INVO Fertility, Inc.

Previous wording

We are a healthcare services and technology company focused on the fertility marketplace and dedicated to expanding access to assisted reproductive technology (“ART”) care for patients in need. Our principal commercial strategy is focused on building, acquiring and operating fertility clinics, including “INVO Centers” dedicated primarily to offering the intravaginal culture (“IVC”) procedure enabled by our INVOcell® medical device (“INVOcell”) and US-based, profitable in vitro fertilization (“IVF”) clinics. We have two operational INVO Centers and one IVF clinic in the United States. We also continue to engage in the sale and distribution of our INVOcell technology solution into third-party owned and operated fertility clinics. We also intend to seek out additional, innovative fertility-focused technologies, to license or acquire in order to utilize within our clinics.

Current wording

We are a healthcare services and technology company focused on the fertility marketplace and dedicated to expanding access to assisted reproductive technology (“ART”) care to patients in need. Our principal commercial strategy is focused on acquiring, establishing, and operating fertility clinics and related businesses and technologies. Our acquisition strategy focuses on US-based, profitable fertility clinics. Our clinics offer a variety of fertility services including in vitro fertilization (“IVF”) and the intravaginal culture (“IVC”) procedure enabled by its INVOcell® medical device (“INVOcell”) procedure enabled by INVOcell. As of the date of this filing, we have four fertility clinics in the United States. We also continue to engage in the sale and distribution of our INVOcell technology solution into third-party owned and operated fertility clinics. We also intend to seek out additional, innovative fertility-focused technologies, to license or acquire in order to utilize within our 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 annual revenue and became a major part of our clinic-based operations. The acquisition accelerated our transformation from a medical device company to a healthcare services company and immediately added scale and a significant source of positive cash flow to our operations. The acquisition of profitable IVF clinics complements our efforts to build new INVO Centers, and we expect to continue this strategy to accelerate overall growth.

Current wording

On August 10, 2023, we consummated the first acquisition of an existing fertility clinic, the Wisconsin Fertility Institute (“WFI”). As an established and profitable clinic, the closing of the WFI acquisition more than tripled our annual revenue and became a major part of our clinic-based operations. The acquisition accelerated our transformation from a medical device company to a healthcare services company and immediately added scale and a significant source of positive cash flow to our operations. The acquisition of profitable IVF clinics complements our efforts to build new INVO Centers, and we expect to continue this strategy to accelerate overall growth.

Previous wording

On March 10 and June 28, 2021, we established joint ventures to open INVO Centers in Birmingham, Alabama, and Atlanta, Georgia, respectively. We established these clinics to increase use of the INVOcell, to accelerate the growth and awareness of the IVC procedure and to expand the availability of statistical data supporting its use. These clinics also enabled us to expand our revenue per fertility cycle from hundreds of dollars (from the sale of each INVOcell device) to thousands of dollars, and to significantly advance our path to profitability. We believe a dedicated INVO Centers requires less investment than a traditional IVF clinic and are operationally efficient, making them ideal for underserved secondary markets. We plan on opening additional, wholly owned INVO Centers in the coming years.

Current wording

On March 10 and June 28, 2021, we established joint ventures to open INVO Centers in Birmingham, Alabama, and Atlanta, Georgia, respectively. We established these clinics to increase use of the INVOcell, to accelerate the growth and awareness of the IVC procedure, and to expand the availability of statistical and clinical data supporting its use. These clinics also represent our initial entry into clinic-based fertility operations and enabled us to expand our revenue per fertility cycle from hundreds of dollars (from the sale of each INVOcell device) to thousands of dollars, and to significantly advance our path to building greater scale in our overall operations and to reaching profitability.

Previous wording

While INVOcell remains part of our efforts, our commercial and corporate development strategy within the fertility market has expanded to focus more broadly on providing ART services through our emphasis on operating clinics. However, we will continue to provide INVOcell as well as seek out additional, innovative technologies, we can utilize to benefit patients and enhance our clinic operations.

Current wording

While INVOcell remains part of our efforts, our strategy has expanded to focus more broadly on providing ART services through clinic operations.

Previous wording

On August 10, 2023, we consummated the first acquisition of an existing IVF clinic, WFI. As an established and profitable clinic, WFI has a full staff, including a reproductive endocrinology and infertility medical doctor (“REI”), an OBGYN trained to provide fertility treatment and full complement of medical, laboratory and administration staff. In June 2024, we replaced WFI’s REI with an REI that had previously worked at the clinic and was well acquainted with its staff and procedures. WFI’s staff manages most day-to-day activities, which, except for medical matters, is overseen by our VP operations. Upon closing the acquisition, our corporate staff assumed finance, accounting, human resources and other overhead responsibilities.

Current wording

As established and profitable clinics, WFI and Family Beginnings have full staffs, including REI’s, an OBGYN trained to provide fertility treatment and full complement of medical, laboratory and administration staff. The day to day clinical operations are handled by on site staff. Our corporate staff manages finance, billing, accounting, human resources and other overhead responsibilities.

Previous wording

On March 10, 2021, our wholly owned subsidiary, INVO Centers, LLC (“INVO CTR”) formed a joint venture with HRCFG, LLC (“HRCFG”) to establish an INVO Center in Birmingham, Alabama. The name of the joint venture 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 INVO Center. Our responsibilities include providing funding to the Alabama JV and being the exclusive provider of the INVOcell. We also perform all required, industry-specific compliance and accreditation functions, and product documentation for product registration. The Birmingham INVO Center opened to patients on August 9, 2021.

Current wording

We established HRCFG INVO, LLC (the “Alabama JV”) with HRCFG, LLC (“HRCFG”). 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 Alabama JV. Our responsibilities include providing funding to the Alabama JV and being the exclusive provider of the INVOcell.

Previous wording

On June 28, 2021, INVO CTR formed a joint venture with Bloom Fertility, LLC (“Bloom”) to establish an INVO Center in Atlanta, Georgia. The name of the joint venture is Bloom INVO LLC (the “Georgia JV”). The responsibilities of Bloom include providing all medical services required for the operation of the INVO Center. Our responsibilities include providing funding to the Georgia JV, lab services, quality management, and being the exclusive provider of the INVOcell. We also perform all required, industry specific compliance and accreditation functions, and product documentation for product registration. The Atlanta INVO Center opened to patients on September 7, 2021.

Current wording

We formed a joint venture with Bloom Fertility, LLC (“Bloom”) to establish a joint venture entity, formed as “Bloom INVO LLC” (the “Georgia JV”). The responsibilities of Bloom include providing all medical services required for the operation of the Georgia JV. Our responsibilities include providing funding to the Georgia JV, lab services, quality management, and being the exclusive provider of the INVOcell.

Previous wording

Over the past several years, the principal focus of our commercial efforts has shifted from the distribution of our INVOcell device to the provision of fertility clinic services through our INVO Centers and IVF clinic acquisition, with acquisitions of existing operations a near-term focus. For the most part, our activities have been focused on secondary markets where there is a greater imbalance between the need for ART treatment and the number of cycles available. Combined with our ability to offer a wider range of advanced fertility care, including IVC, IVF and IUI, at multiple price points, our clinics have the opportunity for differentiation from our competitors. As with our INVOcell technology, we continuously look for new solutions that can create greater efficiency and effectiveness in the provision of fertility cycles and support our efforts to democratize fertility care.

Current wording

Over the past several years, the principal focus of our commercial efforts has shifted from the distribution of our INVOcell device to the provision of fertility clinic services through our network of clinics. For the most part, our clinical activities have been focused on secondary markets where there is a greater imbalance between the need for ART treatment and the number of cycles available. Combined with our ability to offer a wider range of advanced fertility care, including IVC, IVF and IUI, at multiple price points, our clinics have the opportunity for differentiation from our competitors. As with our INVOcell technology, we continuously look for new solutions that can create greater efficiency and effectiveness in the provision of fertility cycles and support our efforts to democratize fertility care.

Previous wording

Our two INVO Centers and WFI clinic employ various strategies to build awareness for their services and/or to maintain and grow patient flow and fertility cycle volume. The principal source of patient flow comes through OBGYN referrals and patient word of mouth. Our clinical staff maintain relationships with the local OBGYN community and organize virtual and in person events to showcase our centers’ services, fertility treatment effectiveness statistics and quality of our clinical personnel. We also conduct regular social and other media campaigns to attract new patients and to build awareness.

Current wording

Our fertility clinics employ various strategies to build awareness for their services and/or to maintain and grow patient flow and fertility cycle volume. The principal source of patient flow comes through OBGYN referrals and patient word of mouth. Our clinical staff maintain relationships with the local OBGYN community and organize virtual and in person events to showcase our centers’ services, fertility treatment effectiveness statistics and quality of our clinical personnel. We also conduct regular social and other media campaigns to attract new patients and to build awareness.

Previous wording

At the corporate level, we seek to build general awareness for our clinical activities and IVC procedure results with a view to drive patients to our centers and to grow demand for our INVOcell device. These efforts also support our ongoing work to open new INVO Centers and to acquire additional IVF clinics.

Current wording

At the corporate level, we seek to build general awareness for our clinical activities and IVC procedure results with a view to drive patients to our centers and to grow demand for our INVOcell device. These efforts also support our ongoing work to acquire additional IVF clinics in the near term and open new fertility clinics longer term.

Previous wording

The acquisition of existing IVF clinics requires less sales and marketing effort compared to opening new INVO Centers, as they have established patient flows that can be built upon. When entering a new market with an INVO Center, we leverage the experience developed in establishing our Alabama and Georgia joint ventures. We employ strategies to secure patient flow levels that can enable new INVO Centers to become profitable and contribute economically to our overall business as soon as possible. Primarily, our INVO Centers seek to employ local, reputable physicians with strong ties to the OBGYN community.

Current wording

The acquisition of existing IVF clinics requires less sales and marketing effort compared to opening new fertility clinics as they have established patient flows that can be built upon. When entering a new market with a fertility clinic, we leverage the experience developed in establishing our Alabama and Georgia joint ventures. We employ strategies to secure patient flow levels that can enable new fertility clinics to become profitable and contribute economically to our overall business as soon as possible. Primarily, our fertility clinics seek to employ local, reputable physicians with strong ties to the OBGYN community.

Previous wording

Historically, our approach to marketing INVOcell was focused on identifying partners within targeted geographic regions that we believe could best support our efforts to expand access to advanced fertility treatment using the INVOcell and IVC procedure for the large number of underserved infertile people around the world. Those efforts resulted in the execution of a series of distribution agreements with partners across the globe. More recently, as we shifted our focus to opening INVO Centers and acquiring IVF clinics, which activities have been centered in the US, and as a result of the limited traction experienced in international markets, proactive marketing efforts for the INVOcell have been limited to the United States. In our domestic market, we distribute the INVOcell directly to a number of third-party IVF clinics and we remain open to pursuing foreign markets that present a realistic opportunity for incremental revenue on a profitable basis.

Current wording

Historically, our approach to marketing INVOcell was focused on identifying partners within targeted geographic regions that we believe could best support our efforts to expand access to advanced fertility treatment using the INVOcell and IVC procedure for the large number of underserved infertile people around the world. Those efforts resulted in the execution of a series of distribution agreements with partners across the globe. More recently, as we shifted our focus to acquiring and operating fertility clinics, which activities have been centered in the US, and as a result of the limited traction experienced in international markets, proactive marketing efforts for the INVOcell have been limited to the United States. In our domestic market, we distribute the INVOcell directly to a number of third-party IVF clinics and we remain open to pursuing foreign markets that present a realistic opportunity for incremental revenue on a profitable basis.

Previous wording

On June 30, 2025, our board of directors approved a reverse stock split of our common stock at a ratio of 1-for-3 and also approved a proportionate decrease in its authorized common stock to 4,166,667 shares from 1,388,888. On July 18, 2025, we filed a certificate of change (with an effective date of July 21, 2025) with the Nevada Secretary of State pursuant to Nevada Revised Statutes 78.209 to effectuate a 1-for-3 reverse stock split of its outstanding common stock. On July 11, 2025, we received notice from Nasdaq that the reverse split would take effect at the open of business on July 21, 2025, 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.

Current wording

On March 25, 2026, we filed a certificate of change with the Secretary of State of Nevada to effectuate a reverse split of our common stock at a ratio of 1-for-5, and our authorized common stock was proportionately reduced to 50,000,000 shares from 250,000,000 shares. The reverse stock split took effect on March 27, 2026. All share information included in this Form 10-K has been reflected as if the reverse stock split occurred as of the earliest period presented

Previous wording

On April 30, 2025, we entered into an inducement letter agreement (the “Inducement Letter Agreement”) with an institutional investor and existing holder (the “Holder”) of certain existing warrants (the “Existing Warrants”) to purchase up to 155,280 shares of our common stock. The Existing Warrants were originally issued on January 14, 2025, with an exercise price of $25.20 per share.

Current wording

On January 28, 2026, we entered into an inducement letter agreement (the “January 2026 Inducement Letter Agreement”) with an institutional investor and existing holder (the “Holder”) of the Common Warrants (as defined below).

Previous wording

The issuance of the shares of common stock upon exercise of the Existing Warrants is registered pursuant to a registration statement on Form S-3 (File No. 333-283872), which was declared effective by the Securities and Exchange Commission (the “SEC”) on January 14, 2025.

Current wording

The issuance of the shares of common stock upon exercise of such the Common Warrants was registered pursuant to a registration statement on Form S-1 (File No. 333-292206), which was declared effective by the SEC on December 29, 2025.

Previous wording

Pursuant to the Inducement Letter Agreement, the Holder agreed to exercise the Existing Warrants for cash at the exercise price of $4.83 per share in consideration for our agreement to issue new unregistered warrants to purchase up to an aggregate of 232,920 shares of common stock at an exercise price of $4.83 per share (the “New Warrant”). The New Warrants will be exercisable upon receipt of such approval as may be required by the applicable rules and regulations of the Nasdaq Capital Market (or any successor entity) from the stockholders of INVO with respect to issuance of all of the New Warrants and the shares of common stock upon the exercise thereof (Stockholder Approval, and such date, the “Stockholder Approval Date”) and have a term of five years from the Stockholder Approval Date.

Current wording

Pursuant to the January 2026 Inducement Letter Agreement, the Holder agreed to exercise the Common Warrants for cash at the exercise price of $7.95 per share in consideration for our agreement to issue new unregistered warrants to purchase up to an aggregate of 1,893,492 shares of common stock at an exercise price of $7.95 per share. Such new warrants will become exercisable upon receipt of such approval as may be required by the applicable rules and regulations of the Nasdaq Capital Market (or any successor entity) from the stockholders of INVO with respect to issuance of all of such new warrants and the shares of common stock upon the exercise thereof and have a term of five and one-half years from the date stockholder approval is obtained.

Previous wording

The aggregate gross proceeds to us from the exercise of the Existing Warrants was approximately $750,000, before deducting offering expenses payable by us.

Current wording

The aggregate gross proceeds to us from the exercise of such existing warrants was approximately $7.5 million, before deducting offering expenses payable by us.

Previous wording

Increase in Authorized Common Stock

Current wording

Increase in Authorized Common Stock (Jan 2026)

Previous wording

On July 23, 2025, our stockholders approved an amendment to our Amended and Restated Articles of Incorporation to increase our number of authorized shares of common stock from 1,388,888 to 50,000,000. On July 23, 2025, we filed a Certificate of Amendment to its Articles of Incorporation to increase our authorized shares of common stock from 1,388,888 shares to 50,000,000 shares.

Current wording

On January 22, 2026, our stockholders approved an amendment to our Amended and Restated Articles of Incorporation to increase our number of authorized shares of common stock from 6,250,000 to 250,000,000, and we filed a Certificate of Amendment to our Articles of Incorporation to increase our authorized shares of common stock for the same.

Previous wording

During the first nine months of 2025, our fertility revenue increased approximately 9% compared to last year. Looking ahead, we expect our fertility operations to expand further, both through organic growth of our existing clinics and through the acquisition of additional, profitable IVF clinics similar to our Wisconsin clinic, which we acquired in 2023 and now serves as a solid foundation for our operations. Our active pursuit of additional acquisitions is aimed at accelerating our growth and driving our overall business to cash flow break even and beyond to profitability.

Current wording

Looking ahead, we expect our fertility operations to expand further, both through organic growth of our existing clinics and through the acquisition of additional, profitable fertility clinics. Our active pursuit of additional acquisitions is aimed at accelerating our growth, building scale in our operations, and driving our overall business to cash flow break even and beyond to profitability.

Previous wording

From a macro perspective, we believe we will benefit from the ongoing growth in the ART market, which continues to experience positive trends, including (1) an under-served 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.

Current wording

From a macro perspective, we believe we will benefit from the ongoing growth in the ART market, which continues to experience positive trends, including (1) an under-served 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, (6) generally improving insurance (private and public) reimbursement trends, and (7) an administration that supports increased access to fertility treatments.

Previous wording

Cost of revenue for the three months ended September 30, 2025, was approximately $1.1 million, compared to approximately $1.0 million for the three months ended September 30, 2024. The increase in cost of revenue was primarily related to increased labor costs in the Wisconsin clinic.

Current wording

Cost of services for the three months ended March 31, 2026 was approximately $1.3 million, compared to approximately $1.0 million for the three months ended March 31, 2025. The increase of approximately $0.3 million or 23% directly correlates to the increase in clinic revenue.

Previous wording

Selling, general, and administrative expenses for the three months ended September 30, 2025, were approximately $2.1 million, compared to approximately $1.5 million for the three months ended September 30, 2024. The increase of approximately $0.6 million was primarily related to increased legal and accounting costs. Non-cash, stock-based compensation expense was $0.01 million in the period, compared to $0.2 million for the same period in the prior year.

Current wording

Selling, general, and administrative expenses for the three months ended March 31, 2026 were approximately $2.2 million, compared to approximately $1.6 million for the three months ended March 31, 2025. The increase of approximately $0.6 million, or approximately 40%, of which, $0.3 million was related to increased professional fees, $0.1 million was related to increased personnel costs, and $0.1 million was related to increased general administrative operating expenses. Non-cash, stock-based compensation expense was $0.2 million in the period, compared to $0.1 million for the same period in the prior year.

Previous wording

Interest expense and financing fees were approximately $0.1 million for the three months ended September 30, 2025, compared to approximately $0.3 million for the three months ended September 30, 2024. The decrease in interest expense and financing fees was primarily related to a decrease in debt.

Current wording

Interest expense and financing fees were approximately $0.2 million for the three months ended March 31, 2026, compared to approximately $0.3 million for the three months ended March 31, 2025.

Previous wording

For the nine months ended September 30, 2025, and 2024, we had net losses of approximately $25.3 million and $5.5 million, respectively, and an accumulated deficit of approximately $93.1 million as of September 30, 2025. Approximately $19.6 million of the net loss was related to non-cash expenses for the nine months ended September 30, 2025, compared to $3.2 million for the nine months ended September 30, 2024. We had negative working capital of approximately $3.3 million as of September 30, 2025, compared to negative working capital of approximately $5.6 million as of December 31, 2024. As of September 30, 2025, we had stockholder’s equity of approximately $5.8 million compared to stockholder’s equity of approximately $12.7 million as of December 31, 2024.

Current wording

For the three months ended March 31, 2026, and 2025, we had net losses of approximately $5.5 million and $17.4 million, respectively, and an accumulated deficit of approximately $96.9 million as of March 31, 2026. Approximately $4.1 million of the net loss was related to non-cash expenses for the three months ended March 31, 2026, compared to $14.8 million for the three months ended March 31, 2025. We had negative working capital of approximately $0.6 million as of March 31, 2026, compared to negative working capital of approximately $7.5 million as of December 31, 2025. As of March 31, 2026, we had stockholder’s equity of approximately $15.0 million compared to stockholder’s equity of approximately $7.2 million as of December 31, 2025.

Previous wording

We have been dependent on raising capital from debt and equity financings to meet our needs for cash required to fund our operating expenses and investing activities. During the first nine months of 2025, we received $2.2 million for the sale of our preferred stock, $1.0 million from the exercise of warrants, and $8.7 million in net proceeds for a public offering, which was partially used to redeem $4 million of preferred stock and repay approximately $1.2 million in debt. During the first nine months of 2024, we received net proceeds of approximately $1.6 million for the sale of our preferred stock, $0.9 million from the exercise of warrants, $0.7 million in proceeds from the sale of notes payable, and $0.2 million in net proceeds for the sale of our common stock. Until we can generate positive cash from operations, we will need to raise additional funding to meet our liquidity needs and to execute our business strategy. As in the past, we will seek debt and/or equity financing, which may not be available on reasonable terms, if at all.

Current wording

We have been dependent on raising capital through debt and equity financing to secure the cash required to fund our operating expenses and investing activities. During the first three months of 2026, we received net proceeds of approximately $7.1 million from the exercise of warrants, which was partially used to repay approximately $0.1 million in debt.

Previous wording

The following table shows a summary of our cash flows for the nine months ended September 30, 2025 and 2024:

Current wording

The following table shows a summary of our cash flows for the three months ended March 31, 2026 and 2025:

Previous wording

As of September 30, 2025, we had approximately $0.4 million in cash, compared to approximately $0.5 million as of September 30, 2024. Net cash used in operating activities for the first nine months of 2025 was approximately $7.0 million, compared to approximately $2.4 million for the same period in 2024. The increase in net cash used in operating activities was primarily due to the increase in net loss related to the consolidation of NTI.

Current wording

As of March 31, 2026, we had approximately $4.9 million in cash, compared to approximately $0.8 million as of March 31, 2025. Net cash used in operating activities for the first three months of 2026 was approximately $1.9 million, compared to approximately $3.5 million for the same period in 2025. The decrease in net cash used in operating activities was primarily due to changes in the business from the divesture of NAYA Therapeutics.

Previous wording

During the nine months ended September 30, 2025, cash used in investing activities of $38 thousand was primarily related to the purchase of equipment for WFI. During the nine months ended September 30, 2024, cash used in investing activities of $30 thousand was primarily related to the purchase of equipment for WFI.

Current wording

During the three months ended March 31, 2026, cash used in investing activities of approximately $0.2 million was primarily related to the acquisition of Family Beginnings. During the three months ended March 31, 2025, cash used in investing activities of $14 thousand was primarily related to the purchase of equipment for WFI.

Previous wording

During the nine months ended September 30, 2025, cash provided by financing activities of approximately $6.7 million was primarily related to approximately $8.7 million of net proceeds from a public offering and $2.2 million in proceeds from the sale of preferred stock, which was partially offset by a $4 million redemption of the C-2 Preferred Stock, approximately $1.2 million of debt repayment, and warrant exercises. During the nine months ended September 30, 2024, cash provided by financing activities of approximately $2.6 million was primarily related to the sale of preferred stock, warrant exercises, and notes payable.

Current wording

During the three months ended March 31, 2026, cash provided by financing activities of approximately $5.0 million was primarily related to approximately $7.1 million of net proceeds from warrant exercises which was partially offset by approximately $2.0 million for deferred consideration payments for WFI and approximately $0.1 million of debt repayment. During the three months ended March 31, 2025, cash provided by financing activities of approximately $3.7 million was primarily related to approximately $8.7 million of net proceeds from a public offering which was partially offset by a $4 million redemption of the C-2 Preferred Stock and approximately $1.1 million in debt repayment.

Previous wording

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.

Current wording

The discussion and analysis of our financial condition presented in this section is based upon our unaudited 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.

Previous wording

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

Current wording

SeeNote 1 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for a summary of significant accounting policies and the effect on our consolidated financial statements.

Previous wording

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.

Current wording

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. SeeNote 4 – Variable Interest Entities for additional information on the Company’s consolidated VIEs.

Previous wording

Investments in unconsolidated affiliates, over 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.

Current wording

Investments in unconsolidated affiliates, over 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. SeeNote 4 – Variable Interest Entities for additional information on the Company’s equity method VIE’s.

Previous wording

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying condensed consolidated financial statements.

Current wording

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying consolidated financial statements.