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, 2023

☐ 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 13, 2023, the Registrant had 2,474,756 shares of common stock outstanding.

INVO BIOSCIENCE, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED September 30, 2023

TABLE OF CONTENTS

Item		Page Number
PART I. FINANCIAL INFORMATION

1.	Financial Statements (Unaudited):	4
	Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022	4
	Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (Unaudited)	5
	Consolidated Statements of Stockholders’ Equity (Deficit) for the nine months ended September 30, 2023 and 2022 (Unaudited)	6
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (Unaudited)	7
	Notes to the Consolidated Financial Statements	8
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
3.	Quantitative and Qualitative Disclosures about Market Risks	36
4.	Controls and Procedures	36

PART II. OTHER INFORMATION

1.	Legal Proceedings	37
1A.	Risk Factors	37
2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
3.	Defaults Upon Senior Securities	38
4.	Mine Safety Disclosure	38
5.	Other Information	38
6.	Exhibits	39
	Signatures	40

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.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

INVO BIOSCIENCE, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	September 30,			December 31,
	2023			2022
				(audited)
ASSETS
Current assets
Cash	$	1,055,544		$	90,135
Accounts receivable		116,781			77,149
Inventory		254,220			263,602
Prepaid expenses and other current assets		365,227			190,201
Total current assets		1,791,772			621,087
Property and equipment, net		772,447			436,729
Lease right of use		5,858,042			1,808,034
Intangible assets		1,750,000			-
Goodwill		8,224,708			-
Investment in joint ventures		1,079,202			1,237,865
Total assets	$	19,476,171		$	4,103,715
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities	$	1,851,783		$	1,349,038
Accrued compensation		590,598			946,262
Notes payable– current portion, net		822,574			100,000
Notes payable – related parties, net		880,000			662,644
Notes payable, net		880,000			662,644
Deferred revenue		229,921			119,876
Lease liability, current portion		385,836			231,604
Other current liabilities		123,432			-
Total current liabilities		4,884,144			3,409,424
Notes payable, net of current portion		1,095,000
Lease liability, net of current portion		5,622,279			1,669,954
Deferred tax liability		1,949			1,949
Additional payments for acquisition		7,500,000			-
Total liabilities		19,103,372			5,081,327

Stockholders’ equity (deficit)
Common Stock, $.0001 par value; 50,000,000 shares authorized; 2,474,756 and 608,611 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		247			61
Additional paid-in capital		56,195,915			48,805,860
Accumulated deficit		(55,823,363	)		(49,783,533	)
Total stockholders’ equity (deficit)		372,799			(977,612	)
Total liabilities and stockholders’ equity (deficit)	$	19,476,171		$	4,103,715

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

INVO BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2023			2022			2023			2022

Revenue:
Clinic revenue	$	947,891		$	176,395		$	1,499,636		$	394,601
Product revenue		27,003			58,926			139,185			149,453
Total revenue		974,894			235,321			1,638,821			544,054
Operating expenses
Cost of revenue		580,968			248,977			1,047,687			616,184
Selling, general and administrative expenses		1,257,044			2,316,763			5,630,487			7,308,478
Research and development expenses		2,668			175,267			160,038			470,208
Depreciation and amortization		20,504			19,732			59,296			57,361
Total operating expenses		1,861,184			2,760,739			6,897,508			8,452,231
Loss from operations		(886,290	)		(2,525,418	)		(5,258,687	)		(7,908,177	)
Other income (expense):
Loss from equity method joint ventures		(8,163	)		(21,470	)		(32,110	)		(210,565	)
Interest income		-			34			-			307
Interest expense		(352,085	)		(1,761	)		(743,866	)		(3,319	)
Foreign currency exchange loss		(16	)		(1,008	)		(416	)		(2,922	)
Total other income (expense)		(360,264	)		(24,205	)		(776,392	)		(216,499	)
Net loss before income taxes		(1,246,554	)		(2,549,623	)		(6,035,079	)		(8,124,676	)
Income taxes		1,886			-			4,751			800
Net loss	$	(1,248,440	)	$	(2,549,623	)	$	(6,039,830	)	$	(8,125,476	)

Net loss per common share:
Basic	$	(0.70	)	$	(4.19	)	$	(5.76	)	$	(13.42	)
Diluted	$	(0.70	)	$	(4.19	)	$	(5.76	)	$	(13.42	)
Weighted average number of common shares outstanding:
Basic		1,776,898			607,783			1,048,115			605,356
Diluted		1,776,898			607,783			1,048,115			605,356

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

INVO BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)


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

Balances, June 30, 2022		606,514	$	60	$	47,823,240		$	(44,466,875	)	$	3,356,425
Common stock issued to directors and employees		1,784		-		79,479			-			79,479
Proceeds from sale of common stock, net of fees and expenses		-		-		(25,200	)		-			(25,200	)
Stock options issued to directors and employees as compensation		-		-		426,143			-			426,143
Net loss		-		-		-			(2,549,623	)		(2,549,623	)
Balances, September 30, 2022		608,298	$	60	$	48,303,662		$	(47,016,498	)	$	1,287,224

Balances, June 30, 2023		826,886	$	83	$	52,869,346		$	(54,574,923	)	$	(1,705,494	)
Balances, value		826,886	$	83	$	52,869,346		$	(54,574,923	)	$	(1,705,494	)

Common stock issued to directors and employees		-		-		2,670			-			2,670
Common stock issued for services		-		-		11,249			-			11,249
Proceeds from the sale of common stock, net of fees and expenses		1,587,500		158		2,995,903			-			2,996,061
Common stock issued for liability settlement		16,250		2		65,196			-			65,198
Warrants exercised		43,985		4		(4	)		-			-
Stock options issued to directors and employees as compensation		-		-		251,555			-			251,555
Rounding for reverse split		135		-		-			-			-
Net loss		-		-		-			(1,248,440	)		(1,248,440	)
Balances, September 30, 2023		2,474,756	$	247	$	56,195,915		$	(55,823,363	)	$	372,799
Balances, value		2,474,756	$	247	$	56,195,915		$	(55,823,363	)	$	372,799

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

Balances, December 31, 2021		596,457	$	60	$	46,201,642		$	(38,891,022	)	$	7,310,680
Common stock issued to directors and employees		4,360		-		408,027			-			408,027
Common stock issued for services		2,750		-		116,766			-			116,766
Proceeds from sale of common stock, net of fees and expenses		4,731		-		289,800			-			289,800
Stock options issued to directors and employees as compensation		-		-		1,287,427			-			1,287,427
Net loss		-		-		-			(8,125,476	)		(8,125,476	)
Balances, September 30, 2022		608,298	$	60	$	48,303,662		$	(47,016,498	)	$	1,287,224

Balances, December 31, 2022		608,611	$	61	$	48,805,860		$	(49,783,533	)	$	(977,612	)

Common stock issued to directors and employees		3,994		-		54,235			-			54,235
Common stock issued for services		25,817		2		255,422			-			255,424
Proceeds from the sale of common stock, net of fees and expenses		1,771,500		177		5,724,823			-			5,725,000
Common stock issued with notes payable		4,167		1		56,313			-			56,314
Common stock issued for liability settlement		16,250		2		65,196			-			65,198
Options exercised for cash		297		-		2,375			-			2,375
Warrants exercised		43,985		4		(4	)		-			-
Stock options issued to directors and employees as compensation		-		-		904,305			-			904,305
Warrants issued with notes payable		-		-		327,390			-			327,390
Rounding for reverse split		135		-		-			-			-
Net loss		-		-		-			(6,039,830	)		(6,039,830	)
Balances, September 30, 2023		2,474,756	$	247	$	56,195,915		$	(55,823,363	)	$	372,799

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

INVO BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

-

		For the Nine Months Ended
		September 30,

SEC Form 10-Q filed by INVO BioScience Inc.