UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(
CURRENT REPORT
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EXPLANATORY NOTE
INVO Bioscience, Inc. (the “Company”) is filing this Form 8-K/A (“Amendment No 3”) to its Current Report on Form 8-K/A as originally filed with the Securities and Exchange Commission on March 20, 2023, amended by the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on March 20, 2023 and amended by the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on June 21, 2023 (collectively, the “Original Filing”), solely to provide unaudited combined pro forma Statement of Operations of WFRSA and FLOW for the fiscal year ended December 31, 2022. No other changes have been made from the Original Filing.
| Item 1.01 | Entry into a Material Definitive Agreement. |
On March 16, 2023, INVO Bioscience Inc., a Nevada corporation (“INVO”), through Wood Violet Fertility LLC, a Delaware limited liability company (“Buyer”) and wholly owned subsidiary of INVO Centers LLC, a Delaware company wholly-owned by INVO, entered into binding purchase agreements to acquire Wisconsin Fertility Institute (the “Clinic”) for a combined purchase price of $10 million.
The purchase price is payable in four installments of $2.5 million each (which payments may be offset by assumption of certain Clinic liabilities, payable at closing and on each of 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 $6.25, $9.09, and $14.29, for the second, third, and final installments, respectively.
The Clinic 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”). 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.
As described in greater detail in this Form 8-K and its exhibits, INVO is purchasing the non-medical assets of WFRSA and one hundred percent of FLOW’s membership interests. As reflected in the WFRSA purchase agreement, the Buyer and WFRSA will enter into a management services agreement pursuant to which WFRSA will outsource all its non-medical activities to the Buyer.
The Clinic’s audited financial statements for the years ended December 31, 2022 and 2021, attached hereto as an exhibit, reflect revenue of approximately $5.3 million and $5.7 million, respectively, and net income of approximately $1.7 million and $2.3 million respectively.
Asset Purchase Agreement
On March 16, 2023, Buyer entered into an Asset Purchase Agreement (the “APA”) with WFRSA and The Elizabeth Pritts Revocable Living Trust (the “Seller,” together with the WFRSA, the “Seller Parties”) pursuant to which Buyer agreed to acquire the Purchased Assets (as defined in the APA) related to WFRSA’s business. Buyer also agreed to assume certain liabilities of WFRSA as set forth in the APA. Certain non-clinical assets, properties and rights of WFRSA shall be excluded from the Purchased Assets including patient lists, charts, records and ledgers, all contracts with Payors (as defined in the APA); all Health Care Permits (as defined in the APA).
The Buyer will deliver to WFRSA an amount equal to (all capitalized terms as defined in the APA) the Closing Payment at closing consisting of $500,000 less Target Closing Date Debt less the Holdback Amount of $280,000. Buyer has agreed to make the following Post-Closing Additional Payments of $500,000 on each of the first three anniversaries of closing provided that Seller may elect to receive shares of INVO common stock in lieu of such cash payments as follows: (i) 80,000 shares of INVO common stock on the first additional payment date; (ii) 55,000 shares of INVO common stock on the second additional payment date and (iii) 35,000 shares of INVO common stock on the third additional payment date. The Additional Payments are secured by Seller having a subordinated lien on the Purchased Assets.
The APA contains a purchase price adjustment whereby (all capitalized terms as defined in the APA) if the Post Closing Adjustment Amount is a positive number, then Buyer shall pay to Seller an amount equal to the Post-Closing Adjustment Amount and if the Post-Closing Adjustment Amount is a negative number, then Seller shall pay to Buyer an amount equal to the absolute value of the Post-Closing Adjustment Amount, which amount will be first set off from the Holdback Amount. The Post-Closing Adjustment Amount shall be an amount equal to (i) the Closing Accounts Receivable minus the Target Accounts Receivable plus (ii) the Closing Supplies Value minus the Target Closing Supplies Value plus (iii) the Target Closing Date Debt minus the Closing Date Debt plus (iv) The Target Operating Escrow Account minus the Closing Operating Expense Amount plus (v) the Target Prepaid Amounts minus the Closing Prepaid Amounts.
| -2- |
The Seller Parties agreed to a five (5) year non-compete and non-solicitation provisions under the APA.
The APA is subject to certain closing conditions, including performance of all obligations under the APA and no material adverse effect.
We expect to close the transaction contemplated in the APA in the second calendar quarter of 2023.
The paragraphs above describe certain of the material terms of the APA. Such description is not a complete description of the material terms of the APA and is qualified in its entirety by reference to the APA which are included as Exhibit 10.1 to this Current Report on Form 8-K.
Membership Interest Purchase Agreement
On March 16, 2023, Buyer entered into a Membership Interest Purchase Agreement (the “MIPA”) with FLOW, IVF Science, LLC, a Wisconsin limited liability company (“IVF Science”), owned by Wael Megid, Ph.D. (“Dr. Megid”), and Dr. Elizabeth Pritts as trustee for the Elizabeth Pritts Revocable List Trust, a Trust created under the laws of the State of Wisconsin (each, a “Selling Member” and collectively, the “Selling Members”). Under the MIPA, the Selling Members agreed to sell to Buyer 100% of the Membership Interests of FLOW for a purchase price equal to (all capitalized terms as defined in the MIPA) the Initial Purchase Price, which is equal to (i) two million dollars ($2,000,000) minus (ii) the Closing Indebtedness minus (iii) any Transaction Expenses minus (iv) the Holdback Amount of $70,000. In addition to the Initial Closing Payment, Purchaser has agreed to pay to the Selling Members additional payments of $2,000,000 within 90-days of each of the first three anniversaries of closing provided that Selling Members may elect to receive shares of INVO common stock in lieu of such cash payments as follows: (i) 320,000 shares of INVO common stock on the first additional payment date; (ii) 220,000 shares of INVO common stock on the second additional payment date and (iii) 140,000 shares of INVO common stock on the third additional payment date. These additional payments are secured by the Selling Members having a lien on the assets of FLOW.
The MIPA contains (all capitalized terms as defined in the MIPA) a Post-Closing Purchase Price Adjustment whereby if the Post-Closing Adjustment Amount is a positive number then Purchaser shall pay Seller’s Representative for distribution to the Selling Members an amount equal to the Post-Closing Adjustment Amount and if the Post-Closing Adjustment Amount is a negative number, then the Selling Members shall pay to Purchaser an amount equal to the absolute value of the Post-Closing Adjustment Amount which amount will be first set off against the Holdback Amount. The Post-Closing Adjustment Amount will be determined based upon the actual Net Working Capital, the Closing Indebtedness, the Transaction Expenses, and any difference to the Estimated Net Working Capital, Estimated Closing Indebtedness, and Estimated Transaction Expenses.
The Selling Members agreed to a five (5) year non-compete and non-solicitation provisions under the MIPA.
The MIPA is subject to certain closing conditions, including performance of all obligations under the MIPA.
The MIPA provides IVF Science, upon written notice from Dr. Megid (to be given no later than March 30, 2023), an option to contribute and exchange its pro rata membership interest in FLOW for an equivalent membership interest in Buyer, in lieu of IVF Science pro rata share of the purchase price payable to the Selling Members. Upon receipt of such notice, Buyer, IVF Science and Dr Megid agree to negotiate in good faith over a period of thirty days such contribution and exchange transaction; provided, however, if the parties are unable to agree upon the terms of such transaction, IVF Science’s pro rata membership interest in FLOW will be purchased by Buyer as contemplated in the MIPA.
We expect to close the transaction contemplated in the MIPA in the second calendar quarter of 2023.
| -3- |
The paragraphs above describe certain of the material terms of the MIPA. Such description is not a complete description of the material terms of the MIPA and is qualified in its entirety by reference to the MIPA which are included as Exhibit 10.2 to this Current Report on Form 8-K.
| Item 9.01 | Financial Statements and Exhibits |
| (a) | Financial Statements of Business Acquired. |
The following combined financial statements of Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/t Wisconsin Fertility Institute (“WFRSA”) and Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company (“FLOW”) are being filed as exhibits to this Current Report on Form 8-K:
(i) The audited combined financial statements of WFRSA and FLOW as of and for the years ended December 31, 2022 and 2021 and related notes, attached as Exhibit 99.4.
(ii) The unaudited combined financial statements of WFRSA and FLOW as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 and related notes, attached as Exhibit 99.5.
| (b) | Pro Forma Financial Information* |
(i) The unaudited combined pro forma Balance Sheet and Statement of Operations of WFRSA and FLOW for the three month period ended March 31, 2023; and
(ii) The unaudited combined pro forma Statement of Operations of WFRSA and FLOW for the fiscal year ended December 31, 2022.
*Attached as Exhibit 99.6
(d) Exhibits.
*Previously filed.
| -4- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: June 30, 2023 | INVO BIOSCIENCE, INC. |
| /s/ Steven Shum | |
| Steven Shum | |
| Chief Executive Officer |
| -5- |
Exhibit 99.6
INVO BIOSCIENCE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On March 16, 2023, INVO Bioscience Inc., a Nevada corporation (“INVO”), through Wood Violet Fertility LLC, a Delaware limited liability company (“Buyer”) and wholly owned subsidiary of INVO Centers LLC, a Delaware company wholly-owned by INVO, entered into binding purchase agreements to acquire Wisconsin Fertility Institute (the “Clinic”) for a combined purchase price of $10 million (the “WFI Acquisition”).
The purchase price is payable in four installments of $2.5 million each, payable at closing and on each of 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 $6.25, $9.09, and $14.29, for the second, third, and final installments, respectively.
The Clinic 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”). 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.
As described in greater detail in the Current Report on Form 8-K (the “Report”) to which these pro forma condensed combined financial statements are an exhibit, INVO is purchasing the non-medical assets of WFRSA and one hundred percent of FLOW’s membership interests.
On March 16, 2023, Buyer entered into an Asset Purchase Agreement (the “APA”) with WFRSA and The Elizabeth Pritts Revocable Living Trust (the “Seller,” together with the WFRSA, the “Seller Parties”) pursuant to which Buyer agreed to acquire the Purchased Assets (as defined in the APA) related to WFRSA’s business. Buyer also agreed to assume certain liabilities of WFRSA as set forth in the APA. Certain non-clinical assets, properties and rights of WFRSA shall be excluded from the Purchased Assets including patient lists, charts, records and ledgers, all contracts with Payors (as defined in the APA); all Health Care Permits (as defined in the APA).
The Buyer will deliver to WFRSA an amount equal to (all capitalized terms as defined in the APA) the Closing Payment at closing consisting of $500,000 less Target Closing Date Debt less the Holdback Amount of $280,000. Buyer has agreed to make the following Post-Closing Additional Payments of $500,000 on each of the first three anniversaries of closing provided that Seller may elect to receive shares of INVO common stock in lieu of such cash payments as follows: (i) 80,000 shares of INVO common stock on the first additional payment date; (ii) 55,000 shares of INVO common stock on the second additional payment date and (iii) 35,000 shares of INVO common stock on the third additional payment date. The Additional Payments are secured by Seller having a subordinated lien on the Purchased Assets.
On March 16, 2023, Buyer entered into a Membership Interest Purchase Agreement (the “MIPA”) with FLOW, IVF Science, LLC, a Wisconsin limited liability company, owned by Wael Megid, Ph.D., and Dr. Elizabeth Pritts as trustee for the Elizabeth Pritts Revocable List Trust, a Trust created under the laws of the State of Wisconsin (each, a “Selling Member” and collectively, the “Selling Members”). Under the MIPA, the Selling Members agreed to sell to Buyer 100% of the Membership Interests of FLOW for a purchase price equal to (all capitalized terms as defined in the MIPA) the Initial Purchase Price, which is equal to (i) two million dollars ($2,000,000) minus (ii) the Closing Indebtedness minus (iii) any Transaction Expenses minus (iv) the Holdback Amount of $70,000. In addition to the Initial Closing Payment, Purchaser has agreed to pay to the Selling Members additional payments of $2,000,000 within 90-days of each of the first three anniversaries of closing provided that Selling Members may elect to receive shares of INVO common stock in lieu of such cash payments as follows: (i) 320,000 shares of INVO common stock on the first additional payment date; (ii) 220,000 shares of INVO common stock on the second additional payment date and (iii) 140,000 shares of INVO common stock on the third additional payment date. These additional payments are secured by the Selling Members having a lien on the assets of FLOW.
The following unaudited pro forma condensed combined financial statements are based on the INVO’s historical consolidated financial statements and the historical combined financial statements of WFRSA and FLOW (the “Companies”) as adjusted to give effect to the WFI Acquisition and related financing transactions. The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2023 and the year ended December 31, 2022 give effect to these transactions as if they had occurred on January 1, 2022. The unaudited pro forma condensed combined balance sheet as of March 31, 2023 gives effect to these transactions as if they had occurred on March 31, 2023.
The unaudited pro forma combined balance sheet and unaudited combined statement of operations are presented for informational purposes only and do not purport to be indicative of the combined financial condition that would have resulted if the acquisition would have occurred on January 1, 2022.
The unaudited pro forma condensed combined financial statements should be read together with INVO’s historical financial statements, which are included in INVO’s latest Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, and the Companies’ historical financial statements, which are included in the Report.
INVO BIOSCIENCE, INC.
PRO FORMA COMBINED BALANCE SHEET
(UNAUDITED)
AS OF MARCH 31, 2023
| INVO | WFI | Pro Forma | Pro Forma | |||||||||||||
| March 31, 2023 | March 31, 2023 | Adjustments | Balances | |||||||||||||
| ASSETS | ||||||||||||||||
| Current assets | ||||||||||||||||
| Cash | $ | 2,188,245 | $ | 169,361 | $ | - | $ | 2,357,606 | ||||||||
| Accounts receivable, net | 99,720 | 119,559 | - | 219,279 | ||||||||||||
| Inventory | 270,919 | - | - | 270,919 | ||||||||||||
| Prepaid expenses and other current assets | 250,878 | 526 | - | 251,404 | ||||||||||||
| Total current assets | 2,809,762 | 289,446 | - | 3,099,208 | ||||||||||||
| Property and equipment, net | 417,642 | 71,763 | - | 489,405 | ||||||||||||
| Goodwill | - | - | 10,055,110 | (a) | 10,055,110 | |||||||||||
| Investment in joint ventures | 1,173,577 | - | - | 1,173,577 | ||||||||||||
| Lease right of use | 1,750,175 | 911,201 | - | 2,661,376 | ||||||||||||
| Total assets | $ | 6,151,156 | $ | 1,272,410 | $ | 10,055,110 | $ | 17,478,676 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
| Current liabilities | ||||||||||||||||
| Accounts payable and accrued liabilities | $ | 1,847,208 | $ | 96,949 | $ | - | 1,944,157 | |||||||||
| Accrued compensation | 1,220,682 | - | - | 1,220,682 | ||||||||||||
| Notes payable | 331,321 | - | - | 331,321 | ||||||||||||
| Notes payable, related party | 770,000 | - | - | 770,000 | ||||||||||||
| Deferred revenue, current portion | 46,746 | 132,703 | - | 179,449 | ||||||||||||
| Distributions payable | - | 171,981 | - | 171,981 | ||||||||||||
| Lease liability, current portion | 234,050 | 217,958 | - | 452,008 | ||||||||||||
| Total current liabilities | 4,450,007 | 619,591 | - | 5,069,598 | ||||||||||||
| Deferred tax liability | 1,949 | - | - | 1,949 | ||||||||||||
| Long-term liability | - | - | 7,500,000 | (b) | 7,500,000 | |||||||||||
| Lease liability, net of current portion | 1,610,734 | 707,929 | - | 2,318,663 | ||||||||||||
| Total liabilities | 6,062,690 | 1,327,520 | 7,500,000 | 14,890,210 | ||||||||||||
| Stockholders’ equity | ||||||||||||||||
| Common stock | 1,397 | - | 1,250 | (c) | 2,647 | |||||||||||
| Additional paid-in capital | 52,421,481 | - | 2,498,750 | (c) | 54,920,231 | |||||||||||
| Accumulated deficit | (52,334,412 | ) | - | - | (52,334,412 | ) | ||||||||||
| Members’ capital - beginning | - | (246,479 | ) | 246,479 | - | |||||||||||
| Members’ capital - current year | - | 191,369 | (191,369 | ) | - | |||||||||||
| Total stockholders’ equity | 88,466 | (55,110 | ) | 2,555,110 | 2,588,466 | |||||||||||
| Total liabilities and stockholders’ equity | $ | 6,151,156 | $ | 1,272,410 | $ | 10,055,110 | 17,478,676 | |||||||||
INVO BIOSCIENCE, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2023
| Pro Forma | ||||||||||||||||
INVO March 31, 2023 | WFI March 31, 2023 | Pro Forma Adjustments | Combined March 31, 2023 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product revenue | $ | 50,644 | $ | - | $ | - | $ | 50,644 | ||||||||
| Clinic revenue | 297,381 | 1,339,967 | - | 1,637,348 | ||||||||||||
| Total revenue | 348,025 | 1,339,967 | - | 1,687,992 | ||||||||||||
| Cost of revenue | 72,554 | 509,725 | - | 582,279 | ||||||||||||
| Gross profit | 275,471 | 830,242 | - | 1,105,713 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | $ | 2,508,371 | $ | 367,791 | $ | - | 2,876,162 | |||||||||
| Research and development | 73,520 | - | - | 73,520 | ||||||||||||
| Total operating expenses | 2,581,891 | 367,791 | - | 2,949,682 | ||||||||||||
| Income (loss) from operations | (2,306,420 | ) | 462,451 | - | (1,843,969 | ) | ||||||||||
| Other income (expense): | ||||||||||||||||
| Loss from equity method investment | $ | (27,735 | ) | $ | - | $ | - | (27,735 | ) | |||||||
| Other income | - | - | - | - | ||||||||||||
| Interest income | - | - | - | - | ||||||||||||
| Interest expense | (216,589 | ) | - | - | (216,589 | ) | ||||||||||
| Foreign currency exchange loss | (135 | ) | - | - | (135 | ) | ||||||||||
| Total other expense, net | (244,459 | ) | - | - | (244,459 | ) | ||||||||||
| Income (loss) before income taxes | (2,550,879 | ) | 462,451 | - | (2,088,428 | ) | ||||||||||
| Provision for income taxes | - | - | - | (d) | - | |||||||||||
| Net income (loss) | (2,550,879 | ) | 462,451 | - | (2,088,428 | ) | ||||||||||
| Net profit (loss) per common share | ||||||||||||||||
| Basic | (0.20 | ) | - | - | (0.17 | ) | ||||||||||
| Diluted | (0.20 | ) | - | - | (0.17 | ) | ||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 12,450,072 | - | - | 12,450,072 | ||||||||||||
| Diluted | 12,450,072 | - | - | 12,450,072 | ||||||||||||
INVO BIOSCIENCE, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 2022
| Pro Forma | ||||||||||||||||
INVO December 31, 2022 | WFI December 31, 2022 | Pro Forma Adjustments | Combined December 31, 2022 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product Revenue | $ | 207,342 | - | - | 207,342 | |||||||||||
| Clinic Revenue | 614,854 | 5,379,675 | - | 5,994,529 | ||||||||||||
| Total revenue | 822,196 | 5,379,675 | - | 6,201,871 | ||||||||||||
| Cost of revenue | 331,523 | 2,284,922 | - | 2,616,445 | ||||||||||||
| Gross profit | 490,673 | 3,094,753 | - | 3,585,426 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | $ | 10,573,111 | 1,411,012 | - | 11,984,123 | |||||||||||
| Research and development | 544,043 | - | - | 544,043 | ||||||||||||
| Total operating expenses | 11,117,154 | 1,411,012 | - | 12,528,166 | ||||||||||||
| Income (loss) from operations | (10,626,481 | ) | 1,683,741 | (8,942,740 | ) | |||||||||||
| Other income (expense): | ||||||||||||||||
| Loss from equity method investment | $ | (200,558 | ) | - | - | (200,558 | ) | |||||||||
| Other income | - | 904 | - | 904 | ||||||||||||
| Interest income | 308 | - | - | 308 | ||||||||||||
| Interest expense | (59,445 | ) | (238 | ) | - | (59,683 | ) | |||||||||
| Foreign currency exchange loss | (3,463 | ) | - | - | (3,463 | ) | ||||||||||
| Total other expense, net | (263,158 | ) | 666 | - | (262,492 | ) | ||||||||||
| Income (loss) before income taxes | (10,889,639 | ) | 1,684,407 | - | (9,205,232 | ) | ||||||||||
| Provision for income taxes | 2,872 | - | - | (d) | 2,872 | |||||||||||
| Net income (loss) | (10,892,511 | ) | 1,684,407 | - | (9,208,104 | ) | ||||||||||
| Net profit (loss) per common share | ||||||||||||||||
| Basic | (0.90 | ) | - | - | (0.76 | ) | ||||||||||
| Diluted | (0.90 | ) | - | - | (0.76 | ) | ||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 12,122,606 | - | - | 12,122,606 | ||||||||||||
| Diluted | 12,122,606 | - | - | 12,122,606 | ||||||||||||
INVO BIOSCIENCE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 1 – Basis of presentation
The WFI Acquisition will be accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. As the acquirer for accounting purposes, the Company has estimated the fair value of WFI’s assets acquired and liabilities assumed and conformed the accounting policies of WFI to its own policies.
Note 2 – Calculation of purchase consideration and preliminary purchase price allocation
The following table summarizes the fair value of purchase consideration that will be transferred on the Closing Date:
| Proceeds from the sale of INVO common stock | $ | 2,500,000 | ||
| Total upfront cash consideration | 2,500,000 | |||
| Future cash or equity consideration(1) | 7,500,000 | |||
| Total purchase consideration | $ | 10,000,000 |
| (1) | Sellers may elect to receive shares of INVO common stock in lieu of cash payments. See Note 3. |
The Company has performed a preliminary valuation analysis of the fair market value of the Companies’ assets and liabilities. The following table summarizes the preliminary allocation of the purchase price as of March 31, 2023:
| Cash | $ | 169,361 | ||
| Accounts receivable | 119,559 | |||
| Prepaid expenses and other current assets | 526 | |||
| Property and equipment, net | 71,763 | |||
| Lease right of use asset | 911,201 | |||
| Goodwill | 10,055,110 | |||
| Accounts payable and accrued expenses | (96,949 | ) | ||
| Distributions payable | (171,981 | ) | ||
| Deferred revenue | (132,703 | ) | ||
| Lease liability | (925,887 | ) | ||
| Total consideration | $ | 10,000,000 |
This preliminary purchase price allocation has been used to prepare pro forma adjustments in the unaudited pro forma condensed combined balance sheet and income statements. The final purchase price allocation will be determined when INVO has completed all detailed valuations and necessary calculations, which are expected to be finalized within the next twelve months. The final allocation could differ materially from the preliminary allocation used in the pro forma adjustments. The final allocation may include (i) changes in identifiable net assets, (ii) changes in fair values of property, plant and equipment, and (iii) other changes to assets and liabilities.
Note 3 – Pro forma adjustments
The pro forma adjustments are based on the INVO’s preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial statements:
(a) Represents the preliminary goodwill associated with the WFI Acquisition as presented in Note 2. Goodwill represents the estimate of the excess of the purchase price over the fair value of the assets acquired and liabilities assumed.
(b) Represents the future cash payments owed for the WFI acquisition. INVO has agreed to make additional payments of $2,500,000 within 90-days of each of the first three anniversaries of closing. The sellers may elect to receive shares of INVO common stock in lieu of cash payments as follows: (i) 400,000 shares of INVO common stock on the first additional payment date; (ii) 275,000 shares of INVO common stock on the second additional payment date and (iii) 175,000 shares of INVO common stock on the third additional payment date.
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Cover |
Mar. 16, 2023 |
|---|---|
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