.
Pursuant to the Notice, Nasdaq gave us 45 calendar days, or until January 7, 2023, to submit to Nasdaq a plan to regain compliance.
In addition, if we are unable to attract additional capital, it could have an adverse impact on our ability to implement our business plan and/or sustain our operations. Our status as a former “shell company” could prevent us from raising additional funds to develop additional technological advancements, which could cause the value of our securities to decline in value.
In addition, if we are unable to attract additional capital, it could have an adverse impact on our ability to implement our business plan and/or sustain our operations.
Also, it may be difficult for us to raise additional capital if we are not listed on a national exchange. Our common stock is subject to risks arising from restrictions on reliance on Rule 144 by shell companies or former shell companies.
Our common stock is subject to risks arising from restrictions on reliance on Rule 144 by shell companies or former shell companies.
Should we issue additional shares of our common stock, each investor’s ownership interest in our stock would be proportionally reduced. The indemnification rights provided to our directors, officers and employees may result in substantial expenditures by us and may discourage lawsuits against its directors, officers and employees.
The indemnification rights provided to our directors, officers, and employees may result in substantial expenditures by us and may discourage lawsuits against its directors, officers, and employees. Our articles of incorporation and applicable Nevada law provide for the indemnification of our directors, officers, employees.
Any such debt financing would likely require us to pledge all or substantially all of our assets as collateral.
In order to finance our acquisition of Wisconsin Fertility, we secured debt financing and may look to raise additional debt proceeds. The current debt financing requires us to pledge all or substantially all of our assets as collateral.
In addition, on January 11, 2023, we received a letter from the staff (the “Staff”) of Nasdaq listing qualifications group indicating that, based upon the closing bid price of our common stock for the last 30 consecutive business days, we were not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing under Nasdaq Listing Rule 5550(a)(2).
On July 27, 2023, we received a letter from the Panel under which they granted our request for continued listing of Nasdaq subject to us demonstrating compliance with the Equity Rule as well as Nasdaq Listing Rule 5550(a)(2) to maintain a minimum bid price of $1 (the “Price Rule”) on or before September 29. 2023.
Removed
Risks Related to the Proposed Acquisition of the Wisconsin Fertility Institute Our potential acquisition of the Wisconsin Fertility Institute may not close. On March 16, 2023, we signed definitive acquisition agreements to acquire Wisconsin Fertility.
Added
Risks Relating to Our Potential Merger with NAYA Biosciences, Inc. The Merger may be completed even if the Interim PIPE or the Closing PIPE are not completed. The parties have agreed to use their commercially reasonable efforts to raise capital for the combined company privately through the Interim PIPE and the Closing PIPE.
Removed
This transaction is subject to certain customary closing conditions, as well as an initial cash payment of approximately $2.5 million less certain assumed liabilities and a holdback. We have not currently secured sufficient funds to make the initial closing payment which may impact our ability to close the transaction.
Added
It is a condition of closing the Merger that the Interim PIPE has been consummated, but the consummation of the Closing PIPE is not a condition to closing. Moreover, the parties can mutually agree to waive the Interim PIPE as a condition to closing the Merger.
Removed
We can no longer depend on minimum annual product purchases from Ferring. On November 2, 2021, Ferring International Center S.A. (“Ferring”) notified us of their intent to terminate the U.S. Distribution Agreement (the “Ferring Agreement”), pursuant to which we granted Ferring certain rights to sell our products in the United States market.
Added
If the parties are unable to consummate the Interim PIPE or the Closing PIPE and the Merger closes, the combined company may be inadequately capitalized upon the closing of the Merger, in which case the combined company would need to raise additional capital.
Removed
Ferring gave notice of termination for convenience under Section 14.2(b) of the Ferring Agreement which required 90-days prior written notice. Accordingly, the Ferring Agreement officially terminated on January 31, 2022. By its terms, our Supply Agreement with Ferring also terminated on such date.
Added
Such capital may not be available to the combined company on terms acceptable to the combined company, or at all.
Removed
Under the terms of these agreements, Ferring was required to make certain minimum annual purchases to maintain U.S. exclusivity for the INVOcell. Such purchases are no longer available now that the Ferring Agreement has been terminated. Ferring’s termination of these agreements could have a material adverse effect on our business, financial condition and results of operations.
Added
Because the price of INVO’s common stock has fluctuated and will continue to fluctuate, INVO’s stockholders cannot be certain, at the time they vote on the Merger, of the value of the Merger consideration they will receive or the value of the INVO common stock they will give up.
Removed
Our planned additional clinical trial and 510(k) efforts may prove unsuccessful. We are pursuing the expansion of our label, and corresponding 510(k) submission utilizing real-market usage (retrospective) data, to expand the INVOcell incubation period from 3 days to 5 days. We may also conduct an additional prospective clinical trial related to such label expansion.
Added
Upon completion of the Merger, each share of NAYA common stock outstanding immediately prior to the Closing will be converted into the right to receive 7.33333 shares of INVO common stock (subject to adjustment as set forth in the Merger Agreement).
Removed
While we anticipate positive outcomes of these efforts, an unsuccessful trial or insufficient retrospective data could adversely impact our ability to receive FDA clearance for the particular indication related to 5-day incubation and impact our ability to expand our marketing efforts.
Added
Prior to closing, INVO’s stock price my fluctuate due to a variety of factors, including, among others, general market and economic conditions, changes in INVO’s and NAYA’s respective businesses, operations and prospects, market assessments of the likelihood that the Merger will be completed, the timing of the Merger and regulatory considerations.
Removed
Additionally, if Nasdaq does not grant us an extension or if a favorable decision is not be obtained from a hearings panel, or the Panel, after the hearing, our common stock would be delisted from Nasdaq. Our common stock is currently listed on Nasdaq.
Added
Many of these factors are beyond INVO’s and NAYA’s control.
Removed
We must furnish to the SEC and Nasdaq a publicly available report (e.g. a Form 8-K) which report, among other things, includes a description of the completed transaction or event that enabled us to satisfy the stockholders’ equity requirement for continued listing After filing the publicly available report described above, if we fail to evidence compliance upon filing its periodic report for the June 30, 2023, with the SEC and Nasdaq, the Company may be subject to delisting.
Added
There is no guarantee that INVO stockholders will receive market value for their shares of INVO common stock following the Merger in accordance with the Exchange Ratio. 19 After completion of the Merger, INVO stockholders will have a significantly lower ownership and voting interest in INVO (or NAYA following the Merger) than they currently have in INVO, and will exercise less influence over management.
Removed
In the event we do not satisfy these terms, Nasdaq will provide written notification that its securities will be delisted. At that time, the Company may appeal Nasdaq’s determination to a Hearings Panel.
Added
It is expected that, after completion of the Merger, former INVO stockholders will own approximately own 12% of INVO.
Removed
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided an initial period of 180 calendar days, or until July 10, 2023, to regain compliance with the minimum bid price requirement.
Added
The Series B Common Stock that NAYA is issuing to INVO in the Merger has voting rights that provide the holder of such shares to voting rights that have the right to ten (10) votes per share of Class B Common Stock held of record by such holder.
Removed
If at any time before July 10, 2023, the closing bid price of our common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that we have achieved compliance with the minimum bid price requirement, and the matter would be resolved.
Added
Consequently, current INVO stockholders will have significantly less influence over the management and policies of INVO following the Merger than they currently have over the management and policies of INVO prior to the Merger.
Removed
If we do not regain compliance prior to July 10, 2023, then Nasdaq may grant us a second 180 calendar day period to regain compliance, provided we (i) meets the continued listing requirement for market value of publicly-held shares and all other initial listing standards for The Nasdaq Capital Market, other than the minimum closing bid price requirement, and (ii) notifies Nasdaq of its intent to cure the deficiency within such second 180 calendar day period, by effecting a reverse stock split, if necessary. 23 We will continue to monitor the closing bid price of our common stock and will consider implementing available options to regain compliance with the minimum bid price requirement under the Nasdaq Listing Rules.
Added
The market price of INVO common stock after the Merger may be affected by factors different from those affecting the market price of INVO common stock currently. Upon completion of the Merger, holders of INVO common stock will become holders of NAYA’s business.
Removed
If we do not regain compliance with the minimum bid price requirement within the allotted compliance periods, we will receive a written notification from Nasdaq that its securities are subject to delisting. We would then be entitled to appeal that determination to a Nasdaq hearings panel.
Added
The overall business composition and asset mix of INVO, along with its liabilities and potential exposures, differs from that of INVO in certain important respects, and accordingly, the results of operations of INVO after the Merger, as well as the market price of INVO common stock, may be affected by factors different from those currently affecting the results of operations of INVO.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe lease approximately 1,223 square feet in the Sarasota facility, pursuant to a May 2019 lease with a 3% annual rent increase. We believe that our facilities are adequate to meet our needs.
Biggest changeThe lease is for a 10-year term with an automatic 5-year renewal period. We lease approximately 9,680 square feet pursuant to a lease effective August 10, 2023 with a 3% annual rent increase. We believe that our facilities are adequate to meet our needs.
Added
We lease approximately 1,223 square feet in the Sarasota facility, pursuant to a May 2019 lease with a 3% annual rent increase. In April 2024, we took the option to extend the lease on the Sarasota facility for three years. Our clinic, Wisconsin Fertility Institute, is located at 3146 Deming Way, Middleton, Wisconsin.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of the outcome, litigation can, among other things, be time consuming and expensive to resolve, and can divert management resources. Item 4. Mine Safety Disclosures. Not applicable. 27 Part II
Biggest changeRegardless of the outcome, litigation can, among other things, be time consuming and expensive to resolve, and can divert management resources. Item 4. Mine Safety Disclosures. Not applicable. 34 Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+2 added−0 removed2 unchanged
Biggest changeWe intend to retain future earnings (if any) to fund the development and growth of our business, rather than to pay them as dividends, for the foreseeable future. Recent Sales of Unregistered Securities None. Purchase of Equity Securities No repurchase of equity securities were made during the 2022 fiscal year. 28 Item 6. Reserved
Biggest changeWe intend to retain future earnings (if any) to fund the development and growth of our business, rather than to pay them as dividends, for the foreseeable future. Recent Sales of Unregistered Securities In November 2023, the Company issued 7,500 shares of Common Stock to consultants in consideration of services rendered.
As of April 17, 2023, there were 13,971,283 shares of our common stock outstanding. Information required with respect to Equity Compensation Plans in this Item 5 is included in Item 11 on page 44 of this report on Form 10-K. Stockholders As of April 17, 2023, there were approximately 183 stockholders of record of our common stock.
As of April 16, 2024, there were 2,743,031 shares of our common stock outstanding. Information required with respect to equity compensation plans in this Item 5 is included in Item 11 on page 57 of this report on Form 10-K. Stockholders As of April 16, 2024, there were approximately 191 stockholders of record of our common stock.
Added
These shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. The Company did not receive any cash proceeds from this issuance. In February 2024, the Company issued 125,500 shares of Common Stock to consultants in consideration of services rendered.
Added
These shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. The Company did not receive any cash proceeds from this issuance. Purchase of Equity Securities No repurchase of equity securities were made during the 2023 fiscal year. 35 Item 6. Reserved

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

79 edited+152 added−63 removed44 unchanged
Biggest changeNotice Regarding Failure to Maintain Minimum Bid Price On January 11, 2023, we received a letter from the staff (the “Staff”) of Nasdaq listing qualifications group indicating that, based upon the closing bid price of our common stock for the last 30 consecutive business days, we were not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing under Nasdaq Listing Rule 5550(a)(2). 37 The notice has no immediate effect on the listing of our common stock, and our common stock will continue to trade on The Nasdaq Capital Market under the symbol “INVO.” In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided an initial period of 180 calendar days, or until July 10, 2023, to regain compliance with the minimum bid price requirement.
Biggest changeNotice Regarding Failure to Maintain Minimum Bid Price On January 11, 2023, we received a letter from the Staff indicating that, based upon the closing bid price of our common stock for the last 30 consecutive business days, we were not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing under the Price Rule.
In the United States, infertility, according to the American Society of Reproductive Medicine (2017), affects an estimated 10%-15% of the couples of childbearing-age. According to the Centers for Disease Control (“CDC”), there are approximately 6.7 million women with impaired fertility.
In the United States, infertility, affects an estimated 10%-15% of the couples of childbearing-age, according to the American Society of Reproductive Medicine (2017). According to the Centers for Disease Control (“CDC”), there are approximately 6.7 million women with impaired fertility.
During the year ended December 31, 2022, cash provided by financing activities of approximately $1.1 million was related to proceeds from demand notes and from the sale of common stock.
During the year ended December 31, 2022, cash provided by financing activities of approximately $1.1 million was primarily related to proceeds from demand notes and from the sale of common stock.
Unlike conventional IVF where the oocytes and sperm develop into embryos in an expensive laboratory incubator, the INVOcell allows fertilization and early embryo development to take place in the woman’s body.
Unlike IVF where the oocytes and sperm develop into embryos in an expensive laboratory incubator, the INVOcell allows fertilization and early embryo development to take place in the woman’s body.
We are also required to register the product in each market before the distributor can begin importing, a process and timeline that can vary widely depending on the market. 31 The following table sets forth a list of our current international distribution agreements: INVOcell Registration Market Distribution Partner Date Initial Term Status in Country Mexico (a) Positib Fertility, S.A. de C.V.
We are also required to register the product in each market before the distributor can begin importing, a process and timeline that can vary widely depending on the market. 38 The following table sets forth a list of our current international distribution agreements: INVOcell Registration Market Distribution Partner Date Initial Term Status in Country Mexico (a) Positib Fertility, S.A. de C.V.
Although our audited consolidated financial statements for the year ended December 31, 2022 were prepared under the assumption that we would continue operations as a going concern, the report of our independent registered public accounting firm that accompanies our consolidated financial statements for the year ended December 31, 2022 contains a going concern qualification in which such firm expressed substantial doubt about our ability to continue as a going concern, based on the consolidated financial statements at that time.
Although our audited consolidated financial statements for the year ended December 31, 2023 were prepared under the assumption that we would continue operations as a going concern, the report of our independent registered public accounting firm that accompanies our consolidated financial statements for the year ended December 31, 2023 contains a going concern qualification in which such firm expressed substantial doubt about our ability to continue as a going concern, based on the consolidated financial statements at that time.
This powerful combination of lower cost and added capacity has the potential to open up access to care for underserved patients around the world. 30 Greater patient involvement . With the IVC procedure, the patient uses their own body for fertilization, incubation, and early embryo development which creates a greater sense of involvement, comfort, and participation.
This powerful combination of lower cost and added capacity has the potential to open up access to care for underserved patients around the world. 37 Greater patient involvement . With the IVC procedure, the patient uses their own body for fertilization, incubation, and early embryo development which creates a greater sense of involvement, comfort, and participation.
In some cases, this may also free people from barriers related to due to ethical or religious concerns, or fears of laboratory mix-ups.
In some cases, this may also free people from barriers related to ethical or religious concerns, or fears of laboratory mix-ups.
April 2021 1-year Completed Sudan Quality Medicines, Cosmetics & Medical Equipment Import Sept 2020 1-year In process Ethiopia Quality Medicines, Cosmetics & Medical Equipment Import Sept 2020 1-year In process Uganda Quality Medicines, Cosmetics & Medical Equipment Import Sept 2020 1-year Not required Nigeria G-Systems Limited Sept 2020 5-year Completed Iran Tasnim Behboud Dec 2020 1-year Completed Sri Lanka Alsonic Limited July 2021 1-year In process China Onesky Holdings Limited May 2022 5-year In process (a) Our Mexico JV.
April 2021 1-year Completed Sudan Quality Medicines, Cosmetics & Medical Equipment Import Sept 2020 1-year In process Ethiopia Quality Medicines, Cosmetics & Medical Equipment Import Sept 2020 1-year In process Uganda Quality Medicines, Cosmetics & Medical Equipment Import Sept 2020 1-year Not required Nigeria G-Systems Limited Sept 2020 5-year Completed Iran Tasnim Behboud Dec 2020 1-year Completed Sri Lanka Alsonic Limited July 2021 1-year On hold China Onesky Holdings Limited May 2022 5-year In process (a) Our Mexico JV.
Sales and Marketing Our approach to market is focused on identifying partners within targeted geographic regions that we believe can best promote support our efforts to expand access to advanced fertility treatment for the large number of underserved infertile people hoping to have a baby.
INVOcell Sales and Marketing Our approach to market is focused on identifying partners within targeted geographic regions that we believe can best support our efforts to expand access to advanced fertility treatment for the large number of underserved infertile people hoping to have a baby.
Notices from Nasdaq of Failure to Satisfy Continued Listing Rules. Notice Regarding Non-Compliance with Minimum Stockholders’ Equity On November 23, 2022, we received notice (the “Stockholders’ Equity Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) advising us that we were not in compliance with the minimum stockholders’ equity requirement for continued listing on The Nasdaq Capital Market.
Notices from Nasdaq of Failure to Satisfy Continued Listing Rules Notice Regarding Non-Compliance with Minimum Stockholders’ Equity On November 23, 2022, we received notice from The Nasdaq Stock Market LLC (“Nasdaq”) advising us that we were not in compliance with the minimum stockholders’ equity requirement for continued listing on The Nasdaq Capital Market.
Nasdaq Listing Rule 5550(b)(1) requires companies listed on The Nasdaq Capital Market to maintain stockholders’ equity of at least $2,500,000 (the “Stockholders’ Equity Requirement). In our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, we reported stockholders’ equity of $1,287,224, which is below the Stockholders’ Equity Requirement for continued listing.
Nasdaq Listing Rule 5550(b)(1) (the “Equity Rule”) requires companies listed on The Nasdaq Capital Market to maintain stockholders’ equity of at least $2,500,000 (the “Stockholders’ Equity Requirement”). In our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, we reported stockholders’ equity of $1,287,224, which is below the Stockholders’ Equity Requirement for continued listing.
If at any time before July 10, 2023, the closing bid price of our common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that we have achieved compliance with the minimum bid price requirement, and the matter would be resolved.
If at any time before July 10, 2023, the closing bid price of our common stock closed at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq would provide written notification that we have achieved compliance with the minimum bid price requirement, and the matter would be resolved.
For the years ended December 31, 2022 and 2021, the Alabama JV recorded net losses of $0.3 million and $0.6 million, respectively, of which we recognized losses from equity method investments of $0.2 million and $0.3 million, respectively. 32 Georgia JV Agreement On June 28, 2021, INVO CTR entered into a limited liability company agreement (the “Bloom Agreement”) with Bloom Fertility, LLC (“Bloom”) to establish a joint venture entity, formed as “Bloom INVO LLC” (the “Georgia JV”), for the purposes of commercializing INVOcell, and the related IVC procedure, through the establishment of an INVO Center, (the “Atlanta Clinic”) in the Atlanta, Georgia metropolitan area.
For the years ended December 31, 2023 and 2022, the Alabama JV recorded net losses of $0.03 million and $0.3 million, respectively, of which we recognized losses from equity method investments of $0.02 million and $0.2 million, respectively. 39 Georgia JV Agreement On June 28, 2021, INVO CTR entered into a limited liability company agreement (the “Bloom Agreement”) with Bloom Fertility, LLC (“Bloom”) to establish a joint venture entity, formed as “Bloom INVO LLC” (the “Georgia JV”), for the purposes of commercializing INVOcell, and the related IVC procedure, through the establishment of an INVO Center, (the “Atlanta Clinic”) in the Atlanta, Georgia metropolitan area.
The March Warrants (and the shares of Common Stock issuable upon the exercise of the Private Warrants) were not registered under the Securities Act and were offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.
The March Warrant (and the shares of common stock issuable upon the exercise of the Private Warrants) was not registered under the Securities Act and was offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.
As of December 31, 2022, INVO invested $0.1 million in the Mexico JV. For the years ended December 31, 2022 and 2021, the Mexico JV recorded net losses of $0.1 million and $0.04 million, respectively, of which we recognized losses from equity method investments of $0.05 million and $0.01 million, respectively.
As of December 31, 2023, INVO invested $0.1 million in the Mexico JV. For the years ended December 31, 2023 and 2022, the Mexico JV recorded net losses of $0.1 million and $0.1 million, respectively, of which we recognized losses from equity method investments of $0.04 million and $0.05 million, respectively.
The IVC procedure is currently being offered at several IVF clinics at a price range of $5,000 - $11,000 per cycle and from $4,500 to $7,000 at the existing INVO Centers, thereby making it more affordable than conventional IVF (which tends to average $12,000 to $17,000 per cycle or higher).
The IVC procedure is currently being offered at several IVF clinics at a price range of $5,000 - $11,000 per cycle and from $4,500 to $7,000 at the existing INVO Centers, thereby making it more affordable than IVF (which tends to average $11,000 to $15,000 per cycle or higher).
While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. Overview We are a commercial-stage fertility company dedicated to expanding the assisted reproductive technology (“ART”) marketplace by making fertility care accessible and inclusive to people around the world.
While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. Overview We are a healthcare services fertility company dedicated to expanding the assisted reproductive technology (“ART”) marketplace by making fertility care more accessible and inclusive to people around the world.
Our key suppliers have been steadfast partners since our company first began and can provide us with virtually an unlimited capability to support our growth objectives, with all manufacturing performed in the New England region of the U.S.. ● Raw Materials : all raw materials utilized for the INVOcell are medical grade and commonly used in medical devices (e.g., medical grade silicone, medical grade plastic).
Our key suppliers, which include NextPhase Medical Devices and Casco Bay Molding, have been steadfast partners since our company first began and can provide us with virtually an unlimited capability to support our growth objectives, with all manufacturing performed in the New England region of the U.S.. ● Raw Materials : All raw materials utilized for the INVOcell are medical grade and commonly used in medical devices (e.g., medical grade silicone, medical grade plastic).
As of December 31, 2022, INVO invested $0.9 million in the Georgia JV in the form of capital contributions as well as $0.5 million in the form of a note. For the years ended December 31, 2022 and 2021, the Georgia JV recorded net losses of $0.6 million and $0.4 million, respectively. Noncontrolling interest in the Georgia JV was $0.
As of December 31, 2023, INVO invested $0.9 million in the Georgia JV in the form of capital contributions as well as $0.5 million in the form of a note. For the years ended December 31, 2023 and 2022, the Georgia JV recorded net losses of $0.2 million and $0.6 million, respectively. Noncontrolling interest in the Georgia JV was $0.
The ART market also continues to benefit from a number of industry tailwinds, including 1) the large under-served potential patient population, 2) increasing infertility rates around the world 3) growing awareness and education of fertility treatment options, 4) a growing acceptance of fertility treatment, 5) improvements in procedure techniques and hence improvements in pregnancy success rates and 6) generally improving insurance (private and public) reimbursement trends. 38 Comparison of the years ended December 31, 2022 and 2021 Revenues Revenue for the years ended December 31, 2022 and 2021 was $0.8 million and $4.2 million, respectively, representing a decrease of approximately $3.4 million, or 80% in the year ended December 31, 2022.
The ART market also continues to benefit from a number of industry tailwinds, including 1) the large under-served potential patient population, 2) increasing infertility rates around the world 3) growing awareness and education of fertility treatment options, 4) a growing acceptance of fertility treatment, 5) improvements in procedure techniques and hence improvements in pregnancy success rates, and 6) generally improving insurance (private and public) reimbursement trends. 50 Comparison of the years ended December 31, 2023 and 2022 Revenues Revenue for the years ended December 31, 2023 and 2022 was $3.0 million and $0.8 million, respectively.
We believe our INVO Center approach adds much needed capacity and affordability, and we expect our acquisition strategy to allow for ART cycle volume increases at existing clinics. These efforts align with our key mission to open access to care to the underserved.
We believe our INVO Center approach adds much needed capacity and affordability, and we expect our acquisition strategy to allow for ART cycle volume increases at existing clinics. As such, we believe both our acquisition and INVO Center strategies align with our key mission to open access to care to the underserved.
The March Warrants are immediately exercisable upon issuance, will expire eight years from the date of issuance, and in certain circumstances may be exercised on a cashless basis. On March 27, 2023, the Company closed the offering, raising gross proceeds of approximately $3 million before deducting placement agent fees and other offering expenses payable by the Company.
The March Warrant is immediately exercisable upon issuance, will expire eight years from the date of issuance, and in certain circumstances may be exercised on a cashless basis. On March 27, 2023, we closed the RD Offering and March Warrant Placement, raising gross proceeds of approximately $3 million before deducting placement agent fees and other offering expenses payable by us.
Research and Development Expenses We began to fund additional research and development (“R&D”) efforts in 2020 as part of our 5-day label expansion efforts. R&D expenses were $0.5 million and $0.2 million, for the years ended December 31, 2022 and 2021, respectively.
Research and Development Expenses We began to fund additional research and development (“R&D”) efforts in 2020 as part of our 5-day label expansion efforts. This effort was completed in June 2023. R&D expenses were $0.2 million and $0.5 million, for the years ended December 31, 2023 and 2022, respectively.
Market Opportunity The global ART marketplace is a large, multi-billion industry growing at a strong pace in many parts of the world as increased infertility rates, increased patient awareness, acceptance of treatment options, and improving financial incentives such as insurance and governmental assistance continue to drive demand.
The data supporting the expanded 5-day incubation clearance demonstrated improved patient outcomes. Market Opportunity The global ART marketplace is a large, multi-billion industry growing at a strong pace in many parts of the world as increased infertility rates, increased patient awareness, acceptance of treatment options, and improving financial incentives such as insurance and governmental assistance continue to drive demand.
Approximately $3.0 million of the net loss was related to non-cash expenses for the year ended December 31, 2022, compared to $4.2 million for the year ended December 31, 2021. We had negative working capital of approximately $2.8 million as of December 31, 2022, compared to positive working capital of approximately $5.1 million as of December 31, 2021.
Approximately $2.8 million of the net loss was related to non-cash expenses for the year ended December 31, 2023, compared to $3.0 million for the year ended December 31, 2022. We had negative working capital of approximately $7.0 million as of December 31, 2023, compared to negative working capital of approximately $2.8 million as of December 31, 2022.
A Convertible Note may not be converted and shares of common stock may not be issued under the Convertible Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the Company’s outstanding ordinary shares.
The FirstFire Note may not be converted and Conversion Shares may not be issued under the FirstFire Note if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 4.99% of the outstanding common stock.
Selling, General and Administrative Expenses Selling, general and administrative expenses for the years ended December 31, 2022 and 2021 were $10.6 million and $9.0 million, respectively, of which $2.2 million and $2.7 million, respectively, was for non-cash, stock-based compensation expense.
Selling, General, and Administrative Expenses Selling, general and administrative expenses for the years ended December 31, 2023 and 2022 were $7.5 million and $10.0 million, respectively, of which $1.3 million and $2.2 million, respectively, was for non-cash, stock-based compensation expense.
During the year ended December 31, 2022, cash used in investing activities of approximately $0.1 million was primarily related to investments in support of our INVO Center joint ventures.
Cash Flows from Investing Activities During the year ended December 31, 2023, cash used in investing activities of approximately $2.5 million was primarily related to the acquisition of WFI. During the year ended December 31, 2022, cash used in investing activities of approximately $0.1 million was primarily related to investments in support of our INVO Center joint ventures.
We believe our solutions can help address the key challenges of affordability and capacity to provide care to the vast number of patients that go untreated every year. This represents the major opportunity for INVOcell and the IVC procedure it enables.
We believe our solutions can help address the key challenges of affordability and capacity to provide care to the vast number of patients that go untreated every year. This represents the major opportunity for INVOcell and the IVC procedure it enables. The fertility industry has and continues to expand, even during the global pandemic.
The model has a five-step approach: 1. Identify the contract with the customer. 2. Identify the performance obligations in the contract. 3. Determine the total transaction price. 4. Allocate the total transaction price to each performance obligation in the contract. 5. Recognize as revenue when (or as) each performance obligation is satisfied.
The model has a five-step approach: 1. Identify the contract with the customer. 2. Identify the performance obligations in the contract. 3. Determine the total transaction price. 4. Allocate the total transaction price to each performance obligation in the contract. 5.
The increase of approximately $0.3 million was primarily related to our FDA response efforts on the 5-day label expansion. 39 Loss from equity investment Loss from equity investments for the years ended December 31, 2022 and 2021, was $0.2 million and $0.3, respectively.
The decrease of approximately $0.3 million was primarily related to the completion of our FDA response efforts on the 5-day label expansion in June 2023. 51 Loss from equity investment Loss from equity investments for the years ended December 31, 2023 and 2022, was $0.2 million and $0.2 million, respectively.
Our principal molded component suppliers are well-established companies in the molding industry and are either ISO 13485 or ISO 9001 certified. The molded components are supplied to our contract manufacturer for assembly and packaging of the INVOcell system. The contract manufacturer is ISO 13485 certified, and U.S.
Our principal molded component suppliers, Casco Bay Molding and R.E.C. Manufacturing Corporation are well-established companies and are either ISO 13485 or ISO 9001 certified. The molded components are supplied to our contract manufacturer for assembly and packaging of the INVOcell system. The contract manufacturer is ISO 13485 certified, and U.S.
Specifically, as noted above, we have incurred significant operating losses and we expect to continue to incur significant expenses and operating losses as we continue to ramp up the development of new INVO Centers and the commercialization of our INVOcell solution Prior losses and expected future losses have had, and will continue to have, an adverse effect on our financial condition.
Specifically, as noted above, we have incurred significant operating losses and we expect to continue to incur significant expenses and operating losses as we continue to acquire existing IVF clinics and the commercialization of our INVOcell solution Prior losses and expected future losses have had, and will continue to have, an adverse effect on our financial condition.
Net cash used in operating activities in 2022, was approximately $6.6 million, compared to approximately $6.0 million for the same period in 2021. The increase in net cash used in operations was primarily due to the increase in operating expenses.
Net cash used in operating activities in 2023 was approximately $4.8 million, compared to approximately $6.6 million for the same period in 2022. The decrease in net cash used in operations was primarily due to the decrease in operating expenses.
Variable Interest Entities Our consolidated financial statements include the accounts of INVO Bioscience, Inc., its wholly owned subsidiaries, and variable interest entities (“VIE”), where we are the primary beneficiary under the provisions of ASC 810, Consolidation (“ASC 810”).
Recognize as revenue when (or as) each performance obligation is satisfied. 53 Variable Interest Entities Our consolidated financial statements include the accounts of INVO Bioscience, Inc., its wholly owned subsidiaries, and variable interest entities (“VIE”), where we are the primary beneficiary under the provisions of ASC 810, Consolidation (“ASC 810”).
During 2022, we received proceeds of $0.8 million from demand notes and net proceeds of approximately $0.3 million for the sale of our common stock. Over the next 12 months, our plan includes opening additional INVO Centers, completing the acquisition of Wisconsin Fertility Institute and pursuing additional IVF clinic acquisitions.
During 2023, we received proceeds of $3.2 million from notes and net proceeds of approximately $5.8 million for the sale of our common stock. Over the next 12 months, our plan includes growing Wisconsin Fertility Institute and pursuing additional IVF clinic acquisitions.
The CE Mark permits the sale of devices in Europe, Australia and other countries that recognize the CE Mark, subject to local registration requirements. 29 ● US Marketing Clearance : the safety and efficacy of the INVOcell has been demonstrated and cleared for marketing and use by the FDA in November 2015. ● Clinical : we are actively seeking to expand the labeling on our device, the indication for use, to cover a day 5 incubation period, in addition to the currently approved use of day 3 incubation.
The CE Mark permits the sale of devices in Europe, Australia and other countries that recognize the CE Mark, subject to local registration requirements. 36 ● US Marketing Clearance : the safety and efficacy of the INVOcell has been demonstrated and cleared for marketing and use by the FDA in November 2015. ● Clinical : in June 2023 we received FDA 510(k) clearance to expand the labeling on the INVOcell device and its indication for use to provide for a 5-day incubation period.
The securities to be issued in the registered direct offering (priced at the marked under Nasdaq rules) were offered pursuant to the Company’s shelf registration statement on Form S-3 (File 333-255096) (the “Shelf Registration Statement”), initially filed by the Company with the SEC under the Securities Act of 1933, as amended (the “Securities Act”), on April 7, 2021 and declared effective on April 16, 2021.
The securities to be issued in the RD Offering (priced at the marked under Nasdaq rules) were offered pursuant to our shelf registration statement on Form S-3 (File 333-255096), initially filed by us with the SEC under the Securities Act, on April 7, 2021 and declared effective on April 16, 2021.
The Company may prepay the February Debentures at any time in whole or in part by paying a sum of money equal to 105% of the principal amount to be redeemed, together with accrued and unpaid interest.
The Company may prepay the FirstFire Note at any time in whole or in part by paying a sum of money equal to 110% of the sum of the principal amount to be redeemed plus the accrued and unpaid interest. Future Proceeds .
WFRSA owns, operates and manages the Clinic’s fertility practice that provides direct treatment to patients focused on fertility, gynecology and obstetrics care and surgical procedures, and employs physicians and other healthcare providers to deliver such services and procedures. FLOW provides WFRSA with related laboratory services.
WFRSA owns, operates and manages WFI’s fertility practice that provides direct treatment to patients focused on fertility, gynecology and obstetrics care and surgical procedures, and employs physicians and other healthcare providers to deliver such services and procedures. FLOW provides WFRSA with related laboratory services. INVO purchased the non-medical assets of WFRSA and one hundred percent of FLOW’s membership interests.
This allows for many benefits in the IVC procedure, including: ● Eliminates expensive and time-consuming lab procedures, allowing clinics and doctors to increase patient capacity and reduce costs; ● Provides a natural, stable incubation environment; ● Offers a more personal, intimate experience in creating a baby; and ● Reduces the risk of errors and wrong embryo transfers.
The IVC procedure can provide benefits, including the following: ● Reducing expensive and time-consuming lab procedures, helping clinics and doctors to increase patient capacity and reduce costs; ● Providing a natural, stable incubation environment; ● Offering a more personal, intimate experience in creating a baby; and ● Reducing the risk of errors and wrong embryo transfers.
While we continue selling the INVOcell directly to IVF clinics and via distributors and other partners around the world, we have transitioned INVO from being a medical device company to one that is mostly focused on providing fertility services. Ferring On November 12, 2018, we entered into a U.S. Distribution Agreement (the “Ferring Agreement”) with Ferring International Center S.A.
While we continue selling the INVOcell directly to IVF clinics and via distributors and other partners around the world, we have transitioned INVO from being a medical device company to one that is mostly focused on providing fertility services. International Distribution Agreements We have entered into exclusive distribution agreements for a number of international markets.
March 2023 Registered Direct Offering On March 23, 2023, INVO entered into a securities purchase agreement (the “March Purchase Agreement”) with a certain institutional investor, pursuant to which the Company agreed to issue and sell to such investor (i) in a registered direct offering, 1,380,000 shares (the “March Shares”) of Common Stock, and pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 2,300,000 shares of Common Stock, at an exercise price of $0.01 per share, and (ii) in a concurrent private placement, common stock purchase warrants (the “March Warrants”), exercisable for an aggregate of up to 5,520,000 shares of Common Stock, at an exercise price of $0.63 per share.
March 2023 Registered Direct Offering On March 23, 2023, INVO entered into a securities purchase agreement (the “March Purchase Agreement”) with a certain institutional investor, pursuant to which we agreed to issue and sell to such investor (i) in a registered direct offering (the “RD Offering”), 69,000 shares of common stock, and a pre-funded warrant (the “Pre-Funded Warrant”) to purchase up to 115,000 shares of common stock, at an exercise price of $0.20 per share, and (ii) in a concurrent private placement (the “March Warrant Placement”), a common stock purchase warrant (the “March Warrant”), exercisable for an aggregate of up to 276,000 shares of common stock, at an exercise price of $12.60 per share.
As of December 31, 2022, we had negative stockholder’s equity of approximately $1.0 million compared to positive stockholder’s equity of approximately $7.3 million as of December 31, 2021. Cash used in operations for the year of 2022 was approximately $6.6 million, compared to approximately $6.0 million for the year of 2021.
As of December 31, 2023, we had stockholder’s equity of approximately $0.9 million compared to a stockholder’s deficit of approximately $1.0 million as of December 31, 2022. Cash used in operations for the year of 2023 was approximately $4.8 million, compared to approximately $6.6 million for the year of 2022.
Additionally, as of the date of the Notice, we did not meet either of the alternative Nasdaq continued listing standards under the Nasdaq Listing Rules, market value of listed securities of at least $35 million, or net income of $500,000 from continuing operations in the most recently completed fiscal year, or in two of the three most recently completed fiscal years.
Additionally, as of the date of the notice, we did not meet either of the alternative Nasdaq continued listing standards under the Nasdaq Listing Rules, market value of listed securities of at least $35 million, or net income of $500,000 from continuing operations in the most recently completed fiscal year, or in two of the three most recently completed fiscal years. 48 The notice had no immediate effect on the listing of our common stock and our common stock continued to trade on The Nasdaq Capital Market under the symbol “INVO” subject to our compliance with the other continued listing requirements.
Cash Flows The following table shows a summary of our cash flows for the year ended December 31: 2022 2021 Cash (used in) provided by: Operating activities (6,603,319 ) (6,029,914 ) Investing activities (81,217 ) (2,153,512 ) Financing activities 1,089,800 3,770,537 40 As of December 31, 2022, we had approximately $0.09 million in cash compared to approximately $5.7 million as of December 31, 2021.
Cash Flows The following table shows a summary of our cash flows for the year ended December 31: 2023 2022 Cash (used in) provided by: Operating activities (4,755,054 ) (6,603,319 ) Investing activities (2,494,879 ) (81,217 ) Financing activities 7,392,222 1,089,800 52 Cash Flows from Operating Activities As of December 31, 2023, we had approximately $0.2 million in cash compared to approximately $0.09 million as of December 31, 2022.
The Pre-Funded Warrants are exercisable upon issuance and will remain exercisable until all of the Pre-Funded Warrants are exercised in full.
The Pre-Funded Warrant is exercisable upon issuance and will remain exercisable until all of the shares underlying the Pre-Funded Warrant are exercised in full. All Pre-Funded Warrants were exercised by the investor in June 2023.
We have contracted out the manufacturing, assembly, packaging, labeling, and sterilization of the device to a medical manufacturing company and a sterilization specialist to perform the gamma sterilization process.
Our most critical management and leadership functions are carried out by our core management team. We have contracted out the manufacturing, assembly, packaging, labeling, and sterilization of the INVOcell device to a medical manufacturing company and a sterilization specialist to perform the gamma sterilization process.
Management monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the investees and records reductions in carrying values when necessary. Recent Accounting Pronouncements None.
Management monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the investees and records reductions in carrying values when necessary. Business Acquisitions We account for all business acquisitions at fair value and expenses acquisition costs as they are incurred.
On January 18, 2023, we received a letter from Nasdaq under which it stated that based on our submission that Nasdaq has determined to grant us an extension of time to regain compliance with Nasdaq Listing Rule 5550(b) until May 22, 2023.
We submitted our plan within the prescribed time and, on January 18, 2023, we received a letter from Nasdaq stating that based on our submission that Nasdaq had determined to grant us an extension of time to regain compliance with the Equity Rule until May 22, 2023.
If we do not regain compliance prior to July 10, 2023, then Nasdaq may grant us a second 180 calendar day period to regain compliance, provided we (i) meets the continued listing requirement for market value of publicly-held shares and all other initial listing standards for The Nasdaq Capital Market, other than the minimum closing bid price requirement, and (ii) notifies Nasdaq of its intent to cure the deficiency within such second 180 calendar day period, by effecting a reverse stock split, if necessary.
If we did not regain compliance prior to July 10, 2023, then Nasdaq may grant us a second 180 calendar day period to regain compliance, provided we (i) meet the continued listing requirement for market value of publicly-held shares and all other initial listing standards for The Nasdaq Capital Market, other than the minimum closing bid price requirement, and (ii) notify Nasdaq of its intent to cure the deficiency within such second 180 calendar day period, by effecting a reverse stock split, if necessary. 49 We were unable to regain compliance by July 10, 2023 and accordingly on July 11, 2023, we received a notice from the Staff that, based upon our non-compliance with the minimum bid price requirement set forth in the Price Rule 5550(a)(2), the Panel will consider such non-compliance in its decision regarding the Company’s continued listing on Nasdaq .
The laboratory equipment needed to perform an IVF cycle is expensive and requires ongoing costs as compared to what is required for an IVC cycle. As a result, we also believe INVOcell and the IVC procedure enable a clinic and its laboratory to be more efficient as compared to conventional IVF.
As a result, we also believe INVOcell and the IVC procedure enable a clinic and its laboratory to be more efficient as compared to conventional IVF.
During the year ended December 31, 2021, cash provided by financing activities of approximately $3.8 million was primarily related to proceeds from the sale of common stock and the exercise of unit purchase options and warrants.
Cash Flows from Financing Activities During the year ended December 31, 2023, cash provided by financing activities of approximately $7.4 million was related to proceeds from notes and from the sale of common stock.
While any portion of each February Debenture remains outstanding, if the Company receives cash proceeds of more than $2,000,000 (the “Minimum Threshold”) in the aggregate from any source or series of related or unrelated sources, the February Investors shall have the right in their sole discretion to require the Company to immediately apply up to 50% of all proceeds received by the Company above the Minimum Threshold to repay the outstanding amounts owed under the February Debentures.
While any portion of the FirstFire Note is outstanding, if the Company receives cash proceeds of more than $1,500,000 from any source or series of related or unrelated sources, or more than $1,000,000 from any public offering (the “Minimum Threshold”), the Company shall, within one (1) business day of Company’s receipt of such proceeds, inform FirstFire of such receipt, following which FirstFire shall have the right in its sole discretion to require the Company to immediately apply up to 100% of all proceeds received by the Company above the Minimum Threshold to repay the outstanding amounts owed under the FirstFire Note.
Based on preliminary 2020 data from CDC’s National ART Surveillance System, approximately 326,000 IVF cycles were performed at 449 IVF centers, leaving the U.S. with a large, underserved patient population, similar to most markets around the world.
Based on 2021 data from CDC’s National ART Surveillance System, approximately 413,000 IVF cycles were performed at 453 IVF centers, leaving the U.S. with a large, underserved patient population, similar to most markets around the world. As part of its expanded corporate expansion efforts the Company has incorporated an acquisition strategy to the business.
These losses expire in various amounts at varying times beginning in 2027 with a portion carrying on indefinitely. Unless expiration occurs, these NOLs may be used to offset future taxable income and thereby reduce our income taxes. We recorded a valuation allowance against our deferred tax assets at December 31, 2022 and 2021 totaling $9.3 million and $6.8 million, respectively.
Income Taxes As of December 31, 2023, we had unused federal net operating loss carryforwards (“NOLs”) of $32.9 million. These losses expire in various amounts at varying times beginning in 2027 with a portion carrying on indefinitely. Unless expiration occurs, these NOLs may be used to offset future taxable income and thereby reduce our income taxes.
Mexico 33 % Ginekalix INVO Bioscience LLC Skopje Republic of North Macedonia 50 % The following table sets forth a list of our current partnership arrangements: Partner Country Partnership Split Lyfe Medical United States 40 % Alabama JV Agreement On March 10, 2021, our wholly owned subsidiary, INVO Centers, LLC (“INVO CTR”), entered into a limited liability company agreement with HRCFG, LLC (“HRCFG”) to form a joint venture for the purpose of establishing an INVO Center in Birmingham, Alabama.
Mexico 33 % Alabama JV Agreement On March 10, 2021, our wholly owned subsidiary, INVO Centers, LLC (“INVO CTR”), entered into a limited liability company agreement with HRCFG, LLC (“HRCFG”) to form a joint venture for the purpose of establishing an INVO Center in Birmingham, Alabama. The name of the joint venture LLC is HRCFG INVO, LLC (the “Alabama JV”).
Pursuant to the Notice, Nasdaq gave us 45 calendar days, or until January 7, 2023, to submit to Nasdaq a plan to regain compliance. If our plan is accepted, Nasdaq may grant an extension of up to 180 calendar days from the date of the Notice to evidence compliance.
Pursuant to the notice, Nasdaq gave us 45 calendar days, or until January 7, 2023, to submit to Nasdaq a plan to regain compliance.
The responsibilities of INVO CTR include providing certain funding to the Alabama JV and providing access to and being the exclusive provider of the INVOcell to the Alabama JV. INVO CTR will also perform all required, industry specific compliance and accreditation functions, and product documentation for product registration. The Alabama JV opened to patients on August 9, 2021.
INVO CTR will also perform all required, industry specific compliance and accreditation functions, and product documentation for product registration. The Alabama JV opened to patients on August 9, 2021. The Alabama JV is accounted for using the equity method in our consolidated financial statements.
We have been dependent on raising capital through debt and equity financings to secure the cash required to fund our operating expenses and investing activities.
We have been dependent on raising capital through debt and equity financings to secure the cash required to fund our operating expenses and investing activities. During 2022, we received proceeds of approximately $0.8 million from demand notes and net proceeds of approximately $0.3 million for the sale of our common stock.
The name of the joint venture LLC is HRCFG INVO, LLC (the “Alabama JV”). The responsibilities of HRCFG’s principals include providing clinical practice expertise, performing recruitment functions, providing all necessary training, and providing day-to-day management of the clinic.
The responsibilities of HRCFG’s principals include providing clinical practice expertise, performing recruitment functions, providing all necessary training, and providing day-to-day management of the clinic. The responsibilities of INVO CTR include providing certain funding to the Alabama JV and providing access to and being the exclusive provider of the INVOcell to the Alabama JV.
Operations We operate with a core internal team and outsource certain operational functions in order to help advance our efforts as well as reduce fixed internal overhead needs and costs and in-house capital equipment requirements. Our most critical management and leadership functions are carried out by our core management team.
In both current utilization of the INVOcell, and in clinical studies, the IVC procedure has demonstrated equivalent pregnancy success and live birth rates as IVF. Operations We operate with a core internal team and outsource certain operational functions in order to help advance our efforts as well as reduce fixed internal overhead needs and costs and in-house capital equipment requirements.
Our commercialization strategy is focused on the opening of dedicated “INVO Centers” offering the INVOcell and IVC procedure (with three centers in North America now operational) and the acquisition of existing IVF clinics, in addition to continuing to sell our technology solution into existing fertility clinics.
Our commercial strategy is primarily focused on operating fertility-focused clinics, which includes the opening of dedicated “INVO Centers” offering the INVOcell® and IVC procedure (with three centers in North America now operational) and the acquisition of US-based, profitable in vitro fertilization (“IVF”) clinics (with the first acquired in August 2023).
The Alabama JV is accounted for using the equity method in our consolidated financial statements. As of December 31, 2022 we invested $1.6 million in the Alabama JV in the form of a note.
As of December 31, 2023 we invested $1.4 million in the Alabama JV in the form of a note.
Wisconsin Fertility is comprised of (a) a medical practice, Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/a Wisconsin Fertility Institute (“WFRSA”), and (b) a laboratory services company, Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company (“FLOW”).
The sellers have the option to take all or a portion of the final three installments in shares of INVO common stock valued at $125.00, $181.80, and $285.80, for the second, third, and final installments, respectively. 41 WFI is comprised of (a) a medical practice, Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/a Wisconsin Fertility Institute (“WFRSA”), and (b) a laboratory services company, Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company (“FLOW”).
Competitive Advantages We believe that the INVOcell, and the IVC procedure it enables, have the following key advantages: Lower cost than IVF with equivalent efficacy . The IVC procedure can be offered for less than IVF due to lower cost of supplies, labor, capital equipment and general overhead.
Competitive Advantages of INVOcell While our commercial efforts have expanded to clinic services within the ART market, we also continue to believe that our INVOcell device, and the IVC procedure it enables, have the following key advantages: Lower cost than IVF with equivalent efficacy .
The IVC procedure can deliver comparable results to IVF and is a significantly more effective treatment than intrauterine insemination (“IUI”).
This technique, designated as “IVC”, provides patients with a more natural, intimate, and more affordable experience in comparison to other ART treatments. We believe the IVC procedure can deliver comparable results at a lower cost than traditional IVF and is a significantly more effective treatment than intrauterine insemination (“IUI”).
Recent Developments January and March 2023 Convertible Note and Warrant Financings In January and March 2023, we sold unsecured convertible notes of the Company in the aggregate original principal amount of $410,000 (the “Convertible Notes”) with a fixed conversion prices of $0.50 (for the $275,000 of January 2023 Notes) and $0.60 (for the $135,000 of March 2023 Notes) and (ii) 5-year warrants (the “Note Warrants”) to purchase 387,500 shares of the Company’s common stock at an exercise price of $1.00 (subject to adjustments) (the “Note and Warrant Private Placement”).
The Convertible Notes were issued with fixed conversion prices of $10.00 (for the $275,000 issued in January 2023) and $12.00 (for the $135,000 issued in March 2023) and (ii) 5-year warrants (the “Q1 2023 Warrants”) to purchase 19,375 shares of common stock at an exercise price of $20.00.
The increase of approximately $1.6 million or 17% was primarily the result of approximately $1.0 million in increased personnel expense, approximately $0.7 million in increased expenses related to the full-year operations of the consolidated Georgia JV, approximately $0.4 million in increased marketing spend and was partially offset by an approximate $0.3 million decrease in legal and startup costs related to new and potential INVO Centers and an approximate $0.6 million decrease in professional fees.
The decrease of approximately $2.5 million or 25% was primarily the result of approximately $1.9 million in decreased personnel expenses, approximately $0.7 million in decreased marketing expenses, and approximately $0.2 million in decreased travel & entertainment expenses, and was partially offset by a $0.1 million increase in professional fees and a $0.3 million increase in operational expenses related to WFI.
The decrease of approximately $1.2 million, or approximately 96%, was primarily due to a decrease in non-cash amortization of discount, debt issuance cost and interest on convertible notes . Income Taxes As of December 31, 2022, we had unused federal net operating loss carryforwards (“NOLs”) of $32.8 million.
Interest Expense and Financing Fees Interest expense and financing fees for the years ended December 31, 2023 and 2022 were $0.9 million and $0.1 million, respectively. The increase of approximately $0.8 million, or approximately 1,387%, was primarily non-cash and due to the debt discount, debt issuance cost and interest on convertible notes .
Through these efforts we have experienced both growing interest in our INVOcell solution and in the potential by these clinics of being acquired by INVO. From a market strategy perspective, our commercialization efforts continue to focus on the substantial, underserved patient population and on expanding access to advanced fertility treatments.
Although we anticipate our clinic operations will dominate our commercial efforts and revenues, we will also continue to work on providing the INVOcell to other existing fertility clinics. From a broad strategic perspective, our commercialization efforts will continue to focus on the substantial, underserved patient population and on expanding access to advanced fertility treatments.
Our primary mission is to implement new medical technologies aimed at increasing the availability of affordable, high-quality, patient-centered fertility care. Our flagship product is INVOcell, a revolutionary medical device that allows fertilization and early embryo development to take place in vivo within the woman’s body.
INVOcell: Our proprietary technology, INVOcell®, is a revolutionary medical device that allows fertilization and early embryo development to take place in vivo within the woman’s body. This treatment solution is the world’s first intravaginal culture technique for the incubation of oocytes and sperm during fertilization and early embryo development.
The decrease of $0.2 million was the result of our Paycheck Protection Program note and related interest being forgiven in 2021. Interest Expense and Financing Fees Interest expense and financing fees were for the years ended December 31, 2022 and 2021 were $0.1 million and $1.3 million, respectively.
Cost of Revenue Cost of revenue for the years ended December 31, 2023 and 2022 was $1.9 million and $0.9 million, respectively. The increase in our cost of revenue was primarily related to the acquisition of WFI.
The Notice has no immediate effect on the listing of our common stock and our common stock continues to trade on The Nasdaq Capital Market under the symbol “INVO” subject to our compliance with the other continued listing requirements.
The notice had no immediate effect on the listing of our common stock, and our common stock continued to trade on The Nasdaq Capital Market under the symbol “INVO.” In accordance with Nasdaq Listing Rule 5810I(3)(A), we were provided an initial period of 180 calendar days, or until July 10, 2023, to regain compliance with the minimum bid price requirement.
The purchase price is payable in four installments of $2.5 million each (which payments may be offset by assumption of certain Wisconsin Fertility liabilities, payable at closing and on each of the subsequent three anniversaries of closing.
The remaining three installments of $2.5 million each will be paid on the subsequent three anniversaries of closing.
Liquidity and Capital Resources For the years ending December 31, 2022, and 2021, we had net losses of approximately $10.9 million and $6.7 million, respectively. The increase in net loss primarily was due to the increase in operating loss resulting from the absence of license revenue in 2022 and an increase in operating expenses.
We recorded a valuation allowance against our deferred tax assets at December 31, 2023 and 2022 totaling $11.1 million and $9.3 million, respectively. Liquidity and Capital Resources For the years ending December 31, 2023, and 2022, we had net losses of approximately $8.0 million and $10.9 million, respectively.
In the event that all March Warrants are exercised for cash, the Company would receive additional gross proceeds of approximately $3.5 million. Under the March Purchase Agreement, the Company may use a portion of the net proceeds of the offering to (a) repay February Debentures, and (b) to pay the down payment for Wisconsin Fertility acquisition.
If the March Warrant is fully exercised for cash, we would receive additional gross proceeds of approximately $3.5 million. We used $383,879 in proceeds to repay a portion of the convertible debenture issued in February 2023 and the remainder of the proceeds were used for working capital and general corporate purposes.
Execution of Definitive Agreements to Acquire the Wisconsin Fertility Institute On March 16, 2023, INVO, through Wood Violet Fertility LLC, a Delaware limited liability company (“Wood Violet”) and wholly owned subsidiary of INVO Centers LLC, a Delaware company (“INVO CTR”) wholly-owned by INVO, entered into binding purchase agreements to acquire Wisconsin Fertility Institute ( “Wisconsin Fertility”) for a combined purchase price of $10 million.
Wisconsin Fertility Institute Acquisition On August 10, 2023, INVO, through Wood Violet Fertility LLC, a Delaware limited liability company (“WVF”) and wholly owned subsidiary of INVO CTR, consummated its acquisition of WFI for a combined purchase price of $10 million, of which $2.5 million was paid on the closing date (net cash paid was $2,150,000 after a $350,000 holdback) plus assumption of the inter-company loan owed by WFRSA (as defined below) in the amount of $528,756.
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This treatment solution is the world’s first intravaginal culture technique for the incubation of oocytes and sperm during fertilization and early embryo development. This technique, designated as “IVC”, provides patients a more connected and intimate experience at a more affordable cost in comparison to in vitro fertilization (“IVF”), the other advanced ART treatment.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur principal exchange rate exposure relates to the Mexican Peso. 41
Biggest changeOur principal exchange rate exposure relates to the Mexican Peso. 54

Other IVF 10-K year-over-year comparisons