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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K/A

(Amendment No. 3)

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) March 16, 2023

 

INVO BIOSCIENCE, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   001-39701   20-4036208

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

5582 Broadcast Court

Sarasota, FL 34240

(Address of principal executive offices, including zip code)

 

(978) 878-9505

(Registrant’s telephone number, including area code)

 

Not Applicable

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

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, $0.0001 par value   INVO   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

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

 

 

 

 
 

 

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.

 

Exhibit No.   Exhibit
10.1*   Asset Purchase Agreement dated March 16, 2023, by and among Wood Violet Fertility LLC, a Delaware limited liability company, Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/t Wisconsin Fertility Institute (and The Elizabeth Pritts Revocable Living Trust.
10.2*   Membership Interest Purchase Agreement dated March 16, 2023 by and among Wood Violet Fertility LLC, a Delaware limited liability company, Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company, 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.
99.1*   Audited combined financial statements of Wisconsin Fertility and Reproductive Surgery Associates, S.C. and Fertility Labs of Wisconsin, LLC as of and for the years ended December 31, 2020 and 2021.
99.2*   Unaudited combined financial statements of Wisconsin Fertility and Reproductive Surgery Associates, S.C. and Fertility Labs of Wisconsin, LLC as of September 30, 2022 and for the nine months ended September 30, 2022 and 2021.
99.3*   Pro Forma Financial Statements (the unaudited combined pro forma Balance Sheet and Statement of Operations of WFRSA and FLOW. for the nine month period ended September 30, 2022 and the unaudited combined pro forma Statement of Operations of WFRSA and FLOW for the fiscal years ended December 31, 2020 and 2021
99.4*   Audited combined financial statements of Wisconsin Fertility and Reproductive Surgery Associates, S.C. and Fertility Labs of Wisconsin, LLC as of and for the years ended December 31, 2021 and 2022.
99.5*   Unaudited combined financial statements of Wisconsin Fertility and Reproductive Surgery Associates, S.C. and Fertility Labs of Wisconsin, LLC as of March 31, 2023 and for the three months ended March 31, 2023 and 2022.
99.6   Pro Forma Financial Statements listed under Item 9.01(b) above.
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

*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.

 

(c) Represents estimated proceeds from common stock sold by INVO to meet the initial $2.5 million due upon closing of the WFI acquisition. As an alternative, INVO may decide to fund the upfront consideration using debt financing, if available on reasonable terms.

 

(d) WFRSA and FLOW are taxed at the partnership level and as such no provision for income taxes has been recorded for the WFI Acquisition. Beginning in 2022 the members elected to have state income taxes paid by the Companies on the members’ behalf. This expense is included in the Companies operating expenses.

 

 

v3.23.2
Cover
Mar. 16, 2023
Cover [Abstract]  
Document Type 8-K/A
Amendment Flag true
Amendment Description Amendment No. 3
Document Period End Date Mar. 16, 2023
Entity File Number 001-39701
Entity Registrant Name INVO BIOSCIENCE, INC.
Entity Central Index Key 0001417926
Entity Tax Identification Number 20-4036208
Entity Incorporation, State or Country Code NV
Entity Address, Address Line One 5582 Broadcast Court
Entity Address, City or Town Sarasota
Entity Address, State or Province FL
Entity Address, Postal Zip Code 34240
City Area Code (978)
Local Phone Number 878-9505
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.0001 par value
Trading Symbol INVO
Security Exchange Name NASDAQ
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