Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐ NO ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO NO☒ ☒

The aggregate market value of the voting stock and non-voting common equity held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter ended June 30, 2023 was $3,072,404based onupon the closing price of the ~~shares of~~registrant’s common stock of $4.00 on the ~~Nasdaq Stock Market on June 30, 2021, was $46,939,332~~.NASDAQ as of that date.

The number of shares outstanding of the registrant’s common stock, $0.0001 par value, as of ~~March 31, 2022~~April 16, 2024 was ~~12,089,298~~2,743,031.

~~None.~~Portions of the registrant’s Proxy Statement for the 2023 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, 2023.

This Amendment No. 1 to Form 10-K (this “Amendment” or “Amendment No. 1”) amends the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 originally filed on April 16, 2024 (the “Original Filing”) by INVO Bioscience, Inc., a Nevada corporation (“INVO,” the” Company,” “we,” or “us”). We are filing this Amendment to include an updated consent of M&K CPA’s PLLC, our independent registered public accounting firm (the “Auditors”), to the incorporation in previously filed Registration Statements on Form S-8 Nos. 333-234230 and 333-252228, 333-263239, and 333-269258, Form S-3 333-255096, and Form S-1 Nos. 333-272872 and 333-273174 of its report dated April 16, 2024 of the Company relating to the audit of the consolidated financial statements as of December 31, 2023 and 2022, and for the periods then ended, including an explanatory paragraph regarding the Company’s ability to continue as a going concern, and the reference to the Auditors under the caption “Experts” in such registration statements.

In addition, Footnote 8 of the financial statements is being amended to state that the noncompetition agreements were deemed to have a useful life of 5 years instead of 15 years.

Except as described above, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, respectively, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing. Accordingly, this Amendment should be read in conjunction with our Original Filing and our other filings made with the SEC subsequent to the filing of the Form 10-K.

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, the impact of the COVID-19 pandemic on our ability to advance our clinical programs and raise additional financing and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

On May 26, 2020, the Company effected a 1-for-20 reverse stock split of its common stock. All shares, options and warrants throughout these consolidated financial statements have been retroactively restated to reflect the reverse split.

On November 9, 2020, the Company effected a 5-for-8 reverse stock split of its common stock. All shares, options and warrants throughout these consolidated financial statements have been retroactively restated to reflect the reverse split.

This Annual Report on Form 10-K should be read together and in connection with the other reports that have been filed by us with the SEC for a comprehensive description of our financial condition and operating results. In the interest of disclosure, we have included in this Form 10-K certain material events and developments that have taken place through the date of filing of this Form 10-K with the SEC.

In this Annual Report on Form 10-K, INVO Bioscience, Inc. (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. Please refer to all such information when reading this Annual Report on Form 10-K. All information is as of December 31, 2021, unless otherwise indicated. For a description of the risk factors affecting or applicable to our business, see “Risk Factors,” below.

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 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. Our primary mission is to implement new medical technologies aimed at increasing the availability of affordable, high-quality, patient-centered fertility care. 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 natural, intimate and more affordable experience in comparison to other ART treatments. The IVC procedure can deliver comparable results at a lower cost than traditional ~~in vitro~~ fertilization (“IVF”) and is a significantly more effective treatment than intrauterine insemination (“IUI”). 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), in addition to continuing to sell our technology solution into existing fertility clinics.

We were formed on January 5, 2007, under the laws of the Commonwealth of Massachusetts under the name Bio X Cell, Inc. to acquire the assets of Medelle Corporation (“Medelle”). Dr. Claude Ranoux purchased and contributed all of the assets of Medelle, including four patents relating to the INVOcell technology, to Bio X Cell, Inc. upon its formation in January 2007.

On December 5, 2008, Bio X Cell, Inc., doing business as INVO Bioscience, and each of the shareholders of INVO Bioscience entered into a share exchange agreement and consummated a share exchange with Emy’s Salsa AJI Distribution Company, Inc., a Nevada corporation (“Emy’s”). Upon the closing of the share exchange on December 5, 2008, the INVO Bioscience shareholders transferred all of their shares of common stock in INVO Bioscience to Emy’s. In connection with the share exchange, Emy’s changed its name to INVO Bioscience, Inc. and Bio X Cell, Inc. became a wholly owned subsidiary of Emy’s (re-named INVO Bioscience, Inc.).

In January 2022, we issued 94,623 shares of common stock to Paradigm Opportunities Fund, LP (“Paradigm”). The shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. We received $315,000 in proceeds from this issuance. Pursuant to its terms, on March 30, 2022, we terminated the stock purchase agreement with Paradigm, under which Paradigm had committed to purchase 600,703 shares of our common stock for an aggregate purchase price of $1,999,740.29. We issued our termination notice when it became clear that Paradigm would not be able to fulfil its commitment in a timely fashion.

On March 29, 2022, the joint venture agreement between INVO and Medesole Healthcare and Trading Private Limited, India was terminated by us pursuant to the terms of the joint venture agreement after mutual agreement with Medesole that Medesole would not be able to fulfil its commitments in a timely fashion.

We operate with a core internal team and outsource certain operational functions in order to help accelerate our efforts as well as reduce internal fixed overhead needs and in-house capital equipment requirements. Our most critical management and leadership functions are carried out by our core management team. We have contracted out the manufacturing, packaging/labeling and sterilization of the device to a contract medical manufacturing company that completes final product manufacturing as well as manages the gamma sterilization process at a U.S. Food and Drug Administration (“FDA”) registered contract sterilization facility.

~~As of December 31, 2021, we had ten full time and two part time employees. We also engage key consultants to further support our operations.~~

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. According to the European Society for Human Reproduction 2020 ART Fact Sheet, one in six couples worldwide experience infertility problems. Additionally, the worldwide market remains vastly underserved as a high percentage of patients in need of care continue to go untreated each year for many reasons, but key among them are capacity constraints and cost barriers. While there have been large increases in the use of IVF, there are still only approximately 2.6 million ART cycles, including IVF, IUI and other fertility treatments, performed globally each year, producing around 500,000 babies. This amounts to less than 3% of the infertile couples worldwide being treated and only 1% having a child though IVF. The industry remains capacity constrained which creates challenges in providing access to care to the volume of patients in need. A survey by “Resolve: The National Infertility Association,” indicates the two main reasons couples do not use IVF is cost and geographical availability (and/or capacity).

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. 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, which is similar to most markets around the world.

~~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. 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.

The IVC procedure is currently being offered at practicing clinics at a 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).

~~Improved efficiency providing for greater capacity and improved access to care and geographic availability~~. In many parts of the world, including the U.S., IVF clinics tend to be concentrated in higher population centers and are often capacity constrained in terms of how many patients a center can treat, with volume often limited by the number of capital-intensive incubators available in IVF clinic labs. With the significant number of untreated patients along with the growing interest and demand for services, the industry remains challenged to provide sufficient access to care and to do so at an economical price. We believe INVOcell, and the IVC procedure it enables, can play a significant role in helping to address these challenges. According to the 2020 CDC Report, there are approximately 449 IVF centers in the U.S. We estimate that by adopting the INVOcell, IVF clinics can increase fertility cycle volume by up to 30% without adding to personnel, space and/or equipment costs. Our own INVO Centers also address capacity constraints by adding to the overall ART cycle capacity and doing so with comparable efficacy to IVF outcomes as well as at a lower per cycle price. Moreover, we believe that we are uniquely positioned to drive more significant growth in fertility treatment capacity in the future by partnering with existing OB/GYN practices. In the U.S., there are an estimated 5,000 OB/GYN offices, many of which offer fertility services (usually limited to consultation and IUI, but not IVF). Since the IVC procedure requires a much smaller lab facility, less equipment, and fewer lab personnel (in comparison to conventional IVF), it could potentially be offered as an extended service in an OB/GYN office. With proper training and a lighter lab infrastructure, the INVOcell could expand the business for these physicians and allow them to treat patients that are unable to afford IVF and provide patients with a more readily accessible, convenient, and cost-effective solution. With our three-pronged strategy (IVF clinics, INVO Centers and OB/GYN practices), in addition to lowering costs, we believe INVOcell and the IVC procedure can address our industry’s key challenges, capacity and cost, by their ability to expand and decentralize treatment and increase the number of points of care for patients in need. This powerful combination of lower cost and added capacity has the potential to dramatically open up access to care for patients around the world.

~~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 ethical or religious concerns, or fears of laboratory mix-ups.

Our product commercialization efforts are focused on identifying distributors and partners within targeted geographic regions that we believe can best promote, market, and sell the INVOcell and support our efforts to expand access to advanced fertility treatment for the large number of underserved infertile people hoping to have a baby. We believe that the IVC procedure is an effective and affordable treatment option that greatly reduces the need for more expensive IVF lab facilities and allows providers to pass on related savings to patients without compromising efficacy. 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. Our primary focus has been on establishing INVO Centers to promote the INVOcell and the IVC procedure, selling the INVOcell directly to U.S. fertility clinics, and developing key international market partnerships around the world.

We anticipate that we will experience quarterly fluctuations in our revenue as we expand the sales of the INVOcell to new markets in the U.S. and globally. We continue to seek partners that will contractually commit to meeting agreeable performance objectives that are consistent with our goals and objectives.

On November 12, 2018, we entered into a U.S. Distribution Agreement (the “Ferring Agreement”) with Ferring International Center S.A. (“Ferring”), which closed on January 14, 2019. Pursuant to the Ferring Agreement, among other things, we granted Ferring an exclusive license in the United States to market, promote, distribute, and sell the INVOcell. Ferring was responsible, at its own cost, for all commercialization activities for in the United States. We retained a limited exception to the exclusive license granted to Ferring allowing us, subject to certain restrictions, to establish up to five INVO Centers in the United States, which as of March 2, 2021, was amended to seven centers. We retained all commercialization rights for the INVOcell outside of the United States.

On November 2, 2021, Ferring notified us of its intention to terminate the Ferring Agreement, which required 90-days prior written notice. Accordingly, the Ferring Agreement officially terminated on January 31, 2022. Pursuant to the terms of the Ferring Agreement, upon notice of termination, Ferring was required to use commercially reasonable efforts to transition any customers to us and otherwise facilitate the orderly transition of the distribution from Ferring to us. By its terms, our Supply Agreement with Ferring also terminated on January 31, 2022.

The Ferring license was deemed to be a functional license that provides the counterparty with a “right to access” to our intellectual property during the subscription period and accordingly, revenue is recognized over a period of time, which is generally the subscription period. During the years ended December 31, 2021, and 2020, we recognized $3.6 million and $0.7 million of revenue related to the Ferring license agreement, respectively.

As of December 31, 2021, we had no deferred revenue related to the Ferring Agreement as it was recognized in the fourth quarter of fiscal year 2021 in relation to the contract termination. The likelihood of Ferring exercising its rights became remote at the time notice of termination was received therefore INVO recognized the full remaining amount of the deferred revenue.

We have entered into exclusive distribution agreements for a number of international markets. These agreements usually have an initial term with renewal options and require the distributors to meet minimum annual purchases, which vary depending on the market. 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.

~~The following table sets forth a list of our current international distribution agreements:~~

~~As part of our commercialization strategy, we entered into a number of joint ventures and partnerships designed to establish new INVO Centers.~~

~~The following table sets forth a list of our current joint venture arrangements:~~

~~The following table sets forth a list of our current partnership arrangements:~~

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”). 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. 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, and initial treatment cycles commenced in September 2021.~~

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.

In consideration for INVO’s commitment to contribute up to $800,000 within the 24-month period following execution of the Bloom Agreement to support the start-up operations of the Georgia JV, the Georgia JV issued 800 of its units to INVO CTR and in consideration for Bloom’s commitment to contribute physician services having an anticipated value of up to $1,200,000 over the course of a 24-month vesting period, the Georgia JV issued 1,200 of its units to Bloom.

The responsibilities of Bloom include providing all medical services required for the operation of the Atlanta Clinic. The responsibilities of INVO CTR include providing certain funding to the Georgia JV, lab services quality management, and providing access to and being the exclusive provider of the INVOcell to the Georgia JV. INVO CTR will also perform all required, industry specific compliance and accreditation functions, and product documentation for product registration.

~~The Georgia JV opened to patients on September 7, 2021, and commenced initial treatment cycles in November 2021.~~

Effective September 24, 2020, INVO CTR entered into a Pre-Incorporation and Shareholders Agreement with Francisco Arredondo, MD PLLC (“Arredondo”) and Security Health LLC, a Texas limited liability company (“Ramirez”, and together with INVO CTR and Arredondo, the “Shareholders”) under which the Shareholders will commercialize the IVC procedure and offer related medical treatments in Mexico. Each party owns one-third of the Mexican incorporated company, Positib Fertility, S.A. de C.V. (the “Mexico JV”).

The Mexico JV will operate in Monterrey, Nuevo Leon, Mexico and any other cities and places in Mexico as approved by the Mexico JV’s board of directors and Shareholders. 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, and commenced initial treatment cycles beginning in January 2022.~~

On November 23, 2020, we entered into a joint venture agreement with SNS Murni SDN BHD (“SNS Murni”), a company incorporated in Malaysia, to establish an exclusive joint venture in Malaysia to (i) introduce, promote and market technologies related to the INVOcell and IVC Procedure in dedicated government-owned fertility clinics in Malaysia, and (ii) establish INVO Centers in Malaysia. The joint venture is co-managed and owned 50% by each of INVO Bioscience and SNS Murni. As of December 31, 2021, no joint venture entity had been formed.

On November 23, 2020, we entered into a joint venture agreement with Ginekaliks Dooel (“Ginekaliks”), a limited liability company incorporated in the Republic of North Macedonia, to establish an exclusive joint venture to (i) commercialize, introduce, promote, and market technologies related to the INVOcell and IVC procedure in the Republic of North Macedonia, and (ii) establish an INVO Center. The joint venture will be co-managed and owned 50% by each of INVO and Ginekaliks. As of December 31, 2021, no joint venture entity had been formed.

On April 9, 2021, we entered into a partnership agreement (the “Lyfe Agreement”) with Lyfe Medical Center I, LLC (“Lyfe”) in connection with Lyfe’s intention to establish an INVO Center in the Bay Area of California (the “Bay Area Clinic”). Pursuant to the Lyfe Agreement, we will provide embryology laboratory services in connection with the IVC procedure and other fertility-related treatments (the “Lab Services”) to be provided by Lyfe to its patients at the Bay Area Clinic. Under the terms of the Lyfe Agreement, we will receive 40% of the net income received by the Bay Area Clinic for the performance of the Lab Services. As of December 31, 2021, the Bay Area Clinic was not yet operational.

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. Our INVOcell enables the first new advanced treatment alternative in over forty years. We face competition from all ART practitioners and device manufacturers. To date, most advancements in the ART market have been limited to incremental improvements to the various products designed to simply support conventional IVF.

Our principal ART medical device competitor for INVOcell is an intrauterine device called AneVivo™, developed by Anecova, a Swiss life sciences company. The principal difference between the INVOcell and AneVivo™ is its placement inside the woman’s uterus for early embryo development. We believe that placing the device in the uterus may be more invasive and thus may increase the risk to patients compared to the INVOcell, which is placed in the vaginal cavity. Currently, AneVivo™ has obtained a CE Mark, but has not received FDA approval.

~~For additional information about competition, see Risk Factors in Item 1A of this Annual Report on Form 10-K.~~

In November 2015, FDA granted our petition for de novo classification of the INVOcell. The INVOcell is intended for use in preparing, holding, and transferring human gametes or embryos during IVC procedure with or without intra-cytoplasmic sperm injection fertilization (“ICSI”). The special controls include clinical and non-clinical performance testing, biocompatibility, sterility and shelf-life testing, and labeling. These special controls also apply to competing products that seek 510(k) clearance under the classification regulation for IVC systems, including our own 510(k) effort to expand the labeling on INVOcell from a 3-day incubation period to up to a 5-day incubation period.

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 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.

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. Every country has different regulatory and registration requirements, and we have begun or completed registrations in a number of countries. In general, we are registering the product based on the size of the market and our ability to service it given our resources as well as based on interest received from, and the execution of, agreements with distribution and joint venture partners.

These laws are subject to extensive and increasing enforcement by numerous federal, state, and local government agencies including the Office of Inspector General, the Department of Justice, the Centers for Medicare & Medicaid Services, and various state authorities. At present, the Company’s products and services are not reimbursable under any government healthcare program. If, however, that changes in the future and it were determined that the Company was not in compliance with these federal fraud, waste, and abuse laws, the Company would be subject to liability.

We are subject to the 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”). Under HIPAA, the Company must have in place administrative, physical, and technical standards to guard against the misuse of individually identifiable health information. 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”). We face risks relative to protecting this critical information, including loss of access risk, inappropriate disclosure risk, inappropriate modification risk, and the risk of being unable to adequately monitor our controls. Our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to employee error, malfeasance, or other disruptions. Failure to comply with HIPAA, including through a breach of PHI, could result in penalties and sanctions, and materially harm our business.

~~For additional information about government regulation applicable to our business, see Risk Factors in Item 1A.~~

We rely on a combination of patent, copyright, and trademark laws in the United States and other countries to obtain and maintain our intellectual property. We protect our intellectual property by, among other methods, filing patent applications with the U.S. Patent and Trademark Office and its foreign counterparts on inventions that are important to the development of our business.

Our product development process has resulted in the development of one (1) patent currently live and in good standing covering the INVOcell device, which is set to expire on July 14, 2024 (US Pat. No. 7,759,115). We completed a redesign of the INVOcell device as well as process improvements on the IVC procedure, which supported a new patent application that was filed on November 11, 2020 and is currently pending. We also filed a PCT (Patent Cooperation Treaty) application for the new U.S. application on January 18, 2021 to further expand patent protection in strategic locations across the globe.

~~We also have pending U.S. applications to register the trademarks INVO CENTER (App. No. 88564596), and Life Begins Within (App. No. 90803801).~~

~~For additional information about our intellectual property, see Risk Factors in Item 1A of this Annual Report on Form 10-K.~~

We maintain an internet website at www.invobio.com. We make available, free of charge through our website, our annual report on Form 10-K, current reports on Form 8-K, quarterly reports on Form 10-Q and each amendment to these reports. Each such report is posted on our website as soon as reasonably practicable after such report is filed with the SEC via the EDGAR system.

The information on our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered a part of this Annual Report. Our website address is included in this Annual Report as an inactive textual reference only.

You should carefully consider the following risk factors, in addition to the other information in this report on Form 10-K, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. If any of the events described in the following risk factors and the risks described elsewhere in this report on Form 10-K occurs, our business, operating results and financial condition could be seriously harmed. This report on Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described below and elsewhere in this report.

The following is a summary of certain important factors that may make an investment in our company speculative or risky. You should carefully consider the full risk factor disclosure set forth in Item 1A of this Annual Report, in addition to the other information herein, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes.

~~Our business has posted net operating losses, has a limited operating history, and needs additional capital to grow and finance its operations.~~

From the inception of our consolidated subsidiary BioXcell Inc. on January 5, 2007, through December 31, 2021, we had an accumulated net loss of $38.9 million. We have a limited operating history and are essentially an early-stage operation. We will continue to be dependent on having access to additional new capital or generating positive operating cash flow primarily through increased device sales and the development of our INVO Centers in order to finance the growth of our operations. Continued net operating losses together with limited working capital make investing in our common stock a high-risk proposal. 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.

~~We may require additional capital to continue as a going concern and to continue executing our business plan, which if not obtained could result in a need to curtail operations.~~

As reflected in the accompanying financial statements for the year ended December 31, 2021, we continue to make progress toward commercialization of our INVOcell and the development of our INVO Centers, although revenue is not yet sufficient to cover our current operations. Longer term, based on our projected cash needs, we will be dependent on generating sufficient sales, entering into new distribution agreements, the profitability of our INVO Centers, and/or raising additional debt or equity capital to support our operations. No assurance can be given that we will be successful in raising capital in the amounts or at the rates required to continue operations, or that such capital, if available, will be available on terms acceptable to us. If we are not able to raise additional capital at the rate and in the amounts needed, our business may be significantly impacted, which could materially adversely affect the value of your investment.

Our existing INVO Centers were established as joint ventures with medical partners. Future INVO Centers may also be established as joint ventures. These joint ventures will be important to our business. If we are unable to maintain any of these joint ventures, or if they are not successful, our business could be adversely affected.

We have established, and plan to establish additional, entered into, and may enter into additional, joint ventures for the operation of our INVO Centers. Our existing and any future joint ventures may have a number of risks, including that our joint venture partners:

Additionally, if one of our joint venture partners seeks to terminate its agreement with us, we may find it difficult to attract new joint venture partners and the perception of our INVO Centers in the business and financial communities could be adversely affected.

The fertility industry is highly competitive and characterized by well entrenched and long-standing practices as well as technological improvements and advancements. New ART services, devices and techniques may be developed that may render the INVOcell obsolete. Competition in the areas of fertility and ART services is largely based on pregnancy rates and other patient outcomes. Accordingly, the ability of our business to compete is largely dependent on our ability to achieve adequate pregnancy rates and patient satisfaction levels. Our business operates in highly competitive areas that are subject to change. New health care providers and medical technology companies entering the market may reduce our and our INVO Centers’ market share, patient volume and growth rates, and could force us to alter our planned pricing and INVO Center service offerings. Additionally, increased competitive pressures may require us to commit more resources to our and our INVO Centers’ marketing efforts, thereby increasing our cost structure and affecting our ability to achieve, or the timing of achieving, profitability. There can be no assurance that we will not be able to compete effectively, nor can there be any assurance that additional competitors will not enter the market. Such competition may make it more difficult for us to enter into additional contracts with fertility clinics or open profitable INVO Centers.

Our operations, both inside and outside the United States, are subject to risks inherent in conducting business globally and under the laws, regulations and customs of various jurisdictions and geographies. 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. Foreign Corrupt Practices Act and the trade sanctions laws and regulations administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control. Acts of terror or war may impair our ability to operate in particular countries or regions and may impede the flow of goods and services between countries. Customers in weakened economies may be unable to purchase our products, or it could become more expensive for them to purchase imported products in their local currency, or sell at competitive prices, and we may be unable to collect receivables from such customers. Further, changes in exchange rates may affect our net earnings, the book value of our assets outside the United States and our stockholders’ equity. 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.

~~Failure to comply with the United States Foreign Corrupt Practices Act or similar laws could subject us to penalties and other adverse consequences.~~

We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies, including their suppliers, distributors and other commercial partners, from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in the countries in which we distribute products. We have adopted formal policies and procedures designed to facilitate compliance with these laws. If our employees or other agents, including our distributors or suppliers, are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

~~We need to manage growth in operations, and we may not be successful in implementing our growth strategy.~~

In order to maximize potential growth in our current and potential markets, we may need to expand the scope of our services in the medical device/bioscience industry. We continue to seek additional market strategies to increase the adoption of INVOcell, including the establishment of stand-alone INVO Centers and our efforts to bring the INVOCell and IVC procedure into the existing OB/GYN infrastructure. Such expansion will place a significant strain on our management, operational and sales systems. As a result, we plan to continue to improve our INVOcell technology, operating procedures and management information systems. We will also need to effectively train, motivate and manage our employees. Our failure to manage our growth could disrupt our operations and ultimately prevent us from generating revenues at the levels we expect.

Many factors including, but not limited to, increased competition from similar businesses, unexpected costs, costs associated with marketing efforts and maintaining a strong client base may interfere with our ability to expand successfully. Our inability to implement our internal strategy successfully may have a negative impact on our growth, future financial condition, results of operations and/or cash flows.

~~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~~.

While we currently own U.S. and international patents, these patents may be challenged, invalidated or circumvented, and will ultimately expire. In addition, the rights granted under these patents may not provide the competitive advantages we currently anticipate. Certain countries, including the United States and in Europe, could place restrictions on the patentability of various medical devices which may materially affect our business and competitive position. Additionally, the laws of some foreign countries, in particular China and India, do not protect our proprietary rights to the same extent or in the same manner as U.S. laws, and we may encounter significant problems in protecting and defending our proprietary rights in these countries. In addition to relying on patent, copyright and trademark laws, we also utilize a combination of trade secrets, confidentiality policies, non-disclosure and other contractual arrangements to protect our intellectual property rights. However, these measures may not be adequate to prevent or deter infringement or other misappropriation. Further, our intellectual property rights may be found to infringe on intellectual property rights of third parties. Moreover, we may not be able to detect unauthorized use or take appropriate and timely steps to establish and enforce our proprietary rights. Existing laws of some countries in which we conduct business offer only limited protection of our intellectual property rights, if at all. As the number of market entrants as well as the complexity of technology in the fertility marketplace increases, the possibility of functional overlap and inadvertent infringement of intellectual property rights also increases.

~~We may be forced to defend our intellectual property rights from infringement through expensive legal action.~~

Third parties may in the future assert claims against us alleging infringement on their intellectual property rights. Defending such claims may be expensive, time consuming and divert the efforts of our management and/or technical personnel. Because of litigation, we could be required to pay damages and other compensation, develop non-infringing products or enter into royalty and/or licensing agreements. However, we cannot be certain that any such licenses, will be made available to us on commercially reasonable terms.

We regard our trade secrets, patents and similar intellectual property as critical to our successful operations. To protect our proprietary rights, we rely on intellectual property and trade secret laws, as well as confidentiality and license agreements with certain employees, customers and third parties. No assurance can be given that our intellectual property will not be challenged, invalidated, infringed or circumvented. If necessary, we intend to defend our intellectual property rights from infringement through legal action, which could be very costly and could adversely affect our ability to achieve and maintain profitability. Our limited capital resources could put us at a disadvantage if we are required to take legal action to enforce our intellectual property rights.

~~We face potential liability as a provider of a medical device. These risks may be heightened in the area of artificial reproduction.~~

The provision of medical devices entails the substantial risk of potential tort injury claims. We do not engage in the practice of medicine or assume responsibility for compliance with regulatory requirements directly applicable to physicians. We currently utilize product liability insurance to provide coverage against potential tort injury claims, as well as customary insurance protection for our INVO Centers. However, there can be no assurance such coverage will provide adequate protection against any potential claims. 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.

There are inherent risks specific to the provision of fertility and ART services. For example, the long-term effects on women of the administration of fertility medication, integral to most fertility and ART services, are of concern to certain physicians and others who fear the medication may prove to be carcinogenic or cause other medical problems. Additionally, any ban or other limitation imposed by the FDA or other foreign regulatory department on fertility medication and services could have a material adverse effect on our business. Any such action would likely adversely affect the value of your investment.

~~If we fail to maintain adequate quality standards for our products, our reputation and business may be adversely affected and harmed.~~

Our customers are expecting that our products will perform as marketed and in accordance with industrial standards. We rely on third-party manufacturing companies and their packaging processes in connection with the production of our products. A failure to maintain product quality standards in accordance with our customer’s expectations could result in the loss of demand for our products. Additionally, delays or quality lapses in our production lines could result in substantial economic losses to us. Although we believe that our current quality control procedures adequately address these risks, there can be no assurance that we will not experience occasional or systemic quality lapses in our manufacturing and service operations. Currently, we have limited manufacturing capabilities as we rely on a single manufacturing provider regarding our production process. 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 we experience significant or prolonged disturbance in our quality standards, our business and reputation may be harmed, which may result in the loss of customers, our inability to participate in future customer product opportunities and reduced revenue and earnings.

We heavily rely on third party package delivery services, and a significant disruption in these services or significant increases in prices may disrupt our ability to import or export materials, increase our costs and negatively affect our ability to achieve and maintain profitability.

We ship a significant portion of our products to our customers through independent package delivery companies. If any of our key third party package delivery providers experience a significant disruption such that any of our products, components or raw materials cannot be delivered in a timely fashion or such that we incur additional shipping costs that we are unable to recoup, our costs may increase and our relationships with certain customers may be adversely affected. In particular, if our third-party package delivery providers increase prices and we are not able to find comparable alternatives or adjust our delivery network, our profitability could be adversely affected.

~~We may not be able to develop or continue our business if we fail to retain key personnel.~~

We substantially rely upon the efforts and abilities of our executive management and directors. The loss of any of our executive officers and/or directors services could potentially have a material adverse effect on our business, operations, revenues and/or prospects. If one or more of these persons were to become unable or unwilling to continue in their present positions, we may not be able to replace them readily or timely, if at all. We do not maintain key man life insurance on the lives of any of our executive management or directors.

~~We will need additional, qualified personnel in order to expand our business. Without additional personnel, we will not be able to expand our business.~~

Expanding our business requires increasing the number of persons engaged in activities for the sale, marketing, administration and delivery of our products as well as clinical training personnel for proper IVC procedure training . Our ability to attract and hire personnel to fulfil these efforts is dependent on our ability to attract and retain potential employees with the proper background and training matching the skills required for the positions. In addition, we may not be able to attract personnel who will be able to successfully implement our business operations and growth strategy in the manner that we currently anticipate.

~~Currency exchange rate fluctuations may affect the results of our operations.~~

We intend to distribute our INVOcell product internationally with all sales, domestic and international, in U.S. dollars. As a result, our operations could be impacted by fluctuations in currency exchange rates, although we attempt to mitigate such risk by invoicing only in U.S. dollars. In spite of this, our operations may still be negatively impacted by foreign currency exchange rates in the event the U.S. dollar strengthens and the local currency where the product is being sold weakens. 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. As we expand our international footprint with joint ventures, these joint ventures will likely have a functional currency based on their location and as a result, if we are required to consolidate these financial results it may create currency fluctuations. Additionally, as an international business we may be susceptible to adverse foreign currency fluctuations unconnected to the U.S. dollar.

~~We are subject to risks in connection with changes in international, national and local economic and market conditions.~~

Our business is subject to risks in connection with changes in international, national and local economic and market conditions, including the effects of global financial crises, effects of terrorist acts, war and global pandemics. Such economic changes could negatively impact infertile people’s ability to pay for fertility treatment around the world.

~~We anticipate that eventually international sales will account for a meaningful part of our revenue. We will experience additional risks associated with international sales, including:~~

Any of these factors could have a material adverse effect on our business, results of operations and financial condition. From 2011 through 2021, 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. 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.

~~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. 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. 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.

~~We are subject to significant domestic and international governmental regulation.~~

Our business is heavily regulated domestically in the United States and internationally. 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 addition, additional restrictive laws, regulations or interpretations could be adopted, making compliance with such regulations more difficult or expensive. While we devote substantial resources to ensure our compliance with laws and regulations, we cannot completely eliminate the risk that we may be found non-compliant with applicable legal and regulatory requirements.

We believe that the healthcare industry will continue to be subject to increased regulation as well as political and legal action, as future proposals to reform the health care system are considered by the U.S. Congress and state legislatures. We do not know of, nor do we have any control over, future changes to health care laws and regulations which may have a significant impact on our business.

The FDA regulatory review process for medical devices is expensive, time-consuming and uncertain, and the failure to obtain and maintain required regulatory clearances and approvals could prevent us from commercializing our products.

Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a 510(k) premarket notification, approval of a premarket approval, or issuance of a de novo classification order. The FDA clearance, de novo classification, and approval processes for medical devices are expensive, uncertain and time-consuming.

Future modifications to the INVOcell that was classified through de novo may require a 510(k) clearance. We may make minor changes to the INVOcell without seeking clearance for the modifications if we determine such clearances are not necessary and document the basis for that conclusion. However, the FDA may disagree with our determination or may require additional information, including clinical data, to be submitted before a determination is made, in which case we may be required to delay the introduction and marketing of our modified products, redesign our products, conduct clinical trials to support any modifications, or we may be subject to enforcement actions. In addition, the FDA may not clear such modified INVOcell for the indications that are necessary or desirable for successful commercialization.

There is no assurance that we will be able to obtain the necessary clearances on a timely basis or at all. Further, the FDA may change its policies, adopt additional regulations or revise existing regulations, or take other actions which may impact our ability to modify the INVOcell on a timely basis, and may prevent or delay clearance of future products. 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.

In addition, we are required to continue to comply with applicable FDA and other regulatory requirements following de novo classification or clearance. The failure to comply with existing or future regulatory requirements could have a material adverse effect on our business.

Improper marketing and promotion or off-label use of our product could lead to investigations and enforcement by governmental bodies including product recalls or market withdrawal, may harm our reputation and business, and could result in product liability suits.

If the FDA or any foreign regulatory entity determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions. These enforcement actions could include, for example, a warning letter or untitled letter, injunction, seizure, civil fine or criminal penalties. 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.

~~If we fail to comply with the FDA~~’s Quality System Regulation (“QSR”) or comparable EU requirements, the FDA or EU competent authorities could take various enforcement actions, including suspending our FDA clearance to market, withdrawal of our EU CE Certificate or halting our manufacturing operations, and our business would suffer.

In the United States, as a manufacturer of a medical device, we are required to demonstrate and maintain compliance with the FDA’s QSR. The QSR covers the methods and documentation of the design, testing, control, manufacturing, labeling, quality assurance, packaging, storage and distribution of medical devices. The FDA enforces the QSR through periodic inspections and unannounced “for cause” inspections. Outside the United States, our products and operations are also required to comply with national requirements where the product is sold and also standards set by industrial standards bodies, such as the International Organization for Standardization. Foreign regulatory bodies may evaluate our products or the testing that our products undergo against these standards. The specific standards, types of evaluation and scope of review differ among foreign regulatory bodies. Our failure to comply with FDA or foreign regulatory agency requirements, or failure to take satisfactory and prompt corrective action in response to an adverse inspection, could result in enforcement actions, including a warning letter, adverse publicity, a shutdown of or restrictions on our manufacturing operations, a recall or seizure of our products, fines, injunctions, civil or criminal penalties, or other sanctions, any of which could cause our business and operating results to suffer.

~~We are subject to continuing regulation by the FDA, and failure to comply may materially harm our business.~~

We are subject to Medical Device Reporting (“MDR”) regulations, which require us to report to the FDA if we become aware of information that reasonably suggests our product may have caused or contributed to a death or serious injury or has malfunctioned and the device or a similar device we market would likely cause or contribute to a death or serious injury if the malfunction were to recur. We may fail to report adverse events of which we become aware within the prescribed timeframe. We may also fail to recognize that we have become aware of a reportable adverse event. If we fail to comply with our medical device reporting obligations, the FDA could issue warning letters or untitled letters, take administrative actions, commence criminal prosecution, impose civil monetary penalties, request or require a product recall, seize our products, or delay the clearance of our future products. We must report corrections and removals to the FDA where the correction or removal was initiated to reduce a risk to health posed by the device or to remedy a violation of the Federal Food, Drug, and Cosmetic Act, or FDCA, caused by the device that may present a risk to health.

Our failure to comply with these or other applicable regulatory requirements could result in enforcement actions by the FDA which may include untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; customer notifications or repair, replacement or refunds; and criminal prosecution.

Our products are generally subject to regulatory requirements in foreign countries in which we sell those products. 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.

In order to sell our products in foreign countries, generally we must obtain regulatory approvals and comply with the regulations of those countries. These regulations, including the requirements for approvals or clearances and the time required for regulatory review, vary from country-to-country.

The EU requires that manufacturers certify compliance of medical devices with Council Directive (93/42/EEC) (“MDD”), as amended, and affix the CE mark before selling such devices in member countries of the EU or European Economic Area (“EEA”). The CE mark is an international symbol of adherence to quality assurance standards and compliance with applicable European medical device directives. 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.

In May 2017, the EU adopted Regulation (EU) 2017/745 (“MDR”), which will repeal and replace the MDD with effect from May 26, 2021. Under transitional provisions, medical devices with notified body certificates issued under the MDD prior to May 26, 2021, may continue to be placed on the market for the remaining validity of the certificate, until May 27, 2024, at the latest as long as there have been no significant changes made to the product. After the expiry of any applicable transitional period, only devices that have been CE marked under the MDR may be placed on the market in the EU (or EEA). The MDR includes increasingly stringent requirements in multiple areas, such as pre-market clinical evidence (some of which are now in effect), review of high-risk devices, labeling and post-market surveillance. Under the MDR, pre-market clinical data will now be required to obtain CE Mark approval for high-risk, new and modified medical devices. We believe these new requirements have the potential to be expensive and time-consuming to implement and maintain.

Complying with and obtaining regulatory approval in foreign countries, including compliance with the MDR, have caused and will likely continue to cause us to experience more uncertainty, risk, expense and delay in commercializing products in certain foreign jurisdictions, which could have a material adverse impact on our net sales, market share and operating profits from our international operations.

~~Our planned additional clinical trial and 510(k) efforts may prove unsuccessful.~~

We intend to pursue our label expansion effort and corresponding 510(k) submission utilizing real-market usage (retrospective) data. We may also conduct an additional prospective clinical trial related to the expansion of INVOcell’s indications to include 5-day incubation. While we anticipate a positive outcome of this effort, 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.

~~Changes in the healthcare industry may require us to decrease the selling price for our products or could result in a reduction in the available market size.~~

Governmental and private sector initiatives in the U.S. and abroad involving trends toward managed healthcare and cost containment could place an emphasis on our ability to deliver more cost-effective medical therapies. The development of other cost-effective devices could eventually adversely affect the prices and/or sales of our products. Companies in the healthcare industry are subject to various existing and proposed laws and regulations, in both domestic and international markets, regulating healthcare pricing and profitability. Additionally, there have been third-party payer initiatives to challenge the prices associated with medical products, which if successful, could affect our ability to sell products on a competitive basis in the future.

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. Any pressure to reduce our product prices in response to these industry trends and the decrease in market size could adversely affect our anticipated revenue and profitability of our sales, creating a material adverse effect on our business.

~~If third-party payers do not provide adequate coverage and reimbursement for INVOcell and the IVC procedure, we may be unable to generate significant revenues.~~

Our success in marketing and commercializing INVOcell and the IVC procedure may depend in part on whether private health insurers and other payer organizations provide adequate coverage and reimbursement. If physicians or insurers do not find our clinical data compelling or wish to wait for additional studies, they may choose not to use or provide coverage and reimbursement for INVOcell and the IVC procedure. We cannot provide assurance that data we or others may generate in the future will be consistent with that observed in our existing clinical studies, or that our current or future published clinical evidence will be sufficient to obtain adequate coverage and reimbursement for our products. 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. In addition, in the United States, no uniform policy of coverage and reimbursement for INVOcell and the procedure exists among third-party payers. Therefore, coverage and reimbursement for INVOcell and the IVC procedure may differ significantly from payer to payer. In addition, payers continually review new technologies for possible coverage and can, without notice, deny coverage for these new products and procedures. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of INVOcell and the IVC procedure to each payer separately, with no assurance that coverage and adequate reimbursement will be obtained or maintained if obtained.

Reimbursement systems in international markets vary significantly by country and by region within some countries, and reimbursement approvals must be obtained on a country-by-country basis. In many international markets, a product must be approved for reimbursement before it can be approved for sale in that country. Further, many international markets have government-managed healthcare systems that control reimbursement for new devices and procedures. In most markets, there are private insurance systems as well as government-managed systems. If sufficient and timely coverage and reimbursement is not available for our current or future products, in either the United States or internationally, the demand for our products and our revenues may be adversely affected.

~~We are subject to risks relating to federal and state healthcare fraud, waste, and abuse laws.~~

We may be subject to healthcare fraud, waste, and abuse regulation and enforcement by the federal government and the governments in the states and foreign countries in which we might conduct our business. Such federal laws generally apply only to entities or individuals that provide items or services for which payment may be made under a federal healthcare program. These laws are subject to extensive and increasing enforcement by numerous federal, state, and local government agencies including the Office of Inspector General, the Department of Justice, the Centers for Medicare & Medicaid Services, and various state authorities. The healthcare laws and regulations that may affect our ability to operate include the following:

At present, our products and services are not reimbursable under any federal healthcare program. If, however, that changes in the future and it were determined that we were not in compliance with these federal fraud, waste, and abuse laws, we would be subject to liability.

Also, as noted above, many states have similar laws and regulations, such as anti-kickback and false claims laws that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs. We may be subject to such laws in Alabama and Georgia due to our joint venture operations in those states. The Georgia State False Medicaid Claims Act (Ga. Code Ann. §§ 49-4-168 – 49-4-168.6), Georgia Medical Assistance Act false statements provision (Ga. Code Ann. §§ 49-4-140 – 49-4-157), and Alabama Medicaid false statements statute (Ala. 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.

The Georgia Patient Self-Referral Act of 1993 (Ga. Code Ann. §§ 43-1B-1 – 43-1B-8) contains prohibitions on self-referral that are similar to those under the Stark Law, however, the Georgia law applies to additional classes of providers, including pharmacists, and is not limited to items or services reimbursable by a federal healthcare program. The Georgia law prohibits health care providers or entities regulated by the law from presenting any claim for payment to any individual, third-party payer, or other entity for a service furnished pursuant to a prohibited referral.

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:

Responding to lawsuits and other proceedings as well as defending ourselves in such matters would require management’s attention and cause us to incur significant legal expense. It is also possible that criminal proceedings may be initiated against us or individuals in our business in connection with investigations by the federal government.

~~Additionally, to the extent that our product is sold or our services are provided in a foreign country, we may be subject to similar foreign laws.~~

HIPAA established comprehensive federal protection for the privacy and security of health information. The HIPAA standards apply to three types of organizations, or “Covered Entities”: (1) health plans, (2) health care clearing houses, and (3) health care providers who conduct certain health care transactions electronically. The HIPAA standards also apply to Covered Entities’ “Business Associates.” Covered Entities and their Business Associates must have in place administrative, physical, and technical standards to guard against the misuse of individually identifiable health information. The HITECH Act promotes the adoption and meaningful use of health information technology. The HITECH Act addresses the privacy and security concerns associated with the electronic transmission of health information, in part, through several provisions that strengthen the civil and criminal enforcement of the HIPAA rules. These laws may impact our business in the future. INVO is currently a Business Associate of various Covered Entities. Failure to comply with these confidentiality requirements, including via a breach of PHI, may result in penalties and sanctions.

In the ordinary course of our business, we may use, collect, and store sensitive data, including PHI. We face risks relative to protecting this critical information, including loss of access risk, inappropriate disclosure risk, inappropriate modification risk, and the risk of being unable to adequately monitor our controls. Our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to employee error, malfeasance or other disruptions. Any such breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, such as HIPAA, and regulatory penalties. There is no guarantee that we can continue to protect our systems from breach. Unauthorized access, loss, or dissemination could also disrupt our operations.

The U.S. Office of Civil Rights in the Department of Health and Human Services enforces the HIPAA privacy and security rules and may impose penalties for failure to comply with requirements of HIPAA. Penalties vary significantly depending on factors such as whether failure to comply was due to willful neglect. These penalties include civil monetary penalties of $100 to $50,000 per violation, up to an annual cap of $1,500,000 for identical violations. A person who knowingly obtains or discloses individually identifiable health information in violation of HIPAA may face a criminal penalty of up to $50,000 per violation and up to one-year imprisonment. The criminal penalties increase to $100,000 per violation and up to five-years imprisonment if the wrongful conduct involves false pretenses, and to $250,000 per violation and up to 10-years imprisonment if the wrongful conduct involves the intent to sell, transfer, or use identifiable health information for commercial advantage, personal gain, or malicious harm. The U.S. Department of Justice is responsible for criminal prosecutions under HIPAA. Furthermore, in the event of a breach as defined by HIPAA, there are reporting requirements to the Office of Civil Rights under the HIPAA regulations as well as to affected individuals, and there may also be additional reporting requirements to other state and federal regulators, including the Federal Trade Commission, and to the media. Issuing such notifications can be costly, time and resource intensive, and can generate significant negative publicity. Breaches of HIPAA may also constitute contractual violations, including violation of the Company’s Business Associate contracts with Covered Entities from which the Company receives PHI, that could lead to contractual damages or terminations.

~~If we are unable to effectively adapt to changes in the healthcare industry, our business may be harmed.~~

Federal, state, and local legislative bodies frequently pass legislation and promulgate regulations relating to healthcare reform or that affect the healthcare industry. As has been the trend in recent years, it is reasonable to assume that there will continue to be increased government oversight and regulation of the healthcare industry in the future. We cannot predict the ultimate content, timing, or effect of any new healthcare legislation or regulations, nor is it possible at this time to estimate the impact of potential new legislation or regulations on our business. It is possible that future legislation enacted by Congress or state legislatures, or regulations promulgated by regulatory authorities at the federal or state level, could adversely affect our business. It is also possible that the changes to federal healthcare program reimbursements to providers who purchase our products or use our services may serve as precedent to possible changes in other payors’ reimbursement policies in a manner adverse to us. Similarly, changes in private payor reimbursements could lead to adverse changes in federal healthcare programs, which could have a material adverse effect on our business, financial condition, cash flows, and results of operations.

There can be no assurance that we will be able to successfully address changes in the current regulatory environment. Some of the healthcare laws and regulations applicable to us are subject to limited or evolving interpretations, and a review of our business or operations by a court, law enforcement, or a regulatory authority might result in a determination that could have a material adverse effect on us. 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.

~~Recent economic trends could adversely affect our financial performance.~~

Economic downturns and declines in consumption in the healthcare market may affect the levels of both our sales and profitability. If a downturn in economic conditions occurs, or if there is deterioration in financial markets and major economies, our financial performance could be adversely affected. The tightening of credit in financial markets may adversely affect the ability of our customers and suppliers to obtain financing, which could result in a decrease in, or deferrals or cancellations of, the sale of our products and services. In addition, weakening economic conditions may result in a decline in spending for ART and fertility assistance that could adversely affect our business operations and liquidity. We are unable to predict the likely duration and severity of any disruption in the domestic and global financial markets.

The unauthorized use of certain social media vehicles could result in the improper collection and/or dissemination of personally identifiable information causing brand damage and various legal implications. In addition, negative or inaccurate social media posts or comments about us on any social networking site could damage our brand, reputation, and goodwill.

~~Our common stock is subject to risks arising from restrictions on reliance on Rule 144 by shell companies or former shell companies.~~

Under a SEC rule known as “Rule 144”, a person who has beneficially owned restricted securities of an issuer and who is not an affiliate of that issuer may sell them without registration under the Securities Act provided that certain conditions have been met. 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. The SEC defines a shell company as a company that has no or nominal operations and either (i) no or nominal assets, (ii) assets consisting solely of cash and cash equivalents, or (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets. We are a former shell company.

The SEC has provided an exception to this unavailability if and for as long as the following conditions are met: (a) the issuer of the securities that was formerly a shell company has ceased to be a shell company; (b) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; (c) the issuer of the securities has filed all Exchange Act reports and materials required to be filed, as applicable during the preceding 12 months, other than certain Current Reports on Form 8-K; and (d) at least one (1) year has elapsed form the time the issuer filed current comprehensive disclosure with the SEC reflecting its status as an entity that it is not a shell company.

Because of our prior history as a shell company, stockholders who receive our restricted securities will only be able to sell them pursuant to Rule 144 without registration for only as long as we continue to meet the requirements set forth above. No assurance can be given that we will meet these requirements going forward. Furthermore, any non-registered securities we sell in the future or issue will have limited or no liquidity until and unless such securities are registered with the SEC and/or until we comply with the foregoing requirements.

As a result, it may be harder for us to raise funding through the sale of debt or equity securities unless we agree to register such securities with the SEC, which could require us to deploy additional resources. 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.

~~A portion of the ownership of our common stock is concentrated in a small number of investors, some of whom are affiliated with our board of directors and management.~~

Our management and board of directors own approximately 7.5% of our issued and outstanding shares of common stock. By virtue of such holdings, they have the ability to exercise influence over our business and affairs, including matters requiring approval by our stockholders including but not limited to the following actions:

~~Our directors have the right to authorize the issuance of shares of our preferred stock and additional shares of our common stock.~~

Our directors, within the limitations and restrictions contained in our articles of incorporation and without further action by our shareholders, have the authority to issue shares of preferred stock from time to time in one or more series and to fix the number of shares and the relative conversion and voting rights, and terms of redemption, liquidation preferences and any other preferences, special rights and qualifications of any such series. 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.

~~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.~~

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. These provisions and resultant costs may also discourage us from brining a lawsuit against out directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by our stockholders against our directs or officer even though such actions, if successful, might otherwise benefit us and our stockholders.

~~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 have a trading symbol for our common stock (“INVO”) and our common stock is currently listed on the Nasdaq Capital Market.~~

Our shares of common stock are thinly traded, and as such the price, if traded, may not reflect our value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. The market liquidity will be dependent on, among other things, the perception of our operating business and any steps that our management might take to bring us to the awareness of investors. There can be no assurance given that there will be any awareness generated or, if given, that it will be positive.

Consequently, investors may not be able to liquidate their investment or may be able to liquidate it only at a price that does not reflect the value of the business. If a more active market should develop, the price may be highly volatile. Due to the possibility of our common stock being priced lower than its actual value, many brokerage firms may not be willing to effect transactions in the securities. 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.

~~Our failure to meet the continued listing requirements of the Nasdaq Stock Market could result in a delisting of our common stock.~~

We are required to satisfy the continued Nasdaq listing requirements. If we fail to satisfy the continued listing requirements of the Nasdaq Stock Market, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our common stock. Such a delisting would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. In the event of a delisting, we would take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements.

~~Our common stock may be subject to the~~ “~~penny stock~~” ~~rules of the SEC, which will make the shares of our common stock more difficult to sell.~~

Our shares of common stock are subject to the “penny stock” rules of the Exchange Act. The Exchange Act defines “penny stock” as any equity security that has a market price of less than $5.00 per share, subject to certain restrictions. We anticipate our common stock may continue to be considered a penny stock in the future.

The penny stock rules require broker-dealers to deliver to potential investors a standardized risk disclosure document prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the potential investor current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market value of each penny stock held in the investor’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the potential investor orally or in writing prior to completing the transaction and must be given to the potential investor in writing before or with the investor’s confirmation.

In addition, the penny stock rules require that prior to a transaction the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for shares of our common stock. As long as our shares of common stock are subject to the penny stock rules, the holders of such shares of common stock may find it more difficult to sell their securities.

~~The market for penny stocks has experienced numerous frauds and abuses, which could adversely affect investors in our stock.~~

We believe that the market for penny stocks has suffered from patterns of fraud and abuse. We believe that many of these abuses have occurred with respect to the promotion of low-price stock companies that lacked experienced management, adequate financial resources, an adequate business plan and/or marketable and successful business or product. Because our shares are penny stocks, the share price for our common stock may be adversely affected such frauds and abuses involving other penny stocks.

To date, we have never declared or paid any dividends to our stockholders. Our board of directors does not intend to distribute dividends in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial conditions, operating and capital requirements, and other factors as the board of directors considers relevant. 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.~~

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.

~~We may have difficulty raising the necessary capital to fund operations because of the thin market and market price volatility for our shares of common stock.~~

Throughout 2021, there has been a thin market for our shares, and the market price for our shares has been volatile. In recent years, the securities markets in the U.S. and around the world have experienced a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values or prospects of such companies. For these reasons, we expect our shares of common stock may also be subject to volatility resulting from market forces over which we will have no control. The success of our products and services may be dependent upon our ability to obtain additional financing through debt and equity or other means. The thin market for our shares, and the volatility in the market price for our shares, may adversely affect our ability to raise needed additional capital.

~~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.~~

To satisfy certain financial obligations, we have issued and may continue to issue shares of our common stock and we have incurred and may continue to incur debt, which may be convertible into shares of our common stock. We may attempt to raise capital by selling shares of our common stock, possibly with warrants, which may be issued or exercised at a discount to the market price for our common stock. These actions would result in dilution of the ownership interests of existing shareholders, and may further dilute the common stock book value, and that dilution may be material. 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.

~~We are subject to the reporting requirements of U.S. federal securities laws, which can be expensive.~~

We are a public reporting company and accordingly subject to the information and reporting requirements of the Exchange Act, and other federal securities laws, including compliance with the Sarbanes-Oxley Act of 2002. We are required to prepare and file annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports. Compliance with such reporting requirements is both time-consuming and costly for us. We may need to hire additional financial reporting, internal control, and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures.

In addition, the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules implemented by the SEC and the securities exchanges, require certain corporate governance practices for public companies. Our management and other personnel have devoted and expect to continue to devote a substantial amount of time to public reporting requirements and corporate governance. These rules and regulations have significantly increased our legal and financial compliance costs and made some activities more time-consuming and costly. If these costs are not offset by increased revenues and improved financial performance, our financial condition and results of operations may be materially adversely affected. These rules and regulations also make it more difficult and more expensive for us to obtain director and officer liability insurance in the future. Additionally, we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified personnel to serve on our board of directors or as executive officers.

~~Failure to comply with internal control attestation requirements could lead to loss of public confidence in our financial statements and negatively impact our stock price.~~

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to conduct an annual management assessment of the effectiveness of our internal controls over financial reporting. If we fail to timely develop our internal controls, and management is unable to make this assessment, or, once required, if the independent registered public accounting firm cannot timely attest to this assessment, we could be subject to regulatory sanctions. As a result, a loss of public confidence in our financial controls and the reliability of our financial statements may develop ultimately negatively impacting our stock price and our ability to raise additional capital when and as needed.

We currently do not own any real property and operate from leased facilities. Our principal executive office is located at 5582 Broadcast Court Sarasota, Florida 34240. The lease is for one 5-year term, with an option to extend for one 3-year term. We 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.

The Company is not currently subject to any material legal proceedings; however, it could be subject to legal proceedings and claims from time to time in the ordinary course of its business, or legal proceedings it considered immaterial may in the future become material. Regardless of the outcome, litigation can, among other things, be time consuming and expensive to resolve, and can divert management resources.

~~Item 5. Market for Registrant~~’~~s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~

Trading of our shares of our common stock is on the Nasdaq Capital Market under the symbol “INVO.” Prior to November 12, 2020, our common stock was traded on the OTC QB Venture Market tier of the over-the-counter (“OTC”) market.

~~As of December 31, 2021, and 2020, there were 11,929,147 and 9,639,268 shares of our common stock outstanding, respectively.~~

~~Information required with respect to Equity Compensation Plans in this Item 5 is included in Item 11 on page 33 of this report on Form 10-K.~~

As of December 31, 2021, and 2020, there were approximately 180 and 172 stockholders of record of our common stock, respectively. However, we estimate that we have a significantly greater number of beneficial holders of our common stock because a number of shares are held of record by broker-dealers for their customers in street name.

We have never declared or paid a dividend on our common stock. We 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.

During 2021, we issued 97,500 shares of our common stock to consultants and employees in consideration of services rendered. These shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. We did not receive any proceeds from this issuance.

In November 2021, we issued 30,000 shares of our common stock in consideration for purchasing Effortless IVF with a fair value of $117,600. These shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. We did not receive any proceeds from this issuance.

In December 2021, we issued 78,125 shares of our common stock upon conversion of $250,000 of a convertible promissory note. We did not receive any proceeds upon conversion. We relied on the exemption from registration provided by Section 3(a)(9) and/or Section 4(a)(2) of the Securities Act of 1933, as amended.

In January 2022, the Company issued 94,623 shares of common stock to Paradigm Opportunities Fund, LP (“Paradigm”). The 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 received $315,000 in proceeds from this issuance.

In February 2022, we issued 3,000 shares of common stock to consultants in consideration of services rendered. These shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. We did not receive any cash proceeds from this issuance.

~~Item 7. Management s Discussion and Analysis of Financial Condition and Results of Operations~~

This discussion includes certain forward-looking statements about our business and our expectations, including statements relating to revenues, international revenues, revenue growth rates, gross margin, operating expenses, amortization expense, earnings per share, available cash and operating cash flow. Any such statements are subject to risk that could cause the actual results to vary materially from expectations. For a further discussion of the various risks that may affect our business and expectations, see the section titled “Risk Factors” contained in Item 1A of Part I of this Annual Report on Form 10-K. The risks and uncertainties discussed therein do not reflect the potential future impact of any mergers, acquisitions or dispositions. In addition, any forward-looking statements represent our estimates only as of the day this Annual Report was filed with the SEC and should not be relied upon as representing our estimates as of any subsequent date. 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.

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 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. Our primary mission is to implement new medical technologies aimed at increasing the availability of affordable, high-quality, patient-centered fertility care. 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 natural, intimate and more affordable experience in comparison to other ART treatments. The IVC procedure can deliver comparable results at a lower cost than traditional ~~in vitro~~ ~~fertilization (“IVF”) and is a significantly more effective treatmen~~t than intrauterine insemination (“IUI”). 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), in addition to continuing to sell our technology solution into existing fertility clinics.

Unlike conventional infertility treatments such as 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. This allows for many benefits in the IVC procedure, including:

~~In both current utilization of the INVOcell, and in clinical studies, the IVC procedure has proven to have equivalent pregnancy success and live birth rates as IVF.~~

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. 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.

~~To date, we have completed a series of important steps in the successful development and manufacturing of the INVOcell:~~

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. 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, which is similar to most markets around the world.

~~We believe that the INVOcell, and the IVC procedure it enables, have the following key advantages:~~

~~Improved efficiency providing for greater capacity and improved access to care and geographic availability~~. In many parts of the world, including the U.S., IVF clinics tend to be concentrated in higher population centers and are often capacity constrained in terms of how many patients a center can treat, since volume is limited by the number of capital-intensive incubators available in IVF clinic labs. With the significant number of untreated patients along with the growing interest and demand for services, the industry remains challenged to provide sufficient access to care and to do so at an economical price. We believe INVOcell and the IVC procedure it enables can play a significant role in helping to address these challenges. According to the 2020 CDC Report, there are approximately 449 IVF centers in the U.S. We estimate that by adopting the INVOcell, IVF clinics can increase fertility cycle volume by up to 30% without adding to personnel, space and/or equipment costs. Our own INVO Centers also address capacity constraints by adding to the overall ART cycle capacity and doing so with comparable efficacy to IVF outcomes as well as at a lower per cycle price. Moreover, we believe that we are uniquely positioned to drive more significant growth in fertility treatment capacity in the future by partnering with existing OB/GYN practices. In the U.S., there are an estimated 5,000 OB/GYN offices, many of which offer fertility services (usually limited to consultation and IUI, but not IVF). Since the IVC procedure requires a much smaller lab facility, less equipment and fewer lab personnel (in comparison to conventional IVF), it could potentially be offered as an extended service in an OB/GYN office. With proper training and a lighter lab infrastructure, the INVOcell could expand the business for these physicians and allow them to treat patients that are unable to afford IVF and provide patients with a more readily accessible, convenient, and cost-effective solution. With our three-pronged strategy (IVF clinics, INVO Centers and OB/GYN practices), in addition to lowering costs, we believe INVOcell and the IVC procedure can address our industry’s key challenges, capacity and cost, by their ability to expand and decentralize treatment and increase the number of points of care for patients in need. This powerful combination of lower cost and added capacity has the potential to open up access to care for underserved patients around the world.

~~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.

Our product commercialization efforts are focused on identifying distributors and partners within targeted geographic regions that we believe can best promote, market and sell the INVOcell and support our efforts to expand access to advanced fertility treatment for the large number of underserved infertile people hoping to have a baby. We believe that the IVC procedure is an effective and affordable treatment option that greatly reduces the need for more expensive IVF lab facilities and allows providers to pass on related savings to patients without compromising efficacy. 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. Our primary focus has been on establishing INVO Centers to promote the INVOcell and the IVC procedure, selling the INVOcell directly to U.S. fertility clinics, and developing key international market partnerships around the world.

~~The following table sets forth a list of our current international distribution agreements:~~

~~As part of our commercialization strategy, we entered into a number of joint ventures and partnerships designed to establish new INVO Centers.~~

~~The following table sets forth a list of our current joint venture arrangements:~~

~~The following table sets forth a list of our current partnership arrangements:~~

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”). 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. 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, and initial treatment cycles commenced in September 2021.~~

The Alabama JV is accounted for using the equity method in our financial statements. As of December 31, 2021 we invested $1.7 million in the Alabama JV in the form of a note. For the year ended December 31, 2021, the Alabama JV recorded a net loss of $0.6 million of which we recognized a loss from equity method investment of $0.3 million.

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 Georgia JV opened to patients on September 7, 2021, and commenced initial treatment cycles in November 2021.~~

The results of the Georgia JV are consolidated in our financial statements. As of December 31, 2021, INVO invested $0.5 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 year ended December 31, 2021, the Georgia JV recorded a net loss of $0.4 million. Noncontrolling interest in the Georgia JV was $0. See Note 3 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information on the Georgia JV.

~~The Mexico JV opened to patients on November 1, 2021, and commenced initial treatment cycles beginning in January 2022.~~

The Mexico JV is accounted for using the equity method in our financial statements. As of December 31, 2021, INVO invested $0.1 million in the Mexico JV. For the year ended December 31, 2021, the Mexico JV recorded a net loss of $0.04 million of which we recognized a loss from equity method investment of $0.01 million.

On November 23, 2020, we entered into a joint venture agreement with Ginekaliks Dooel (“Ginekaliks”), a limited liability company incorporated in the Republic of North Macedonia, to establish an exclusive joint venture to (i) commercialize, introduce, promote and market technologies related to the INVOcell and IVC procedure in the Republic of North Macedonia, and (ii) establish an INVO Center. The joint venture will be co-managed and owned 50% by each of INVO and Ginekaliks. As of December 31, 2021, no joint venture entity had been formed.

On January 13, 2020, we entered into a joint venture agreement (the “Medesole Agreement”) with Medesole Healthcare and Trading Private Limited, India (“Medesole”), an Indian corporation that promotes and distributes healthcare technologies, medical equipment and allied services to hospitals, clinics and primary health care centers in India and the Middle East.

Pursuant to the Medesole Agreement, INVO and Medesole formed a joint venture entity incorporated and registered in India, which would operate under the name Medesole INVO Bioscience India Private Limited (the “India JV”). After formation, we would grant to the India JV all required licenses for promoting, marketing and selling our INVOcell® technology in India. INVO and Medesole intended for the India JV to open and operate INVO Centers only in India.

The India JV would be co-managed and owned 50% by each of INVO and Medesole, who would share equally in the expenditures, revenue and profits of the India JV. The Agreement has a term of three years and may be terminated by either party on 180 days’ prior written notice. As of December 31, 2021, no joint venture entity had been formed. On March 29, 2021, INVO terminated the Medesole Agreement pursuant to its terms after mutual agreement with Medesole that Medesole would not be able to fulfil its commitments under the Medesole Agreement in a timely fashion.

During 2021 we believe we made substantial progress toward our commercialization goals. As one of our key objectives for the year, we set out to develop an entirely new commercial pathway for our solutions: opening jointly owned fertility centers focused on offering INVOcell and the IVC procedure to patients. We successfully accomplished this major milestone with the opening of three new centers in the latter part of the year, with the first starting in Birmingham, Alabama, followed by Atlanta, Georgia, and finally in Monterrey, Mexico. All three centers are now fully operational and treating patients. We also made key personnel additions to our operating team to support our key objectives. Our recently added marketing resources are working to enhance our branding and messaging to support both the new INVO Centers as well as our distribution partners around the world. Our dedicated team is looking to aggressively drive awareness of the INVOcell and IVC procedure to help accelerate adoption of and expand fertility care through the utilization of our technology. Going forward, we anticipate opening additional INVO Centers in key domestic and international markets. We believe we have initially identified more than 20 markets in the U.S. alone as excellent potential locations for an INVO Center. We also continue to work toward expanding our distribution efforts to promote and sell into existing fertility clinics. Beginning in 2022, we re-assumed control of the U.S. market distribution efforts with the termination of the Ferring Agreement. We have elected to sell directly ourselves (rather than through a distributor) to the existing, established fertility clinics in the U.S. market and we believe we have added the necessary resources to do so effectively.

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. 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. While the ongoing pandemic may have delayed our progress in some markets, the fertility industry has and continues to expand, and we believe our growing volume of partners (both distributors and JVs) affords us a strong forward-looking outlook. We believe our INVO Center approach adds much needed capacity and affordability and aligns with our key mission to open access to care to the underserved.

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.

Revenue for the years ended December 31, 2021 and 2020 were $4.2 million and $1.0 million, respectively, representing an increase of $3.2 million, or 301% in the year ended December 31, 2021. The increase was due to recognizing the remaining $3.0 million of deferred revenue related to the termination of the Ferring Agreement.

~~Gross profit for the years ended December 31, 2021 and 2020 was $4.0 million and $0.9 million, respectively. Gross margin was 97% and 91% for the years ended December 31, 2021 and 2020, respectively.~~

Selling, general and administrative expenses for the years ended December 31, 2021 and 2020 were $9.0 million and $6.0 million, respectively, of which $2.7 million and $1.8 million, respectively, was for non-cash, stock-based compensation expense. The increase of approximately $2.9 million or 49% was primarily the result of approximately $0.9 million in increased non-cash, stock-based compensation, approximately $0.7 million in increased personnel expense, approximately $0.5 million in increased expenses related to the operations of the consolidated Georgia JV and $0.4 million in legal and startup costs related to new and potential INVO Centers.

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 $0.2 million and $0.4 million, for the years ended December 31, 2021 and 2020, respectively.

Loss from equity investments for the years ended December 31, 2021 and 2020, were $0.3 million and $0, respectively. The increase in loss is due to the investment in Alabama JV becoming operational in the third quarter of 2021. The clinic was only open for part of the period and was still in the early ramp-up phase.

Other income for the years ended December 31, 2021 and 2020, were $0.2 million and $0, respectively. The increase of $0.2 million was the result of the extinguishment of our Paycheck Protection Program note and related interest being forgiven.

Interest expense and financing fees were for the years ended December 31, 2021 and 2020 were $1.3 million and $2.8 million, respectively. The decrease of approximately $1.5 million, or approximately 55%, was primarily due to an decrease in amortization of discount, debt issuance cost and interest on the 2020 Convertible Notes (see Note 10 of the Notes to Consolidated Financial Statements) and was a non-cash related expense.

As of December 31, 2021, we had unused federal net operating loss carryforwards (“NOLs”) of $25.8 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 otherwise payable.

~~We recorded a valuation allowance against our deferred tax assets at December 31, 2021 and 2020 totaling $6.8 and $6.4 million, respectively.~~

For the years ending December 31, 2021, and 2020, we had net losses of approximately $6.7 million and $8.3 million, respectively. The increase in net loss was due to increased operating expenses and interest expense, partially offset by an increase in product revenue. Approximately $4.2 million of the net loss was related to non-cash expenses for the year ended December 31, 2021, compared to $4.4 million for the year ended December 31, 2020. The Company had working capital of approximately $5.1 million as of December 31, 2021, compared to approximately $8.3 million as of December 31, 2020. As of December 31, 2021, the Company’s stockholder’s equity was approximately $7.3 million compared to approximately $5.7 million as of December 31, 2020. Cash used in operation for the year of 2021 was approximately $6.0 million, compared to approximately $4.8 million for the year of 2020.

During 2020, we raised approximately $13.8 million in debt and equity financings. During 2021, we received proceeds of approximately $3.7 million for the sale of common stock, we converted approximately $1.5 million of outstanding debt to equity and received approximately $0.4 million of proceeds from unit purchase option and warrant exercises. Our current plan includes opening additional INVO Centers over the next 12 months. Until we can generate a sufficient amount of cash from operations and to the extent additional funds are necessary to meet our longer-term liquidity needs and to execute our business strategy, we may need to raise additional funding, as we have done in the past, by way of debt and/or equity financings. Such additional funding may not be available on reasonable terms, if at all.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly scale back our operations or delay, scale back or discontinue development of our products. If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing stockholders and increased fixed payment obligations, and these securities may have rights senior to those of our common stock. If we incur indebtedness, we could become subject to covenants that would restrict our operations, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.

~~The following table shows a summary of our cash flows for the year ended December 31:~~

As of December 30, 2021, we had approximately $5.7 million in cash compared to approximately $10.1 million as of December 31, 2020. Net cash used in operating activities in 2021, was approximately $6.0 million, compared to approximately $4.8 million for the same period in 2020. The increase in net cash used in operations was primarily due to the increase in operating expenses.

During the year ended December 31, 2021, cash used in investing activities of approximately $2.2 million was primarily related to payments to acquire equipment for and the necessary investments in our INVO Center joint ventures. During the year ended December 31, 2020, cash used in investing activities of approximately $0.2 million was related to new molds and trademarks.

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. During the year ended December 31, 2020, cash provided by financing activities of approximately $13.8 million related to the proceeds from the 2020 Convertible Notes and our underwritten public offering.

The discussion and analysis of our financial condition presented in this section is based upon our audited consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. During the preparation of the financial statements, we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate, based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, our results, which allows us to form a basis for making judgments on the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates based on variance with our assumptions and conditions. A summary of significant accounting policies is included below. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

See Note 1 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for a summary of significant accounting policies and the effect on our financial statements.

~~We account for stock-based compensation under the provisions of ASC 718~~~~-10 Share-Based Payment.~~ This statement requires us to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the period in which the employee is required to provide service or performance goals in exchange for the award, which is usually immediate but sometimes over a vesting period. Warrants granted to non-employees are recorded as an expense over the requisite service period based on the grant date and the estimated fair value of the grant, which is determined using the Black-Scholes option pricing model.

We recognize revenue on arrangements in accordance with ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services ASC 606 requires companies to assess their contracts to determine the timing and amount of revenue to recognize under the new revenue standard. The model has a five-step approach:

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”). A VIE must be consolidated by its primary beneficiary when, along with its affiliates and agents, the primary beneficiary has both: (i) the power to direct the activities that most significantly impact the VIE’s economic performance; and (ii) the obligation to absorb losses or the right to receive the benefits of the VIE that could potentially be significant to the VIE. We reconsider whether an entity is still a VIE only upon certain triggering events and continually assesses its consolidated VIEs to determine if it continues to be the primary beneficiary.

Investments in unconsolidated affiliates in which we exert significant influence but do not control or otherwise consolidate are accounted for using the equity method. Equity method investments are initially recorded at cost. These investments are included in investment in joint ventures in the accompanying consolidated balance sheets. Our share of the profits and losses from these investments is reported in loss from equity method investment in the accompanying consolidated statements of operations. 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.

~~We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.~~

~~We will be exposed to risk from changes in foreign currency exchange rates related to our foreign joint ventures. Our principal exchange rate exposure relates to the Mexican Peso.~~

We have audited the accompanying consolidated balance sheets of INVO Bioscience, Inc. (the Company) as of December 31, ~~2021~~2023 and ~~2020,~~2022, and the related consolidated statements of operations, stockholders’ equity ~~(deficiency)~~(deficit), and cash flows for each of the years in the two-year period ended December 31, ~~2021,~~2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2021~~2023 and ~~2020,~~2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, ~~2021,~~2023, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered net losses from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are discussed in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

The critical audit ~~matters~~matter communicated below ~~are matters~~is a matter arising from the current period audit of the consolidated financial statements that ~~were~~was communicated or required to be communicated to the audit committee and that: (1) ~~relate~~relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit ~~matters~~matter below, providing a separate ~~opinions~~opinion on the critical audit ~~matters~~matter or on the accounts or disclosures to which ~~they relate.~~it relates.

As discussed in Note 1 to the consolidated financial statements, the Company ~~previously recorded deferred~~recognizes revenue on arrangements in accordance with ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 is to recognize revenues ~~related~~when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASC 606 requires companies to assess their contracts to determine the timing and amount of revenue to recognize under the revenue standard. The model has a ~~U.S. Distribution Agreement~~five-step approach:

Identify the contract with ~~Ferring International Center, S.A (“Ferring”). The note discloses that~~ the ~~Company received a 90-day notice from Ferring on November 2, 2021, at which time~~customer.

Identify the ~~Company recognized~~performance obligations in the ~~remaining balance included~~contract.

Allocate the total transaction price to each performance obligation in ~~deferred~~the contract.

Recognize as revenue ~~related to the distribution agreement.~~when (or as) each performance obligation is satisfied.

Auditing management’s evaluation of ~~the distribution agreement and termination notice~~revenue from contracts with ~~Ferring~~customers involves significant judgment, given the fact that the agreements require management’s evaluation, identification of the ~~recognition~~contract and the performance obligation, the total transaction price and the allocation of ~~revenues over-time or at a point in time.~~the total transaction price, the determination of when the performance obligation is satisfied, and consideration that revenue is an inherent fraud risk.

To evaluate the appropriateness and accuracy of the assessment by management, we evaluated management’s assessment in relationship to the relevant ~~agreements and their application of the guidance outlined in ASC 606-10-25.~~agreements.

As discussed in Note 1 & 3 to the financial statements, the Company has material investments in consolidated and unconsolidated entities. The Company evaluated the need to consolidate as a VIE or equity investment under the provisions of ASC 810 and ASC 323, respectively.

Auditing management’s evaluation of the need to consolidate the entities associated with the investments involves significant judgment, given the fact that the agreements require management’s evaluation ownership percentages, influence, control and whether or not the Company is the primary beneficiary.

To evaluate the appropriateness and accuracy of the assessment by management, we evaluated management’s assessment in relationship to their application of the guidance outlined in ASC 810 and ASC 323.

~~See~~The accompanying notes toare an integral part of these consolidated financial statements.

	2021			2020
	For the Twelve Months						For the Years Ended
	Ended December 31,						December 31,
	2021			2020			2023			2022
Cash flows from operating activities:
Net loss	$	(6,654,940	)	$	(8,347,316	)	$	(8,034,612	)	$	(10,892,511	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash stock compensation issued for services		804,124			150,862			287,450			123,211
Non-cash stock compensation issued to directors and employees		360,153			465,140
Non-cash stock compensation issued to directors and/or employees								56,936			484,807
Fair value of stock options issued to employees		1,543,912			1,140,989			1,049,109			1,616,401
Non-cash compensation for services								180,000			120,000
Amortization of discount on notes payable		1,188,310			2,494,236			720,128			52,644
Debt conversion expense		-			131,984
Amortization of leasehold right of use asset		138,322			22,564
Gain on extinguishment of debt		(159,126	)		-
Loss on impairment of intangible assets								-			132,227
Loss from equity method investment		327,542			-			60,270			200,558
Impairment from equity method joint venture								89,794			-
Loss from debt extinguishment								163,278			-
Depreciation and amortization		27,760			11,917			200,894			77,301
Changes in assets and liabilities:
Accounts receivable		(28,771	)		(14,141	)		(63,401	)		(26,679	)
Inventory		(22,401	)		(163,985	)		(905	)		24,171
Prepaid expenses and other current assets		(124,811	)		38,210			(432,093	)		92,550
Accounts payable and accrued expenses		114,495			(42,603	)		924,678			904,060
Accrued compensation		54,363			134,309			(224,011	)		364,573
Deferred revenue		(3,565,529	)		(714,286	)		288,893			113,976
Other current liabilities								(226,568	)		-
Leasehold liability		(53,846	)		(21,518	)		85,191			7,026
Accrued interest		20,921			(61,696	)		121,864			1,556
Income taxes payable		(392	)		150
Deferred tax liabilities		-			36			(1,949	)		810
Net cash used in operating activities		(6,029,914	)		(4,775,148	)		(4,755,054	)		(6,603,319	)
Cash from investing activities:
Cash used in investing activities:
Payments to acquire property, plant, and equipment		(415,710	)		(49,261	)		(444,722	)		(10,785	)
Payments to acquire intangible assets		(38,939	)		(39,669	)		-			(1,943	)
Other assets		-			(240)
Investment in joint ventures		(1,698,863	)		(98,084	)		(8,447	)		(68,489	)
Payment for acquisitions								(2,041,710	)		-
Net cash used in investing activities		(2,153,512	)		(187,254	)		(2,494,879	)		(81,217	)
Cash from financing activities:
Proceeds from the sale of notes payable		-			2,998,905
Proceeds from notes payable								3,060,250			100,000
Proceeds from notes payable – related parties								100,000			700,000
Proceeds from the sale of common stock, net of offering costs		3,650,697			11,475,052			5,701,948			289,800
Proceeds from notes payable		-			157,620
Proceeds from warrant exercise		123,562			-			23,051			-
Proceeds from unit purchase option exercise		246,278			-
Principal payment on notes payable – related parties		-			(40,000	)
Principal payment on notes payable		(250,000	)		(770,000	)
Proceeds from option exercise								2,375			-
Principal payments on notes payable								(1,495,402	)		-
Net cash provided by financing activities		3,770,537			13,821,577			7,392,222			1,089,800
(Decrease) increase in cash and cash equivalents		(4,412,889	)		8,859,175
Increase in cash and cash equivalents								142,289			(5,594,736	)
Cash and cash equivalents at beginning of period		10,097,760			1,238,585			90,135			5,684,871
Cash and cash equivalents at end of period	$	5,684,871		$	10,097,760		$	232,424		$	90,135

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	52,603		$	253,392		$	9,640		$	-
Taxes	$	3,307		$	1,062		$	-		$	800
Noncash activities:
Common stock issued upon note payable and accrued interest conversion	$	1,493,788		$	1,451,824
Cashless exercise of warrants	$	9		$	-
Cashless exercise of unit purchase options	$	8		$	-
Fair value of warrants issued with debt							$	490,668		$	90,000
Fair value of common stock issued with debt							$	56,314		$	-
Fair value of shares issued for settlement of liability							$	65,198		$	-
Initial ROU asset and lease liability	$	2,096,055		$	-		$	4,269,881		$	-
Fair value of options issued for debt	$	-		$	524,452
Fair value of warrants issued with debt	$	-		$	524,452
Fair value of warrants issued related to service providers	$	-		$	8,660
Beneficial conversion feature on convertible notes	$	-		$	2,062,586
Fixed assets transferred to investment in joint venture	$	20,529		$	-
Fair value of Series B preferred shares issued in exchange for shares of NAYA common stock							$	2,172,000		$	-

~~See~~The accompanying notes toare an integral part of these consolidated financial statements.

INVO Bioscience, Inc. (“INVO” or the “Company”) is a ~~commercial-stage~~healthcare services fertility company dedicated to expanding the assisted reproductive technology (“ART”) marketplace by making fertility care accessible and inclusive to people around the world. The Company’s ~~flagship product~~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), the acquisition of US-based, profitable in vitro fertilization (“IVF”) clinics (with one such clinic acquired in August 2023) and the sale and distribution of our technology solution into existing fertility clinics. The Company’s 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. ~~The Company’s primary mission is to implement new medical technologies aimed at increasing the availability of affordable, high-quality, patient-centered fertility care.~~ 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 natural and intimate experience in comparison to other ART treatments. The IVC procedure can deliver comparable results at a lower cost than traditional ~~in vitro~~ fertilization (“IVF”) and is a significantly more effective treatment than intrauterine insemination (“IUI”). The Company’s commercialization strategy involves the opening of dedicated “INVO Centers” focused on offering the INVOcell and IVC procedure (with three centers in North America now operational), as well as selling its technology solution into existing fertility clinics.

The Company formed on January 5, 2007, under the laws of the Commonwealth of Massachusetts under the name Bio X Cell, Inc. to acquire the assets of Medelle Corporation (“Medelle”). Dr. Claude Ranoux purchased all of the assets of Medelle, and then he contributed those assets, including four patents relating to the INVOcell technology, to Bio X Cell, Inc. upon its formation in January 2007.

The accompanying consolidated financial statements present on a consolidated basis the accounts of the Company and its wholly owned subsidiaries and controlled affiliates. The Company presents noncontrolling interest within the equity section of its consolidated balance sheets and the amount of consolidated net income (loss) that is attributable to the Company and to the noncontrolling interest in its consolidated statement of operations. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company uses the equity method of accounting when it owns an interest in an entity whereby it can exert significant influence over but cannot control the entity’s operations.

The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

The Company considers events or transactions that have occurred after the consolidated balance sheet date of December 31, ~~2021,~~2023, but prior to the filing of the consolidated financial statements with the SEC in this Annual Report on Form 10-K, to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure, as applicable. Subsequent events have been evaluated through the date of the filing of this Annual Report on Form 10-K.

Certain amounts in the consolidated financial statements for the prior year have been reclassified to conform to the current year presentation. These reclassifications had no impact on net earnings, financial position, or cash flows.

The Company operates in 1one segment and therefore segment information is not presented.

The Company accounts for all business acquisitions at fair value and expenses acquisition costs as they are incurred. Any identifiable assets acquired and liabilities assumed are recognized and measured at their respective fair values on the acquisition date. If information about facts and circumstances existing as of the acquisition date is incomplete at the end of the reporting period in which a business acquisition occurs, the Company will report provisional amounts for the items for which the accounting is incomplete. The measurement period ends once the Company receives sufficient information to finalize the fair values; however, the period will not exceed one year from the acquisition date. Any adjustments to provisional amounts that are identified during the measurement period are recognized in the reporting period in which the adjustment amounts are determined.

The Company’s consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and variable interest entities (“VIE”), where the Company is the primary beneficiary under the provisions of ASC 810, Consolidation (“ASC 810”). A VIE must be consolidated by its primary beneficiary when, along with its affiliates and agents, the primary beneficiary has both: (i) the power to direct the activities that most significantly impact the VIE’s economic performance; and (ii) the obligation to absorb losses or the right to receive the benefits of the VIE that could potentially be significant to the VIE. The Company reconsiders whether an entity is still a VIE only upon certain triggering events and continually assesses its consolidated VIEs to determine if it continues to be the primary beneficiary. See “Note 3 – Variable Interest Entities” for additional information on the Company’s VIEs.

Investments in unconsolidated affiliates, in which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method. Equity method investments are initially recorded at cost. These investments are included in investment in joint ventures in the accompanying consolidated balance sheets. The Company’s share of the profits and losses from these investments is reported in loss from equity method joint venture in the accompanying consolidated statements of operations. The Company 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.

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.

For financial statement presentation purposes, the Company considers time deposits, certificates of deposit and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. At times, cash and cash equivalents balances exceed amounts insured by the Federal Deposit Insurance Corporation.

Inventories consist of raw materials, work in process and finished goods and are stated at the lower of cost or net realizable value, using the first-in, first-out method as a cost flow method.

The Company records property and equipment at cost. Property and equipment is depreciated using the straight-line method over the estimated economic lives of the assets, which are from 3 to 10 years. The Company capitalizes the expenditures for major renewals and improvements that extend the useful lives of property and equipment. Expenditures for maintenance and repairs are charged to expense as incurred. The Company reviews the carrying value of long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ~~Recoverability~~The recoverability of long-lived assets is measured by a comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.

Long-lived assets and certain identifiable assets related to those assets are periodically reviewed for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the non-discounted future cash flows of the asset are less than their carrying amount, their carrying amounts are reduced to the fair value and an impairment loss recognized. There was 0no impairment recorded during the ~~years~~year ended December 31, ~~2021,~~2023, and ~~2020.~~an impairment of $132,227 recorded during the year ended December 31, 2022.

ASC 825-10-50, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments.

Effective January 1, 2008, the Company adopted ASC 820-10, “Fair Value Measurements”, which provides a framework for measuring fair value under GAAP. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company is subject to income taxes in the United States and its domestic tax liabilities are subject to the allocation of expenses in multiple state jurisdictions. The Company uses the asset and liability method to account for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The recoverability of deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more-likely-than-not that a deferred tax asset will be recovered, a valuation allowance is established.

~~The Company operates in one segment and therefore segment information is not presented.~~

Cash includes amounts deposited in financial institutions in excess of insurable Federal Deposit Insurance Corporation (“FDIC”) limits. As of December 31, ~~2021,~~2023, the Company ~~had~~did not have cash balances in excess of FDIC limits.

The Company recognizes revenue on arrangements in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services ASC 606 requires companies to assess their contracts to determine the timing and amount of revenue to recognize under the new revenue standard. The model has a five-step approach:

Revenue generated from the sale of INVOcell is typically recognized at the time the product is shipped, at which time the title passes to the customer, and there are no further performance obligations.

Revenue generated from clinical and lab services related at the Company’s affiliated INVO Centers is typically recognized at the time the service is performed.

On November 12, 2018, the Company entered into a U.S. Distribution Agreement (the “Ferring Agreement”) with Ferring International Center S.A. (“Ferring”), pursuant to which it granted Ferring an exclusive license in the United States market only, with rights to sublicense under patents related to our proprietary intravaginal culture device (INVOcell), together with the retention device and any other applicable accessories (collectively, the “Licensed Product”) to market, promote, distribute and sell the Licensed Product with respect to all therapeutic, prophylactic and diagnostic uses of medical devices or pharmaceutical products involving reproductive technology (including fertility treatment) in humans.

On November 2, 2021, Ferring notified the Company of its intention to terminate the Ferring Agreement, which requires 90-days prior written notice. Accordingly, the Ferring Agreement officially terminated on January 31, 2022.

The Ferring license was deemed to be a functional license that provides a customer with a “right to access” to the Company’s intellectual property during the subscription period and accordingly, under ASC 606-10-55-60 revenue is recognized over a period of time, which is generally the subscription period. The initial upfront payment of $~~5,000,000~~ ~~which was received upon the signing of the agreement was being recognized as income over the~~ 7~~-year term.~~

~~As of December 31, 2021, the Company had~~ no deferred revenue related to the Ferring Agreement as it was recognized in the fourth quarter of fiscal year 2021 in relation to the contract termination. Per ASC 606-10-55-48 the likelihood of Ferring exercising its rights became remote at the time notice of termination was received so INVO recognized the full remaining amount of the deferred revenue.

The Company accounts for stock-based compensation under the provisions of Accounting Standards Codification (“ASC”) subtopic 718-10, Compensation (“ASC 718-10”). This statement requires the Company to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the period in which the employee is required to provide service or based on performance goals in exchange for the award, which is usually the vesting period.

Basic loss per share calculations are computed by dividing net loss ~~attributable to the Company’s common shareholders~~ by the weighted-average number of common shares outstanding. Diluted earnings per share are computed similar to basic earnings per share except that the denominator is increased to include potentially dilutive securities. The Company’s diluted loss per share is the same as the basic loss per share for the years ended December 31, ~~2021,~~2023, and ~~2020,~~2022, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.

	2021			2020			2023			2022
	Year Ended December 31,						Year Ended December 31,
	2021			2020			2023			2022
Net loss (numerator)	$	(6,654,940	)	$	(8,347,316	)	$	(8,034,612	)	$	(10,892,511	)
Basic and diluted weighted-average number of common shares outstanding (denominator)		10,632,413			5,489,738			1,565,951			606,130
Basic and diluted net loss per common share		(0.63	)		(1.52	)		(5.13	)		(17.97	)

The Company has excluded the following dilutive securities from the calculation of fully diluted shares outstanding because the result would have been anti-dilutive:

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

	2021		2020		2023		2022
	As of December 31,				As of December 31,
	2021		2020		2023		2022
Options		1,055,894		594,114		106,753		64,850
Convertible notes and interest		-		536,302		42,416		-
Convertible preferred shares						1,200,000		-
Unit purchase options and warrants		260,165		613,996		3,493,269		30,508
Total		1,316,059		1,744,412		4,842,438		95,358

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements, and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations.

Historically, the Company has funded its cash and liquidity needs through ~~operating cash flow,~~revenue collection, equity financings, notes, and convertible notes. For the years ended December 31, ~~2021~~2023 and ~~2020,~~2022, the Company incurred a net loss of approximately $~~6.7~~ 8.0million and $~~8.3~~ 10.9million, respectively, and has an accumulated deficit of approximately $~~38.9~~57.8 million as of December 31, ~~2021.~~2023. Approximately $~~4.2~~ 2.8million of the net loss was related to non-cash expenses for the year ended December 31, ~~2021,~~2023, compared to $~~4.4~~ 3.0million for the year ended December 31, ~~2020.~~2022.

The Company has been dependent on raising capital ~~from~~through debt and equity financings to meet its needs for cash ~~flow~~ used in operating and investing activities. During ~~2020, the Company raised approximately $13.8~~ ~~million in debt and equity financings. During 2021,~~2022, the Company received proceeds of $0.8 million from demand notes and net proceeds of approximately $~~3.7~~0.3 million for the sale of ~~stock, converted~~its common stock. During 2023, the Company received proceeds of $3.2 million from notes and net proceeds of approximately $~~1.5~~5.7 million for the sale of ~~outstanding debt to equity and received approximately $0.4~~ ~~million of proceeds from unit purchase option and warrant exercises. The Company’s current plan includes opening additional INVO Centers over~~its common stock. Over the next 12 ~~months.~~months, the Company’s plan includes growing the Wisconsin Fertility Institute and pursuing additional IVF clinic acquisitions. Until the Company can generate ~~a sufficient amount of~~positive cash from operations, ~~and~~it will need to ~~the extent~~raise additional ~~funds are necessary~~funding to meet ~~our longer-term~~its liquidity needs and to execute ~~our~~its business ~~strategy, it may need to raise additional funding, as it has done~~strategy. As in the past, ~~by way of~~the Company will seek debt and/or equity ~~financings. Such additional funding~~financing, which may not be available on reasonable terms, if at all.

Although the Company’s audited consolidated financial statements for the year ended December 31, ~~2021~~2023 were prepared under the assumption that it would continue operations as a going concern, the report of the Company’s independent registered public accounting firm that accompanies the Company’s consolidated financial statements for the year ended December 31, ~~2021~~2023 contains a going concern qualification in which such firm expressed substantial doubt about the Company’s ability to continue as a going concern, based on the consolidated financial statements at that time. Specifically, as noted above, the Company has incurred significant operating losses and the Company expects to continue to incur significant expenses and operating losses as it continues to ramp up the commercialization of INVOcell and develop new INVO Centers. These prior losses and expected future losses have had, and will continue to have, an adverse effect on the Company’s financial condition. If the Company cannot continue as a going concern, its stockholders would likely lose most or all of their investment in the Company.

On August 10, 2023, INVO, through Wood Violet Fertility LLC, a Delaware limited liability company (“Buyer”) and wholly owned subsidiary of INVO Centers LLC (“INVO CTR”), a Delaware company wholly-owned by INVO, consummated its acquisition of the Wisconsin Fertility Institute (“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. 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.

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”). 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. The Buyer and WFRSA entered into a management services agreement pursuant to which WFRSA outsourced all its non-medical activities to the Buyer.

The Company’s consolidated financial statements for the year ended December 31, 2023 include WFI’s results of operations. For the year ended December 31, 2023, WFI’s results of operations are included from the acquisition date of August 10, 2023 through December 31, 2023. The Company’s consolidated financial statements reflect the preliminary purchase accounting adjustments in accordance with ASC 805 “Business Combinations”, whereby the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date.

The following unaudited pro forma consolidated results of operations for the years ended December 31, 2023 and 2022 assume the acquisition was completed on January 1, 2022:

Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at the beginning of the periods presented and is not intended to be a projection of future results. The share and per share data have been retroactively reflected for the acquisition.

As of December 31, 2023, the Company has $259,407 in undeposited funds held in reserve that it intends to use towards the Holdback amount once it becomes due.

On June 28, 2021, INVO ~~CTR~~Centers LLC, a Delaware limited liability company (“INVO CTR”) entered into a limited liability company operating 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.

In consideration for INVO’s commitment to contribute up to $800,000 within the 24-month period following the execution of the Bloom Agreement to support the start-up operations of the Georgia JV, the Georgia JV issued 800 of its units to INVO CTR and in consideration for Bloom’s commitment to contribute physician services having an anticipated value of up to $1,200,000 over the course of a 24-month vesting period, the Georgia JV issued 1,200 of its units to Bloom.

The responsibilities of Bloom include providing all medical services required for the operation of the Atlanta Clinic. The responsibilities of INVO CTR include providing certain funding to the Georgia JV, lab services quality management, and providing access to and being the exclusive provider of the INVOcell to the Georgia JV. INVO CTR ~~will~~ also ~~perform~~performs all required, industry specific compliance and accreditation functions, and product documentation for product registration.

The Bloom Agreement provides Bloom with a “profits interest” in the Georgia JV and, in connection with such profits interest, states that profits and losses be allocated to its members based on a hypothetical liquidation of the Georgia JV. In such a scenario, liquidation proceeds would be distributed in the following order: (a) to INVO CTR until the difference between its capital contributions and distributions (the “Hurdle Amount”) equals ~~$0;~~$0; (b) to Bloom until its distributions equal 150% of the liquidation amounts distributed to INVO CTR (a “catch-up” to rebalance the distributions between members); and (c) thereafter on a pro rata basis. The Georgia JV had no assets or liabilities at the time the units were issued, and, as of December 31, ~~2021,~~2023, INVO CTR had made capital contributions greater than the net loss of the Georgia JV. As such, the entire net loss was allocated to INVO CTR, and no loss was allocated to the noncontrolling interest of Bloom.

The Georgia JV opened to patients on September 7, ~~2021, and commenced initial treatment cycles in November~~ 2021.

The Company determined the Georgia JV is a VIE, and that the Company is its primary beneficiary because the Company has an obligation to absorb losses that are potentially significant and the Company controls the majority of the activities that impact the Georgia JV’s economic performance, specifically control of the INVOcell and lab services quality management. As a result, the Company consolidated the Georgia JV’s results with its own. As of December 31, ~~2021,~~2023, the Company invested $~~0.5~~ 0.9million in the Georgia JV in the form of capital contributions as well as $0.5million in the form of a note. For the ~~year~~years ended December 31, ~~2021,~~2023 and 2022, the Georgia JV recorded a net ~~loss~~losses of $~~0.4~~ 0.2 million and $0.6~~million.~~ million, respectively. Noncontrolling interest in the Georgia JV was $0.

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. The name of the joint venture entity is HRCFG INVO, LLC (the “Alabama JV”). The Company also provides certain funding to the Alabama JV. Each party owns 50% of the Alabama JV.

The Alabama JV opened to patients on August 9, ~~2021, and initial treatment cycles commenced in September~~ 2021.

The Company determined the Alabama JV is a VIE, and that there is no primary beneficiary. As a result, the Company ~~will use~~uses the equity method to account for its interest in the Alabama JV. As of December 31, ~~2021,~~2023, the Company invested $~~1.7~~ 1.4million in the Alabama JV in the form of a note. For the ~~year~~years ended December 31, ~~2021,~~2023 and 2022, the Alabama JV recorded a net ~~loss~~losses of $~~0.6~~ 0.03 million and $0.3million, respectively, of which the Company recognized ~~a loss~~losses from equity method ~~investment~~investments of $~~0.3~~ 0.02 million and $0.2~~million.~~ million, respectively.

On September 24, 2020, INVO CTR entered into a Pre-Incorporation and Shareholders Agreement with Francisco Arredondo, MD PLLC (“Arredondo”) and Security Health LLC, a Texas limited liability company (“Ramirez”, and together with INVO CTR and Arredondo, the “Shareholders”) under which the Shareholders will commercialize the IVC procedure and offer related medical treatments in Mexico. Each party owns one-third of the Mexican incorporated company, Positib Fertility, S.A. de C.V. (the “Mexico JV”).

The Mexico JV opened to patients on November 1, ~~2021, and commenced initial treatment cycles beginning in January 2022.~~2021.

The Company determined the Mexico JV is a VIE, and that there is no primary beneficiary. As a result, the Company ~~will use~~uses the equity method to account for its interest in the Mexico JV. As of December 31, ~~2021,~~2023, the Company invested $0.1 million in the Mexico JV. For the ~~year~~years ended December 31, ~~2021,~~2023 and 2022, the Mexico JV recorded a net ~~loss~~losses of $~~0.04~~ 0.1 million and $0.1million, respectively, of which the Company recognized a loss from equity method ~~investment~~investments of $~~0.01~~ 0.04 million and $0.05 million, respectively. As of December 31, 2023 the Company determined that this investment is impaired and recognized an impairment of $0.09million.

Schedule of Earnings from Investments in Unconsolidated Variable Interest Entities

The following tables summarize the combined unaudited financial information of our investments in unconsolidated VIEs:

Schedule of Financial Information of Investments in Unconsolidated Variable Interest Entities

	2021			2020		2023			2022
	Year Ended December 31,					Year Ended December 31,
	2021			2020		2023			2022
Statements of operations:
Operating revenue	$	151,672			-	$	1,484,359			1,071,851
Operating expenses		(821,705	)		-		(1,648,890	)		(1,565,558	)
Net loss	$	(670,033	)		-	$	(164,531	)		(493,707	)

	December 31, 2021			December 31, 2020		December 31, 2023			December 31, 2022
Balance sheets:
Current assets	$	456,967			-	$	288,369			267,502
Long-term assets		1,302,067			-		1,026,873			1,094,490
Current liabilities		(404,155	)		-		(510,091	)		(396,619	)
Long-term liabilities		(142,321	)		-		(123,060	)		(107,374	)
Net assets	$	1,212,558			-	$	682,091			857,999

The Company sells the INVOcell to its consolidated and unconsolidated VIEs and anticipates continuing to do so in the ordinary course of business. All intercompany transactions with consolidated entities are eliminated in the Company’s consolidated financial statements. Per ASC 323-10-35-8 the Company eliminates any sales to an unconsolidated VIE for INVOcell inventory that the VIE still has remaining on the books at period end.

\	2021		2020
					2023		2022
	Year Ended December 31,				Year Ended December 31,
	2021		2020		2023		2022
Bloom Invo, LLC
INVOcell revenue	$	21,600		-	$	24,000		13,500
Unconsolidated VIEs
INVOcell revenue	$	16,310		-	$	6,315		30,000

	December 31,2021		December 31, 2020		December 31, 2023		December 31, 2022
Bloom Invo, LLC
Accounts receivable	$	21,600		-	$	31,500		13,500
Notes payable		453,406		-		482,656		468,031
Unconsolidated VIEs
Accounts receivable	$	16,310		-	$	15,000		46,310

	December 31, 2021		December 31, 2020		December 31, 2023		December 31, 2022
Raw materials	$	67,605	$	72,022	$	53,479	$	68,723
Work in process		-		29,645
Finished goods		220,168		163,705		211,028		194,879
Total inventory	$	287,773	$	265,372	$	264,507	$	263,602

The estimated useful lives and accumulated depreciation for equipment are as follows as of December 31, ~~2021,~~2023, and December 31, ~~2020:~~2022:

	December 31, 2021			December 31, 2020			December 31, 2023			December 31, 2022
Manufacturing equipment	$	132,513		$	132,513		$	132,513		$	132,513
Medical equipment		275,423			49,261			303,943			283,065
Office equipment		74,891			2,689			85,404			77,601
Leasehold improvements		96,817			-			538,151			96,817
Property, plant and equipment, gross								538,151			96,817
Less: accumulated depreciation		(78,208	)		(52,257	)		(233,593	)		(153,267	)
Total equipment, net	$	501,436		$	132,206		$	826,418		$	436,729

During each of the years ended December 31, ~~2021,~~2023, and ~~2020,~~2022, the Company recorded depreciation expense of $~~25,952~~80,325 and $~~10,110~~75,492, respectively.

The Company capitalizes the initial expense related to establishing patents by country and then amortizes the expense over the life of the patent, typically 20 years. It then expenses annual filing fees to maintain the patents. The Company regularly reviews the value of its patents in the marketplace in proportion to the expense it must spend to maintain the patent. The Company fully impaired its patents as of December 31, 2022.

During the years ended December 31, ~~2021,~~2023, and ~~2020,~~2022, the Company recorded amortization expenses related to patents of $~~1,809~~0 and $~~1,807~~1,809, respectively.

The trademarks have an indefinite life and therefore are not amortized. Trademarks are periodically reviewed for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. The ~~trademark~~Company fully impaired its trademarks related to the INVO name as of December 31, 2022.

As part of the acquisition of Wisconsin Fertility Institute, that closed on August 10, 2023, the Company acquired tradename valued at $253,000, noncompetition agreements valued at $3,961,000 and goodwill of $5,878,986 which includes assembled workforce valued at $34,000. The tradename was deemed to have a useful life of 10 years. The noncompetition agreements were deemed to have a useful life of 5 years.

Goodwill has an indefinite useful life and is therefore not amortized.The Company reviewed and found no indicators for impairment of the intangible assets ~~were created in 2019, and no material adverse changes have occurred since their creation.~~related to the acquisition of Wisconsin Fertility Institute as of December 31, 2023.

The Company has various operating lease agreements in place for its office and joint ventures. Per FASB’s ASU 2016-02, Leases Topic 842 (“ASU 2016-02”), effective January 1, 2019, the Company is required to report a right-of-use asset and corresponding liability to report the present value of the total lease payments, with appropriate interest calculation. Per the terms of ASU ~~201-02,~~2016-02, the Company can use its implicit interest rate, if known, or applicable federal rate otherwise. Since the Company’s implicit interest rate was not readily determinable, the Company utilized the applicable federal rate, as of the commencement of the lease. Lease renewal options included in any lease are considered in the lease term if it is reasonably certain the Company will exercise the option to renew. The Company’s operating lease agreements do not contain any material restrictive covenants.

As of December 31, ~~2021,~~2023, the Company’s lease components included in the consolidated balance sheet were as follows:

Lease component	Balance sheet classification	December 31, 2021		Balance sheet classification	December 31, 2023
Assets
ROU assets - operating lease	Other assets	$	2,037,052	Other assets	$	5,740,929
Total ROU assets		$	2,037,052		$	5,740,929

Liabilities
Current operating lease liability	Current liabilities	$	221,993	Current liabilities	$	397,554
Long-term operating lease liability	Other liabilities		1,901,557	Other liabilities		5,522,090
Total lease liabilities		$	2,123,550		$	5,919,644


2022	$	258,406
2023		264,108
2024		251,671			616,158
2025		247,960			622,676
2026 and beyond		1,316,245
2026					638,469
2027					632,152
2028 and beyond					5,311,766
Total future minimum lease payments	$	2,338,390		$	7,821,221
Less: Interest		(214,840	)		(1,901,577	)
Total operating lease liabilities	$	2,123,550		$	5,919,644

~~From May 15, 2020, through July 1, 2020,~~In the fourth quarter of 2022, the Company ~~entered into agreements~~received $550,000 through the issuance of five demand notes (the “JAG Notes”) from a related party, JAG Multi Investments LLC (“JAG”). The Company’s Chief Financial Officer is a beneficiary of JAG but does not have any control over JAG’s investment decisions with ~~accredited investors~~respect to the Company. The JAG Notes accrue 10% annual interest from their respective dates of issuance. At maturity, the Company agreed to pay outstanding principal, a 10% financing fee and accrued interest. On July 10, 2023, the Company received an additional $100,000 from JAG through the issuance of an additional demand note.

In consideration for ~~their~~subscribing to the JAG Note for $100,000 dated December 29, 2022, and for agreeing to extend the date on which the other JAG Notes are callable to March 31, 2023, the Company issued JAG a warrant to purchase 17,500 shares of ~~secured~~Common Stock. The warrant may be exercised for a period of five (5) years from issuance at a price of $10.00 per share. The financing fees for said JAG Note and the fair value of the warrant issued were capped at the total proceeds. The relative fair value of the warrant was recorded as a debt discount and as of December 31, 2023 the Company had fully amortized the discount. On July 10, 2023 JAG agreed to extend the date on which the JAG Notes are callable to September 30, 2023.

In the fourth quarter of 2022, the Company received $200,000 through the issuance of demand promissory notes of which (1) $100,000 was received from its Chief Executive Officer ($60,000 on November 29, 2022, $15,000 on December 2, 2022, and $25,000 on December 13, 2022) and (2) $100,000 was received from an entity controlled by its Chief Financial Officer ($75,000 on November 29, 2022 and $25,000 on December 13, 2022). These notes accrue 10% annual interest accrues from the date of issuance. These notes are callable with 10 days prior written notice. At maturity, the Company agreed to pay outstanding principal, a 10% financing fee and accrued interest.

The financing fees for all demand notes were recorded as a debt discount and as of December 31, 2023 the Company had fully amortized the discount.

For the year ended December 31, 2023, the Company incurred $75,889 in interest related to these demand notes.

In January and March 2023, the Company issued $410,000 of convertible notes (“Q1 23 Convertible Notes”), for $310,000 in cash and the conversion of $100,000 of demand notes from the fourth quarter of 2022. These convertible notes were issued bywith 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 to purchase 19,375 shares of the Common Stock at an exercise price of $20.00.

The cumulative fair value of the warrants at issuance was $132,183. This was recognized as a debt discount and will to be amortized on a straight-line basis over the life of the respective notes. For the year ending December 31, 2023 the Company inamortized $132,183 of the ~~aggregate original principal amount~~debt discount and as of $~~3,494,840~~ ~~(the “2020 Convertible Notes”). See Note 14 – Unit Purchase Options and Warrants for additional information on related securities.~~December 31, 2023 was fully amortized.

Interest on ~~the 2020 Convertible Notes accrued~~these notes accrues at a rate of ten percent (1010%%) per annum and ~~was~~is payable at the holder’s option either in cash or in shares of Common Stock at the conversion price set forth in the notes on December 31, 2023, unless converted earlier. For the ~~maturity dates of November 15, 2021,~~year ended December ~~22, 2021, and December 30, 2021~~31, 2023 the Company incurred $38,411. in interest related to these convertible notes.

All amounts ~~of principal and interest~~ due under ~~the 2020 Convertible Notes were~~these 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~~Common Stock at a fixed conversion price for the notes as described above.

As of December 27, 2023, the Company secured written consent by the note holders of the Q1 23 Convertible Notes for the maturity date to be extended to June 30, 2024. As an incentive for the Q1 23 Convertible Note holders to approve the extension, the Company agreed to lower both the Q1 23 Convertible Notes fixed conversion price and the related warrant exercise price to $~~3.20~~2.25~~, subject~~. The maturity date extension and the conversion and exercise price reduction applies to ~~adjustments.~~all Q1 23 Convertible Notes. As the terms for the note were deemed substantial different, the Company recognized a $163,278 loss from debt extinguishment related to the change in terms.

AsOn 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 ~~December 31, 2021, all 2020 Convertible Notes had either converted or been repaid by~~(i) convertible debentures of the ~~Company.~~Company in the aggregate original principal amount of $500,000 (the “February Debentures”) for a purchase price of $450,000, (ii) warrants (the “February Warrants”) to purchase 12,500 shares (the “February Warrant Shares”) of Common Stock at an exercise price of $15.00 per share, and (iii) 4,167 shares of Common Stock issued as an inducement for issuing the February Debentures. The proceeds, net of placement agent and legal fees, were used for working capital and general corporate purposes.

~~Principal balances~~The cumulative fair value of the ~~2020 Convertible Notes were~~warrants at issuance was $291,207. This was recognized as ~~follows:~~

~~Schedule~~a debt discount and will be amortized on a straight-line basis over the life of ~~Convertible Notes~~

~~Interest expense on~~ the ~~2020 Convertible Notes was $72,018~~ ~~and $194,631~~ ~~for~~respective notes. For the ~~years~~year ended December 31, ~~2021,~~2023 the Company amortized $347,520 of the debt discount and ~~2020, respectively.~~as of December 31, 2023 the Company had fully amortized the discount.

~~Amortization of options discount~~Pursuant to the February Debentures, interest on the ~~2020 Convertible Notes was $~~February Debentures accrued at a rate of eight percent (~~224,051~~8 ~~and $300,365~~ ~~for~~%) per annum payable at maturity, one year from the ~~years~~date of the February Debentures. For the year ended December 31, ~~2021, and 2020, respectively.~~2023 the Company incurred $9,640 in interest on the February Debentures.

~~Amortization~~All amounts due under the February Debentures were convertible at any time after the issuance date, in whole or in part, at the option of ~~warrant discount on~~ the ~~2020 Convertible Notes~~February Investors into Common Stock at an initial price of $10.40 per share. This conversion price was $~~229,954~~subject to adjustment for stock splits, combinations or similar events and $~~301,228~~ ~~for the years ended December 31, 2021,~~anti-dilution provisions, among other adjustments and ~~2020, respectively.~~is subject to a floor price.

~~Amortization~~The Company could prepay the February Debentures at any time in whole or in part by paying a sum of ~~beneficial conversion feature on~~money equal to 105% of the ~~2020 Convertible Notes was $604,897~~principal amount to be redeemed, together with accrued and $~~1,670,135~~ ~~for the years ended December 31, 2021, and 2020, respectively.~~unpaid interest.

~~Amortization~~While any portion of ~~issuance costs~~each February Debenture remained outstanding, if the Company received 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 had 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. In April 2023, the Company used $360,151 in proceeds from the RD Offering (as described in Note 11 below) to repay a portion of the February Debentures. On August 8, 2023, the Company repaid the remaining balance of $139,849 with proceeds from the August Public Offering (as described in Note 16 below).

The February Warrants included anti-dilution protection whereby a subsequent offering priced below the February Warrants’ strike price then in effect would entitle the February Investors to a reduction of such strike price to the price of such subsequent offering and an increase in the February Warrant Shares determined by dividing the dollar amount for which the February Warrants are exercisable by such lower strike price. As a result of the $2.85 unit purchase price of the August Public Offering (as described in Note 16 below), following consummation of the August Public Offering, the February Warrants now entitle the February Investors to purchase a total 65,790 at an exercise price of $2.85 per February Warrant Share. On August 8, 2023, the Company issued 26,391 shares of Common Stock upon exercise of one of the February Warrants on a net-exercise basis and on August 21, 2023, the ~~2020 Convertible Notes was $~~Company issued ~~129,408~~17,594 ~~and $222,508~~ ~~for~~shares of Common Stock upon exercise of the ~~years ended December 31, 2021, and 2020, respectively.~~other February Warrant on a net-exercise basis. Following these exercises, there were no February Warrants outstanding.

On July ~~1, 2020,~~20, 2023, the Company entered into a Standard Merchant Cash Advance Agreement (the “Cash Advance Agreement”) with Cedar Advance LLC (“Cedar”) under which Cedar purchased $543,750 of the Company’s receivables for a gross purchase price of $375,000 (the “Initial Advance”). The Company received cash proceeds of $356,250, net of a ~~loan in~~financing fee. Until the ~~principal~~purchase price is repaid, the Company agreed to pay Cedar $19,419.64 per week. Since, through the refinancing described below, the Company repaid Cedar within 30 days, the amount payable under the Initial Advance was reduced from $543,750 to $465,000.

On August 31, 2023, the Company refinanced the Initial Advance through the purchase by Cedar of $746,750 of the Company’s receivables for a gross purchase price of $515,000 (the “Refinanced Advance”). The Company received net cash proceeds of $134,018 after applying $390,892 towards the repayment of the Initial Advance. The new Cash Advance Agreement provides that if the Company repays the Refinanced Advance within 30 days then the amount payable to Cedar shall be reduced to $643,750, and if the Refinanced Advance is repaid on days 31 to 60 then the amount payable to Cedar shall be reduced to $674,650. Until the purchase price is repaid, the Company agreed to pay Cedar $16,594 per week. On September 29, 2023, the Company repaid $~~157,620~~ 0.3~~pursuant to~~ million of the ~~U.S. Small Business Administration’s Paycheck Protection Program.~~ ~~The loan matured 18 months~~Cash Advance Agreement with proceeds from the ~~date~~RLSA Loan (as defined below). As a result of ~~funding,~~such payment, the weekly payment was ~~payable over 18 equal monthly installments, and had an interest of 1% per annum~~. Upreduced to ~~100% of the principal balance of the loan was forgivable based upon satisfaction of certain criteria under the Paycheck Protection Program~~$9,277.

The financing fees were recorded as ~~well as $1,506~~ ~~of accrued interest was forgiven and the note was extinguished. The Company recognized~~ a ~~gain of $159,126~~ ~~on extinguishment of~~ debt ~~during~~discount. For the year ended December 31, ~~2021.~~2023 the Company amortized $122,279 of the debt discount and as of December 31, 2023 had a remaining debt discount balance of $250,721.

On September 29, 2023, the Company, Steven Shum, as a Key Person, and the Company’s wholly-owned subsidiaries Bio X Cell, Inc, INVO CTR, Wood Violet Fertility LLC, FLOW and Orange Blossom Fertility LLC as guarantors (the “Guarantors”), entered into a Revenue Loan and Security Agreement (the “Loan Agreement”) with Decathlon Alpha V LP (the “Lender”) under which the Lender advanced a gross amount of $1,500,000 to the Company (the “RSLA Loan”). The RSLA Loan has a maturity date of June 29, 2028, is payable in fixed monthly installments, as set forth in the Loan Agreement, and may be prepaid without penalty at any time. The installments include an interest factor that varies based on when the RSLA Loan is fully repaid and is based on a minimum amount that increases from thirty five percent (35%) of the RSLA Loan principal, if fully repaid in the first six months, to one hundred percent (100%) of the RSLA Loan principal, if fully repaid after 30 months from the RSLA Loan’s effective date.

The financing fees for the RSLA Loan were recorded as a debt discount. For the year ended December 31, 2023, the Company amortized $790 of the debt discount and as of December 31, 2023 had a remaining debt discount balance of $14,211. For the year ended December 31, 2023 the Company incurred $41,244 in interest related to the RSLA Loan.

In ~~November 2020, Paulson Investment~~the fourth quarter of 2022, the Company ~~served~~received $700,000 through the issuance of demand notes from related parties, as follows: (a) $500,000 from JAG; (b) $100,000 from our Chief Executive Officer; and (c) $100,000 from our Chief Financial Officer. On July 10, 2023, the Company received an additional $100,000 through the issuance of a ~~co-managing underwriter for~~demand note from JAG. The Company’s Chief Financial Officer is a beneficiary of JAG but does not have any control over JAG’s investment decisions with respect to the ~~Company’s underwritten public offering and received fees and commissions for such role in the amount of $271,440. Trent Davis, one~~Company. See Note 10 of the ~~Company’s directors, is President of Paulson Investment Company. Mr. Davis did not receive any compensation related~~Notes to ~~the fees and commissions received by Paulson.~~Consolidated Financial Statements for additional information.

~~In October 2021, Paulson Investment~~As of December 31, 2023 the Company ~~served as a placement agent for the Company’s registered direct offering and received fees and commissions for such role in the amount of~~ owed accounts payable to related parties totaling $~~323,584~~228,907~~. Trent Davis, one of the Company’s directors, is President of Paulson Investment Company. Mr. Davis did not receive any compensation~~, primarily related to ~~the fees~~unpaid employee expense reimbursements and ~~commissions received by Paulson. Steve Shum and Andrea Goren, the CEO and CFO of the Company, respectively, each purchased~~ ~~30,674~~ ~~shares in the registered direct offering for gross proceeds of $199,994~~.unpaid board fees.

On ~~December 16, 2019, the Company’s stockholders approved a reverse stock split at a ratio of between~~ ~~1-for-5 and 1-for-25, with discretion for the exact ratio to be approved by the Company’s board of directors. On February 19, 2020,~~June 28, 2023, the Company’s board of directors approved a reverse stock split of the Company’s common stock at a ratio of 1-for-20 and also approved a proportionate decrease in its authorized common stock to ~~1-for-20~~6,250,000 shares from 125,000,000. On ~~May 21, 2020,~~July 26, 2023, the Company filed a certificate of change (with an effective date of ~~May 26, 2020)~~July 28, 2023) with the Nevada Secretary of State pursuant to Nevada Revised Statutes 78.209 to effectuate a 1-for-20 reverse stock split of its outstanding common stock. ~~The reverse split took effect at the open of business on May 26, 2020.~~

On ~~October 22, 2020, the Company’s board of directors approved a reverse stock split of the Company’s common stock at a ratio of~~ ~~5-for-8~~ ~~and also approved a proportionate decrease in the Company’s authorized common stock to~~ ~~125,000,000~~ ~~shares from~~ ~~200,000,000~~. On November 5, 2020, the Company filed a certificate of change (with an effective date of November 9, 2020) with the Nevada Secretary of State pursuant to Nevada Revised Statutes 78.209 to effectuate a ~~5-for-8~~ ~~reverse stock split of its outstanding common stock. As a result of the reverse stock split,~~ ~~133~~ ~~shares were issued in lieu of fractional shares. On November 6, 2020,~~July 27, 2023, the Company received notice from ~~FINRA/OTC Corporate Actions~~Nasdaq that the reverse split would take effect at the open of business on ~~November 9, 2020,~~July 28, 2023, and the reverse stock split took effect on that date. All share information included in this Form 10-Q has been reflected as if the reverse stock split occurred as of the earliest period presented.

~~The consolidated financial statements presented reflect the reverse splits.~~Increase in Authorized Common Stock

On October 13, 2023, shareholders of the Company approved an increase to the number of authorized shares of the Company’s common stock from 6,250,000 shares to 50,000,000 shares as set forth below. On October 13, 2023, the Company filed a Certificate of Amendment to its Articles of Incorporation to increase its authorized shares of common stock from 6,250,000 shares to 50,000,000 shares.

On November ~~12, 2020,~~20, 2023, the Company filed with the Nevada Secretary of State a Certificate of Designation of Series A Convertible Preferred Stock (the “Series A Certificate of Designation”) which sets forth the rights, preferences, and privileges of the Series A Preferred Stock (the “Series A Preferred”). One million (1,000,000) shares of Series A Preferred with a stated value of $5.00 per share were authorized under the Series A Certificate of Designation.

Each share of Series A Preferred has a stated value of $5.00, which is convertible into shares of the Company’s common stock (the “Common Stock”) at a fixed conversion price equal to $2.20 per share, subject to adjustment. The Company may not effect the conversion of any shares of Series A Preferred if, after giving effect to the conversion or issuance, the holder, together with its affiliates, would beneficially own more than 9.99% of the Company’s outstanding Common Stock. Moreover, the Company may not effect the conversion of any shares of Series A Preferred if, after giving effect to the conversion or issuance, the holder, together with its affiliates, would beneficially own more than 19.99% of the Company’s outstanding Common Stock unless and until the Company receives the approval required by the applicable rules and regulations of The Nasdaq Stock Market LLC (or any subsequent trading market).

Each share of Series A Preferred stock shall automatically convert into Common Stock upon the closing of a merger (the “Merger”) of INVO Merger Sub Inc., a wholly owned subsidiary of the Company and a Delaware corporation (“Merger Sub”), with and into NAYA Biosciences, Inc., a Delaware corporation (“NAYA”) pursuant to an Agreement and Plan of Merger, as amended, by and among the Company, Merger Sub, and NAYA (the “Merger Agreement”).

The holders of Series A Preferred shall be entitled to receive a pro-rata portion, on an as-if converted basis, of any dividends payable on Common Stock.

In the event of any voluntary or involuntary liquidation, dissolution, or winding up, or sale of the Company (other than the Merger), each holder of Series A Preferred shall be entitled to receive its pro rata portion of an aggregate payment equal to (i) $5.00, multiplied by (ii) the total number of shares of Series A Preferred Stock issued under the Series A Certificate of Designation.

Other than those rights provided by law, the holders of Series A Preferred shall not have any voting rights.

On December 29, 2023,the Company entered into securities purchase agreement (the “Preferred Series A SPA”) with NAYA for the purchase of 1,000,000 shares of the Company’s Series A Preferred Stock at a purchase price of $5.00 per share. The parties agreed that NAYA’s purchases will be made in tranches in accordance with the following schedule: (1) $500,000 no later than Dec 29, 2023; (2) $500,000 no later than January 19, 2024; (3) $500,000 no later than February 2, 2024; (4) $500,000 no later than February 16, 2024; and (5) an additional amount as may be required prior to closing of the previously announced merger by and among the Company, INVO Merger Sub, Inc. and NAYA, and to be determined in good faith by the parties to adequately support the Company’s fertility business activities per an agreed forecast, as well as for a period of twelve (12) months post-closing including a catch-up on the Company’s past due accrued payables still outstanding. The Preferred Series A SPA contains customary representations, warranties and covenants of the Company and NAYA.

On January 4, 2024, the Company and NAYA closed on 100,000 shares of Series A Preferred Stock in the first tranche of this private offering for gross proceeds of $500,000. On April 15, 2024, the Company and NAYA closed on additional 61,200 shares of Series A Preferred Stock for additional gross proceeds of $306,000.

On November 20, 2023, the Company filed with the Nevada Secretary of State a Certificate of Designation of Series B Convertible Preferred Stock (the “Series B Certificate of Designation”) which sets forth the rights, preferences, and privileges of the Series B Preferred Stock (the “Series B Preferred”). One million two hundred (1,200,000) shares of Series B Preferred with a stated value of $5.00 per share were authorized under the Series B Certificate of Designation.

Each share of Series B Preferred has a stated value of $5.00, which is convertible into shares of the Company’s common stock (the “Common Stock”) at a fixed conversion price equal to $5.00 per share, subject to adjustment. The Company may not effect the conversion of any shares of Series B Preferred if, after giving effect to the conversion or issuance, the holder, together with its affiliates, would beneficially own more than 19.99% of the Company’s outstanding Common Stock unless and until the Company receives the approval required by the applicable rules and regulations of Nasdaq (or any subsequent trading market).

Each share of Series B Preferred stock shall automatically convert into Common Stock upon the closing of the Merger.

The holders of Series B Preferred shall be entitled to receive a pro-rata portion, on an as-if converted basis, of any dividends payable on Common Stock.

In the event of any voluntary or involuntary liquidation, dissolution, or winding up, or sale of the Company (other than the previously announced merger with NAYA), each holder of Series B Preferred shall be entitled to receive its pro rata portion of an aggregate payment equal to (i) $5.00, multiplied by (ii) the total number of shares of Series B Preferred Stock issued under the Series B Certificate of Designation.

Other than those rights provided by law, the holders of Series B Preferred shall not have any voting rights.

On November 19, 2023, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Cytovia Therapeutics Holdings, Inc., a Delaware corporation (“Cytovia”) for Cytovia’s acquisition of 1,200,000 shares of the Company’s newly designated Series B Preferred Stock in exchange for 163,637 shares of common stock of NAYA held by Cytovia (the “Share Exchange”). On November 20, 2023, the Company and Cytovia closed on the exchange of shares. As of December 31, 2023, the Company owns approximately 6.5% of the outstanding shares of NAYA’s common stock and had no significant control over NAYA therefore the asset is accounted for using the fair value method.

On February 3, 2023, the Company entered into an ~~underwriting~~equity purchase agreement (the ~~“Underwriting Agreement”~~“ELOC”) and registration rights agreement (the “ELOC RRA”) with ~~Roth Capital Partners, LLC, as representative~~an accredited investor (the “Feb 3 Investor”) pursuant to which the Company has the right, but not the obligation, to direct the Feb 3 Investor to purchase up to $10.0 million (the “Maximum Commitment Amount”) of shares of Common Stock, in multiple tranches. Further, under the ELOC and subject to the Maximum Commitment Amount, the Company has the right, but not the obligation, to submit notices to the Feb 3 Investor to purchase shares of Common Stock (i) in a minimum amount of not less than $25,000 and (ii) in a maximum amount of up to the lesser of (a) $750,000 or (b) 200% of the ~~several underwriters (the “Underwriters”), in connection with~~Company’s average daily trading value of the ~~Company’s public offering (the “Offering”) of~~ Common Stock.

Also on February 3, 2023, the Company issued to the Feb 3 Investor 7,500 shares of ~~common stock, at a public offering price of $~~Common Stock for its commitment to enter into the ELOC.

The ~~initial closing~~obligation of the ~~Offering for~~ ~~3,625,000~~Feb 3 Investor to purchase shares of ~~common stock took place on November 17, 2020. On November 18, 2020, the Underwriters exercised their option~~Common Stock pursuant to the ~~Underwriting Agreement~~ELOC ends on the earlier of (i) the date on which the purchases under the ELOC equal the Maximum Commitment Amount, (ii) 24 months after the date of the ELOC (February 3, 2025), (iii) written notice of termination by the Company, (iv) the date that the ELOC RRA is no longer effective after its initial effective date, or (v) the date that the Company commences a voluntary case or any person or entity commences a proceeding against the Company pursuant to ~~purchase an additional~~ or within the meaning of federal or state bankruptcy law, a custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors (the “Commitment Period”).

During the Commitment Period, and subject to the shares of ~~common stock (the “Option Shares”). The closing for~~Common Stock underlying the ~~Option Shares took place on November 20, 2020, for which~~ELOC be registered, the ~~Company received approximately $1.5~~ ~~million in net proceeds after deducting underwriting discounts and commissions. With the exercise of the option~~price that Feb 3 Investor will pay to purchase the ~~Option Shares, the total amount of~~ shares of ~~common stock sold in~~Common Stock that it is obligated to purchase under the ~~Offering was~~ ~~4,153,750~~ ~~shares~~ELOC shall be 97% of the “market price,” which is defined as the lesser of (i) the lowest closing price of our Common Stock during the 7 trading day-period following the clearance date associated with ~~aggregate net proceeds received by~~the applicable put notice from the Company or (ii) the lowest closing bid price of ~~approximately $~~the Common Stock on the principal trading market for the Common Stock (currently, the Nasdaq Capital Market) on the trading day immediately preceding a put date.

To date, the Company has not been in a position to register the shares underlying the ELOC as a result of standstill agreements related to the RD Offering and ~~commissions and offering expenses.~~the August 2023 Offering (both as defined below).

On ~~October 1, 2021, the Company and certain institutional and accredited investors and members of the Company’s management team (the “Investors”)~~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 ~~the Investors~~ ~~1,240,737~~ ~~shares of its common stock,~~such investor (i) in a registered direct offering (the ~~“Direct~~“RD Offering”) ~~for aggregate gross proceeds of $4,044,803. The purchase price for each share in the Direct Offering was $3.26. The net proceeds to the Company from the Direct Offering, after deducting placement agent fees and the Company’s estimated offering expenses, were approximately $3.65~~ ~~million. Paulson Investment Company served as a placement agent for the Direct Offering and received a fee for its role in the amount of $323,584~~, ~~as well as warrants to purchase~~ ~~37,222~~69,000 shares of ~~the Company’s common stock~~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 $~~3.912~~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. The securities to be issued in the RD 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), initially filed by the Company with the SEC under the Securities Act, on April 7, 2021 and declared effective on April 16, 2021. All Pre-Funded Warrants were exercised by the investor in June 2023.

~~During~~The March Warrant (and the shares of Common Stock issuable upon the exercise of the March Warrant) 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 March Warrant is immediately exercisable upon issuance, will expire eight years ~~ended December 31, 2021,~~from the date of issuance, and ~~2020,~~in certain circumstances may be exercised on a cashless basis.

On March 27, 2023, the Company ~~incurred~~closed the RD Offering and March Warrant Placement, raising gross proceeds of approximately $~~0.4~~3 million before deducting placement agent fees and other offering expenses payable by the Company. In the event the March Warrant were fully exercised for cash, the Company would receive additional gross proceeds of approximately $3.5 million. Under the March Purchase Agreement, the Company was entitled to use a portion of the net proceeds of the offering to (a) repay the February Debentures, and (b) to make the down payment for the WFI acquisition. The remainder of the net proceeds could be used for working capital, capital expenditures, and other general corporate purposes. The Company used $383,879 in proceeds to repay a portion of the February Debentures and related fees and interest and the remainder of the proceeds were used for working capital and general corporate purposes.

On August 4, 2023, the Company, entered into securities purchase agreements (the “Purchase Agreements”) with certain institutional and other investors, pursuant to which the Company agreed to issue and sell to such investors in a public offering (the “August 2023 Offering”), 1,580,000 units (the “Units”) at a price of $2.85 per Unit, with each Unit consisting of (i) one share of Common Stock (the “Shares”) of the Company, and (ii) two common stock purchase warrants (the “Warrants”), each exercisable for one share of Common Stock at an exercise price of $2.85 per share. In the aggregate, in the August 2023 Offering the Company issued 1,580,000 Shares and 3,160,000 Warrants. The securities issued in the August 2023 Offering were offered pursuant to the Company’s registration statement on Form S-1 (File 333-273174) (the “Registration Statement”), initially filed by the Company with the SEC under the Securities Act, on July 7, 2023 and declared effective on August 3, 2023.

The Company closed the Offering on August 8, 2023, raising gross proceeds of approximately $4.5 million before deducting placement agent fees and other offering expenses payable by the Company. The Company used (i) $2,150,000 to fund the initial installment of the WFI purchase price (net of a $350,000 holdback) on August 10, 2023, (ii) $1,000,000 to pay Armistice the Armistice Amendment Fee (as defined below), and (iii) $139,849 to complete repayment of the February Debentures to the February Investors, plus accrued interest and fees of approximately $10,911. The Company is using the remaining proceeds from the August 2023 Offering for working capital and general corporate purposes.

In connection with the August 2023 Offering, on August 4, 2023, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with Maxim Group LLC (the “Placement Agent”), pursuant to which (i) the Placement Agent agreed to act as placement agent on a “best efforts” basis in connection with the August 2023 Offering and (ii) the Company agreed to pay the Placement Agent an aggregate fee equal to 7.0% of the gross proceeds (and 5% for certain investors) raised in the August 2023 Offering and warrants to purchase up to 110,600 shares of Common Stock at an exercise price of $3.14 (the “Placement Agent Warrants”). The Placement Agent Warrants (and the shares of Common Stock issuable upon the exercise of the Placement Agent 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 August 2023 Offering was facilitated by the Company entering into an Amendment to Securities Purchase Agreement on July 7, 2023 (the “Armistice Amendment”) with Armistice Capital Markets Ltd. to delete Section 4.12(a) of our March 23, 2023 Securities Purchase Agreement (the “Armistice SPA”) with Armistice pursuant to which we agreed that from March 23, 2023 until 45 days after the effective date of the Resale Registration Statement (as defined below) we would not (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents or (ii) file any registration statement or any amendment or supplement thereto, other than the prospectus supplement filed in connection with that offering and the Resale Registration Statement (the “Subsequent Equity Financing Provision”). In consideration of Armistice’s agreement to enter into the Armistice Amendment and delete the Subsequent Equity Financing Provision from the Armistice SPA, we agreed to pay Armistice a fee a $1,000,000 ~~million and $1.8~~ ~~million, respectively~~(the “Armistice Amendment Fee”) within two days of ~~offering costs related~~the closing of the August 2023 Offering. Additionally, we agreed to include a proposal in our proxy statement for our 2023 Annual Meeting of Stockholders for the purpose of obtaining the approval of the holders of a majority of our outstanding voting common stock, to effectuate the reduction of the exercise price (the “Exercise Price Reduction”) set forth in Section 2(b) of the Common Stock Purchase Warrants issued to Armistice on March 27, 2023 (the “Existing Warrants”) to the ~~issuance~~per unit public offering price of ~~common stock.~~the August 2023 Offering (or $2.85), in accordance with Nasdaq Rule 5635(d) (the “Shareholder Approval”) with the recommendation of our board of directors that such proposal be approved. We also agreed to solicit proxies from our shareholders in connection therewith in the same manner as all other management proposals in such proxy statement and that all management-appointed proxyholders shall vote their proxies in favor of such proposal. Further, if we did not obtain Shareholder Approval at the first meeting, we agree to call a meeting every six (6) months thereafter to seek Shareholder Approval until the earlier of the date Shareholder Approval is obtained or the Existing Warrants are no longer outstanding. Until such approval is obtained, the exercise price of the Existing Warrants will remain unchanged. At the annual meeting on December 26, 2023, Company shareholders approved the Exercise Price Reduction.

During ~~2021,~~2023, the Company issued ~~466,809~~ ~~shares of common stock with a fair value of $1,493,788~~ as a result of the conversion of the 2020 Convertible Notes and accrued interest thereon. No gain or loss was recorded on conversion, as the issuance of common stock was pursuant to the terms of a prior agreement.

~~In March 2021, the Company issued~~ ~~77,444~~4,269 shares of ~~common stock for proceeds of $246,278~~ ~~as a result of the exercise of unit purchase options.~~

~~In March 2021, the Company issued~~ ~~39,095~~ ~~shares of common stock for proceeds of $123,562~~ ~~as a result of the exercise of warrants.~~

~~In March 2021, the Company issued~~ ~~86,529~~ ~~shares of common stock as a result of cashless exercises of unit purchase options.~~

~~In March 2021, the Company issued~~ ~~91,709~~ ~~shares of common stock as a result of cashless exercises of warrants.~~

~~During 2021, the Company issued~~ ~~49,806~~ ~~shares of common stock~~Common Stock to employees and directors and ~~110,250~~ 22,202shares of ~~common stock~~Common Stock to consultants with a fair value of $~~360,153~~ 56,936and $~~382,645~~124,476, respectively. The shares were issued under the Company’s 2019 Stock Incentive Plan (the “2019 Plan”).

During ~~2021,~~2023, the Company issued ~~97,500~~ 21,115shares of ~~its common stock~~Common Stock to consultants in consideration of services rendered with a fair value of $~~303,879~~69,975. 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.

During 2023, the Company issued 297 shares of Common Stock upon the exercise of options. The Company received proceeds of $2,375.

In February 2023, the Company issued 4,167 shares of Common Stock with a fair value of $56,313 as inducement for issuing the February Debentures. The fair value of the shares was recognized as a discount to the February Debentures and will be amortized over the life of the notes.

In February 2023, the Company 7,500 shares of Common Stock in connection with the ELOC with a fair value of $93,000 that was expensed in the period.

In March 2023, the Company issued 69,000 shares of Common Stock in the RD Offering and March Warrant Placement. The Company received net proceeds of approximately $2.7 million.

In June 2023, the Company issued 115,000 shares of Common Stock upon exercise prefunded warrants. The Company received net proceeds of $23,051.

On July 11, 2023, the Company issued 16,250 shares of Common Stock in consideration of a settlement with an unrelated third party. 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 ~~November 2021,~~August 2023, the Company issued ~~30,000~~43,985 shares of ~~its common in consideration for purchasing Effortless IVF with~~Common Stock upon exercise of an existing warrant on a ~~fair value of $117,600~~.net-exercise basis. These shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) and/or 3(a)(9) of the Securities Act of 1933, as amended.

On August 8, 2023, the Company issued 1,580,000 shares of Common Stock in the August 2023 Offering. The Company ~~did not receive any cash~~received net proceeds ~~from this issuance.~~of approximately $4.1 million.

In October 2019, the Company adopted the 2019 Plan. Under the 2019 Plan, the Company’s board of directors is authorized to grant ~~both incentive and non-qualified~~ stock options to purchase ~~common stock, as well as~~Common Stock, restricted stock ~~awards~~units, and restricted shares of Common Stock to its employees, directors, and consultants. The 2019 Plan initially provided for the issuance of ~~500,000~~25,000 shares. A provision in the 2019 Plan provides for an automatic annual increase equal to 6% of the total number of shares of ~~Company common stock~~Common Stock outstanding on December 31 of the preceding calendar ~~year.~~year. In January ~~2020,~~2023, the number of available shares ~~was increased to 793,093. In January 2021, the number of available shares issuable~~ increased by ~~an additional~~ ~~578,356~~36,498 shares bringing the total shares available under the 2019 Plan to ~~a total of~~ ~~1,371,449~~125,000 ~~shares.~~.

Options granted under the 2019 Plan generally have a life of 3 to 10 years and exercise prices equal to or greater than the fair market value of the common stock as determined by the Company’s board of directors. Vesting for employees typically occurs over a three-year period.

The following table sets forth the activity of the options to purchase common stock under the 2019 Plan.

	Number of Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value		Number of Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding as of December 31, 2020		939,114		$	5.73	$	17,250
Outstanding as of December 31, 2022									64,850		$	68.00	$	-
Granted		179,797			3.14		-		59,048			7.74		-
Exercised		-			-		-		(297	)		8.00		-
Canceled		(63,017	)		9.10		-		16,848			54.63		-
Balance as of December 31, 2021		1,055,894		$	5.09	$	133,022
Exercisable as of December 31, 2021		650,161		$	5.71	$	54,266
Balance as of December 31, 2023									106,753			41.90		-
Exercisable as of December 31, 2023									93,227		$	54.61	$	-

The fair value of each option granted is estimated as of the grant date using the Black-Scholes option pricing model with the following assumptions:

Schedule of ~~Share-based~~Share-Based Payment Award, Stock Options, Valuation Assumptions

	Years ended December 31,				Years ended December 31,
	2021		2020		2023		2022
Risk-free interest rate range	0.22% to 0.73	%	0.48% to 1.65	%	3.60 to 3.69	%	1.60 to 3.94	%
Expected life of option-years	5.3 to 6.5		5.20 to 5.77		5.00 to 5.63		5.00 to 5.77
Expected stock price volatility	107% to 125	%	111% to 128.	%	106.6 to 114.9	%	110.00 to 114.6	%
Expected dividend yield	-	%	-	%	-	%	-	%

The risk-free interest rate is based on U.S. Treasury interest rates, the terms of which are consistent with the expected life of the stock options. Expected volatility is based upon the average historical volatility of the Company’s common stock over the period commensurate with the expected term of the related instrument. The expected life and estimated post-employment termination behavior is based upon historical experience of homogeneous groups, executives and non-executives, within the Company. The Company does not currently pay dividends on its common stock, nor does it expect to do so in the foreseeable future.

Schedule of Share Based Payments Arrangements Options Exercised and Options Vested

For the year ended December 31, ~~2021,~~2023, the weighted average grant date fair value of options granted was $~~3.14~~ 6.38per share. The Company estimates the fair value of options at the grant date using the Black-Scholes model. For all stock options granted through December 31, ~~2021,~~2023, the weighted average remaining service period is ~~4.0~~ 1.01years.

In the year ended December 31, ~~2021,~~2023, the Company ~~issued~~granted ~~198,063~~23,547 in restricted stock units and shares of restricted stock to certain employees, directors, and consultants under the 2019 Plan. Restricted stock issued to employees, directors, and consultants generally vest either at grant or vest over a period of one year from the date of ~~grant~~.grant.

The following table summarizes the Company’s restricted stock awards activity under the 2019 Plan during the year ended December 31, ~~2021:~~2023:

Schedule of Aggregate Restricted Stock Awards and Restricted Stock Unit Activity

	Number of Unvested Shares			Weighted Average Grant Date Fair Value		Aggregate Value of Shares			Number of Unvested Shares			Weighted Average Grant Date Fair Value		Aggregate Value of Shares

Balance as of December 31, 2020		16,698		$	4.67	$	77,927
Balance as of December 31, 2022										3,533		$	8.40	$	29,949
Granted		198,063			3.29		652,098			23,547			4.95		116,618
Vested		(205,031	)		3.27		(693,877	)		(27,055	)		11.60		(310,554	)
Forfeitures		-			-		-			-			-		-
Balance as of December 31, 2021		9,730		$	3.72	$	36,148
Balance as of December 31, 2023										25			18.42		5,525

The Company recognizes stock compensation expense on a straight-line basis over the vesting period of the grant. If the restricted stock vests immediately, the corresponding stock compensation expense is recognized immediately. For the year ended December 31, 2023, the Company recognized $315,895 in stock compensation expense related to restricted stock granted under the 2019 plan.

~~In connection with the issuance of the 2020 Convertible Notes, the Company also issued unit purchase options to purchase~~ ~~303,623~~ ~~units at an exercise price of $3.20~~ ~~per unit, with each unit consisting of~~ 1 ~~share of common stock and a warrant to purchase one share of common stock at an exercise price of $3.20~~ ~~per share. The units and warrants vested immediately, are exercisable for a period of~~ ~~five years~~ from the date of issuance and are subject to downward adjustment if the Company issues securities at a lower price. Warrant holders have a right to require the Company to pay cash in the event of a fundamental transaction. In accordance with ASC 815, the unit purchase options and warrants issued in this period were determined to require equity treatment.

~~In connection with the issuance of the 2020 Convertible Notes, the Company agreed to issue the placement agent and the selling agent~~ ~~five-year warrants to purchase~~ ~~6,750~~ ~~shares of the Company’s common stock at an exercise price of $3.20~~.

~~A Monte Carlo model was used because the investor unit purchase options and warrants contain fundamental transaction payouts and reset events that cannot be modeled with a Black Scholes model.~~

~~The fair value of the unit purchase options and warrants issued to the convertible debt holders is estimated as of the issue date using a Monte Carlo model with the following assumptions:~~

The risk-free interest rate is based on U.S. Treasury interest rates, the terms of which are consistent with the expected life of the unit purchase options and warrants. Expected volatility is based upon the historical volatility of the Company’s common stock over the period commensurate with the expected term of the related instrument. The unit purchase options and warrants are valued assuming projected reset events adjusting the exercise price and a forced exercise upon a projected fundamental transaction by management. The unit purchase options and warrants early exercise are modeled assuming registration after 180 days. The Company does not currently pay dividends on its common stock, nor does it expect to in the foreseeable future.

	Number of Unit Purchase Options			Weighted Average Exercise Price		Aggregate Intrinsic Value		Number of Unit Purchase Options		Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding as of December 31, 2020		303,623		$	3.20	$	-
Outstanding as of December 31, 2022									4,649	$	64.00	$	-
Granted		-			-		-		-		-		-
Exercised		(210,730	)		3.20		457,839		-		-		-
Canceled		-			-		-		-		-		-
Balance as of December 31, 2021		92,893		$	3.20	$	5,647
Balance as of December 31, 2023									4,649		64.00		-

	Number of Warrants			Weighted Average Exercise Price		Aggregate Intrinsic Value		Number of Warrants			Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding as of December 31, 2020		310,373		$	3.48	$	-
Outstanding as of December 31, 2022									25,884		$	30.20	$	-
Granted		37,222			3.91		-		3,643,526			3.63		-
Exercised		(180,323	)		3.20		457,839		(180,790	)		1.16		-
Canceled		-			-		-		-			-		-
Balance as of December 31, 2021		167,272		$	3.62	$	16,029
Balance as of December 31, 2023									3,488,620		$	3.95	$	-

In January and March 2023, the Company issued 5-year warrants to purchase 19,375 shares of the Common Stock at an exercise price of $20.00 related to the Q1 23 Convertible Notes. As of December 27, 2023, as an incentive for the Q1 23 Convertible Note holders to approve the extension, the Company agreed to lower the warrant exercise price to $2.25. As the terms for the note were deemed substantial different, the Company recognized a $163,278 loss from debt extinguishment related to the change in terms.

On February 3, and February 17, 2023, the Company issued warrants (the “February Warrants”) to purchase 12,500 shares (the “February Warrant Shares”) of Common Stock at an exercise price of $15.00 per share as an inducement for issuing the February Debentures.

The February Warrants included anti-dilution protection whereby a subsequent offering priced below the February Warrants’ strike price then in effect would entitle the February Investors to a reduction of such strike price to the price of such subsequent offering and an increase in the February Warrant Shares determined by dividing the dollar amount for which the February Warrants are exercisable by such lower strike price. As a result of the $2.85 unit purchase price of the August Public Offering, following consummation of the August Public Offering, the February Warrants now entitle the February Investors to purchase a total 65,790 at an exercise price of $2.85 per February Warrant Share. On August 8, 2023, the Company issued 26,391 shares of Common Stock upon exercise of one of the February Warrants on a net-exercise basis and on August 21, 2023, the Company issued 17,594 shares of Common Stock upon exercise of the other February Warrant on a net-exercise basis. Following these exercises, there were no February Warrants outstanding.

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 (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. The securities to be issued in the RD 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), initially filed by the Company with the SEC under the Securities Act, on April 7, 2021 and declared effective on April 16, 2021. All Pre-Funded Warrants were exercised by the investor in June 2023.

The March Warrant (and the shares of Common Stock issuable upon the exercise of the March Warrant) 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 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 July 7, 2023, we entered into an Amendment to Securities Purchase Agreement (the “Armistice Amendment”) with Armistice Capital Markets Ltd. to delete Section 4.12(a) of our March 23, 2023 Securities Purchase Agreement (the “Armistice SPA”) with Armistice pursuant to which we agreed that from March 23, 2023 until 45 days after the effective date of the Resale Registration Statement (as defined below) we would not (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or Common Stock Equivalents or (ii) file any registration statement or any amendment or supplement thereto, other than the prospectus supplement filed in connection with that offering and the Resale Registration Statement (the “Subsequent Equity Financing Provision”). In consideration of Armistice’s agreement to enter into the Armistice Amendment and delete the Subsequent Equity Financing Provision from the Armistice SPA, we agreed to pay Armistice a fee a $1,000,000 (the “Armistice Amendment Fee”) within two days of the closing of the August 2023 Offering. Additionally, we agreed to include a proposal in our proxy statement for our 2023 Annual Meeting of Stockholders for the purpose of obtaining the approval of the holders of a majority of our outstanding voting common stock, to effectuate the reduction of the exercise price (the “Exercise Price Reduction”) set forth in Section 2(b) of the Common Stock Purchase Warrants issued to Armistice on March 27, 2023 (the “Existing Warrants”) to the per unit public offering price of the August 2023 Offering (or $2.85), in accordance with Nasdaq Rule 5635(d) (the “Stockholder Approval”) with the recommendation of our board of directors that such proposal be approved. We also agreed to solicit proxies from our stockholders in connection therewith in the same manner as all other management proposals in such proxy statement and that all management-appointed proxyholders shall vote their proxies in favor of such proposal. Further, if we did not obtain Stockholder Approval at the first meeting, we agreed to call a meeting every six (6) months thereafter to seek Stockholder Approval until the earlier of the date Stockholder Approval is obtained or the Existing Warrants are no longer outstanding. Until such approval was obtained, the exercise price of the Existing Warrants will remain unchanged.

On December 26, 2023, INVO held its 2023 annual meeting of stockholders (the “2023 Annual Meeting”) whereby INVO’s stockholders voted on and approved the Exercise Price Reduction.

The provision for income taxes consists of the following for the ~~year~~years ended December 31, ~~2021,~~2023, and ~~2020:~~2022:

	2021		2020			2023			2022
	December 31					December 31
	2021		2020			2023			2022
Federal income taxes:
Current		-		-		$	-		$	-
Deferred		280		(84	)		(860	)		315
Total federal income taxes		280		(84	)		(860	)		315

State income taxes:
Current		4,094		1,212			29,735			2,062
Deferred		390		120			(1,089	)		496
Total state income taxes		4,484		1,332			28,646			2,558
Total income taxes	$	4,764	$	1,248		$	27,786		$	2,872

The effective income tax rate is lower than the U.S. federal and state statutory rates primarily because of the valuation allowance and, to a lesser extent, permanent items. A reconciliation of the ~~2021~~2023 and ~~2020~~2022 federal statutory rate as compared to the effective income tax rate is as follows:


	December 31										December 31
	2021					2020					2023					2022
Pre-Tax Book Income at Statutory Rate	$	(1,363,829	)	21.00	%	$	(1,688,606	)	21.00	%	$	(1,519,297	)	21.00	%	$	(2,202,718	)	21.00	%
State Tax Expense, net		3,624		-0.06	%		1,078		-0.01	%		23,719		-0.33	%		1,629		-0.02	%
Permanent Items		425,318		-6.55	%		37,441		-0.47	%		226,420		-3.13	%		348,768		-3.33	%
Hanging Credit												-		0.00	%		811		-0.01
True-Ups		713,398		-10.98	%		6,790		-0.09	%		(1,949	)	0.03	%		(36,554	)	0.35	%
Change in Federal Valuation Allowance		226,255		-3.48	%		1,644,545		-20.45	%		1,298,892		-17.95	%		1,890,936		-18.03	%
Total Expense	$	4,764		-0.07	%	$	1,248		-0.02	%	$	27,786		-0.38	%	$	2,872		-0.03	%

Deferred income taxes reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax. Significant components of the deferred tax assets and liabilities as of December 31, ~~2021~~2023 and ~~2020,~~2022, are as follows:

The Company recorded a full valuation allowance against its net deferred tax asset at December 31, ~~2021~~2023 and ~~2020~~2022 totaling $~~6.8~~11.1 millionand $~~6.4~~9.3 million,, respectively. A naked credit resulting from indefinite lived intangibles was valued at December 31, ~~2021,~~2023, and ~~2020~~2022 totaling $~~($1,139~~0) and ~~($468~~($1,949)), respectively.

As of December 31, ~~2021,~~2023, the Company has federal net operating loss carryforwards of approximately $~~25.8~~32.9 million. Of that amount, $~~10.8~~10.2 million will expire, if not utilized, in various years beginning in 2028 and which are also subject to the limitations of IRC §382. The remaining carryforward amount of $~~15.0~~22.7 million, has no expiration period and can be applied to 80% of taxable income per year in future periods. State net operating loss carryforwards total $~~23.5~~21.9 million. Of that amount, $3.5 million will begin to expire in 2033 and are subject to the limitations of IRC §382. The remaining $~~20.0~~18.4 million of state net operating loss carryforwards are similar to the federal net operating loss in that it has no expiration period and can be applied to 100% of state taxable income per year.

The Company’s insurance coverage is carried with third-party insurers and includes: (i) general liability insurance covering third-party exposures; (ii) statutory workers’ compensation insurance; (iv) excess liability insurance above the established primary limits for general liability and automobile liability insurance; (v) property insurance, which covers the replacement value of real and personal property and includes business interruption; and (vi) insurance covering our directors and officers for acts related to our business activities. All coverage is subject to certain limits and deductibles, the terms and conditions of which are common for companies with similar types of operations.

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”).

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.

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”).

Immediately following the effective time of the Merger, Dr. 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.

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. 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.

The Merger Agreement contains termination rights for each of the Company and NAYA, including, among others: (1) if the consummation of the Merger does not occur on or before December 31, 2023 (the “End Date”) (which has since been extended to April 30, 20204), except that any party whose material breach of the Merger Agreement caused or was the primary contributing factor that resulted in the failure of the Merger to be consummated on or before the End Date, (2) if any governmental authority has enacted any law or order making illegal, permanently enjoining, or otherwise permanently prohibiting the consummation of the Merger, and (3) if the required vote of the stockholders of either the Company or NAYA has not been obtained. The Merger Agreement contains additional termination rights for NAYA, including, among others: (1) if the Company materially breaches its non-solicitation obligations or fails to take all action necessary to hold a stockholder meeting to approve the transactions contemplated by the Merger Agreement, (2) if the aggregate of the liabilities of the Company, excluding certain specified liabilities, exceed $5,000,000, (3) if NAYA determines that the due diligence contingency will not be satisfied by October 26, 2023, (4) if NAYA determines that the Company has experienced a material adverse effect, or (5) the Company material breaches any representation, warranty, covenant, or agreement such that the conditions to closing would not be satisfied and such breach is incapable of being cured, unless such breach is caused by NAYA’s failure to perform or comply with any of the covenants, agreements, or conditions hereof to be performed or complied with by it prior to the closing.

If all of NAYA’s conditions to closing are satisfied or waived and NAYA fails to consummate the Merger, NAYA would be required to pay the Company a termination fee of $1,000,000. If all of the Company’s conditions to closing conditions are satisfied or waived and the Company fails to consummate the Merger, the Company would be required to pay NAYA a termination fee of $1,000,000.

On December 27, 2023, the Company entered into second amendment (“Second Amendment”) to the Merger Agreement. Pursuant to the Second Amendment, the parties agreed to extend the End Date to April 30, 2024. The parties further agreed to modify the closing condition for the Interim PIPE from a private offering of shares of Company common stock at a price that is a premium to the market price of the Company common stock in an estimated amount of $5,000,000 or more of gross proceeds to a private offering of the Company’s preferred stock at a price per share of $5.00 per share in an amount equal to at least $2,000,000 to the Company, 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 the Company’s fertility business activities per an agreed forecast, as well as for a period of twelve (12) months post-closing including a catch-up on the Company’s past due accrued payables still outstanding. The parties further agreed to the following schedule (the “Minimum Interim Pipe Schedule”) for the initial $2,000,000: (1) $500,000 no later than December 29, 2023, (2) $500,000 no later than January 19, 2024, (3) $500,000 no later than February 2, 2024, and (4) $500,000 no later than February 16, 2024. The parties also further agreed to modify the covenant of the parties regarding the Interim PIPE to require NAYA to consummate the Interim PIPE before the closing of the Merger; provided, however, if the Company does not receive the initial gross proceeds pursuant to the Minimum Interim Pipe Schedule, the Company shall be free to secure funding from third parties to make up for short falls on reasonable terms under SEC and Nasdaq regulations. As of the date of this filing, NAYA has purchased approximately $806,000 of the Company’s preferred stock.

On January 4, 2024, the Company and NAYA closed on 100,000 shares of Series A Preferred Stock in the first tranche of Preferred Series A SPA for gross proceeds of $500,000. On April 15, 2024, the Company and NAYA closed on additional 61,200 shares of Series A Preferred Stock for additional gross proceeds of $306,000.

In ~~January 2022,~~February 2024, the Company issued ~~62,528~~125,500 shares of ~~common stock to consultants and directors under the 2019~~Common Stock ~~Incentive Plan.~~

~~In February 2022, the Company issued~~ ~~3,000~~ ~~shares of common stock~~ to consultants in consideration of services rendered. 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 January 2022,~~On February 26, 2024, the Company ~~issued~~ finalized an Agreement for the Purchase and Sale of Future Receipts (the “Future Receipts Agreement”) with a buyer (the “Buyer”) under which the Buyer purchased $~~94,623~~344,925 ~~shares~~ of ~~common stock to Paradigm Opportunities Fund, LP (“Paradigm”). The shares were issued pursuant to the exemption from registration provided by Section 4(a)(2)~~our future sales for a gross purchase price of ~~the Securities Act of 1933, as amended.~~$236,250. The Company received net proceeds of $~~315,000~~225,000 ~~in proceeds from this issuance. Pursuant to its terms, on March 30, 2022,~~. Until the purchase price has been repaid, the Company ~~terminated~~agreed to pay the ~~stock~~Buyer $13,797 per week.

On March 27, 2024, the Company entered into a purchase agreement (the “Triton Purchase Agreement”) with ~~Paradigm, under~~Triton Funds LP (“Triton”), pursuant to which ~~Paradigm had committed~~the Company agreed to sell, and Triton agreed to purchase, ~~600,703~~upon the Company’s request in one or more transactions, up to 1,000,000 shares of the Company’s common stock, ~~for an~~par value $0.0001 per share, providing aggregate gross proceeds to the Company of up to $850,000. Triton will purchase the shares of common stock under the Triton Purchase Agreement at the price of ~~$1,999,740.29.~~ $0.85 per share. The purchase agreement expires upon the earlier of the sale of all 1,000,000 shares of the Company’s common stock or December 31, 2024.

Among other limitations, unless otherwise agreed upon by Triton, each individual sale of shares of common stock will be limited to no more than the number of shares of common stock that would result in the direct or indirect beneficial ownership by Triton of more than 9.99% of the then-outstanding shares of common stock. In addition, the total cumulative number of shares of common stock that may be issued to Triton under the Triton Purchase Agreement may not exceed the requirements of Nasdaq Listing Rule 5635(d), except that such limitation will not apply in the event the Company obtains stockholder approval of the shares of common stock to be issued under the Triton Purchase Agreement, if necessary, in accordance with the requirements of Nasdaq Listing Rule 5635(d).

The Triton Purchase Agreement provides that the Company will file a prospectus supplement (the “Prospectus Supplement”) to its ~~termination notice when it became clear that Paradigm would~~Registration Statement on Form S-3, which was declared effective on April 16, 2021 (File No. 333-255096) (the “Base Registration Statement”), covering the offering and sale of the shares of common stock to Triton pursuant to the Triton Purchase Agreement. Triton’s obligation to purchase shares of common stock under the Triton Purchase Agreement is conditioned upon, among other things, the filing of the Prospectus Supplement and the Base Registration Statement remaining effective.

The Triton Purchase Agreement contains customary representations, warranties, and covenants by each of the Company and Triton. Actual sales of shares of common stock to Triton will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the common stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. Triton has no right to require any sales of shares of common stock by the Company but is obligated to make purchases of shares of common stock from the Company from time to time, pursuant to directions from the Company, in accordance with the Triton Purchase Agreement. During the term of the Triton Purchase Agreement, Triton has covenanted not ~~be able~~ to ~~fulfil its commitment~~cause or engage in ~~a timely fashion.~~any short selling of shares of common stock.

On March ~~29, 2022, the joint venture agreement between~~27, 2024, the Company and Medesole Healthcare and Trading Private Limited, India was terminated by the Company pursuant to the terms of the joint venture agreement after mutual agreement with Medesole that Medesole would not be able to fulfil its commitments in a timely fashion.

~~Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures~~

Our management, including the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. These disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2021.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

~~Management~~’~~s Report on Internal Control over Financial Reporting~~

Our management is responsible for establishing and maintaining adequate internal control over financial reporting of the Company. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (1992 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation of our internal control over financial reporting, management has concluded that, as of December 31, 2021, our internal control over financial reporting was effective.

This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to rules of the SEC.

There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~The following table sets forth information with respect to each of our directors and executive officers including their positions and age as of the date of this Annual Report.~~

~~Steven M. Shum.~~ Mr. Shum is our Chief Executive Officer, a position he has held since October 10, 2019 and is also a director, a position he has held since October 11, 2017. Previously, Mr. Shum was Interim Chief Executive Officer (from May 2019 to October 7, 2019) and Chief Financial Officer of Eastside Distilling (Nasdaq: ESDI) (from October 2015 to August 2019). Prior to joining Eastside, Mr. Shum served as an Officer and Director of XZERES Corp, a publicly traded global renewable energy company, from October 2008 until April 2015 in various officer roles, including Chief Operating Officer from September 2014 until April 2015, Chief Financial Officer, Principal Accounting Officer and Secretary from April 2010 until September 2014 (under former name, Cascade Wind Corp) and Chief Executive Officer and President from October 2008 to August 2010. Mr. Shum also serves as the managing principal of Core Fund Management, LP and the Fund Manager of Core Fund, LP. He was a founder of Revere Data LLC (now part of Factset Research Systems, Inc.) and served as its Executive Vice President for four years, heading up the product development efforts and contributing to operations, business development, and sales. He spent six years as an investment research analyst and portfolio manager of D.N.B. Capital Management, Inc. His previous employers include Red Chip Review and Laughlin Group of Companies. He earned a B.S. in Finance and a B.S. in General Management from Portland State University in 1992.

~~Andrea Goren.~~ Mr. Goren is our CFO, a position he has held since June 14, 2021, and, before that, was advisor to the CEO of the Company from July 2020. Mr. Goren has over 25 years’ experience in private equity, investment banking and corporate finance working with management teams in growing and restructuring businesses. Mr. Goren currently serves as director and corporate secretary of iSign Solutions Inc. (ticker: ISGN), an electronic signature software company, and also held the position of CFO from December 2010 to June 2021. Mr. Goren also serves as director and treasurer of Americans for Ben Gurion University, a U.S. non-profit organization focused primarily on securing funds from U.S. donors to benefit one of Israel’s leading universities. Previously, Mr. Goren served as managing director and CFO of Phoenix Group, a private equity firm, and in that role served as director of Xplore Technologies Corp., a leader in rugged PCs sold to Zebra Technologies (ticker: ZBRA), and director of The Fairchild Corporation, a holding company with aerospace and retail assets, among others. Prior to Phoenix, Mr. Goren served as vice president of Shamrock International, Ltd, an arm of Roy Disney’s holding company focused onTriton private ~~equity and venture capital investments in Europe and Israel. Mr. Goren earned a BA from Connecticut College in 1989 and an MBA from Columbia University’s Graduate School of Business in 1994.~~

~~Michael J. Campbell.~~ Mr. Campbell is our Chief Operating Officer and Vice President of Business Development, positions he has held since February 2019 and was a director, from October 2017 to November 2020. Mr. Campbell was previously the Vice President of IVF Americas Business Unit for Cooper Surgical, Inc., a wholly owned subsidiary of The Cooper Companies (NYSE: COO). Mr. Campbell has substantial medical device sales, marketing and business development leadership experience within Global Fortune 500 and startup company environments. During his over 11-year career at Cooper Surgical, Mike has been responsible for IVF product portfolio sales globally including the U.S., Canada, Latin America, Europe, Middle East, Africa, and Asia Pacific regions. In addition to Mr. Campbell’s position as Vice President of IVF Americas Business Unit, he served in various leadership roles including Vice President of International Business Unit from 2013-2014 and as Vice President of IVF Business Unit from 2006 to 2012. Prior to joining Cooper Surgical, Mike was Vice President of Sales, Marketing and Business Development at Retroactive Bioscience from 1997 to 2006 and Vice President of Sales and Marketing for Gabriel Medical from 1994 to 1997. Mr. Campbell also served in various senior management positions across marketing, sales and product management at Boston Scientific Corporation beginning in 1984 through 1994.

~~Matthew Szot.~~ Mr. Szot is one of our directors, a position he has held since September 13, 2020, and Chairman of the Audit Committee and Compensation Committee, positions he has held since September 14, 2020. From March 2010 to November 2021, Mr. Szot served as the Executive Vice President and Chief Financial Officer of S&W Seed Company (Nasdaq: SANW), an agricultural biotechnology company. Mr. Szot is also currently a director and serves as Vice Chairman of the board, Chairman of the Audit Committee and a member of both the Compensation Committee and Nominating and Governance Committees of SenesTech (Nasdaq: SNES), a publicly traded life science company with next generation technologies for managing animal pest populations through fertility control. From June 2018 to August 2019, Mr. Szot served on the board of directors and as Chairman of the Audit Committee of Eastside Distilling, Inc. (Nasdaq; EAST), a publicly traded company in the craft spirits industry. From February 2007 until October 2011, Mr. Szot served as the Chief Financial Officer for Cardiff Partners, LLC, a strategic consulting company that provided executive financial services to various publicly traded and privately held companies. Prior thereto, from 2003 to December 2006, Mr. Szot served as Chief Financial Officer and Secretary of Rip Curl, Inc., a market leader in wetsuit and action sports apparel products. From 1996 to 2003, Mr. Szot was a Certified Public Accountant with KPMG in the San Diego and Chicago offices and served as an Audit Manager for various publicly traded companies. Mr. Szot graduated with High Honors from the University of Illinois, Champaign-Urbana with a Bachelor of Science degree in Agricultural Economics/Accountancy. Mr. Szot is a Certified Public Accountant in the State of California.

~~Kevin Doody, M.D.~~ Dr. Doody serves as Medical Director for INVO Bioscience, a position he has held since April 2017 and is also a member of the Board of Directors, a position he has held since April 7, 2017. Dr. Doody is a renowned fertility specialist who is the founder and Medical Director for the Center for Assisted Reproduction (CARE Fertility) and Effortless IVF located in Bedford Texas. The Center for Assisted Reproduction, established in 1989, has been a pioneer of assisted reproductive technologies in the north Texas region with several firsts including the first ICSI pregnancy and the first to successfully implement a blastocyst culture system. CARE Fertility had the first pregnancy in the region with a pregnancy following embryo biopsy and pre-implantation genetic testing for cystic fibrosis. CARE Fertility/ Effortless IVF also was the first to adopt the INVOcell™ Intravaginal Culture System since the INVOcell first obtained FDA clearance. Dr. Doody is President of the Society for Assisted Reproductive Technology (SART), on the Board of Directors of the American Society for Reproductive Medicine (ASRM) and a member of the RESOLVE Physician Council. As INVO Bioscience’s Medical Director, Dr. Doody provides medical and clinical guidance, INVO education and training, and oversight of risk management and post-market surveillance activities as well as support current and new product development.

~~Trent Davis.~~ Mr. Davis is one of our directors since his appointment in December 2019. Mr. Davis also serves as the Chairman of our Nominating and Corporate Governance Committee, a position he has held since November 2020. In addition, Mr. Davis is currently CEO of Paulson Investment Company, LLC, a boutique investment firm that specializes in private equity offerings of small and mid-cap companies. From December 2014 to December 2018, Mr. Davis was President and Chief Operating Officer of Whitestone Investment Network, Inc., which provides executive advisory services and also restructures, recapitalizes and makes strategic investments in small to midsize companies. Since March 2018, Mr. Davis served as a director of Senmiao Technology Limited (Nasdaq: AIHS), an online lending platform in China. From August 2016 to August 2019, Mr. Davis served as director of Eastside Distilling, Inc. (Nasdaq: EAST), and from July 2015 to April 2017, he served as director of Dataram Corporation (Nasdaq: DRAM). Mr. Davis helped to successfully complete the reverse merger between Dataram and U.S. Gold Corp (Nasdaq: USAU), a gold exploration and development company. From December 2014 to July 2015, Mr. Davis served as Chairman of the Board of Majesco Entertainment Company (Nasdaq: COOL). Mr. Davis also served as director and President of Paulson Capital Corp. (Nasdaq: PLCC) from November 2013 to July 2014, when Paulson Capital Corp. completed a reverse merger with VBI Vaccine (Nasdaq: VBIV). Mr. Davis continued to serve on the board and the audit committee of VBI until May 2016. Prior to serving on the board of Paulson Capital Corp., Mr. Davis served as the Chief Executive Officer of its subsidiary, Paulson Investment Company, LLC, where he oversaw he syndication of approximately $600 million of investment in over 50 client companies in both public and private transactions. In 2003, Mr. Davis served as Chairman of the Board of the National Investment Banking Association. Mr. Davis holds a B.S. in Business and Economics from Linfield College and an M.B.A. from the University of Portland. Mr. Davis is qualified to serve on the Board because of his deep knowledge of finance and public company issues, capital market, advisory and entrepreneurial experiences, and extensive expertise in operational and executive management.

~~Barbara Ryan~~. Ms. Ryan is one of our directors, a position she has held since September 2020. Ms. Ryan founded Barbara Ryan Advisors, a capital markets and communications firm, in 2012 following a more than 30-year career on Wall Street as a sell-side research analyst covering the US Large Cap Pharmaceutical Industry. Ms. Ryan has deep experience in equity and debt financings, M&A, valuation, SEC reporting, financial analysis and corporate strategy across a broad range of life sciences companies. Barbara worked on several of the industry’s largest M&A transactions; Shire’s defense versus a hostile takeover attempt by Abbvie, Shire’s takeover of Baxalta, Allergan’s defense against Valeant and Perrigo’s defense versus Mylan. Barbara served as an executive team member and on the disclosure committee for Radius Health from January 2014 to December 2017 and played a critical role in the Company’s IPO and subsequent follow on offerings which raised over $1 billion. Previously, Ms. Ryan was a Managing Director at Deutsche Bank/Alex Brown and Head of the company’s Pharmaceutical Research Team for 19 years and began her research career covering the pharmaceutical industry at Bear Stearns in 1982. Ms. Ryan also covered the drug wholesalers and PBMs and was the lead analyst on many high-profile IPO’s including Express Scripts, PSSI, and Henry Schein. Ms. Ryan currently serves as a director on the Board of MiNK Therapeutics where she Chairs the Audit Committee, Safecor Heatlh, OcuTerra Therapeutics, and The Red Door Community (formerly Gilda’s Club NYC), a non-profit organization. Barbara is the Founder of Fabulous Pharma Females, a non-profit whose mission is to advance women in the biopharma industry, is a member of the Editorial Advisory Board of Pharmaceutical Executive Magazine, a Faculty member of the GLG Institute and a member of the Prix Galien Executive Advisory Board.

~~Jeffrey J. Segal, M.D.~~ Dr. Segal is one of our directors, a position he has held since November 2020. Dr. Segal founded Medical Justice Services Inc., an organization focused on protecting physicians from frivolous lawsuits in 2004, and currently serves as CEO. In 2010, Dr. Segal also launched the eMerit platform for Medical Justice Services, Inc. to enable hospitals and doctors to maximize their online presence and provide patients an ability to locate doctors online. In December 2019, Dr. Segal joined the Byrd Adatto Law Firm as a partner. From 2000-2004, Dr. Segal co-founded and served as CEO of DarPharma, Inc., a clinic focused on therapies for schizophrenia, Parkinson’s disease and other targeted CNS disorders. From 1999 through 2002, Dr. Segal co-founded and served as CEO of On-Call Solutions, Inc., a company focused on web-based design of physician call schedules. Dr. Segal is also a board certified neurosurgeon and operated a private neurosurgery practice from 1991-2000. Dr. Segal received his B.A. from the University of Texas, his medical degree from Baylor College of Medicine and his juris doctor from Concord Law School.

~~Rebecca Messina~~ Ms. Messina is one of our directors, a position she has held since April 2021. Ms. Messina also serves as the Chairman of our Marketing Committee, a position she has held since May 2021. Ms. Messina is currently a senior advisor at McKinsey & Company, a position she has held since 2019. From 2018-2019, Ms. Messina served as Global Chief Marketing Officer for Uber and from 2016-2018, Ms. Messina served as Senior Vice President, Global Chief Marketing Officer for Beam Suntory. Prior to that, Ms. Messina spent 22 years with The Coca-Cola Company in various roles of increasing responsibility, serving as Senior Vice President, Marketing & Innovation, Ventures & emerging Brands from 2014-2016. Ms. Messina is currently a director for each of Vive Organics, Archer Boose, Make-A-Wish Foundation Bartesian, Outdoor Voices and Mobile Marketing Association, all private companies. Ms. Messina received her Bachelor of Arts from Miami University of Ohio in 1994.

The listing rules of Nasdaq require us to maintain a Board comprised of a majority of independent directors, as determined affirmatively by our Board. In addition, the Nasdaq listing rules require that, subject to specified exceptions, each member of our Audit, Compensation and Nominating and Corporate Governance Committees must be independent. Audit Committee members and Compensation Committee members must also satisfy the independence criteria set forth in Rule 10A-3 and Rule 10C-1, respectively, under the Exchange Act. Under Nasdaq listing rules, a director will only qualify as an “independent director” if, in the opinion of our Board, the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out his or her responsibilities.

Our Board has undertaken a review of the independence of our directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities, and determined that Trent Davis, Matthew Szot, Barbara Ryan and Jeffrey Segal, M.D., representing four of our six directors, are independent under Nasdaq listing rules. Mr. Shum is not considered independent due to his position as our Chief Executive Officer. Mr. Doody is not considered independent due to the level of compensation received by him from the Company in 2018.

In making these determinations, our Board considered the relationships that each nonemployee director has with us and all other facts and circumstances our Board deemed relevant in determining their independence, including consulting relationships, family relationships and the beneficial ownership of our capital stock by each non-employee director.

We have adopted a Code of Conduct that applies to all employees including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The text of our Code of Conduct is posted in the “Investor Information—Corporate Governance” section of our website, www.invobio.com.

We intend to disclose on our website any amendments to, or waivers from, our Code of Business Conduct and Ethics that are required to be disclosed pursuant to the disclosure requirements of Item 5.05 of Form 8-K

~~Our Marketing Committee currently consists of Ms. Messina (Chair), Dr. Doody and Dr. Segal.~~

In May 2021, the board elected to form a special Marketing Committee in order to support the addition of our internal marketing resources and overall plan to expand our marketing efforts to support our INVO Centers and distribution activities. The Marketing Committee helps to review, support, oversee, and provide input on our marketing activities in support of our marketing team.

~~Our Compensation Committee currently consists of Mr. Szot (Chair), Mr. Davis and Ms. Ryan.~~

The Compensation Committee oversees our compensation policies, plans and programs, and to review and determine the compensation to be paid to our executive officers and directors. In addition, the Compensation Committee has the authority to act on behalf of the Board in fulfilling the Board’s responsibilities with respect to compensation-based and related disclosures in filings as required by the Securities and Exchange Commission.

~~Our Nominating and Corporate Governance Committee consists of Mr. Szot, Mr. Davis (Chair) and Ms. Ryan.~~

The Nominating and Corporate Governance Committee (i) oversees our corporate governance functions on behalf of the Board; (ii) makes recommendations to the Board regarding corporate governance issues; (iii) identify and evaluate candidates to serve as our directors consistent with the criteria approved by the Board and reviews and evaluates the performance of the Board; (iv) serves as a focal point for communication between director candidates, non-committee directors and management; (v) selects or recommends to the Board for selection candidates to the Board, or, to the extent required below, to serve as nominees for director for the annual meeting of shareholders; and (vi) makes other recommendations to the Board regarding affairs relating to our directors.

Our Audit Committee members currently consist of Mr. Szot (Chair), Dr. Segal and Ms. Ryan. Each of the members of our Audit Committee is an independent director under the Nasdaq listing rules, satisfies the additional independence criteria for Audit Committee members and satisfies the requirements for financial literacy under the Nasdaq listing rules and Rule 10A-3 of the Securities Exchange Act of 1934, as applicable.

Our board has also determined that Mr. Szot qualifies as an Audit Committee financial expert within the meaning of the applicable rules and regulations of the SEC and satisfies the financial sophistication requirements of the Nasdaq listing rules.

Our Audit Committee oversees our corporate accounting and financial reporting process and assists our Board in monitoring our financial systems and our legal and regulatory compliance. Our Audit Committee also:

Our Audit Committee operates under a written charter approved by our Board and that satisfies the applicable rules and regulations of the SEC and the listing requirements of Nasdaq. The charter is available on the corporate governance section of our website, which is located at www.invobio.com.

The following Summary Compensation Table sets forth, for the years indicated, all cash compensation paid, distributed or accrued for services, including salary and bonus amounts, rendered in all capacities by the Company’s “named executive officers” for SEC reporting purposes.

The following table provides information about outstanding stock options issued by the Company held by each of our NEOs as of December 31, 2021. None of our NEOs held any other equity awards from the Company as of December 31, 2021.

On October 16, 2019, the Company entered into an employment agreement with Steven Shum (the “Shum Employment Agreement”), pursuant to which Mr. Shum serves as Chief Executive Officer on an at-will basis at an annual base salary of $260,000. The Shum Employment Agreement provided for a performance bonus of $75,000 upon a successful up-listing to the Nasdaq Stock Market, with all other bonuses to be determined by the board in its sole discretion. In addition to his base salary and performance bonus, we granted Mr. Shum: (i) 12,500 shares of our common stock and (ii) a three-year optionplacement warrants to purchase ~~202,599~~up to 1,000,000 shares of our common stock at an exercise price of ~~$8.1600~~$2.00 per share. These options vest monthly over a 3-year period. Pursuant to the Shum Employment Agreement, Mr. Shum is also entitled to customary benefits, including health insurance and participation in employee benefit plans. The Shum Employment Agreement provides that if Mr. Shum is terminated without cause (as defined in the Shum Employment Agreement) or he resigns his employment due to a constructive termination (as defined in the Shum Employment Agreement) then he will be entitled to receive, as severance, (a) 12 month’s base salary continuation, (b) 6 months reimbursement of payments for continuing health coverage, pursuant to COBRA, assuming you elect COBRA continuation, and (c) continued vesting of his shares for a period of 6 months following such employment termination.

~~Andrea Goren~~On March 27, 2024, the Company delivered a purchase notice for 260,000 shares of common stock. The Company’s common stock traded below the purchase price following the date of the purchase notice, giving Triton the right to return to the Company any of the 260,000 shares. Triton notified the Company that it will return 185,000 shares to the Company and closed the purchase of 75,000 shares pursuant to the Triton Purchase Agreement.

On ~~June 14, 2021,~~April 5, 2024, the Company entered into ~~an employment~~a purchase agreement (the “FirstFire Purchase Agreement”) with ~~Andrea Goren (the “Goren Employment Agreement”~~FirstFire Global Opportunities Fund, LLC (“FirstFire”), pursuant to which ~~Mr. Goren was hired as~~FirstFire agreed to purchase, and the Company agreed to issue and sell, (i) a promissory note with an aggregate principal amount of $275,000.00, which is convertible into shares of the Company’s ~~chief financial officer. The Goren Employment Agreement provides for an annual base salary of $215,000~~common stock, according to the terms, conditions, and limitations outlined in the note (the “FirstFire Note”), (ii) a target annual incentive bonus of up to 50% of base salary if the Company achieves goals and objectives determined by the board of directors. In connection with the Goren Employment Agreement, on June 14, 2021 the Company granted Mr. Goren a stock option under the 2019 Planwarrant (the “First Warrant”) to purchase ~~72,500~~229,167 shares ~~of Company common stock~~ (the “Goren Option”). The Goren option vests in equal monthly installments over a 3-year period, has a term of 10 years and can be exercised at a price of $5.205 per share. Also, in connection with the Goren Employment Agreement, as of July 1, 2021, Mr. Goren was granted a restricted stock award for 5,000 share of Company common stock (the “Goren RSA”). The Goren RSA vests in equal monthly installments over a 12-month period. Mr. Goren is also entitled to customary benefits, including health insurance and participation in employee benefit plans. The Goren Employment Agreement provides that if Mr. Goren terminates the Goren Employment Agreement for “cause” (as defined in the Goren Employment Agreement) or the Company terminates the Goren Employment Agreement without “cause,” then he will continue to receive his base salary for three months after termination and certain insurance benefits for twelve months after termination. The Company may terminate the Goren Employment Agreement without “cause” on 30 days’ notice.

~~On January 15, 2020, the Company entered into an employment agreement (the “Campbell Employment Agreement”~~“First Warrant Shares”) ~~with Michael Campbell to continue serving as~~of the Company’s Chief Operating Officer and Vice President of Business Development. The Campbell Employment Agreement provides for an annual base salary of $220,000, and a target annual incentive bonus of up to 50% of base salary if the Company achieves goals and objectives determined by the board of directors. In connection with the Campbell Employment Agreement, on January 17, 2020, the Company granted Mr. Campbell 31,250 shares of Company common stock ~~and an option to purchase 125,000 shares of Company common stock (the “Option”)~~ at an exercise price of ~~$6.84096~~$1.20 per ~~share. One quarter~~share, (iii) a warrant (the “Second Warrant”) to purchase 500,000 shares (the “Second Warrant Shares”) of common stock at an exercise price of $0.01 issued to FirstFire, and (iv) 50,000 shares of common stock (the “Commitment Shares”), for a purchase price of $250,000. Carter, Terry, & Company, Inc. acted as placement agent for the ~~Option vested upon grant,~~transaction, for which it received a cash fee of $25,000. The proceeds are being used for working capital and the remainder vests in monthly increments over a period of two years from the date of grant. Mr. Campbell is also entitled to customary benefits, including health insurance and participation in employee benefit plans. The Campbell Employment Agreement provides that if Mr. Campbell terminates the Campbell Employment Agreement for “cause” (as defined in the Campbell Employment Agreement) or the Company terminates the Campbell Employment Agreement without “cause,” then he will continue to receive his base salary and certain insurance benefits for three months after termination. The Company may terminate the Campbell Employment Agreement without “cause” on 60 days’ notice.

~~POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL~~general corporate purposes.

~~If Mr. Shum is involuntarily terminated without cause or constructively terminated (in each case, as defined~~Among other limitations, the total cumulative number of shares of common stock that may be issued to FirstFire under the FirstFire Purchase Agreement may not exceed the requirements of Nasdaq Listing Rule 5635(d), except that such limitation will not apply in the ~~Shum Employment Agreement), then he is entitled~~event the Company obtains stockholder approval of the shares of common stock to ~~12 months’ severance and continued vesting~~be issued under the Purchase Agreement, if necessary, in accordance with the requirements of ~~his shares~~Nasdaq Listing Rule 5635(d). The Company has agreed to hold a meeting for ~~a period~~the purpose of ~~6-months following termination.~~obtaining this stockholder approval within nine (9) months of the date of the FirstFire Purchase Agreement.

~~If (i) Mr. Goren terminates his employment agreement for cause, (ii)~~The FirstFire Purchase Agreement contains customary representations, warranties, and covenants by each of the Company ~~provides notice~~and FirstFire. Among other covenants of the parties, the Company granted FirstFire the right to participate in any subsequent placement of securities until the earlier of eighteen (18) months after the date of the FirstFire Purchase Agreement or extinguishment of the FirstFire Note. The Company has also granted customary “piggy-back” registration rights to FirstFire with respect to the shares of common stock underlying the FirstFire Note (the “Conversion Shares”), the First Warrant Shares, the Second Warrant Shares, and the Commitment Shares. FirstFirehas covenanted not to ~~renew his employment agreement on~~cause or engage in any ~~anniversary date, or (iii)~~short selling of shares of common stock until the ~~Company terminates his employment agreement without cause, then he~~FirstFire Note is ~~entitled to three months’ severance and insurance benefits.~~

If (i) Mr. Campbell terminates his employment agreement for cause, (ii) the Company provides notice not to renew his employment agreement on any anniversary date, or (iii) the Company terminates his employment agreement without cause, then he is entitled to three months’ severance and insurance benefits.fully repaid.

The following ~~table~~ sets forth ~~quantitative information with respect to potential payments to be made to either Mr. Shum, Mr. Goren and Mr. Campbell upon termination in various circumstances. The potential payments are based on~~ the material terms of ~~each of~~ the ~~employment agreements discussed above. For a more detailed description of~~FirstFire Note, the ~~employment agreements, see~~First Warrant, and the ~~“Employment Agreements” section above.~~

Interest and Maturity. The FirstFire Note carries an interest rate of twelve percent (12

, guaranteed, and fully earned as of the issue date. The maturity date of the FirstFire Note is twelve (12) months from the issue date, at which point the Principal Amount, together with any accrued and unpaid interest and other fees, shall be due and payable to the holder of the FirstFire Note.

~~SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS~~Conversion. The holder of the FirstFire Note is entitled to convert any portion of the outstanding and unpaid principal amount and accrued interest into Conversion Shares at a conversion price of $1.00 per share, subject to adjustment. 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 to the beneficial ownership limitations in the FirstFire Note, the number of shares of common stock that may be issued under the FirstFire Note, the First Warrant, the Second Warrant, and under the FirstFire Purchase Agreement (including the Commitment Shares) is limited to 19.99% of the outstanding common stock as of April 5, 2024 (the “Exchange Cap”, which is equal to 523,344 shares of common stock, subject to adjustment as described in the FirstFire Purchase Agreement), unless stockholder approval is obtained by the Company to issue more than the Exchange Cap. The Exchange Cap shall be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction.

Prepayment. 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. 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.

Covenants. The Company is subject to various covenants that restrict its ability to, among other things, declare dividends, make certain investments, sell assets outside the ordinary course of business, or enter into transactions with affiliates, thereby ensuring the Company operational and financial activities are conducted in a manner that prioritizes the repayment of the FirstFire Note.

Events of Default. The FirstFire Note outlines specific events of default and provides FirstFire certain rights and remedies in such events, including but not limited to the acceleration of the FirstFire Note’s due date and a requirement for the Company to pay a default amount. Specific events that constitute a default under the FirstFire Note include, but are not limited to, failure to pay principal or interest when due, breaches of covenants or agreements, bankruptcy or insolvency events, and a failure to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Upon an event of default, the FirstFire Note becomes immediately due and payable, and the Borrower is subject to a default sum as stipulated.

The ~~following table shows information regarding our equity compensation plans as of December 31, 2021.~~

~~(1)~~ ~~2019 Stock Incentive Plan.~~ ~~On October 3, 2019, our Board adopted~~FirstFire Note is subject to, and governed by, the ~~2019 Stock Incentive Plan (the “Plan”)~~. ~~The purpose of our Plan is to advance the best interests~~terms and conditions of the company by providing those persons who have a substantial responsibility for our management and growth with additional incentive and by increasing their proprietary interest in the success of the company, thereby encouraging them to maintain their relationships with us. Further, the availability and offering of stock options and common stock under the plan supports and increases our ability to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability which we depend. The total number of shares available for the grant of either stock options or compensation stock under the plan is 1,371,449 shares, subject to adjustment.

~~(2) We granted 225,402 shares subject to restricted stock grants under the Plan in the year ended December 31, 2021.~~

Our Board administers our plan and has full power to grant stock options and common stock, construe and interpret the plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, it believes reasonable and proper. Any decision made, or action taken, by our Board arising out of or in connection with the interpretation and administration of the plan is final and conclusive.

The Board, in its absolute discretion, may award common stock to employees of, consultants to, and directors of the company, and such other persons as the Board or compensation committee may select, and permit holders of common stock options to exercise such options prior to full vesting therein and hold the common stock issued upon exercise of the option as common stock. Stock options may also be granted by our Board or compensation committee to non-employee directors of the company or other persons who are performing or who have been engaged to perform services of special importance to the management, operation or development of the company.

In the event that our outstanding common stock is changed into or exchanged for a different number or kind of shares or other securities of the company by reason of merger, consolidation, other reorganization, recapitalization, combination of shares, stock split-up or stock dividend, prompt, proportionate, equitable, lawful and adequate adjustment shall be made of the aggregate number and kind of shares subject to stock options which may be granted under the plan.

Our Board may at any time, and from time to time, suspend or terminate the plan in whole or in part or amend it from time to time in such respects as our Board may deem appropriate and in our best interest.FirstFire Purchase Agreement.

~~Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~First Warrant

The ~~following table~~First Warrant grants the holder thereof the right to purchase up to 229,167 shares of common stock at an exercise price of $1.20 per share.

Exercisability. The First Warrant is be immediately exercisable and ~~notes~~will expire five years from the issuance date. The First Warrant is exercisable, at the option of the holder, in whole or in part, by delivering to the Company a duly executed exercise notice and, at any time a registration statement registering the issuance of the First Warrant Shares under the Securities Act of 1933, as amended (the “Securities Act”) is effective and available for the issuance of such First Warrant Shares, or an exemption from registration under the Securities Act is available for the issuance of such First Warrant Shares, by payment in full in immediately available funds for the number of First Warrant Shares purchased upon such exercise. If a registration statement registering the issuance of the First Warrant Shares underlying the First Warrant under the Securities Act is not effective or available, the holder may, in its sole discretion, elect to exercise the First Warrant through a cashless exercise, in which case the holder would receive upon such exercise the net number of First Warrant Shares determined according to the formula set forth in the ~~beneficial ownership~~First Warrant.

Exercise Limitation. A holder will not have the right to exercise any portion of the First Warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of the common stock ofoutstanding immediately after giving effect to the ~~Company~~exercise, as of March 31, 2022, by each person who was known by the Company to beneficially own more than 5% of the common stock, by each director and named executive officer, and by all directors and executive officers as a group. Beneficialsuch percentage ownership is determined in accordance with the ~~rules~~terms of the ~~SEC~~First Warrant.

Trading Market Regulation. Until the Company has obtained stockholder approval of the FirstFire Purchase Agreement and ~~includes voting~~the issuance of the securities issued pursuant thereto, the Company may not issue any First Warrant Shares upon the exercise of the First Warrants if the issuance of such First Warrant Shares, (taken together with the issuance of any shares held by or ~~dispositive power with respect~~issuable to the ~~securities. Unless otherwise indicated below,~~holder under the FirstFire Purchase Agreement or any other agreement with the Company) would exceed the aggregate number of shares which the Company may issue without breaching 523,344 shares (19.9% of the Company’s outstanding common stock) or any of the Company’s obligations under the rules or regulations of Nasdaq.

Exercise Price Adjustment. Subject to the aforementioned limitations, the exercise price of the First Warrant is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock, upon any distributions of assets, including cash, stock or other property to our ~~knowledge, all persons listed below have sole voting~~stockholders, and ~~dispositive power with respect to their~~if we issue additional shares of ~~our~~ common stock ~~except~~at a price per share that is less than the exercise price then in effect.

Fundamental Transactions. The Company shall not enter into or be a party to a fundamental transaction unless the ~~extent authority is shared by spouses~~successor entity assumes all obligations of the Company under ~~applicable law. Unless otherwise noted,~~ the ~~address~~First Warrant and other transaction documents. Upon consummation of a fundamental transaction, then the successor entity will succeed to, and be substituted for the Company, and may exercise every right and power that the Company may exercise and will assume all of the ~~individuals and entities~~Company’s obligations under the First Warrant with the same effect as if such successor entity had been named ~~below is care~~in the First Warrant itself.

Rights as a Stockholder. Except as otherwise provided in the First Warrant or by virtue of ~~INVO Bioscience, Inc., 5582 Broadcast Court Sarasota, Florida, 34240.~~such holder’s ownership of shares of common stock, the holder of the First Warrant will not have the rights or privileges of a holder of common stock, including any voting rights, until the holder exercises the First Warrant.

The ~~following table sets forth~~Second Warrant grants the ~~beneficial ownership~~holder thereof the right to purchase up to 500,000 shares of ~~our~~ common ~~shares as~~stock at an exercise price of ~~March 31, 2022 for:~~$0.01 per share.

Exercisability. The Second Warrant will only become exercisable on the specific Triggering Event Date, which is the date that an Event of Default occurs under the Note, and will expire five years from such date. The Second Warrant includes a ‘Returnable Warrant’ clause, providing that the Second Warrant shall be cancelled and returned to the Company if the Note is fully extinguished before any Triggering Event Date. The Second Warrant will be exercisable, at the option of each holder, in whole or in part by delivering to the Company a duly executed exercise notice and, at any time a registration statement registering the issuance of the Second Warrant Shares under the Securities Act is effective and available for the issuance of such Second Warrant Shares, or an exemption from registration under the Securities Act is available for the issuance of such shares, by payment in full in immediately available funds for the number of Second Warrant Shares purchased upon such exercise. If a registration statement registering the issuance of Second Warrant Shares under the Securities Act is not effective or available, the holder may, in its sole discretion, elect to exercise the Second Warrant through a cashless exercise, in which case the holder would receive upon such exercise the net number of Second Warrant Shares determined according to the formula set forth in the warrant.

~~The~~Exercise Limitation. A holder will not have the right to exercise any portion of the Second Warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of the common stock outstanding immediately after giving effect to the exercise, as such percentage ownership ~~information~~ is ~~based upon 12,089,298 common shares outstanding as of March 31, 2022. We have~~ determined ~~beneficial ownership~~ in accordance with the ~~rules~~terms of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws. The address for persons listed in the table is c/o INVO Bioscience, Inc., 5582 Broadcast Court, Sarasota, FL 34240.

~~Section 16(a)~~Trading Market Regulation. Until the Company has obtained stockholder approval of the ~~Exchange Act requires our officers~~FirstFire Purchase Agreement and ~~directors to file~~the issuance of the securities issued pursuant thereto, the Company may not issue any Second Warrant Shares upon the exercise of the Second Warrants if the issuance of such Second Warrant Shares, (taken together with the ~~SEC reports~~issuance of ~~ownership on Form 3 and changes in ownership on Form 4 and Form 5. Officers and directors are required~~any shares held by ~~Commission regulations~~or issuable to ~~furnish to us copies~~the holder under the FirstFire Purchase Agreement or any other agreement with the Company) would exceed the aggregate number of ~~all Section 16(a) forms they file. Based solely on our review of~~shares which the copies of such forms received by us, or written representations from certain reporting persons, to our knowledge all Section 16(a) filing requirements applicable to our officers and directors were timely filed during the fiscal year ended December 31, 2021.

~~There are no present arrangements, including pledges~~Company may issue without breaching 523,344 shares (19.9% of the Company’s ~~securities, known to the Company, the operation of which may result at a subsequent date in a change in control~~outstanding common stock) or any of the ~~Company.~~

~~Item 13. Certain Relationships and Related Transactions~~Company’s obligations under the rules or regulations of Nasdaq.

~~Related Party Transactions Policy~~Exercise Price Adjustment. Subject to the aforementioned limitations, the exercise price of the Second Warrant is subject to appropriate adjustment in the event of certain stock dividends and ~~Procedures~~distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock, upon any distributions of assets, including cash, stock or other property to our stockholders, and if we issue additional shares of common stock at a price per share that is less than the exercise price then in effect.

~~We have adopted~~Fundamental Transactions. The Company shall not enter into or be a ~~written policy with respect~~party to a fundamental transaction unless the ~~review, approval, and ratification of related party transactions. Under the policy, any transactions where the amount involved exceeds the lesser of $120,000 or one percent (1%)~~successor entity assumes all obligations of the ~~average~~Company under the Second Warrant and other transaction documents. Upon consummation of ~~our total assets at year-end~~a fundamental transaction, then the successor entity will succeed to, and be substituted for the ~~last two completed fiscal years~~Company, and ~~in which any related person has or~~may exercise every right and power that the Company may exercise and will ~~have a direct or indirect material interest, other than equity and other compensation, termination and other arrangements which are described~~assume all of the Company’s obligations under the ~~headings “Compensation of Directors” and “Executive and Director Compensation,” is defined~~Second Warrant with the same effect as ~~a related party transaction. Any~~if such ~~related party transactions are reviewed and must be approved by~~successor entity had been named in the ~~Company’s board of directors.~~Second Warrant itself.

~~Certain Related Party Transactions~~Rights as a Stockholder. Except as otherwise provided in the Second Warrant or by virtue of such holder’s ownership of shares of common stock, the holder of the Second Warrant will not have the rights or privileges of a holder of common stock, including any voting rights, until the holder exercises the Second Warrant.

In November 2020, Paulson Investment Company served as a co-managing underwriter for the Company’s underwritten public offering and received fee and commissions for such role in the amount of $271,440. Trent Davis, one of our directors is President of Paulson Investment Company. Mr. Davis did not receive any compensation related to the fees and commissions received by Paulson.

In October 2021, Paulson Investment Company served as a placement agent for the Company’s registered direct offering and received fees and commissions for such role in the amount of $323,584. Trent Davis, one of the Company’s directors, is President of Paulson Investment Company. Mr. Davis did not receive any compensation related to the fees and commissions received by Paulson. Steve Shum and Andrea Goren, the CEO and CFO of the Company, respectively, each purchased 30,674 shares in the registered direct offering for gross proceeds of $199,994.

~~The following table summarizes the approximate aggregate fees billed to the Company or expected to be billed to the Company by its independent registered accounting firm:~~

The Company’s Board of Directors has adopted a procedure for pre-approval of all fees charged by the Company’s independent auditors. Under the procedure, the Board approves the engagement letter with respect to audit and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of the Board. Any such approval by the designated member is disclosed to the entire Board at the next meeting. The audit fees paid to the auditors with respect to fiscal year 2021 and 2020 were pre-approved by the entire Board of Directors.

Information required by Schedule II is shown in the Notes to Consolidated Financial Statements. All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

The exhibits listed in the Original Filing and the exhibits listed below in this Amendment are filed with, or incorporated by reference in, this report.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this ~~report~~Annual Report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized on ~~March 31, 2022.~~April 17, 2024.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 31, 2022.

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging ~~Growth Company~~growth company ☐

	Page
~~Part I~~

~~Item 1.~~	~~Business~~	4
~~Item 1A.~~	~~Risk Factors~~	8
~~Item 1B.~~	~~Unresolved Staff Comments~~	19
~~Item 2.~~	~~Properties~~	19
~~Item 3.~~	~~Legal Proceedings~~	19
~~Item 4.~~	~~Mine Safety Disclosures~~	19

~~Part II~~

~~Item 5.~~	~~Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~	20
~~Item 6.~~	~~[Reserved]~~	21
~~Item 7.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	21
~~Item 7A.~~	~~Quantitative and Qualitative Disclosure About Market Risk~~	28
~~Item 8.~~	~~Financial Statements and Supplementary Data~~	29
~~Item 9.~~	~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~	30
~~Item 9A.~~	~~Controls and Procedures~~	30
~~Item 9B.~~	~~Other Information~~	30

~~Part III~~

~~Item 10.~~	~~Directors, Executive Officers and Corporate Governance~~	30
~~Item 11.~~	~~Executive and Director Compensation~~	34
~~Item 12.~~	~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~	38
~~Item 13.~~	~~Certain Relationships and Related Transactions, and Director Independence~~	39
~~Item 14.~~	~~Principal Accountant Fees and Services~~	39

~~Part IV~~

~~Item 15.~~	~~Exhibits, Financial Statement Schedules~~	40

~~SIGNATURES~~		43

				INVOcell Registration
~~Market~~	~~Distribution Partner~~	~~Date~~	~~Initial Term~~	~~Status in Country~~

~~Canada~~	~~Invaron Pharmaceuticals Inc.~~	~~July 2020~~	~~1-Year~~	~~Completed~~
~~Mexico (a)~~	~~Positib Fertility, S.A. de C.V.~~	~~Sept 2020~~	TBD**	~~Completed~~
~~Malaysia~~	~~iDS Medical Systems~~	~~Nov 2020~~	~~3-year~~	~~Completed~~
~~Jordan~~	~~Biovate~~	~~Sept 2019~~	~~1-year~~	~~Completed~~
~~Pakistan~~	~~Galaxy Pharma~~	~~Dec 2020~~	~~1-year~~	~~In process~~
~~Thailand~~	~~IVF Envimed Co., Ltd.~~	~~April 2021~~	~~1-year~~	~~Complete~~
~~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~~
~~Togolese Republic~~	~~INVOSOLUX TOGO~~	~~Nov 2019~~	~~1-year~~	~~In process~~
~~Iran~~	~~Tasnim Behboud~~	~~Dec 2020~~	~~1-year~~	~~Complete~~
~~Sri Lanka~~	~~Alsonic Limited~~	~~July 2021~~	~~1-year~~	~~In process~~

~~Affiliate Name~~	~~Country~~		~~Percent (%)~~ ~~Ownership~~

~~HRCFG INVO, LLC~~		~~United States~~		50	%
~~Bloom Invo, LLC~~		~~United States~~		40	%
~~Positib Fertility, S.A. de C.V.~~		~~Mexico~~		33	%
~~SNS MURNI INVO Bioscience Malaysia Sendirian Berhad~~		~~Malaysia~~		50	%
~~Ginekalix INVO Bioscience LLC Skopje~~		~~Republic of North Macedonia~~		50	%

☒	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the fiscal year ended December 31, ~~2021~~2023

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from to

~~Partner~~		~~Country~~				Partnership Split
~~Lyfe Medical~~			~~United States~~				40	%

●	~~the payment or receipt of anything of value in exchange for referrals of business (~~~~e.g.~~ ~~Anti-Kickback Statute (42 U.S.C. § 1320a-7b) (the “AKS”); Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a) (the “CMPL”); Ala. Code § 22-1-11(c));~~
●	~~the presenting of a false or fraudulent claim for payment by a government healthcare program, such as Medicare or Medicaid (~~~~e.g.~~ ~~False Claims Act (31 U.S.C. §§ 3729 – 3733); Georgia State False Medicaid Claims Act (Ga. Code Ann. §§ 49-4-168 – 49-4-168.6)); and~~
●	the referral by certain ordering licensed healthcare providers of certain healthcare items and services that are payable by a government healthcare program to an entity in which the healthcare provider or his or her immediate family member has an investment or other financial relationship (~~e.g.~~ ~~Section 1877 of the Social Security Act (42 U.S.C. § 1395nn), commonly referred to as the “Stark Law”; Georgia Patient Self-Referral Act of 1993 (Ga. Code Ann. §§ 43-1B-1 – 43-1B-8)).~~

	●	~~Our business has posted net operating losses, has a limited operating history, and needs additional capital to grow and finance its operations.~~
	●	~~We may require additional capital to continue as a going concern and to continue executing our business plan, which if not obtained could result in a need to curtail operations.~~
	●	Our existing INVO Centers were established as joint ventures with medical partners. Future INVO Centers may also be established as joint ventures. These joint ventures will be important to our business. 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. These risks may be heightened in the area of artificial reproduction.~~
	●	~~We may not be able to develop or continue our business if we fail to retain key personnel.~~
	●	~~We are subject to significant domestic and international governmental regulations.~~
	●	The FDA regulatory review process is expensive, time-consuming and uncertain, and the failure to obtain and maintain required regulatory clearances and approvals could prevent us from commercializing our products.
	●	~~We are subject to continuing regulation by the FDA, and failure to comply may materially harm our business.~~
	●	Our products are generally subject to regulatory requirements in foreign countries in which we sell those products. 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 revenues.~~
	●	~~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.
	●	~~The significant number of common shares registered for resale pursuant to the registration statement 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.~~
	●	~~Our failure to meet the continued listing requirements of the Nasdaq Capital Market could result in a delisting of our common stock.~~
	●	~~We do not expect to pay any dividends to shareholders.~~
	●	~~Our revenues 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 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 financial statements and negatively impact our stock price.~~

	●	~~have significant discretion in determining the efforts and resources that they will apply;~~
	●	~~may not perform their obligations as expected;~~
	●	~~may dispute the amounts of payments owed;~~
	●	~~may fail to comply with applicable legal and regulatory requirements regarding the distribution or marketing of our INVOcell product;~~
	●	may not properly maintain or defend their or our relevant intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation and liability;
	●	~~may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;~~
	●	~~could become involved in a business combination or cessation that could cause them to deemphasize or terminate the development or commercialization of our INVOcell product; and~~
	●	~~may seek to terminate our joint venture, which could require us to raise additional capital and to develop new joint venture relationships.~~

●	~~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.~~

	●	The federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b) (the “AKS”), a criminal statute, makes it illegal for any person or entity to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is in exchange for or to induce the referral of business, including the purchase, order, lease of any good, facility, item, or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. The term “remuneration” has been broadly interpreted to include anything of value. The Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a) (the “CMPL”) also contains a provision that prohibits the payment of anything of value in return for referrals and provides for the imposition of civil penalties.

	●	Federal false claims and false statement laws, including the federal civil False Claims Act (31 U.S.C. §§ 3729 – 3733), prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services that are false or fraudulent.

	●	Section 1877 of the Social Security Act (42 U.S.C. § 1395nn), commonly referred to as the “Stark Law, prohibits referrals by ordering by a physician of “designated health services,” which include durable medical equipment and supplies as well as inpatient and outpatient hospital services, that are payable, in whole or in part, by Medicare or Medicaid, to an entity in which the physician or the physician’s immediate family member has an investment interest or other financial relationship, subject to several exceptions. Financial relationships that are implicated by the Stark Law can include arrangements ranging from marketing arrangements and consulting agreements to medical director agreements with physicians who order our products. The Stark Law also prohibits billing for services rendered pursuant to a prohibited referral. Several states have enacted laws similar to the Stark Law. These state laws may cover all (not just Medicare and Medicaid) patients. Many federal healthcare reform proposals in the past few years have attempted to expand the Stark Law to cover all patients as well. If we violate the Stark Law, our financial results and operations could be adversely affected. Penalties for violations include denial of payment for the services, significant civil monetary penalties, and exclusion from the Medicare and Medicaid programs;

	●	The federal Physician Payments Sunshine Act (42 U.S.C. § 1320a–7h) requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services information related to payments or other transfers of value made to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

	●	~~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.

●	~~the election of members of the board of directors;~~
●	~~amending our articles of incorporation or bylaws; and~~
●	~~approving a merger, sale of assets, or other corporate transaction.~~

	●	~~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.~~

●	Manufacturing: We are ISO 13485:2016 certified and manage all aspects of production and manufacturing with qualified suppliers. 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..
●	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 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. Food & Drug Administration (“FDA”) registered.
●	CE Mark: INVO Bioscience received the CE Mark in October 2019. The CE Mark permits the sale of devices in Europe, Australia and other countries that recognize the CE Mark, subject to local registration requirements.

~~Affiliate Name~~	~~Country~~		Percent (%) Ownership

~~HRCFG INVO, LLC~~		~~United States~~		50	%
~~Bloom Invo, LLC~~		~~United States~~		40	%
~~Positib Fertility, S.A. de C.V.~~		~~Mexico~~		33	%
~~SNS MURNI INVO Bioscience Malaysia Sendirian Berhad~~		~~Malaysia~~		50	%
~~Ginekalix INVO Bioscience LLC Skopje~~		~~Republic of North Macedonia~~		50	%

	2021			2020
Cash (used in) provided by:
Operating activities		(6,029,914	)		(4,775,148	)
Investing activities		(2,153,512	)		(187,254	)
Financing activities		3,770,537			13,821,577

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.~~

		~~Page~~

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 2738)		F-1

Consolidated Balance Sheets as of December 31, ~~2021~~2023 and ~~2020~~2022		F-2

Consolidated Statements of Operations for the Years Ended December 31, ~~2021~~2023 and ~~2020~~2022		F-3

Consolidated Statements of Stockholders’ Equity ~~(Deficiency)~~(Deficit) for the Period from January 1, ~~2020~~2022 to December 31, ~~2021~~2023		F-4

Consolidated Statements of Cash Flows for the Years Ended December 31, ~~2021~~2023 and ~~2020~~2022		F-5

Notes to Consolidated Financial Statements		F-6

	Shares		Amount		Shares		Amount		Capital			Deficit			Total
	Common Stock				Preferred Stock				Additional Paid-in			Accumulated
	Shares		Amount		Shares		Amount		Capital			Deficit			Total
Balances, December 31, 2021		596,457	$	60		0	$	0	$	46,201,642		$	(38,891,022	)	$	7,310,680
Common stock issued to directors and employees		4,360		-		-		-		484,807			-			484,807
Common stock issued for services		3,063		-		-		-		123,211			-			123,211
Proceeds from the sale of common stock, net of fees and expenses		4,731		1		-		-		289,800			-			289,801
Stock options issued to directors and employees as compensation		-		-		-		-		1,616,400			-			1,616,400
Warrants issued with notes payable		-		-		-		-		90,000			-			90,000
Net Loss		-		-		-		-		-			(10,892,511	)		(10,892,511	)
Balances, December 31, 2022		608,611	$	61		-	$	-	$	48,805,860		$	(49,783,533	)		(977,612	)
Balances		608,611	$	61		-	$	-	$	48,805,860		$	(49,783,533	)		(977,612	)

Common stock issued to directors and/or employees		4,269		-		-		-		56,936			-			56,936
Common stock issued for services		50,817		5		-		-		287,445			-			287,450
Preferred stock issued		-		-		1,200,000		6,000,000		(3,828,000	)		-			2,172,000
Proceeds from the sale of common stock, net of fees and expenses		1,617,500		161		-		-		5,701,784			-			5,701,945
Common stock issued for liability settlement		16,250		2		-		-		65,196			-			65,198
Common stock issued with notes payable		4,167		1		-		-		56,313			-			56,314
Options exercised for cash		297		-		-		-		2,375			-			2,375
Warrants exercised (cashless)		43,985		4		-		-		(4	)		-			-
Prefunded warrant exercise		146,500		15		-		-		23,039			-			23,054
Stock options issued to directors and employees as compensation		-		-		-		-		1,049,109			-			1,049,109
Warrants issued with notes payable		-		-		-		-		490,668			-			490,668
Rounding for reverse split		135		-		-		-		-			-			-
Net loss		-		-		-		-		-			(8,034,612	)		(8,034,612	)
Balances, December 31, 2023		2,492,531		249		1,200,000		6,000,000		52,710,721			(57,818,145	)		892,825
Balances		2,492,531		249		1,200,000		6,000,000		52,710,721			(57,818,145	)		892,825

	Shares		Amount		Capital			Deficit			Total
	Common Stock				Additional Paid-in			Accumulated
	Shares		Amount		Capital			Deficit			Total

Balances, December 31, 2019		4,884,879	$	489	$	20,174,682		$	(23,888,766	)	$	(3,713,595	)
Proceeds from the sale of common stock, net of offering costs		4,153,750		416		11,474,636						11,475,052
Common stock issued to directors and employees		112,056		11		465,129			-			465,140
Common stock issued for services
Common stock issued for services, shares
Common stock issued to service providers		34,751		3		150,859			-			150,862
Conversion of notes payable and accrued interest		453,699		45		1,451,779			-			1,451,824
Stock issued for cash
Stock issued for cash, shares
Proceeds from warrant exercise
Proceeds from warrant exercise, shares
Proceeds from unit purchase option exercise
Proceeds from unit purchase option exercise, shares
Cashless warrant exercise
Cashless warrant exercise, shares
Cashless unit purchase option exercise
Cashless unit purchase option exercise, shares
Discount on convertible notes payables		-		-		3,120,150			-			3,120,150
Stock options issued to directors and employees		-		-		1,140,989			-			1,140,989
Rounding shares as a result of stock split		133		-		-			-			-
Net loss		-		-		-			(8,347,316	)		(8,347,316	)
Balances, December 31, 2020		9,639,268	$	964	$	37,978,224		$	(32,236,082	)	$	5,743,106

Balances		9,639,268	$	964	$	37,978,224		$	(32,236,082	)	$	5,743,106	)
Common stock issued to directors and employees		49,806		5		360,148			-			360,153
Common stock issued for services		237,750		24		804,100			-			804,124
Conversion of notes payable and accrued interest		466,809		47		1,493,741			-			1,493,788
Proceeds from the sale of common stock, net of offering costs		1,240,737		124		3,650,573			-			3,650,697
Proceeds from warrant exercise		39,095		4		123,558			-			123,562
Proceeds from unit purchase option exercise		77,444		8		246,270			-			246,278
Cashless warrant exercise		91,709		9		(9	)		-			-
Cashless unit purchase option exercise		86,529		8		(8	)		-			-
Stock options issued to directors and employees as compensation		-		-		1,543,912			-			1,543,912
Net loss		-		-		-			(6,654,940	)		(6,654,940	)
Net income (loss)		-		-		-			(6,654,940	)		(6,654,940	)
Balances, December 30, 2021		11,929,147	$	1,193	$	46,200,509		$	(38,891,022	)	$	7,310,680
Balances		11,929,147	$	1,193	$	46,200,509		$	(38,891,022	)	$	7,310,680

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.


Consideration given:
Cash	2,150,000
Holdback	350,000
Additional payments	7,500,000
Business acquisition cost	10,000,000

Assets and liabilities acquired:
FLOW intercompany receivable	528,756
Accounts receivable	214,972
Property and equipment, net	25,292
Other current assets	56,274
Tradename	253,000
Noncompetition agreement	3,961,000
Goodwill	5,878,986
Deferred revenue	(389,524	)
WFRSA intercompany note	(528,756	)
Total assets and liabilities acquired	10,000,000

					Carrying Value as of
	Location	Percentage Ownership			December 31, 2021		December 31, 2020
HRCFG INVO, LLC	Alabama, United States		50	%	$	1,387,495		-
Positib Fertility, S.A. de C.V.	Mexico		33	%		102,439		-
Total investment in unconsolidated VIEs					$	1,489,934		-

		Estimated Useful Life
Manufacturing equipment		6 to 10 years
Medical equipment		10 years
Office equipment		3 to 7 years

	December 31, 2021			December 31, 2020
Trademarks	$	110,842		$	89,536
Patents		95,355			77,722
Accumulated amortization		(74,104	)		(72,295	)
Total patent costs, net	$	132,093		$	94,963

	December 31, 2023			December 31, 2022
Tradename	$	253,000		$	-
Noncompetition agreement		3,961,000			-
Goodwill		5,878,986			-
Less: accumulated amortization		(120,569	)		-
Total intangible assets	$	9,972,417		$	-

	December 31, 2023			December 31, 2022
Note payable. 35% - 100 % cumulative interest. Matures on June 29, 2028	$	1,451,244		$	-
Related party demand notes with a 10% financing fee. 10% annual interest from issuance. Notes are callable starting March 31, 2023		880,000			770,000
Convertible notes. 10% annual interest. Conversion price of $2.25		410,000			100,000
Cash advance agreement		287,604			-
Less debt discount and financing costs	$	(264,932	)	$	(107,356	)
Total, net of discount		2,763,916			762,644

	December 31, 2021		December 31, 2020

2020 Convertible Notes		-		1,700,000
Accrued interest		-		24,373
Less beneficial conversion feature discount		-		(604,897	)
Less options discount		-		(224,051	)
Less warrants discount		-		(229,954	)
Less issuance cost		-		(129,408	)
Total, net of discount	$	-	$	536,063

	Total Intrinsic Value of Options Exercised		Total Fair Value of Options Vested
Year ended December 31, 2020	$	-	$	1,495,744
Year ended December 31, 2021	$	-	$	1,543,912

	Total Intrinsic Value of Options Exercised		Total Fair Value of Options Vested
Year ended December 31, 2022	$	-	$	1,616,401
Year ended December 31, 2023	$	-	$	1,049,109

~~Risk-free interest rate range~~	~~0.33% -~~ ~~0.39~~		%
~~Stock price~~	$ ~~3.00~~ ~~- $3.95~~
~~Expected life of warrants and unit purchase options (years)~~		~~5.00~~
~~Expected stock price volatility~~		~~108.2% -~~ ~~112.5~~	%
~~Expected dividend yield~~		0	%

~~NAME~~	~~AGE~~		~~POSITION~~
~~Mr. Steven Shum~~	51		~~Director, Chief Executive Officer~~

~~Mr. Andrea Goren~~	54		~~Chief Financial Officer~~

~~Mr. Michael Campbell~~	62		~~Chief Operating Officer and Vice President of Business Development~~

~~Mr. Matthew Szot~~	47		~~Director~~

~~Dr. Kevin Doody, MD~~	62		~~Director, Medical Director~~

~~Mr. Trent Davis~~	53		~~Director~~

~~Ms. Barbara Ryan~~	61		~~Director~~

~~Dr. Jeffrey Segal~~	62		~~Director~~
		��
~~Ms. Rebecca Messina~~	49		~~Director~~