NAYA Biosciences Inc

Previous wording

Throughout this Quarterly Report on Form 10-Q, references to “we,” “our,” “us,” the “Company,” “INVO,” or “INVO Bioscience, Inc.” refer to INVO Bioscience, Inc.

Current wording

Throughout this Quarterly Report on Form 10-Q, references to “we,” “our,” “us,” the “Company,” “NAYA,” or “NAYA Biosciences, Inc.” refer to NAYA Biosciences, Inc. a Nevada corporation formerly known as INVO Bioscience, Inc.

Previous wording

We are a healthcare services fertility company dedicated to expanding access to fertility care around the world. Our commercial strategy is primarily focused on operating fertility-focused clinics, which include the opening of “INVO Centers” dedicated primarily to offering the intravaginal culture (“IVC”) procedure enabled by our INVOcell® medical device (“INVOcell”) and the acquisition of US-based, profitable in vitro fertilization (“IVF”) clinics. As of the date of this filing, we have two operational INVO Centers in the United States and completed our first IVF clinic acquisition in August 2023. We also continue to engage in the sale and distribution of our INVOcell technology solution into existing independently owned and operated fertility clinics.

Current wording

Our commercial strategy for the fertility business is primarily focused on operating fertility-focused clinics, which include the opening of “INVO Centers” dedicated primarily to offering the intravaginal culture (“IVC”) procedure enabled by our INVOcell® medical device (“INVOcell”) and the acquisition of US-based, profitable in vitro fertilization (“IVF”) clinics. As of the date of this filing, we have two operational INVO Centers in the United States and completed our first IVF clinic acquisition in August 2023. We also continue to engage in the sale and distribution of our INVOcell technology solution into existing independently owned and operated fertility clinics.

Previous wording

On August 10, 2023, we consummated the first acquisition of an existing IVF clinic, the Wisconsin Fertility Institute (“WFI”). As an established and profitable clinic, the closing of the WFI acquisition more than tripled our current annual revenues and became a major part of our clinic-based operations. The acquisition accelerates the transformation of INVO to a healthcare services company and immediately added scale and positive cash flow to the operations. It also complements our existing new-build INVO Center efforts. We expect to continue to pursue additional acquisitions of established and profitable existing fertility clinics as part of our ongoing strategy to accelerate overall growth.

Current wording

On August 10, 2023, we consummated the first acquisition of an existing IVF clinic, the Wisconsin Fertility Institute (“WFI”). As an established and profitable clinic, the closing of the WFI acquisition more than tripled our current annual revenues and became a major part of our clinic-based operations. The acquisition accelerates the transformation of NAYA to a healthcare services company and immediately added scale and positive cash flow to the operations. It also complements our existing new-build INVO Center efforts. We expect to continue to pursue additional acquisitions of established and profitable existing fertility clinics as part of our ongoing strategy to accelerate overall growth.

Previous wording

Our most critical management and leadership functions are carried out by our core management team. Each clinic is separately staffed with clinical staff necessary to manage daily activities, while most administrative tasks are centralized and handled by INVO staff. With respect to the INVOcell device, we have contracted out the manufacturing, assembly, packaging, and labeling to a medical manufacturing company, sterilization of the device to a sterilization specialist, and storage and shipping to a third part logistics company.

Current wording

Our most critical management and leadership functions are carried out by our core management team. Each clinic is separately staffed with clinical staff necessary to manage daily activities, while most administrative tasks are centralized and handled by NAYA staff. With respect to the INVOcell device, we have contracted out the manufacturing, assembly, packaging, and labeling to a medical manufacturing company, sterilization of the device to a sterilization specialist, and storage and shipping to a third part logistics company.

Previous wording

While we will continue to sell the INVOcell directly to IVF clinics and via distributors and other partners around the world, we have transitioned INVO from being a medical device company to one that is primarily focused on providing fertility services. Our approach to marketing INVOcell is focused on identifying partners within targeted geographic regions that we believe can best support our efforts to expand access to advanced fertility treatment for the large number of underserved infertile people. 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, and we received an additional FDA clearance in 2023 for expanded usage of the device.

Current wording

While we will continue to sell the INVOcell directly to IVF clinics and via distributors and other partners around the world, we have transitioned NAYA from being a medical device company to one that is primarily focused on providing fertility services. Our approach to marketing INVOcell is focused on identifying partners within targeted geographic regions that we believe can best support our efforts to expand access to advanced fertility treatment for the large number of underserved infertile people. 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, and we received an additional FDA clearance in 2023 for expanded usage of the device.

Previous wording

The Alabama JV is accounted for using the equity method in our financial statements. As of June 30, 2024, we invested $1.3 million in the Alabama JV in the form of a note. For the six months ended June 30, 2024, the Alabama JV recorded net income of $37 thousand, of which we recognized a gain from equity method investments of $18 thousand. For the six months ended June 30, 2023, the Alabama JV recorded a net income of $2 thousand, of which we recognized a gain from equity method investments of $805.

Current wording

The Alabama JV is accounted for using the equity method in our financial statements. As of September 30, 2024, we invested $1.3 million in the Alabama JV in the form of a note. For the nine months ended September 30, 2024, the Alabama JV recorded net loss of $19 thousand, of which we recognized a loss from equity method investments of $9 thousand. For the nine months ended September 30, 2023, the Alabama JV recorded a net income of $32 thousand, of which we recognized a gain from equity method investments of $16 thousand.

Previous wording

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.

Current wording

In consideration for our 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.

Previous wording

The results of the Georgia JV are consolidated in our financial statements. As of June 30, 2024, INVO invested $0.9 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 six months ended June 30, 2024 and 2023, the Georgia JV recorded net losses of $47 thousand and $0.1 million respectively. Noncontrolling interest in the Georgia JV was $0. See Note 4 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information on the Georgia JV.

Current wording

The results of the Georgia JV are consolidated in our financial statements. As of September 30, 2024, we invested $0.9 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 nine months ended September 30, 2024 and 2023, the Georgia JV recorded net losses of $0.1 million and $0.1 million respectively. Noncontrolling interest in the Georgia JV was $0. See Note 4 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information on the Georgia JV.

Previous wording

The Mexico JV is accounted for using the equity method in our financial statements. During the fourth quarter of 2023, our Mexico JV partner informed us that the primary physician onsite had resigned. We elected to impair the investment at year end 2023 in this JV due to the uncertainty and possibility that we may offer reduced services or suspend operations. The total impairment for 2023 was approximately $0.09 million. As of June 30, 2024, INVO investment in the Mexico JV was $0.

Current wording

The Mexico JV is accounted for using the equity method in our financial statements. During the fourth quarter of 2023, our Mexico JV partner informed us that the primary physician onsite had resigned. We elected to impair the investment at year end 2023 in this JV due to the uncertainty and possibility that we may offer reduced services or suspend operations. The total impairment for 2023 was approximately $0.09 million. As of September 30, 2024, our investment in the Mexico JV was $0. The Mexico JV has since ceased operations.

Previous wording

On October 22, 2023, we entered into an Agreement and Plan of Merger, as amended effective October 25, 2023, December 27, 2023, and May 1, 2024 (collectively, the “Merger Agreement”) with INVO Merger Sub Inc., our wholly owned subsidiary and a Delaware corporation (“Merger Sub”), and NAYA Biosciences, Inc., a Delaware corporation (“NAYA”). Upon the terms and subject to the conditions set forth in the Merger Agreement, unless the Merger Agreement is terminated before the consummation of the Merger, Merger Sub will merge (the “Merger”) with and into NAYA, with NAYA continuing as the surviving corporation and our wholly owned subsidiary. Unless the Merger Agreement is terminated before the consummation of the Merger, 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 INVO 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 our common stock, par value $0.0001 per share, which shall be entitled to ten (10) votes per each share (“Company Class B common stock”) for a total of approximately 18,150,000 of our shares (together with cash proceeds from the sale of fractional shares, the “Merger Consideration”).

Current wording

At the Effective Time and as a result of the consummation of the Merger:

Previous wording

As of June 28, 2024, we secured written consent by the Required Holders for the Q1 2023 Convertible Note maturity date to be extended to December 31, 2024. As an incentive for the Required Holders to approve the extension, we agreed (a) to lower both the Q1 2023 Convertible Note fixed conversion price and the Q1 2023 Warrants exercise price to $1.20, (b) to provide the Q1 2023 Convertible Note holders the right to demand early repayment at the closing of the Merger with NAYA or if we raise more than $3 million dollars in a single equity raise, and (c) to increase the number of shares of common stock available under the Q1 2023 Warrants to a total of 124,421. The maturity date extension, the conversion reduction and the early repayment right applies to all outstanding Q1 2023 Convertible Notes, and the exercise price reduction and additional warrant coverage applies to all Q1 2023 Warrants.

Current wording

As of June 28, 2024, we secured written consent by the Required Holders for the Q1 2023 Convertible Note maturity date to be extended to December 31, 2024. As an incentive for the Required Holders to approve the extension, we agreed (a) to lower both the Q1 2023 Convertible Note fixed conversion price and the Q1 2023 Warrants exercise price to $1.20, (b) to provide the Q1 2023 Convertible Note holders the right to demand early repayment at the closing of the Merger with Legacy NAYA or if we raise more than $3 million dollars in a single equity raise, and (c) to increase the number of shares of common stock available under the Q1 2023 Warrants to a total of 124,421. The maturity date extension, the conversion reduction and the early repayment right applies to all outstanding Q1 2023 Convertible Notes, and the exercise price reduction and additional warrant coverage applies to all Q1 2023 Warrants.

Previous wording

On April 5, 2024, we entered into a purchase agreement (the “FirstFire Purchase Agreement”) with FirstFire Global Opportunities Fund, LLC (“FirstFire”), pursuant to which FirstFire agreed to purchase, and INVO agreed to issue and sell, (i) a promissory note with an aggregate principal amount of $275,000, which is convertible into shares of our common stock, according to the terms, conditions, and limitations outlined in the note (the “FirstFire Note”), (ii) a warrant (the “First Warrant”) to purchase 229,167 shares (the “First Warrant Shares”) of our common stock at an exercise price of $1.20 per 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 transaction, for which it received a cash fee of $25,000 and 11,655 restricted shares of our common stock. The proceeds were used for working capital and general corporate purposes.

Current wording

On April 5, 2024, we entered into a purchase agreement (the “FirstFire Purchase Agreement”) with FirstFire Global Opportunities Fund, LLC (“FirstFire”), pursuant to which FirstFire agreed to purchase, and NAYA agreed to issue and sell, (i) a promissory note with an aggregate principal amount of $275,000, which is convertible into shares of our common stock, according to the terms, conditions, and limitations outlined in the note (the “FirstFire Note”), (ii) a warrant (the “First Warrant”) to purchase 229,167 shares (the “First Warrant Shares”) of our common stock at an exercise price of $1.20 per 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 transaction, for which it received a cash fee of $25,000 and 11,655 restricted shares of our common stock. The proceeds were used for working capital and general corporate purposes.

Previous wording

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 event we obtain stockholder approval of the shares of common stock to be issued under the Purchase Agreement, if necessary, in accordance with the requirements of Nasdaq Listing Rule 5635(d). INVO has agreed to hold a meeting for the purpose of obtaining this stockholder approval within nine (9) months of the date of the FirstFire Purchase Agreement.

Current wording

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 event we obtain stockholder approval of the shares of common stock to be issued under the Purchase Agreement, if necessary, in accordance with the requirements of Nasdaq Listing Rule 5635(d). We have agreed to hold a meeting for the purpose of obtaining this stockholder approval within nine (9) months of the date of the FirstFire Purchase Agreement.

Previous wording

The FirstFire Purchase Agreement contains customary representations, warranties, and covenants by each of INVO and FirstFire. Among other covenants of the parties, we 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. INVO 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. FirstFire has covenanted not to cause or engage in any short selling of shares of common stock until the FirstFire Note is fully repaid.

Current wording

The FirstFire Purchase Agreement contains customary representations, warranties, and covenants by each of NAYA and FirstFire. Among other covenants of the parties, we 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. We have 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. FirstFire has covenanted not to cause or engage in any short selling of shares of common stock until the FirstFire Note is fully repaid.

Previous wording

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 INVO 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.

Current wording

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 NAYA 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.

Previous wording

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 INVO 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.

Current wording

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 us 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.

Previous wording

Exercisability. The First Warrant is immediately exercisable and 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 INVO 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 First Warrant.

Current wording

Exercisability. The First Warrant is immediately exercisable and 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 NAYA 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 First Warrant.

Previous wording

Trading Market Regulation. Until we have obtained stockholder approval of the FirstFire Purchase Agreement and the issuance of the securities issued pursuant thereto, we 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 issuable to the holder under the FirstFire Purchase Agreement or any other agreement with INVO) would exceed the aggregate number of shares which we may issue without breaching 523,344 shares (19.9% of our outstanding common stock) or any of our obligations under the rules or regulations of Nasdaq.

Current wording

Trading Market Regulation. Until we have obtained stockholder approval of the FirstFire Purchase Agreement and the issuance of the securities issued pursuant thereto, we 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 issuable to the holder under the FirstFire Purchase Agreement or any other agreement with NAYA) would exceed the aggregate number of shares which we may issue without breaching 523,344 shares (19.9% of our outstanding common stock) or any of our obligations under the rules or regulations of Nasdaq.

Previous wording

Fundamental Transactions. INVO shall not enter into or be a party to a fundamental transaction unless the successor entity assumes all obligations of INVO under the First Warrant and other transaction documents. Upon consummation of a fundamental transaction, then the successor entity will succeed to, and be substituted for INVO, and may exercise every right and power that we may exercise and will assume all of our obligations under the First Warrant with the same effect as if such successor entity had been named in the First Warrant itself.

Current wording

Fundamental Transactions. NAYA shall not enter into or be a party to a fundamental transaction unless the successor entity assumes all obligations of NAYA under the First Warrant and other transaction documents. Upon consummation of a fundamental transaction, then the successor entity will succeed to, and be substituted for NAYA, and may exercise every right and power that we may exercise and will assume all of our obligations under the First Warrant with the same effect as if such successor entity had been named in the First Warrant itself.

Previous wording

Exercisability. The Second Warrant will only become exercisable if an event of default occurs under the FirstFire Note, and will expire five years from the date on which such an event of default occurs (a “Triggering Event Date”). The Second Warrant includes a ‘Returnable Warrant’ clause, providing that the Second Warrant shall be cancelled and returned to us 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 INVO 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.

Current wording

Exercisability. The Second Warrant will only become exercisable if an event of default occurs under the FirstFire Note, and will expire five years from the date on which such an event of default occurs (a “Triggering Event Date”). The Second Warrant includes a ‘Returnable Warrant’ clause, providing that the Second Warrant shall be cancelled and returned to us 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 NAYA 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.

Previous wording

Trading Market Regulation. Until we have obtained stockholder approval of the FirstFire Purchase Agreement and the issuance of the securities issued pursuant thereto, we 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 issuance of any shares held by or issuable to the holder under the FirstFire Purchase Agreement or any other agreement with INVO) would exceed the aggregate number of shares which we may issue without breaching 523,344 shares (19.9% of our outstanding common stock) or any of our obligations under the rules or regulations of Nasdaq.

Current wording

Trading Market Regulation. Until we have obtained stockholder approval of the FirstFire Purchase Agreement and the issuance of the securities issued pursuant thereto, we 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 issuance of any shares held by or issuable to the holder under the FirstFire Purchase Agreement or any other agreement with NAYA) would exceed the aggregate number of shares which we may issue without breaching 523,344 shares (19.9% of our outstanding common stock) or any of our obligations under the rules or regulations of Nasdaq.

Previous wording

Fundamental Transactions. We shall not enter into or be a party to a fundamental transaction unless the successor entity assumes all obligations of INVO under the Second Warrant and other transaction documents. Upon consummation of a fundamental transaction, then the successor entity will succeed to, and be substituted for INVO, and may exercise every right and power that we may exercise and will assume all of our obligations under the Second Warrant with the same effect as if such successor entity had been named in the Second Warrant itself.

Current wording

Fundamental Transactions. We shall not enter into or be a party to a fundamental transaction unless the successor entity assumes all obligations of NAYA under the Second Warrant and other transaction documents. Upon consummation of a fundamental transaction, then the successor entity will succeed to, and be substituted for NAYA, and may exercise every right and power that we may exercise and will assume all of our obligations under the Second Warrant with the same effect as if such successor entity had been named in the Second Warrant itself.

Previous wording

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

Current wording

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

Previous wording

On February 26, 2024, we 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 $344,925 of our future sales for a gross purchase price of $236,250. We received net proceeds of $225,000. Until the purchase price has been repaid, we agreed to pay the Buyer $13,797 per week.

Current wording

On February 26, 2024, we 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 $344,925 of our future sales for a gross purchase price of $236,250. We received net proceeds of $225,000. Until the purchase price has been repaid, we agreed to pay the Buyer A $13,797 per week. The Future Receipts Agreement was fully repaid as of September 30, 2024.

Previous wording

On August 8, 2023, we issued warrants to purchase 3,160,000 shares of our common stock (the “August 2023 Warrants”) as part of the August 2023 Offering. In connection therewith, we entered into a warrant agency agreement (the “Warrant Agent Agreement”), with Transfer Online, Inc. appointing Transfer Online, Inc. as Warrant Agent for the August 2023 Warrants. On April 17, 2024, INVO and the Warrant Agent entered into an Amendment to the Warrant Agent Agreement (the “Amendment”) to confirm that we may adjust the exercise price of the of the August 2023 Warrants to provide an exercise price per share that is lower than the then-current exercise price of the August 2023 Warrants.

Current wording

On August 8, 2023, we issued warrants to purchase 3,160,000 shares of our common stock (the “August 2023 Warrants”) as part of the August 2023 Offering. In connection therewith, we entered into a warrant agency agreement (the “Warrant Agent Agreement”), with Transfer Online, Inc. appointing Transfer Online, Inc. as Warrant Agent for the August 2023 Warrants. On April 17, 2024, NAYA and the Warrant Agent entered into an Amendment to the Warrant Agent Agreement (the “Amendment”) to confirm that we may adjust the exercise price of the of the August 2023 Warrants to provide an exercise price per share that is lower than the then-current exercise price of the August 2023 Warrants.

Previous wording

On April 17, 2024, INVO, having reported, on April 16, 2024, stockholders’ equity of $892,825 in the Form 10-K for the period ended December 31, 2023, received notice (the “Notice”) from the staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) advising us that it no longer complies with Nasdaq Listing Rule 5550(b)(1) that requires companies listed on The Nasdaq Capital Market to maintain stockholders’ equity of at least $2,500,000 (the “Equity Rule”).

Current wording

On April 17, 2024, NAYA, having reported, on April 16, 2024, stockholders’ equity of $892,825 in the Form 10-K for the period ended December 31, 2023, received notice (the “Notice”) from the staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) advising us that we no longer complied with Nasdaq Listing Rule 5550(b)(1) that requires companies listed on The Nasdaq Capital Market to maintain stockholders’ equity of at least $2,500,000 (the “Equity Rule”).

Previous wording

In a decision dated November 22, 2023, a Nasdaq Hearings Panel (the “Panel”) previously had confirmed that we regained compliance with the Equity Rule. In the decision, the Panel imposed a Mandatory Panel Monitor for a period of one year or until November 22, 2024, which would require Staff to issue a Delist Determination Letter, in the event that we failed to maintain compliance with the Equity Rule (the “Panel Monitor”). As a result, the Notice contains the Staff’s determination to delist INVO.

Current wording

In a decision dated November 22, 2023, a Nasdaq Hearings Panel (the “Panel”) previously had confirmed that we regained compliance with the Equity Rule. In the decision, the Panel imposed a Mandatory Panel Monitor for a period of one year or until November 22, 2024, which would require Staff to issue a Delist Determination Letter, in the event that we failed to maintain compliance with the Equity Rule (the “Panel Monitor”). As a result, the Notice contained the Staff’s determination to delist NAYA from Nasdaq.

Previous wording

As described in the Notice, under Nasdaq rules, we had and exercised our right to request an appeal of this determination to prevent its securities from being delisted and suspended at the opening of business on April 26, 2024. Our hearing to present its appeal of the Staff’s determination in front of the Panel was heard on June 6, 2024.

Current wording

As described in the Notice, under Nasdaq rules, we had the right to request an appeal of this determination to prevent its securities from being delisted and suspended at the opening of business on April 26, 2024. We exercised this right, and our hearing to present its appeal of the Staff’s determination in front of the Panel was heard on June 6, 2024.

Previous wording

On June 18, 2024, we received a notice from Nasdaq stating that the Panel had granted our request for continued listing on the Exchange until October 14, 2024, subject to our demonstrating compliance with Nasdaq’s Listing Rule 5505 (the “Initial Listing Rule”), as it would apply to the proposed Merger with NAYA. The Initial Listing Rule requires us to have a minimum bid price, a minimum of unrestricted publicly held shares, a minimum number of round lot shareholders, a minimum number of market makers, and it requires us to meet its Equity Standard, its Market Value of Listed Securities Standard, or its Net Income Standard.

Current wording

On June 18, 2024, we received a notice from Nasdaq stating that the Panel had granted our request for continued listing on the Exchange until October 14, 2024, subject to our demonstrating compliance with Nasdaq’s Listing Rule 5505 (the “Initial Listing Rule”), as it would apply to the proposed Merger with Legacy NAYA. The Initial Listing Rule requires us to have a minimum bid price, a minimum of unrestricted publicly held shares, a minimum number of round lot shareholders, a minimum number of market makers, and it requires us to meet its Equity Standard, its Market Value of Listed Securities Standard, or its Net Income Standard.

Previous wording

The Notice had no immediate effect on the listing of our common stock and our common stock continued to trade on The Nasdaq Capital Market under the symbol “INVO.”

Current wording

The notice has no immediate effect on the listing of our common stock, and our common stock will continue to trade on Nasdaq.

Previous wording

During the first half of 2024, we continued to make steady progress with our efforts to transition INVO towards healthcare services through our ownership of fertility clinics. This was highlighted by our first acquisition (in August of 2023) of an existing IVF practice. This Madison, Wisconsin based fertility center was established more than 15 years ago, generates strong revenue and profits, and provided an immediate and substantial impact to our overall operations as reflected in our significant growth in the first half of this year. We also believe this first acquisition provides a road map and foundation for us to utilize in the pursuit of additional acquisitions of established and profitable small IVF practices. Subject to terms and acquisition capital availability, we anticipate actively pursuing suitable acquisition targets to further accelerate our growth objectives.

Current wording

During the first three quarters of 2024, the benefits of our effort to transition NAYA’s fertility operations towards healthcare services through our ownership of fertility clinics became increasingly evident as our revenue increased compared to last year. This was primarily enabled by our first acquisition (in August of 2023) of an existing IVF practice. This Madison, Wisconsin based fertility center was established more than 15 years ago, generates strong revenue and profits, and provided an immediate and substantial impact to our overall operations as reflected in our significant growth in the first half of this year. We also believe this first acquisition provides a road map and foundation for us to utilize in the pursuit of additional acquisitions of established and profitable small IVF practices. Subject to terms and acquisition capital availability, we anticipate actively pursuing suitable acquisition targets to further accelerate our growth objectives.

Previous wording

Our existing operational INVO Centers located in Alabama and Georgia also made progress, and we anticipate both will continue to make further advances in the current year. Due to international resource constraints and the lack of an available local physician resource, the Mexico clinic has halted providing services. We continue to seek additional U.S. opportunities to expand our INVO Center activities over time, and, in the short-term, expect to devote more of our efforts toward acquisitions as we believe they would enable us to build scale in our operations at a quicker space, and, in turn, help support our long-term objective of building INVO centers across the U.S. market.

Current wording

Our existing operational INVO Centers located in Alabama and Georgia experienced some modest disruption with the shift in federal abortion laws, but as the market adjusts to the new dynamic of individual states rules we anticipate both will continue to make further advances in the current year. Due to international resource constraints and the lack of an available local physician resource, the Mexico clinic has halted providing services. We continue to seek additional U.S. opportunities to expand our INVO Center activities over time, and, in the short-term, expect to devote more of our efforts toward acquisitions as we believe they would enable us to build scale in our operations at a quicker space, and, in turn, help support our long-term objective of building INVO centers across the U.S. market.

Previous wording

Revenue for the three months ended June 30, 2024 was approximately $1.8 million, compared to approximately $0.3 million for the three months ended June 30, 2023. The $1.8 million in revenue for the second quarter of 2024 was primarily related to clinic revenue from the consolidated Georgia JV and WFI. The increase of approximately $1.5 million, or approximately 481%, was primarily related to the acquisition of WFI.

Current wording

Revenue for the three months ended September 30, 2024 was approximately $1.4 million, compared to approximately $1.0 million for the three months ended September 30, 2023. The $1.4 million in revenue for the third quarter of 2024 was primarily related to clinic revenue from the consolidated Georgia JV and WFI. The increase of approximately $0.4 million, or approximately 47%, was primarily related to the acquisition of WFI.

Previous wording

Cost of revenue for the three months ended June 30, 2024 was approximately $0.9 million, compared to approximately $0.2 million for the three months ended June 30, 2023. The increase in cost of revenue was primarily related to the acquisition of WFI.

Current wording

Cost of revenue for the three months ended September 30, 2024 was approximately $1.0 million, compared to approximately $0.6 million for the three months ended September 30, 2023. The increase in cost of revenue was primarily related to the acquisition of WFI.

Previous wording

Selling, general, and administrative expenses for the three months ended June 30, 2024 were approximately $2.6 million, compared to approximately $2.0 million for the three months ended June 30, 2023. The increase of approximately $0.6 million, or approximately 30%, was primarily the result of an increase of $1.0 million in non-cash professional services expenses which was partially offset by a $0.4 million reduction in personnel costs. Non-cash, stock-based compensation expense was $1.2 million in the period, compared to $0.4 million for the same period in the prior year.

Current wording

Selling, general, and administrative expenses for the three months ended September 30, 2024 were approximately $1.5 million, compared to approximately $1.3 million for the three months ended September 30, 2023. The increase of approximately $0.2 million, or approximately 20%, was primarily related to the addition of WFI for the full period in 2024 compared to only part of the period in 2023. Non-cash, stock-based compensation expense was $0.2 million in the period, compared to $0.3 million for the same period in the prior year.

Previous wording

Gain from equity investments for the three months ended June 30, 2024 was approximately $18 thousand, compared to a gain of approximately $4 thousand for the three months ended June 30, 2023. The increase in gain is due to an increase in revenue from the equity method JV’s.

Current wording

Loss from equity investments for the three months ended September 30, 2024 was approximately $27 thousand, compared to a loss of approximately $8 thousand for the three months ended September 30, 2023. The increase in loss is due to a decrease in revenue from the equity method JV’s.

Previous wording

Interest expense and financing fees were approximately $0.4 million for the three months ended June 30, 2024, compared to approximately $0.2 million for the three months ended June 30, 2023.

Current wording

Interest expense and financing fees were approximately $0.3 million for the three months ended September 30, 2024, compared to approximately $0.4 million for the three months ended September 30, 2023.

Previous wording

Revenue for the six months ended June 30, 2024 was approximately $3.4 million, compared to approximately $0.7 million for the six months ended June 30, 2023. Of the $3.4 million in revenue for the first six months of 2024, approximately $3.3 million was related to clinic revenue from the consolidated Georgia JV and WFI. The increase of approximately $2.7 million, or approximately 414%, was primarily related to the acquisition of WFI.

Current wording

Revenue for the nine months ended September 30, 2024 was approximately $4.8 million, compared to approximately $1.6 million for the nine months ended September 30, 2023. The $4.8 million in revenue for the first nine months of 2024 was primarily related to clinic revenue from the consolidated Georgia JV and WFI. The increase of approximately $3.2 million, or approximately 196%, was primarily related to the acquisition of WFI.

Previous wording

Cost of revenue for the six months ended June 30, 2024 was approximately $1.7 million, compared to approximately $0.5 million for the six months ended June 30, 2023. The increase in our cost of revenue was primarily related to the acquisition of WFI.

Current wording

Cost of revenue for the nine months ended September 30, 2024 was approximately $2.7 million, compared to approximately $1.0 million for the nine months ended September 30, 2023. The increase in our cost of revenue was primarily related to the acquisition of WFI.

Previous wording

Selling, general, and administrative expenses for the six months ended June 30, 2024 were approximately $4.1 million, compared to approximately $4.4 million for the six months ended June 30, 2023. The decrease of approximately $0.3 million, or approximately 7%, was primarily the result of a $1.3 million decrease in personnel expenses and was partially offset by a $1.0 million increase in non-cash professional services expense. Non-cash, stock-based compensation expense was $1.4 million in the period, compared to $0.3 million for the same period in the prior year.

Current wording

Selling, general, and administrative expenses for the nine months ended September 30, 2024 were approximately $5.6 million, compared to approximately $5.6 million for the nine months ended September 30, 2023. Non-cash, stock-based compensation expense was $1.6 million in the period, compared to $1.0 million for the same period in the prior year.