UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission File Number: 001-39701

INVO Bioscience, Inc.

(Exact Name of Registrant as Specified in its Charter)

Nevada

20-4036208

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

5582 Broadcast Court
Sarasota, FL		34240
(Address of principal executive offices)		(Zip Code)

(978) 878-9505

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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

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

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.

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

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

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

As of November 14, 2022, the Registrant had 12,165,964 shares of common stock outstanding.

INVO BIOSCIENCE, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED September 30, 2022

TABLE OF CONTENTS

Item		Page Number
PART I. FINANCIAL INFORMATION

1.	Financial Statements (Unaudited):	4
	Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	4
	Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	5
	Consolidated Statements of Stockholders’ Equity for the nine months ended September 30, 2022 and 2021 (Unaudited)	6
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (Unaudited)	7
	Notes to the Consolidated Financial Statements	8
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
3.	Quantitative and Qualitative Disclosures about Market Risks	34
4.	Controls and Procedures	34

PART II. OTHER INFORMATION

1.	Legal Proceedings	35
1A.	Risk Factors	35
2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
3.	Defaults Upon Senior Securities	35
4.	Mine Safety Disclosure	35
5.	Other Information	35
6.	Exhibits	35
	Signatures	36

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by such forward-looking terminology as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:

●	our business strategies;

●	the timing of regulatory submissions;

●	our ability to obtain and maintain regulatory approval of our existing product candidates and any other product candidates we may develop, and the labeling under any approval we may obtain;

●	risks relating to the timing and costs of clinical trials and the timing and costs of other expenses;

●	risks related to market acceptance of products;

●	the ultimate impact of the ongoing Coronavirus pandemic, or any other health epidemic, on our business, our clinical trials, our research programs, healthcare systems or the global economy as a whole;

●	intellectual property risks;

●	risks associated with our reliance on third-party organizations;

●	our competitive position;

●	our industry environment;

●	our anticipated financial and operating results, including anticipated sources of revenues;

●	assumptions regarding the size of the available market, benefits of our products, product pricing and timing of product launches;

●	management’s expectation with respect to future acquisitions;

●	statements regarding our goals, intentions, plans and expectations, including the introduction of new products and markets; and

●	our cash needs and financing plans.

All of our forward-looking statements are as of the date of this Quarterly Report on Form 10-Q only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”) could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q that modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q may include market data and certain industry data and forecasts, which we may obtain from internal company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications, articles and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. While we believe that such studies and publications are reliable, we have not independently verified market and industry data from third-party sources.

Reverse Stock Splits

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.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

INVO BIOSCIENCE, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	2022			2021
	September 30,			December 31,
	2022			2021
					(audited)
ASSETS
Current assets
Cash	$	285,697		$	5,684,871
Accounts receivable		71,311			50,470
Inventory		280,131			287,773
Prepaid expenses and other current assets		305,151			282,751
Total current assets		942,290			6,305,865
Property and equipment, net		456,352			501,436
Intangible assets, net		132,679			132,093
Lease right of use		1,865,648			2,037,052
Investment in joint ventures		1,281,306			1,489,934
Total assets	$	4,678,275		$	10,466,380
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	689,558		$	443,422
Accrued compensation		643,608			581,689
Deferred revenue, current portion		98,659			5,900
Lease liability, current portion		229,169			221,993
Total current liabilities		1,660,994			1,253,004
Lease liability, net of current portion		1,728,918			1,901,557
Deferred tax liability		1,139			1,139
Total liabilities		3,391,051			3,155,700

Stockholders’ equity
Common Stock, $.0001 par value; 125,000,000 shares authorized; 12,165,964 and 11,929,147 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		1,217			1,193
Additional paid-in capital		48,302,505			46,200,509
Accumulated deficit		(47,016,498	)		(38,891,022	)
Total stockholders’ equity		1,287,224			7,310,680
Total liabilities and stockholders’ equity	$	4,678,275		$	10,466,380

The accompanying notes are an integral part of these consolidated financial statements.

INVO BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	2022			2021			2022			2021
	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2022			2021			2022			2021

Revenue:
Product revenue	$	58,926			2,790			149,453			538,642
Clinic revenue		176,395			37,513			394,601			37,513
License revenue		-			178,571			-			535,714
Total revenue		235,321			218,874			544,054			1,111,869
Cost of goods sold:
Cost of revenue		97,590			17,987			219,430			90,464
Depreciation		11,526			2,431			32,899			7,294
Total cost of goods sold		109,116			20,418			252,329			97,758
Gross profit		126,205			198,456			291,725			1,014,111
Operating expenses
Selling, general and administrative expenses		2,476,356			2,416,791			7,729,694			6,581,516
Research and development expenses		175,267			55,391			470,208			152,674
Total operating expenses		2,651,623			2,472,182			8,199,902			6,734,190
Loss from operations		(2,525,418	)		(2,273,726	)		(7,908,177	)		(5,720,079	)
Other income (expense):
Loss from equity method joint ventures		(21,470	)		(113,492	)		(210,565	)		(113,492	)
Other income		-			-			-			159,126
Interest income		34			(843	)		307			3,595
Interest expense		(1,761	)		(92,544	)		(3,319	)		(1,078,895	)
Foreign currency exchange loss		(1,008	)		(721	)		(2,922	)		(2,213	)
Total other income (expense)		(24,205	)		(207,600	)		(216,499	)		(1,031,879	)
Loss before income taxes	$	(2,549,623	)		(2,481,326	)		(8,124,676	)		(6,751,958	)
Income taxes		-			-			800			-
Net loss		(2,549,623	)		(2,481,326	)		(8,125,476	)		(6,751,958	)
Net loss attributable to noncontrolling interest		-			(238,543	)		-			(238,543	)
Net loss attributable to INVO Bioscience, Inc.		(2,549,623	)		(2,242,783	)		(8,125,476	)		(6,513,415	)
Net loss per common share:
Basic	$	(0.21	)		(0.24	)		(0.67	)		(0.66	)
Diluted	$	(0.21	)		(0.24	)		(0.67	)		(0.66	)
Weighted average number of common shares outstanding:
Basic		12,155,655			10,463,981			12,107,124			10,267,495
Diluted		12,155,655			10,463,981			12,107,124			10,267,495

The accompanying notes are an integral part of these consolidated financial statements.

INVO BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

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

Balances, December 31, 2020		9,639,268	$	964	$	37,978,224		$	(32,236,082	)		-		$	5,743,106
Common stock issued to directors and employees		44,806		4		274,694			-			-			274,698
Common stock issued for services		96,500		10		324,840			-			-			324,850
Conversion of notes payable and accrued interest		388,684		39		1,243,749			-			-			1,243,788
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		-		-		1,151,800			-			-			1,151,800
Net loss attributable to noncontrolling interest		-		-		-			-			(238,543	)		(238,543	)
Net loss attributable to INVO Bioscience, Inc.		-		-		-			(6,513,415	)		-			(6,513,415	)
Balances, September 30, 2021		10,464,035	$	1,046	$	41,343,118		$	(38,749,497	)		(238,543	)	$	2,356,124	)

Balances, December 31, 2021		11,929,147	$	1,193	$	46,200,509		$	(38,891,022	)		-		$	7,310,680

Common stock issued to directors and employees		87,194		9		408,018			-			-			408,027
Common stock issued for services		55,000		6		116,760			-			-			116,766
Proceeds from the sale of common stock, net of fees and expenses		94,623		9		289,791			-			-			289,800
Stock options issued to directors and employees as com

SEC Form 10-Q filed by INVO BioScience Inc.