Full Press Release Details
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
March 16, 2023, INVO Bioscience Inc., a Nevada corporation ("INVO"), through Wood Violet Fertility LLC, a Delaware limited
liability company ("Buyer") and wholly owned subsidiary of INVO Centers LLC, a Delaware company wholly-owned by INVO, entered
into binding purchase agreements to acquire Wisconsin Fertility Institute (the "Clinic") for a combined purchase price of
$10 million (the "WFI Acquisition").
purchase price is payable in four installments of $2.5 million each, payable at closing and on each of 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 $6.25, $9.09, and $14.29, for the second, third, and final installments, respectively.
Clinic 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 the Clinic'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
described in greater detail in the Current Report on Form 8-K (the "Report") to which these pro forma condensed combined
financial statements are an exhibit, INVO is purchasing the non-medical assets of WFRSA and one hundred percent of FLOW's membership
March 16, 2023, Buyer entered into an Asset Purchase Agreement (the "APA") with WFRSA and The Elizabeth Pritts Revocable
Living Trust (the "Seller," together with the WFRSA, the "Seller Parties") pursuant to which Buyer agreed to
acquire the Purchased Assets (as defined in the APA) related to WFRSA's business. Buyer also agreed to assume certain liabilities
of WFRSA as set forth in the APA. Certain non-clinical assets, properties and rights of WFRSA shall be excluded from the Purchased Assets
including patient lists, charts, records and ledgers, all contracts with Payors (as defined in the APA); all Health Care Permits (as
defined in the APA).
Buyer will deliver to WFRSA an amount equal to (all capitalized terms as defined in the APA) the Closing Payment at closing consisting
of $500,000 less Target Closing Date Debt less the Holdback Amount of $280,000. Buyer has agreed to make the following Post-Closing Additional
Payments of $500,000 on each of the first three anniversaries of closing provided that Seller may elect to receive shares of INVO common
stock in lieu of such cash payments as follows: (i) 80,000 shares of INVO common stock on the first additional payment date; (ii) 55,000
shares of INVO common stock on the second additional payment date and (iii) 35,000 shares of INVO common stock on the third additional
payment date. The Additional Payments are secured by Seller having a subordinated lien on the Purchased Assets.
March 16, 2023, Buyer entered into a Membership Interest Purchase Agreement (the "MIPA") with FLOW, IVF Science, LLC, a Wisconsin
limited liability company, owned by Wael Megid, Ph.D., and Dr. Elizabeth Pritts as trustee for the Elizabeth Pritts Revocable List Trust,
a Trust created under the laws of the State of Wisconsin (each, a "Selling Member" and collectively, the "Selling Members").
Under the MIPA, the Selling Members agreed to sell to Buyer 100% of the Membership Interests of FLOW for a purchase price equal to (all
capitalized terms as defined in the MIPA) the Initial Purchase Price, which is equal to (i) two million dollars ($2,000,000) minus (ii)
the Closing Indebtedness minus (iii) any Transaction Expenses minus (iv) the Holdback Amount of $70,000. In addition to the Initial Closing
Payment, Purchaser has agreed to pay to the Selling Members additional payments of $2,000,000 within 90-days of each of the first three
anniversaries of closing provided that Selling Members may elect to receive shares of INVO common stock in lieu of such cash payments
as follows: (i) 320,000 shares of INVO common stock on the first additional payment date; (ii) 220,000 shares of INVO common stock on
the second additional payment date and (iii) 140,000 shares of INVO common stock on the third additional payment date. These additional
payments are secured by the Selling Members having a lien on the assets of FLOW.
unaudited pro forma condensed combined financial statements are based on the INVO's historical consolidated financial statements
and the historical combined financial statements of WFRSA and FLOW (the "Companies") as adjusted to give effect to the WFI
Acquisition and related financing transactions. The unaudited pro forma condensed combined statements of operations for the three
months ended March 31, 2023 and the year ended December 31, 2022 give effect to these transactions as if they had occurred
on January 1, 2022. The unaudited pro forma condensed combined balance sheet as of March 31, 2023 gives effect to these
transactions as if they had occurred on March 31, 2023.
unaudited pro forma combined balance sheet and unaudited combined statement of operations are presented for informational purposes only
and do not purport to be indicative of the combined financial condition that would have resulted if the acquisition would have occurred
unaudited pro forma condensed combined financial statements should be read together with INVO's historical financial statements,
which are included in INVO's latest Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, and the Companies'
historical financial statements, which are included in the Report.
FORMA COMBINED BALANCE SHEET
| INVO | WFI | Pro Forma | Pro Forma | |||||||||||||
| March 31, 2023 | March 31, 2023 | Adjustments | Balances | |||||||||||||
| ASSETS | ||||||||||||||||
| Current assets | ||||||||||||||||
| Cash | $ | 2,188,245 | $ | 169,361 | $ | - | $ | 2,357,606 | ||||||||
| Accounts receivable, net | 99,720 | 119,559 | - | 219,279 | ||||||||||||
| Inventory | 270,919 | - | - | 270,919 | ||||||||||||
| Prepaid expenses and other current assets | 250,878 | 526 | - | 251,404 | ||||||||||||
| Total current assets | 2,809,762 | 289,446 | - | 3,099,208 | ||||||||||||
| Property and equipment, net | 417,642 | 71,763 | - | 489,405 | ||||||||||||
| Goodwill | - | - | 10,055,110 | (a) | 10,055,110 | |||||||||||
| Investment in joint ventures | 1,173,577 | - | - | 1,173,577 | ||||||||||||
| Lease right of use | 1,750,175 | 911,201 | - | 2,661,376 | ||||||||||||
| Total assets | $ | 6,151,156 | $ | 1,272,410 | $ | 10,055,110 | $ | 17,478,676 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||
| Current liabilities | ||||||||||||||||
| Accounts payable and accrued liabilities | $ | 1,847,208 | $ | 96,949 | $ | - | 1,944,157 | |||||||||
| Accrued compensation | 1,220,682 | - | - | 1,220,682 | ||||||||||||
| Notes payable | 331,321 | - | - | 331,321 | ||||||||||||
| Notes payable, related party | 770,000 | - | - | 770,000 | ||||||||||||
| Deferred revenue, current portion | 46,746 | 132,703 | - | 179,449 | ||||||||||||
| Distributions payable | - | 171,981 | - | 171,981 | ||||||||||||
| Lease liability, current portion | 234,050 | 217,958 | - | 452,008 | ||||||||||||
| Total current liabilities | 4,450,007 | 619,591 | - | 5,069,598 | ||||||||||||
| Deferred tax liability | 1,949 | - | - | 1,949 | ||||||||||||
| Long-term liability | - | - | 7,500,000 | (b) | 7,500,000 | |||||||||||
| Lease liability, net of current portion | 1,610,734 | 707,929 | - | 2,318,663 | ||||||||||||
| Total liabilities | 6,062,690 | 1,327,520 | 7,500,000 | 14,890,210 | ||||||||||||
| Stockholders' equity | ||||||||||||||||
| Common stock | 1,397 | - | 1,250 | (c) | 2,647 | |||||||||||
| Additional paid-in capital | 52,421,481 | - | 2,498,750 | (c) | 54,920,231 | |||||||||||
| Accumulated deficit | (52,334,412 | ) | - | - | (52,334,412 | ) | ||||||||||
| Members' capital - beginning | - | (246,479 | ) | 246,479 | - | |||||||||||
| Members' capital - current year | - | 191,369 | (191,369 | ) | - | |||||||||||
| Total stockholders' equity | 88,466 | (55,110 | ) | 2,555,110 | 2,588,466 | |||||||||||
| Total liabilities and stockholders' equity | $ | 6,151,156 | $ | 1,272,410 | $ | 10,055,110 | 17,478,676 |
FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
THE THREE MONTHS ENDED MARCH 31, 2023
| Pro Forma | ||||||||||||||||
| INVO March 31, 2023 | WFI March 31, 2023 | Pro Forma Adjustments | Combined March 31, 2023 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product revenue | $ | 50,644 | $ | - | $ | - | $ | 50,644 | ||||||||
| Clinic revenue | 297,381 | 1,339,967 | - | 1,637,348 | ||||||||||||
| Total revenue | 348,025 | 1,339,967 | - | 1,687,992 | ||||||||||||
| Cost of revenue | 72,554 | 509,725 | - | 582,279 | ||||||||||||
| Gross profit | 275,471 | 830,242 | - | 1,105,713 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | $ | 2,508,371 | $ | 367,791 | $ | - | 2,876,162 | |||||||||
| Research and development | 73,520 | - | - | 73,520 | ||||||||||||
| Total operating expenses | 2,581,891 | 367,791 | - | 2,949,682 | ||||||||||||
| Income (loss) from operations | (2,306,420 | ) | 462,451 | - | (1,843,969 | ) | ||||||||||
| Other income (expense): | ||||||||||||||||
| Loss from equity method investment | $ | (27,735 | ) | $ | - | $ | - | (27,735 | ) | |||||||
| Other income | - | - | - | - | ||||||||||||
| Interest income | - | - | - | - | ||||||||||||
| Interest expense | (216,589 | ) | - | - | (216,589 | ) | ||||||||||
| Foreign currency exchange loss | (135 | ) | - | - | (135 | ) | ||||||||||
| Total other expense, net | (244,459 | ) | - | - | (244,459 | ) | ||||||||||
| Income (loss) before income taxes | (2,550,879 | ) | 462,451 | - | (2,088,428 | ) | ||||||||||
| Provision for income taxes | - | - | - | (d) | - | |||||||||||
| Net income (loss) | (2,550,879 | ) | 462,451 | - | (2,088,428 | ) | ||||||||||
| Net profit (loss) per common share | ||||||||||||||||
| Basic | (0.20 | ) | - | - | (0.17 | ) | ||||||||||
| Diluted | (0.20 | ) | - | - | (0.17 | ) | ||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 12,450,072 | - | - | 12,450,072 | ||||||||||||
| Diluted | 12,450,072 | - | - | 12,450,072 |
INVO BIOSCIENCE, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2022
| Pro Forma | ||||||||||||||||
| INVO December 31, 2022 | WFI December 31, 2022 | Pro Forma Adjustments | Combined December 31, 2022 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product Revenue | $ | 207,342 | - | - | 207,342 | |||||||||||
| Clinic Revenue | 614,854 | 5,379,675 | - | 5,994,529 | ||||||||||||
| Total revenue | 822,196 | 5,379,675 | - | 6,201,871 | ||||||||||||
| Cost of revenue | 331,523 | 2,284,922 | - | 2,616,445 | ||||||||||||
| Gross profit | 490,673 | 3,094,753 | - | 3,585,426 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | $ | 10,573,111 | 1,411,012 | - | 11,984,123 | |||||||||||
| Research and development | 544,043 | - | - | 544,043 | ||||||||||||
| Total operating expenses | 11,117,154 | 1,411,012 | - | 12,528,166 | ||||||||||||
| Income (loss) from operations | (10,626,481 | ) | 1,683,741 | (8,942,740 | ) | |||||||||||
| Other income (expense): | ||||||||||||||||
| Loss from equity method investment | $ | (200,558 | ) | - | - | (200,558 | ) | |||||||||
| Other income | - | 904 | - | 904 | ||||||||||||
| Interest income | 308 | - | - | 308 | ||||||||||||
| Interest expense | (59,445 | ) | (238 | ) | - | (59,683 | ) | |||||||||
| Foreign currency exchange loss | (3,463 | ) | - | - | (3,463 | ) | ||||||||||
| Total other expense, net | (263,158 | ) | 666 | - | (262,492 | ) | ||||||||||
| Income (loss) before income taxes | (10,889,639 | ) | 1,684,407 | - | (9,205,232 | ) | ||||||||||
| Provision for income taxes | 2,872 | - | - | (d) | 2,872 | |||||||||||
| Net income (loss) | (10,892,511 | ) | 1,684,407 | - | (9,208,104 | ) | ||||||||||
| Net profit (loss) per common share | ||||||||||||||||
| Basic | (0.90 | ) | - | - | (0.76 | ) | ||||||||||
| Diluted | (0.90 | ) | - | - | (0.76 | ) | ||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 12,122,606 | - | - | 12,122,606 | ||||||||||||
| Diluted | 12,122,606 | - | - | 12,122,606 |
TO COMBINED FINANCIAL STATEMENTS
1 - Basis of presentation
WFI Acquisition will be accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations.
As the acquirer for accounting purposes, the Company has estimated the fair value of WFI's assets acquired and liabilities assumed
and conformed the accounting policies of WFI to its own policies.
2 - Calculation of purchase consideration and preliminary purchase price allocation
following table summarizes the fair value of purchase consideration that will be transferred on the Closing Date:
| Proceeds from the sale of INVO common stock | $ | 2,500,000 | ||
| Total upfront cash consideration | 2,500,000 | |||
| Future cash or equity consideration(1) | 7,500,000 | |||
| Total purchase consideration | $ | 10,000,000 |
Company has performed a preliminary valuation analysis of the fair market value of the Companies' assets and liabilities. The following
table summarizes the preliminary allocation of the purchase price as of March 31, 2023:
| Cash | $ | 169,361 | ||
| Accounts receivable | 119,559 | |||
| Prepaid expenses and other current assets | 526 | |||
| Property and equipment, net | 71,763 | |||
| Lease right of use asset | 911,201 | |||
| Goodwill | 10,055,110 | |||
| Accounts payable and accrued expenses | (96,949 | ) | ||
| Distributions payable | (171,981 | ) | ||
| Deferred revenue | (132,703 | ) | ||
| Lease liability | (925,887 | ) | ||
| Total consideration | $ | 10,000,000 |
preliminary purchase price allocation has been used to prepare pro forma adjustments in the unaudited pro forma condensed combined balance
sheet and income statements. The final purchase price allocation will be determined when INVO has completed all detailed valuations and
necessary calculations, which are expected to be finalized within the next twelve months. The final allocation could differ materially
from the preliminary allocation used in the pro forma adjustments. The final allocation may include (i) changes in identifiable net assets,
(ii) changes in fair values of property, plant and equipment, and (iii) other changes to assets and liabilities.
3 - Pro forma adjustments
pro forma adjustments are based on the INVO's preliminary estimates and assumptions that are subject to change. The following adjustments
have been reflected in the unaudited pro forma condensed combined financial statements:
Represents the preliminary goodwill associated with the WFI Acquisition as presented in Note 2. Goodwill represents the estimate of the
excess of the purchase price over the fair value of the assets acquired and liabilities assumed.
Represents the future cash payments owed for the WFI acquisition. INVO has agreed to make additional payments of $2,500,000 within 90-days
of each of the first three anniversaries of closing. The sellers may elect to receive shares of INVO common stock in lieu of cash payments
as follows: (i) 400,000 shares of INVO common stock on the first additional payment date; (ii) 275,000 shares of INVO common stock on
the second additional payment date and (iii) 175,000 shares of INVO common stock on the third additional payment date.
Represents estimated proceeds from common stock sold by INVO to meet the initial $2.5 million due upon closing of the WFI acquisition.
As an alternative, INVO may decide to fund the upfront consideration using debt financing, if available on reasonable terms.
WFRSA and FLOW are taxed at the partnership level and as such no provision for income taxes has been recorded for the WFI Acquisition.
Beginning in 2022 the members elected to have state
income taxes paid by the Companies on the members' behalf. This expense is included in the Companies operating expenses.