Amendment to Annual Report - Form 10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

☒	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the fiscal year ended December 31, 2023

or

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

INVO BIOSCIENCE, INC.

(Exact name of registrant as specified in Charter)

Nevada		001-39701		20-4036208
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employee Identification No.)

5582 Broadcast CourtSarasota, Florida, 34240

(Address of Principal Executive Offices)

Registrant's telephone number, including area code: (978)878-9505

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 NasdaqStock Market LLC

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

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

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

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

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

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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

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

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

The aggregate market value of the voting stock and non-voting common equity held by non-affiliates of the registrant as of the last business day of the registrant's most recently completed second fiscal quarter ended June 30, 2023 was $3,072,404based upon the closing price of the registrant's common stock of $4.00 on the NASDAQ as of that date.

The number of shares outstanding of the registrant's common stock, $0.0001 par value, as of April 16, 2024 was 2,743,031.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Proxy Statement for the 2023 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant's fiscal year ended December 31, 2023.

Explanatory Note

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

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

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

FORM 10-K

Part II

Item 8. Financial Statements and Supplementary Data

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 2738)	F-1
Consolidated Balance Sheets as of December 31, 2023 and 2022	F-2
Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022	F-3
Consolidated Statements of Stockholders' Equity (Deficit) for the Period from January 1, 2022 to December 31, 2023	F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022	F-5
Notes to Consolidated Financial Statements	F-6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of INVO Bioscience, Inc.

Opinion on the Consolidated Financial Statements

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

Going Concern

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

Basis for Opinion

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

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

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

Critical Audit Matter

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

Revenue Transactions and Improper Revenue Recognition

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

Identify the contract with the customer.

Identify the performance obligations in the contract.

Determine the total transaction price.

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

Recognize as revenue when (or as) each performance obligation is satisfied.

Auditing management's evaluation of revenue from contracts with customers involves significant judgment, given the fact that the agreements require management's evaluation, identification of the contract and the performance obligation, the total transaction price and the allocation of the total transaction price, the determination of when the performance obligation is satisfied, and consideration that revenue is an inherent fraud risk.

To evaluate the appropriateness and accuracy of the assessment by management, we evaluated management's assessment in relationship to the relevant agreements.

/s/ M&K CPAS, PLLC

M&K CPAS, PLLC

PCAOB ID: 2738

We have served as the Company's auditor since 2019.

The Woodlands, TX

April 16, 2024

INVO BIOSCIENCE, INC.

CONSOLIDATED BALANCE SHEETS

		December 31,			December 31,
		2023			2022
ASSETS
Current assets
Cash		$	232,424			$	90,135
Accounts receivable			140,550				77,149
Inventory			264,507				263,602
Prepaid expenses and other current assets			622,294				190,201
Total current assets			1,259,775				621,087
Property and equipment, net			826,418				436,729
Lease right of use			5,740,929				1,808,034
Intangible assets, net			4,093,431				-
Goodwill			5,878,986				-
Investment in NAYA			2,172,000				-
Equity investments			916,248				1,237,865
Total assets		$	20,887,787			$	4,103,715
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities		$	2,330,381			$	1,349,038
Accrued compensation			722,251				946,262
Notes payable - current portion, net			629,920				100,000
Notes payable - related party, net			880,000				662,644
Deferred revenue			408,769				119,876
Lease liability, current portion			397,554				231,604
Additional payments for acquisition, current portion			2,500,000				-
Other current liabilities			350,000				-
Total current liabilities			8,218,875				3,409,424
Lease liability, net of current portion			5,522,090				1,669,954
Notes payable - net of current portion			1,253,997				-
Deferred tax liability			-				1,949
Additional payments for acquisition, net of current portion			5,000,000				-
Total liabilities			19,994,962				5,081,327
Stockholders' equity (deficit)
Series B Preferred Stock, $5.00par value; 1,200,000shares authorized; 1,200,000and 0issued and outstanding as of December 31, 2023 and 2022, respectively.			6,000,000				-
Common Stock, $.0001par value; 50,000,000shares authorized; 2,492,531and 608,611issued and outstanding as of December 31, 2023 and 2022, respectively			249				61
Additional paid-in capital			52,710,721				48,805,860
Accumulated deficit			(57,818,145	)			(49,783,533	)
Total stockholders' equity (deficit)			892,825				(977,612	)
Total liabilities and stockholders' equity (deficit)		$	20,887,787			$	4,103,715

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

INVO BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

		For the Years Ended
		December 31,
		2023			2022
Revenue:
Clinic revenue			2,862,574				614,854
Product revenue			158,001				207,342
Total revenue			3,020,575				822,196
Operating expenses:
Cost of revenue			1,934,437				850,770
Selling, general and administrative expenses			7,486,454				9,976,563
Research and development expenses			165,945				544,043
Depreciation and amortization			200,894				77,301
Total operating expenses			9,787,730				11,448,677
Loss from operations			(6,767,155	)			(10,626,481	)
Other income (expense):
Loss from equity method joint ventures			(60,270	)			(200,558	)
Impairment from equity method joint venture			(89,794	)			-
Loss from debt extinguishment			(163,278	)			-
Interest income			-				308
Interest expense			(925,909	)			(59,445	)
Foreign currency exchange loss			(420	)			(3,463	)
Total other expenses			(1,239,671	)			(263,158	)
Net loss before income taxes			(8,006,826	)			(10,889,639	)
Provision for income taxes			27,786				2,872
Net loss		$	(8,034,612	)		$	(10,892,511	)
Net loss per common share:
Basic			(5.13	)			(17.97	)
Diluted			(5.13	)			(17.97	)
Weighted average number of common shares outstanding:
Basic			1,565,951				606,130
Diluted			1,565,951				606,130

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

INVO BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

		Common Stock			Preferred Stock			Additional Paid-in			Accumulated
		Shares			Amount			Shares			Amount			Capital			Deficit			Total
Balances, December 31, 2021			596,457			$	60				0			$	0			$	46,201,642			$	(38,891,022	)		$	7,310,680
Common stock issued to directors and employees			4,360				-				-				-				484,807				-				484,807
Common stock issued for services			3,063				-				-				-				123,211				-				123,211
Proceeds from the sale of common stock, net of fees and expenses			4,731				1				-				-				289,800				-				289,801
Stock options issued to directors and employees as compensation			-				-				-				-				1,616,400				-				1,616,400
Warrants issued with notes payable			-				-				-				-				90,000				-				90,000
Net Loss			-				-				-				-				-				(10,892,511	)			(10,892,511	)
Balances, December 31, 2022			608,611			$	61				-			$	-			$	48,805,860			$	(49,783,533	)			(977,612	)
Common stock issued to directors and/or employees			4,269				-				-				-				56,936				-				56,936
Common stock issued for services			50,817				5				-				-				287,445				-				287,450
Preferred stock issued			-				-				1,200,000				6,000,000				(3,828,000	)			-				2,172,000
Proceeds from the sale of common stock, net of fees and expenses			1,617,500				161				-				-				5,701,784				-				5,701,945
Common stock issued for liability settlement			16,250				2				-				-				65,196				-				65,198
Common stock issued with notes payable			4,167				1				-				-				56,313				-				56,314
Options exercised for cash			297				-				-				-				2,375				-				2,375
Warrants exercised (cashless)			43,985				4				-				-				(4	)			-				-
Prefunded warrant exercise			146,500				15				-				-				23,039				-				23,054
Stock options issued to directors and employees as compensation			-				-				-				-				1,049,109				-				1,049,109
Warrants issued with notes payable			-				-				-				-				490,668				-				490,668
Rounding for reverse split			135				-				-				-				-				-				-
Net loss			-				-				-				-				-				(8,034,612	)			(8,034,612	)
Balances, December 31, 2023			2,492,531				249				1,200,000				6,000,000				52,710,721				(57,818,145	)			892,825

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

INVO BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

		For the Years Ended
		December 31,
		2023			2022
Cash flows from operating activities:
Net loss		$	(8,034,612	)		$	(10,892,511	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash stock compensation issued for services			287,450				123,211
Non-cash stock compensation issued to directors and/or employees			56,936				484,807
Fair value of stock options issued to employees			1,049,109				1,616,401
Non-cash compensation for services			180,000				120,000
Amortization of discount on notes payable			720,128				52,644
Loss on impairment of intangible assets			-				132,227
Loss from equity method investment			60,270				200,558
Impairment from equity method joint venture			89,794				-
Loss from debt extinguishment			163,278				-
Depreciation and amortization			200,894				77,301
Changes in assets and liabilities:
Accounts receivable			(63,401	)			(26,679	)
Inventory			(905	)			24,171
Prepaid expenses and other current assets			(432,093	)			92,550
Accounts payable and accrued expenses			924,678				904,060
Accrued compensation			(224,011	)			364,573
Deferred revenue			288,893				113,976
Other current liabilities			(226,568	)			-
Leasehold liability			85,191				7,026
Accrued interest			121,864				1,556
Deferred tax liabilities			(1,949	)			810
Net cash used in operating activities			(4,755,054	)			(6,603,319	)
Cash used in investing activities:
Payments to acquire property, plant, and equipment			(444,722	)			(10,785	)
Payments to acquire intangible assets			-				(1,943	)
Investment in joint ventures			(8,447	)			(68,489	)
Payment for acquisitions			(2,041,710	)			-
Net cash used in investing activities			(2,494,879	)			(81,217	)
Cash from financing activities:
Proceeds from notes payable			3,060,250				100,000
Proceeds from notes payable - related parties			100,000				700,000
Proceeds from the sale of common stock, net of offering costs			5,701,948				289,800
Proceeds from warrant exercise			23,051				-
Proceeds from option exercise			2,375				-
Principal payments on notes payable			(1,495,402	)			-
Net cash provided by financing activities			7,392,222				1,089,800
Increase in cash and cash equivalents			142,289				(5,594,736	)
Cash and cash equivalents at beginning of period			90,135				5,684,871
Cash and cash equivalents at end of period		$	232,424			$	90,135
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest		$	9,640			$	-
Taxes		$	-			$	800
Noncash activities:
Fair value of warrants issued with debt		$	490,668			$	90,000
Fair value of common stock issued with debt		$	56,314			$	-
Fair value of shares issued for settlement of liability		$	65,198			$	-
Initial ROU asset and lease liability		$	4,269,881			$	-
Fair value of Series B preferred shares issued in exchange for shares of NAYA common stock		$	2,172,000			$	-

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

INVO BIOSCIENCE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

Note 1 - Summary of Significant Accounting Policies

Description of Business

INVO Bioscience, Inc. ("INVO" or the "Company") is a healthcare services fertility company dedicated to expanding the assisted reproductive technology ("ART") marketplace by making fertility care accessible and inclusive to people around the world. The Company's commercialization strategy is focused on the opening of dedicated "INVO Centers" offering the INVOcell and IVC procedure (with three centers in North America now operational), the acquisition of US-based, profitable in vitro fertilization ("IVF") clinics (with one such clinic acquired in August 2023) and the sale and distribution of our technology solution into existing fertility clinics. The Company's proprietary technology, INVOcell, is a revolutionary medical device that allows fertilization and early embryo development to take place in vivo within the woman's body. This treatment solution is the world's first intravaginal culture technique for the incubation of oocytes and sperm during fertilization and early embryo development.

Basis of Presentation

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

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

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

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

Reclassifications

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

Business Segments

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

Business Acquisitions

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

Variable Interest Entities

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.

Equity Method Investments

Investments in unconsolidated affiliates, 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.

Use of Estimates

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

Cash and Cash Equivalents

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

Inventory

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

Property and Equipment

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

Long- Lived Assets

Long-lived assets and certain identifiable assets related to those assets are periodically reviewed for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the non-discounted future cash flows of the asset are less than their carrying amount, their carrying amounts are reduced to the fair value and an impairment loss recognized. There was noimpairment recorded during the year ended December 31, 2023, and an impairment of $132,227recorded during the year ended December 31, 2022.

Fair Value of Financial Instruments

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

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

Income Taxes

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

Concentration of Credit Risk

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

Revenue Recognition

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

1.	Identify the contract with the customer.
2.	Identify the performance obligations in the contract.
3.	Determine the total transaction price.
4.	Allocate the total transaction price to each performance obligation in the contract.
5.	Recognize as revenue when (or as) each performance obligation is satisfied.

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

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

Stock Based Compensation

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

Loss Per Share

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

		Year Ended December 31,
		2023			2022
Net loss (numerator)		$	(8,034,612	)		$	(10,892,511	)
Basic and diluted weighted-average number of common shares outstanding (denominator)			1,565,951				606,130
Basic and diluted net loss per common share			(5.13	)			(17.97	)

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

		As of December 31,
		2023			2022
Options			106,753				64,850
Convertible notes and interest			42,416				-
Convertible preferred shares			1,200,000				-
Unit purchase options and warrants			3,493,269				30,508
Total			4,842,438				95,358

Recently Adopted Accounting Pronouncements

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

Note 2 - Liquidity

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

The Company has been dependent on raising capital through debt and equity financings to meet its needs for cash used in operating and investing activities. During 2022, the Company received proceeds of $0.8million from demand notes and net proceeds of approximately $0.3million for the sale of its common stock. During 2023, the Company received proceeds of $3.2million from notes and net proceeds of approximately $5.7million for the sale of its common stock. Over the next 12 months, the Company's plan includes growing the Wisconsin Fertility Institute and pursuing additional IVF clinic acquisitions. Until the Company can generate positive cash from operations, it will need to raise additional funding to meet its liquidity needs and to execute its business strategy. As in the past, the Company will seek debt and/or equity financing, which may not be available on reasonable terms, if at all.

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

Note 3 - Business Combinations

Wisconsin Fertility Institute

On August 10, 2023, INVO, through Wood Violet Fertility LLC, a Delaware limited liability company ("Buyer") and wholly owned subsidiary of INVO Centers LLC ("INVO CTR"), a Delaware company wholly-owned by INVO, consummated its acquisition of the Wisconsin Fertility Institute ("WFI") for a combined purchase price of $10million, of which $2.5million was paid on the closing date (net cash paid was $2,150,000after a $350,000holdback) plus assumption of the inter-company loan owed by WFRSA (as defined below) in the amount of $528,756. The remaining three installments of $2.5million each will be paid on the subsequent three anniversaries of closing. The sellers have the option to take all or a portion of the final three installments in shares of INVO common stock valued at $125.00, $181.80, and $285.80, for the second, third, and final installments, respectively.

WFI is comprised of (a) a medical practice, Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/a Wisconsin Fertility Institute ("WFRSA"), and (b) a laboratory services company, Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company ("FLOW"). WFRSA owns, operates and manages WFI's fertility practice that provides direct treatment to patients focused on fertility, gynecology and obstetrics care and surgical procedures, and employs physicians and other healthcare providers to deliver such services and procedures. FLOW provides WFRSA with related laboratory services.

INVO purchased the non-medical assets of WFRSA and one hundred percent of FLOW's membership interests. The Buyer and WFRSA entered into a management services agreement pursuant to which WFRSA outsourced all its non-medical activities to the Buyer.

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

The following allocation of the purchase price is as follows:

Consideration given:
Cash			2,150,000
Holdback			350,000
Additional payments			7,500,000
			10,000,000
Assets and liabilities acquired:
FLOW intercompany receivable			528,756
Accounts receivable			214,972
Property and equipment, net			25,292
Other current assets			56,274
Tradename			253,000
Noncompetition agreement			3,961,000
Goodwill			5,878,986
Deferred revenue			(389,524	)
WFRSA intercompany note			(528,756	)
			10,000,000

Pro Forma Financial Information

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

		Year Ended December 31,
		2023			2022
Pro forma revenue			6,228,171				6,201,871
Pro forma net loss			(7,123,212	)			(9,208,504	)

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

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

Note 4 - Variable Interest Entities

Consolidated VIEs

Bloom INVO, LLC

On June 28, 2021, INVO Centers LLC, a Delaware limited liability company ("INVO CTR") entered into a limited liability company operating agreement (the "Bloom Agreement") with Bloom Fertility, LLC ("Bloom") to establish a joint venture entity, formed as "Bloom INVO LLC" (the "Georgia JV"), for the purposes of commercializing INVOcell, and the related IVC procedure, through the establishment of an INVO Center, (the "Atlanta Clinic") in the Atlanta, Georgia metropolitan area.

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

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

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

The Georgia JV opened to patients on September 7, 2021.

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

Unconsolidated VIEs

HRCFG INVO, LLC

On March 10, 2021, INVO CTR entered into a limited liability company agreement with HRCFG, LLC ("HRCFG") to form a joint venture for the purpose of establishing an INVO Center in Birmingham, Alabama. The name of the joint venture entity is HRCFG INVO, LLC (the "Alabama JV"). The Company also provides certain funding to the Alabama JV. Each party owns 50% of the Alabama JV.

The Alabama JV opened to patients on August 9, 2021.

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

Positib Fertility, S.A. de C.V.

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

The Mexico JV opened to patients on November 1, 2021.

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

The following table summarizes our investments in unconsolidated VIEs:

							Carrying Value as of
		Location		Percentage Ownership			December 31, 2023			December 31, 2022
HRCFG INVO, LLC		Alabama, United States			50	%		$	916,248				1,106,905
Positib Fertility, S.A. de C.V.		Mexico			33	%			-				130,960
Total investment in unconsolidated VIEs								$	916,248				1,237,865

Earnings from investments in unconsolidated VIEs were as follows:

		Year Ended December 31,
		2023			2022
HRCFG INVO, LLC		$	(16,293	)			(154,954	)
Positib Fertility, S.A. de C.V.			(43,977	)			(45,604	)
Total earnings from unconsolidated VIEs		$	(60,270	)			(200,558	)

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

		Year Ended December 31,
		2023			2022
Statements of operations:
Operating revenue		$	1,484,359				1,071,851
Operating expenses			(1,648,890	)			(1,565,558	)
Net loss		$	(164,531	)			(493,707	)

		December 31, 2023			December 31, 2022
Balance sheets:
Current assets		$	288,369				267,502
Long-term assets			1,026,873				1,094,490
Current liabilities			(510,091	)			(396,619	)
Long-term liabilities			(123,060	)			(107,374	)
Net assets		$	682,091				857,999

Note 5 - Agreements and Transactions with VIE's

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

The following table summarizes the Company's transactions with VIEs:

		Year Ended December 31,
		2023			2022
Bloom Invo, LLC
INVOcell revenue		$	24,000				13,500
Unconsolidated VIEs
INVOcell revenue		$	6,315				30,000

The Company had balances with VIEs as follows:

		December 31, 2023			December 31, 2022
Bloom Invo, LLC
Accounts receivable		$	31,500				13,500
Notes payable			482,656				468,031
Unconsolidated VIEs
Accounts receivable		$	15,000				46,310

Note 6 - Inventory

Components of inventory are:

		December 31, 2023			December 31, 2022
Raw materials		$	53,479			$	68,723
Finished goods			211,028				194,879
Total inventory		$	264,507			$	263,602

Note 7 - Property and Equipment

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

		Estimated Useful Life
Manufacturing equipment		6to 10years

Medical equipment

10years

Office equipment

3to 7years

		December 31, 2023			December 31, 2022
Manufacturing equipment		$	132,513			$	132,513
Medical equipment			303,943				283,065
Office equipment			85,404				77,601
Leasehold improvements			538,151				96,817
Less: accumulated depreciation			(233,593	)			(153,267	)
Total equipment, net		$	826,418			$	436,729

During each of the years ended December 31, 2023, and 2022, the Company recorded depreciation expense of $80,325and $75,492, respectively.

Note 8 - Intangible Assets & Goodwill

Components of intangible assets are as follows:

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

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

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

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

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

Goodwill has an indefinite useful life and is therefore not amortized.The Company reviewed and found no indicators for impairment of the intangible assets related to the acquisition of Wisconsin Fertility Institute as of December 31, 2023.

Note 9 - Leases

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

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

Lease component		Balance sheet classification		December 31, 2023
Assets
ROU assets - operating lease		Other assets		$	5,740,929
Total ROU assets				$	5,740,929
Liabilities
Current operating lease liability		Current liabilities		$	397,554
Long-term operating lease liability		Other liabilities			5,522,090
Total lease liabilities				$	5,919,644

Future minimum lease payments as of December 31, 2023 were as follows:

2024			616,158
2025			622,676
2026			638,469
2027			632,152
2028 and beyond			5,311,766
Total future minimum lease payments		$	7,821,221
Less: Interest			(1,901,577	)
Total operating lease liabilities		$	5,919,644

Note 10 - Notes Payable

Notes payables consisted of the following:

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

Related Party Demand Notes

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

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

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

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

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

Jan and March 2023 Convertible Notes

In January and March 2023, the Company issued $410,000of convertible notes ("Q1 23 Convertible Notes"), for $310,000in cash and the conversion of $100,000of demand notes from the fourth quarter of 2022. These convertible notes were issued with fixed conversion prices of $10.00(for the $275,000issued in January 2023) and $12.00(for the $135,000issued in March 2023) and (ii) 5-year warrants to purchase 19,375shares of the Common Stock at an exercise price of $20.00.

The cumulative fair value of the warrants at issuance was $132,183. This was recognized as a debt discount and will to be amortized on a straight-line basis over the life of the respective notes. For the year ending December 31, 2023 the Company amortized $132,183of the debt discount and as of December 31, 2023 was fully amortized.

Interest on these notes accrues at a rate of ten percent (10%) per annum and is payable at the holder's option either in cash or in shares of Common Stock at the conversion price set forth in the notes on December 31, 2023, unless converted earlier. For the year ended December 31, 2023 the Company incurred $38,411in interest related to these convertible notes.

All amounts due under these notes are convertible at any time after the issuance date, in whole or in part (subject to rounding for fractional shares), at the option of the holders into the Common Stock at a fixed conversion price for the notes as described above.

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

February 2023 Convertible Debentures

On February 3, and February 17, 2023, the Company entered into securities purchase agreements (the "February Purchase Agreements") with accredited investors (the "February Investors") for the purchase of (i) convertible debentures of the Company in the aggregate original principal amount of $500,000(the "February Debentures") for a purchase price of $450,000, (ii) warrants (the "February Warrants") to purchase 12,500shares (the "February Warrant Shares") of Common Stock at an exercise price of $15.00per share, and (iii) 4,167shares of Common Stock issued as an inducement for issuing the February Debentures. The proceeds, net of placement agent and legal fees, were used for working capital and general corporate purposes.

The cumulative fair value of the warrants at issuance was $291,207. This was recognized as a debt discount and will be amortized on a straight-line basis over the life of the respective notes. For the year ended December 31, 2023 the Company amortized $347,520of the debt discount and as of December 31, 2023 the Company had fully amortized the discount.

Pursuant to the February Debentures, interest on the February Debentures accrued at a rate of eight percent (8%) per annum payable at maturity, one year from the date of the February Debentures. For the year ended December 31, 2023 the Company incurred $9,640in interest on the February Debentures.

All amounts due under the February Debentures were convertible at any time after the issuance date, in whole or in part, at the option of the February Investors into Common Stock at an initial price of $10.40per share. This conversion price was subject to adjustment for stock splits, combinations or similar events and anti-dilution provisions, among other adjustments and is subject to a floor price.

The Company could prepay the February Debentures at any time in whole or in part by paying a sum of money equal to 105% of the principal amount to be redeemed, together with accrued and unpaid interest.

While any portion of each February Debenture remained outstanding, if the Company received cash proceeds of more than $2,000,000(the "Minimum Threshold") in the aggregate from any source or series of related or unrelated sources, the February Investors had the right in their sole discretion to require the Company to immediately apply up to 50% of all proceeds received by the Company above the Minimum Threshold to repay the outstanding amounts owed under the February Debentures. In April 2023, the Company used $360,151in proceeds from the RD Offering (as described in Note 11 below) to repay a portion of the February Debentures. On August 8, 2023, the Company repaid the remaining balance of $139,849with proceeds from the August Public Offering (as described in Note 16 below).

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

Standard Merchant Cash Advance

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

On August 31, 2023, the Company refinanced the Initial Advance through the purchase by Cedar of $746,750of the Company's receivables for a gross purchase price of $515,000(the "Refinanced Advance"). The Company received net cash proceeds of $134,018after applying $390,892towards the repayment of the Initial Advance. The new Cash Advance Agreement provides that if the Company repays the Refinanced Advance within 30 days then the amount payable to Cedar shall be reduced to $643,750, and if the Refinanced Advance is repaid on days 31 to 60 then the amount payable to Cedar shall be reduced to $674,650. Until the purchase price is repaid, the Company agreed to pay Cedar $16,594per week. On September 29, 2023, the Company repaid $0.3million of the Cash Advance Agreement with proceeds from the RLSA Loan (as defined below). As a result of such payment, the weekly payment was reduced to $9,277.

The financing fees were recorded as a debt discount. For the year ended December 31, 2023 the Company amortized $122,279of the debt discount and as of December 31, 2023 had a remaining debt discount balance of $250,721.

Revenue Loan and Security Agreement

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

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

Note 11 - Related Party Transactions

In the fourth quarter of 2022, the Company received $700,000through the issuance of demand notes from related parties, as follows: (a) $500,000from JAG; (b) $100,000from our Chief Executive Officer; and (c) $100,000from our Chief Financial Officer. On July 10, 2023, the Company received an additional $100,000through the issuance of a demand note from JAG. The Company's Chief Financial Officer is a beneficiary of JAG but does not have any control over JAG's investment decisions with respect to the Company. See Note 10 of the Notes to Consolidated Financial Statements for additional information.

As of December 31, 2023 the Company owed accounts payable to related parties totaling $228,907, primarily related to unpaid employee expense reimbursements and unpaid board fees.

Note 12 - Stockholders' Equity

Reverse Stock Split

On June 28, 2023, the Company's board of directors approved a reverse stock split of the Company's common stock at a ratio of 1-for-20 and also approved a proportionate decrease in its authorized common stock to 6,250,000shares from 125,000,000. On July 26, 2023, the Company filed a certificate of change (with an effective date of July 28, 2023) with the Nevada Secretary of State pursuant to Nevada Revised Statutes 78.209 to effectuate a 1-for-20 reverse stock split of its outstanding common stock.On July 27, 2023, the Company received notice from Nasdaq that the reverse split would take effect at the open of business on July 28, 2023, and the reverse stock split took effect on that date. All share information included in this Form 10-Q has been reflected as if the reverse stock split occurred as of the earliest period presented.

Increase in Authorized Common Stock

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

Series A Preferred Stock

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

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

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

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

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

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

On December 29, 2023,the Company entered into securities purchase agreement (the "Preferred Series A SPA") with NAYA for the purchase of 1,000,000shares of the Company's Series A Preferred Stock at a purchase price of $5.00per share. The parties agreed that NAYA's purchases will be made in tranches in accordance with the following schedule: (1) $500,000no later than Dec 29, 2023; (2) $500,000no later than January 19, 2024; (3) $500,000no later than February 2, 2024; (4) $500,000no later than February 16, 2024; and (5) an additional amount as may be required prior to closing of the previously announced merger by and among the Company, INVO Merger Sub, Inc. and NAYA, and to be determined in good faith by the parties to adequately support the Company's fertility business activities per an agreed forecast, as well as for a period of twelve (12) months post-closing including a catch-up on the Company's past due accrued payables still outstanding. The Preferred Series A SPA contains customary representations, warranties and covenants of the Company and NAYA.On January 4, 2024, the Company and NAYA closed on 100,000shares of Series A Preferred Stock in the first tranche of this private offering for gross proceeds of $500,000. On April 15, 2024, the Company and NAYA closed on additional 61,200shares of Series A Preferred Stock for additional gross proceeds of $306,000.

Series B Preferred Stock

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

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

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

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

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

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

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

February 2023 Equity Purchase Agreement

On February 3, 2023, the Company entered into an equity purchase agreement (the "ELOC") and registration rights agreement (the "ELOC RRA") with an accredited investor (the "Feb 3 Investor") pursuant to which the Company has the right, but not the obligation, to direct the Feb 3 Investor to purchase up to $10.0million (the "Maximum Commitment Amount") of shares of Common Stock, in multiple tranches. Further, under the ELOC and subject to the Maximum Commitment Amount, the Company has the right, but not the obligation, to submit notices to the Feb 3 Investor to purchase shares of Common Stock (i) in a minimum amount of not less than $25,000 and (ii) in a maximum amount of up to the lesser of (a) $750,000 or (b) 200% of the Company's average daily trading value of the Common Stock.

Also on February 3, 2023, the Company issued to the Feb 3 Investor 7,500shares of Common Stock for its commitment to enter into the ELOC.

The obligation of the Feb 3 Investor to purchase shares of Common Stock pursuant to the ELOC ends on the earlier of (i) the date on which the purchases under the ELOC equal the Maximum Commitment Amount, (ii) 24 months after the date of the ELOC (February 3, 2025), (iii) written notice of termination by the Company, (iv) the date that the ELOC RRA is no longer effective after its initial effective date, or (v) the date that the Company commences a voluntary case or any person or entity commences a proceeding against the Company pursuant to or within the meaning of federal or state bankruptcy law, a custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors (the "Commitment Period").

During the Commitment Period, and subject to the shares of Common Stock underlying the ELOC be registered, the price that Feb 3 Investor will pay to purchase the shares of Common Stock that it is obligated to purchase under the ELOC shall be 97% of the "market price," which is defined as the lesser of (i) the lowest closing price of our Common Stock during the 7 trading day-period following the clearance date associated with the applicable put notice from the Company or (ii) the lowest closing bid price of the Common Stock on the principal trading market for the Common Stock (currently, the Nasdaq Capital Market) on the trading day immediately preceding a put date.

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

March 2023 Registered Direct Offering

On March 23, 2023, INVO entered into a securities purchase agreement (the "March Purchase Agreement") with a certain institutional investor, pursuant to which the Company agreed to issue and sell to such investor (i) in a registered direct offering (the "RD Offering"), 69,000shares of Common Stock, and a pre-funded warrant (the "Pre-Funded Warrant") to purchase up to 115,000shares of Common Stock, at an exercise price of $0.20per share, and (ii) in a concurrent private placement (the "March Warrant Placement"), a common stock purchase warrant (the "March Warrant"), exercisable for an aggregate of up to 276,000shares of Common Stock, at an exercise price of $12.60per share. The securities to be issued in the RD Offering (priced at the marked under Nasdaq rules) were offered pursuant to the Company's shelf registration statement on Form S-3 (File 333-255096), initially filed by the Company with the SEC under the Securities Act, on April 7, 2021 and declared effective on April 16, 2021. All Pre-Funded Warrants were exercised by the investor in June 2023.

The March Warrant (and the shares of Common Stock issuable upon the exercise of the March Warrant) was not registered under the Securities Act and was offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder. The March Warrant is immediately exercisable upon issuance, will expire eight years from the date of issuance, and in certain circumstances may be exercised on a cashless basis.

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

August 2023 Public Offering

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

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

In connection with the August 2023 Offering, on August 4, 2023, the Company entered into a placement agency agreement (the "Placement Agency Agreement") with Maxim Group LLC (the "Placement Agent"), pursuant to which (i) the Placement Agent agreed to act as placement agent on a "best efforts" basis in connection with the August 2023 Offering and (ii) the Company agreed to pay the Placement Agent an aggregate fee equal to 7.0% of the gross proceeds (and 5% for certain investors) raised in the August 2023 Offering and warrants to purchase up to 110,600shares of Common Stock at an exercise price of $3.14(the "Placement Agent Warrants"). The Placement Agent Warrants (and the shares of Common Stock issuable upon the exercise of the Placement Agent Warrants) were not registered under the Securities Act and were offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.

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

Year Ended December 31, 2023

During 2023, the Company issued 4,269shares of Common Stock to employees and directors and 22,202shares of Common Stock to consultants with a fair value of $56,936and $124,476, respectively. The shares were issued under the Company's 2019 Stock Incentive Plan (the "2019 Plan").

During 2023, the Company issued 21,115shares of Common Stock to consultants in consideration of services rendered with a fair value of $69,975. These shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. The Company did not receive any cash proceeds from this issuance.

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

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

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

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

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

On July 11, 2023, the Company issued 16,250shares of Common Stock in consideration of a settlement with an unrelated third party. These shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. The Company did not receive any cash proceeds from this issuance.

In August 2023, the Company issued 43,985shares of Common Stock upon exercise of an existing warrant on a net-exercise basis. These shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) and/or 3(a)(9) of the Securities Act of 1933, as amended.

On August 8, 2023, the Company issued 1,580,000shares of Common Stock in the August 2023 Offering. The Company received net proceeds of approximately $4.1million.

Note 13 - Equity-Based Compensation

Equity Incentive Plans

In October 2019, the Company adopted the 2019 Plan. Under the 2019 Plan, the Company's board of directors is authorized to grant stock options to purchase Common Stock, restricted stock units, and restricted shares of Common Stock to its employees, directors, and consultants. The 2019 Plan initially provided for the issuance of 25,000shares. A provision in the 2019 Plan provides for an automatic annual increase equal to 6% of the total number of shares of Common Stock outstanding on December 31 of the preceding calendar year. In January 2023, the number of available shares increased by 36,498shares bringing the total shares available under the 2019 Plan to 125,000.

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

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

		Number of Shares			Weighted Average Exercise Price			Aggregate Intrinsic Value
Outstanding as of December 31, 2022			64,850			$	68.00			$	-
Granted			59,048				7.74				-
Exercised			(297	)			8.00				-
Canceled			16,848				54.63				-
Balance as of December 31, 2023			106,753				41.90				-
Exercisable as of December 31, 2023			93,227			$	54.61			$	-

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

			Years ended December 31,
			2023				2022
Risk-free interest rate range			3.60to 3.69	%			1.60to 3.94	%
Expected life of option-years			5.00to 5.63				5.00to 5.77
Expected stock price volatility			106.6to 114.9	%			110.00to 114.6	%
Expected dividend yield			-	%			-	%

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

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

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

Restricted Stock and Restricted Stock Units

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

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

		Number of Unvested Shares			Weighted Average Grant Date Fair Value			Aggregate Value of Shares
Balance as of December 31, 2022			3,533			$	8.40			$	29,949
Granted			23,547				4.95				116,618
Vested			(27,055	)			11.60				(310,554	)
Forfeitures			-				-				-
Balance as of December 31, 2023			25				18.42				5,525

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

Note 14 - Unit Purchase Options and Warrants

The following table sets forth the activity of unit purchase options:

		Number of Unit Purchase Options			Weighted Average Exercise Price			Aggregate Intrinsic Value
Outstanding as of December 31, 2022			4,649			$	64.00			$	-
Granted			-				-				-
Exercised			-				-				-
Canceled			-				-				-
Balance as of December 31, 2023			4,649				64.00				-

The following table sets forth the activity of warrants:

		Number of Warrants			Weighted Average Exercise Price			Aggregate Intrinsic Value
Outstanding as of December 31, 2022			25,884			$	30.20			$	-
Granted			3,643,526				3.63				-
Exercised			(180,790	)			1.16				-
Canceled			-				-				-
Balance as of December 31, 2023			3,488,620			$	3.95			$	-

Warrants related to Jan and March 2023 Convertible Notes

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

Warrants related to February 2023 Convertible Debentures

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

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

Warrants related to March 2023 Registered Direct Offering

On March 23, 2023, INVO entered into a securities purchase agreement (the "March Purchase Agreement") with a certain institutional investor, pursuant to which the Company agreed to issue and sell to such investor (i) in a registered direct offering (the "RD Offering"), 69,000shares of Common Stock, and a pre-funded warrant (the "Pre-Funded Warrant") to purchase up to 115,000shares of Common Stock, at an exercise price of $0.20per share, and (ii) in a concurrent private placement (the "March Warrant Placement"), a common stock purchase warrant (the "March Warrant"), exercisable for an aggregate of up to 276,000shares of Common Stock, at an exercise price of $12.60per share. The securities to be issued in the RD Offering (priced at the marked under Nasdaq rules) were offered pursuant to the Company's shelf registration statement on Form S-3 (File 333-255096), initially filed by the Company with the SEC under the Securities Act, on April 7, 2021 and declared effective on April 16, 2021. All Pre-Funded Warrants were exercised by the investor in June 2023.

The March Warrant (and the shares of Common Stock issuable upon the exercise of the March Warrant) was not registered under the Securities Act and was offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder. The March Warrant is immediately exercisable upon issuance, will expire eight years from the date of issuance, and in certain circumstances may be exercised on a cashless basis.

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

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

Warrants related to August 2023 Public Offering

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

In connection with the August 2023 Offering, on August 4, 2023, the Company entered into a placement agency agreement (the "Placement Agency Agreement") with Maxim Group LLC (the "Placement Agent"), pursuant to which (i) the Placement Agent agreed to act as placement agent on a "best efforts" basis in connection with the August 2023 Offering and (ii) the Company agreed to pay the Placement Agent an aggregate fee equal to 7.0% of the gross proceeds (and 5% for certain investors) raised in the August 2023 Offering and warrants to purchase up to 110,600shares of Common Stock at an exercise price of $3.14(the "Placement Agent Warrants"). The Placement Agent Warrants (and the shares of Common Stock issuable upon the exercise of the Placement Agent Warrants) were not registered under the Securities Act and were offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.

Note 15 - Income Taxes

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

		December 31
		2023			2022
Federal income taxes:
Current		$	-			$	-
Deferred			(860	)			315
Total federal income taxes			(860	)			315
State income taxes:
Current			29,735				2,062
Deferred			(1,089	)			496
Total state income taxes			28,646				2,558
Total income taxes		$	27,786			$	2,872

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

		December 31
		2023			2022
Pre-Tax Book Income at Statutory Rate		$	(1,519,297	)			21.00	%		$	(2,202,718	)			21.00	%
State Tax Expense, net			23,719				-0.33	%			1,629				-0.02	%
Permanent Items			226,420				-3.13	%			348,768				-3.33	%
Hanging Credit			-				0.00	%			811				-0.01
True-Ups			(1,949	)			0.03	%			(36,554	)			0.35	%
Change in Federal Valuation Allowance			1,298,892				-17.95	%			1,890,936				-18.03	%
Total Expense		$	27,786				-0.38	%		$	2,872				-0.03	%

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

		December 31
		2023			2022
Deferred tax assets:
Accrued Compensation		$	195,584			$	243,056
Amortization of Discount Notes Payable			154,349				-
Lease (ASC 842)			1,210,592				342,254
Charitable Contributions			2,771				2,771
Stock Option Expense			140,699				117,099
Restricted Stock Unit			265,038				62,090
Net Operating Losses			10,255,137				8,395,160
Org Costs			81,255				81,255
-IRC Sec. 174 Expense			204,864				275,519
Investment in HRCFG INVO, LLC			(272,459	)			123,217
Equity in earnings - Positib			(24,054	)			19,950
Gross deferred tax assets			12,213,777				9,662,371
Deferred tax liabilities:
Fixed Assets			(18,733	)			(21,560	)
ROU Lease (ASC 842)			(1,177,701	)			(327,946	)
Trademark Amortization			(5,858	)			(5,858	)
Deferred Revenue			(47	)			(47	)
Tax Amortization of Org Cost			(24,912	)			(7,222	)
Gain/Loss on sale of assets			(2,561	)			(2,561	)
Gross deferred tax liability			(1,114,418	)			(365,194	)
Less: valuation allowance			(11,099,358	)			(9,299,126	)
Net deferred tax liability		$	-			$	(1,949	)

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

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

Note 16 - Commitments and Contingencies

Insurance

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

Legal Matters

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

NAYA Biosciences Merger Agreement

On October 22, 2023, the Company, INVO Merger Sub Inc., a wholly owned subsidiary of the Company and a Delaware corporation ("Merger Sub"), and NAYA Biosciences, Inc., a Delaware corporation ("NAYA"), entered into an Agreement and Plan of Merger, as amended on October 25, 2023 (the "Merger Agreement").

Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge (the "Merger") with and into NAYA, with NAYA continuing as the surviving corporation and a wholly owned subsidiary of the Company.

At the effective time and as a result of the Merger, each share of Class A common stock, par value $0.000001per share, of NAYA (the "NAYA common stock") outstanding immediately prior to the effective time of the Merger, other than certain excluded shares held by NAYA as treasury stock or owned by the Company or Merger Sub, will be converted into the right to receive 7.33333(subject to adjustment as set forth in the Merger Agreement) shares of a newly designated series of common stock, par value $0.0001per share, of the Company which shall be entitled to ten (10) votes per each share ("Company Class B common stock") for a total of approximately 18,150,000shares of the Company (together with cash proceeds from the sale of fractional shares, the "Merger Consideration").

Immediately following the effective time of the Merger, Dr. Daniel Teper, NAYA's current chairman and chief executive officer, will be named chairman and chief executive officer of the Company, and the board of directors will be comprised of at least nine (9) directors, of which (i) one shall be Steven Shum, INVO's current chief executive officer, and (ii) eight shall be identified by NAYA, of which seven (7) shall be independent directors.

The completion of the Merger is subject to satisfaction or waiver of certain customary mutual closing conditions, including (1) the adoption of the Merger Agreement by the stockholders of the Company and NAYA, (2) the absence of any injunction or other order issued by a court of competent jurisdiction or applicable law or legal prohibition prohibiting or making illegal the consummation of the Merger, (3) the completion of due diligence, (4) the completion of a private sale of the Company's preferred stock at a price per share of $5.00per share, in a private offering resulting in an amount equal to at least $2,000,000of gross proceeds to INVO in the aggregate, plus an additional amount as may be required prior to closing of the Merger to be determined in good faith by the parties to adequately support INVO's fertility business activities per an agreed forecast of INVO, as well as for a period of twelve (12) months post-Closing including a catch-up on INVO's past due accrued payables still outstanding (the "Interim PIPE"), (5) the aggregate of the liabilities of the Company, excluding certain specified liabilities, shall not exceed $5,000,000, (6) the receipt of waivers from any and all holders of warrants (and any other similar instruments) to securities of the Company, with respect to any fundamental transaction rights such warrant holders may have under any such warrants, (7) the continued listing of the Company common stock on NASDAQ through the effective time of the Merger and the approval for listing on NASDAQ of the shares of the Company common stock to be issued in connection with the Merger, the interim private offering, and a private offering of shares of Company common stock at a target price of $5.00per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Company common stock) resulting in sufficient cash available for the Company for one year of operations, as estimated by NAYA, (8) the effectiveness of a registration statement on Form S-4 to be filed by the Company pursuant to which the shares of Company common stock to be issued in connection with the Merger will be registered with the SEC, and the absence of any stop order suspending such effectiveness or proceeding for the purpose of suspending such effectiveness being pending before or threatened by the SEC, and (9) the Company shall have received customary lock-up Agreement from certain Company stockholders. The obligation of each party to consummate the Merger is also conditioned upon (1) the other party having performed in all material respects its obligations under the Merger Agreement and (2) the other party's representations and warranties in the Merger Agreement being true and correct (subject to certain materiality qualifiers); provided, however, that these conditions, other than with respects to certain representations and warranties, will be deemed waived by the Company upon the closing of the interim private offering.

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

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

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

Note 17 - Subsequent Events

NAYA Securities Purchase Agreement

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

Consulting Shares

In February 2024, the Company issued 125,500shares of Common Stock to consultants in consideration of services rendered. These shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. The Company did not receive any cash proceeds from this issuance.

Future Receipts Agreement

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

Triton Purchase Agreement

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

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

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

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

On March 27, 2024, the Company sold to Triton private placement warrants to purchase up to 1,000,000shares of our common stock at an exercise price of $2.00per share.

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

FirstFire Securities Purchase Agreement

On April 5, 2024, the Company entered into a purchase agreement (the "FirstFire Purchase Agreement") with FirstFire Global Opportunities Fund, LLC ("FirstFire"), pursuant to which FirstFire agreed to purchase, and the Company agreed to issue and sell, (i) a promissory note with an aggregate principal amount of $275,000.00, which is convertible into shares of the Company's 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 the Company's 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. The proceeds are being used for working capital and general corporate purposes.

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 the Company obtains 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). The Company 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.

The FirstFire Purchase Agreement contains customary representations, warranties, and covenants by each of the Company and FirstFire. Among other covenants of the parties, the Company granted FirstFire the right to participate in any subsequent placement of securities until the earlier of eighteen (18) months after the date of the FirstFire Purchase Agreement or extinguishment of the FirstFire Note. The Company has also granted customary "piggy-back" registration rights to FirstFire with respect to the shares of common stock underlying the FirstFire Note (the "Conversion Shares"), the First Warrant Shares, the Second Warrant Shares, and the Commitment Shares. FirstFirehas covenanted not to cause or engage in any short selling of shares of common stock until the FirstFire Note is fully repaid.

The following sets forth the material terms of the FirstFire Note, the First Warrant, and the Second Warrant.

FirstFire Note

Interest and Maturity. The FirstFire Note carries an interest rate of twelve percent (12%) per annum, with the first twelve months of interest, amounting to $33,000.00, guaranteed, and fully earned as of the issue date. The maturity date of the FirstFire Note is twelve (12) months from the issue date, at which point the Principal Amount, together with any accrued and unpaid interest and other fees, shall be due and payable to the holder of the FirstFire Note.

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 $1.00per share, subject to adjustment. The FirstFire Note may not be converted and Conversion Shares may not be issued under the FirstFire Note if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 4.99% of the outstanding common stock. In addition to the beneficial ownership limitations in the FirstFire Note, the number of shares of common stock that may be issued under the FirstFire Note, the First Warrant, the Second Warrant, and under the FirstFire Purchase Agreement (including the Commitment Shares) is limited to 19.99% of the outstanding common stock as of April 5, 2024 (the "Exchange Cap", which is equal to 523,344 shares of common stock, subject to adjustment as described in the FirstFire Purchase Agreement), unless stockholder approval is obtained by the Company to issue more than the Exchange Cap.The Exchange Cap shall be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction.

Prepayment. The Company may prepay the FirstFire Note at any time in whole or in part by paying a sum of money equal to 110% of the sum of the principal amount to be redeemed plus the accrued and unpaid interest.

Future Proceeds. While any portion of the FirstFire Note is outstanding, if the Company receives cash proceeds of more than $1,500,000from any source or series of related or unrelated sources, or more than $1,000,000from any public offering (the "Minimum Threshold"), the Company shall, within one (1) business day of Company's receipt of such proceeds, inform FirstFire of such receipt, following which FirstFire shall have the right in its sole discretion to require the Company to immediately apply up to 100% of all proceeds received by the Company above the Minimum Threshold to repay the outstanding amounts owed under the FirstFire Note.

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

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

The FirstFire Note is subject to, and governed by, the terms and conditions of the FirstFire Purchase Agreement.

First Warrant

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

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

Exercise Limitation. A holder will not have the right to exercise any portion of the First Warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of the common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the First Warrant.

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

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

Fundamental Transactions. The Company shall not enter into or be a party to a fundamental transaction unless the successor entity assumes all obligations of the Company 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 the Company, and may exercise every right and power that the Company may exercise and will assume all of the Company's obligations under the First Warrant with the same effect as if such successor entity had been named in the First Warrant itself.

Rights as a Stockholder. Except as otherwise provided in the First Warrant or by virtue of such holder's ownership of shares of common stock, the holder of the First Warrant will not have the rights or privileges of a holder of common stock, including any voting rights, until the holder exercises the First Warrant.

Second Warrant

The Second Warrant grants the holder thereof the right to purchase up to 500,000shares of common stock at an exercise price of $0.01per share.

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

Exercise Limitation. A holder will not have the right to exercise any portion of the Second Warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of the common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Second Warrant.

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

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

Fundamental Transactions. The Company shall not enter into or be a party to a fundamental transaction unless the successor entity assumes all obligations of the Company 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 the Company, and may exercise every right and power that the Company may exercise and will assume all of the Company's obligations under the Second Warrant with the same effect as if such successor entity had been named in the Second Warrant itself.

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

Part IV

Item 15. Exhibits and Financial Statement Schedules

(a) Financial Statements

The following are filed as a part of this report:

1. Financial Statements

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 2738)	F-1
Consolidated Balance Sheets as of December 31, 2023 and 2022	F-2
Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022	F-3
Consolidated Statements of Stockholders' Equity (Deficit) for the Period from January 1, 2022 to December 31, 2023	F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022	F-5
Notes to Consolidated Financial Statements	F-6

2. Financial Statement Schedules

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

(b) Exhibits

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

23.1		Consent of M&K CPAs, PLLC
31.3		Certification by Principal Executive Officer pursuant to Rule 13a-4(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.4		Certification by Principal Financial Officer pursuant to Rule 13a-4(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.2		Certification by Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Item 16. Form 10-K Summary

Not applicable.

SIGNATURES

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

	INVO Bioscience, Inc.
Date: April 17, 2024	By:	/s/ Steven Shum
		Steven Shum
		Chief Executive Officer (Principal Executive Officer)

Public link

Please use the above public link if you want to share this noodl on another website.