SARASOTA, Fla., Aug. 13, 2020 — INVO Bioscience, Inc. (OTCQB: INVO), a medical device company focused on creating alternative treatments for patients diagnosed with infertility and developers of INVOcell®, the world’s only in vivo Intravaginal Culture System, today announced financial results for the quarter ended June 30, 2020.
Recent Highlights
- Similar to the first quarter of 2020, revenues of $246,072 in the second quarter of 2020 continued to be impacted by COVID-19. However, with many fertility clinics reopening along with the annual minimums required under the Company’s U.S. commercialization agreement, the Company expects higher revenue in the second half of 2020.
- The Company finished the quarter ended June 30, 2020 with a cash position of approximately $1.5 million. Subsequent to the quarter end, the Company completed its 3rd and final closing of its convertible note financing along with the receipt of its PPP loan, the combination of which added approximately $557,000 in additional cash proceeds.
- Received registration approval for INVOcell in Turkey paving the way for commercialization efforts to begin in the country.
Management Discussion
“Despite the impact that COVID-19 has had in delaying fertility treatment for many around the world, we continue to make strong progress on our key goals to create commercialization agreements for our INVOcell solution” commented Steve Shum, Chief Executive Officer of INVO Bioscience. “As we have been advancing our commercialization efforts outside the United States, industry leaders, as well as our internal team, have begun to recognize the expanded opportunity that exists through the creation of these joint ventures for developing dedicated, INVO-only centers in the U.S. and select markets around the world. The INVO center model also allows INVO Bioscience to participate in a greater share of the economics. Over the past year, we have had a number of conversations that started as standard distribution agreements that have evolved into potential joint venture agreements. We believe such partnerships, such as the one signed in India, will ultimately be mutually beneficial to achieving our goal to increase access to care and lower the cost of fertility treatment across the globe.”
“Similar to the first quarter of 2020, the second quarter 2020 results were impacted by the COVID-19 virus outbreak which resulted in reduced product sales to Ferring. A majority of clinics curtailed their fertility services in connection with the lockdowns that occurred. Many of the clinics have since resumed operations, albeit at a measured pace. As a result, and along with Ferring’s required annual minimums, we expect to experience stronger sales in the second half of 2020. We also believe that new guidelines that requiring limiting interactions and social distancing at most clinics could favor accelerated adoption of our technology, which allows for a more streamlined cycle approach with fewer patient visits and reduced lab requirements and resources,” Mr. Shum concluded.
International Market Update
- Africa and Eurasia: The Company previously executed distribution agreements in certain markets in Africa and Eurasia toward the end of 2019. Following execution of those agreements, the Company began the product registration and approval process in order to begin importing into those markets.
The Company recently received the first of the product registration approvals for Turkey in July 2020. The Company is now working with its distribution partner in Turkey to begin commercialization. Work is continuing with the remaining countries to complete registrations, and while the timelines have been impacted by COVID-19, the Company expects several will be completed near-term. - India: INVO Biosciences’ JV partnership, signed in January 2020, remains focused on opening dedicated INVO-only clinic in the India marketplace. While those efforts were delayed due to the pandemic and the country-wide shutdown, the joint-venture is still targeting the first clinic opening before year end.
- New Markets: INVO Bioscience is targeting a number of additional markets outside the U.S (OUS). and has discussions underway in Mexico, Canada, Columbia, Spain, Macedonia, Indonesia, Russia, Malaysia, and China among others. The Company has set a goal of adding additional OUS markets (through distribution or partnership agreements) before year end.
Financial Results
Revenue for the three months ended June 30, 2020, was $246,072 compared to $658,638 for the same three-month period in 2019, a decrease of $412,566 or 63%.
The gross margin reported for the second quarter ended June 30, 2020 was 91% or $224,902 compared to 92% or $603,356 for the three months ended June 30, 2019. The decrease in gross margin was related to slightly higher product costs. The cost of sales recognized during the second quarter of 2019 were attributed to product shipments to Ferring.
Selling, general and administrative expenses for the three months ended June 30, 2020 were $1,252,939 as compared to $669,152 for the three months ended June 30, 2019, an increase of $583,787 or 87%. The increase in SG&A during the second quarter of 2020 compared to the second quarter of 2019 was primarily the result of an increase in wages, stock-based compensation and other corporate expenses.
The Company began to fund additional research and development (“R&D”) efforts in 2020 in preparation for its upcoming clinical trial, anticipated to occur in 2020, and additional patent filings. Excluding the investment in inventory in anticipation of clinical trials beginning in 2020 and patents, R&D expenses for 2020 were $32,890. During 2019 the Company did not fund any R&D as a result of its limited resources at the time.
During the three-month period ended June 30, 2020 we incurred $259,954 in interest expense, an increase of $84,198 compared to $175,756 in the three-month period ended June 30, 2019 or approximately 48%. The increase was primarily due to higher amortization of debt discount on the 2020 Convertible Notes Payable.
For the reasons stated above, the Company had a net loss of $1,322,881 for the three months ended June 30, 2020, an increase of $1,081,329 compared to a net loss of $241,552 for the three months ended June 30, 2019, or approximately 448%. The increase in net loss is primarily attributable to the increase in operating expense, with $511,798 related to non-cash expenses.
The Company finished the quarter ended June 30, 2020 with a cash position of approximately $1.5 million. Subsequent to the quarter end, the Company completed its 3rd and final closing of its financing along with the receipt of its PPP loan, the combination of which added an approximately $557,000 in additional cash proceeds.
Virtual Investor Conference Details
INVO Bioscience is scheduled to participate in a virtual presentation at the June 2020 Lytham Partners Virtual Investor Growth Conference on Wednesday, August 19, 2020 at 2:00pm ET (11:00am PT).
A webcast of the presentation will be posted under the investor relations section of INVO Bioscience’s website at www.invobioscience.com or can be accessed at https://www.webcaster4.com/Webcast/Page/2162/36418. A replay of the presentation will be available following the event.
Management will also be participating in virtual one-on-one meetings on August 19-21, 2020. To arrange a meeting, please contact Robert Blum of Lytham Partners at blum@lythampartners.com or visit www.lythampartners.com/virtual.
About INVO Bioscience
INVO Bioscience, Inc. (“INVO”) is an innovative medical device company developing solutions for the global infertility industry. INVO’s goal is to increase access to care and expand fertility treatment across the globe while seeking to lower the cost and increase the availability of care. INVO’s lead commercial product, the INVOcell, is a patented Assisted Reproductive Technology (ART) used in the treatment of infertility. The INVOcell device and procedure is unique as the first Intravaginal Culture (IVC) system in the world used for the natural in vivo incubation of eggs and sperm during fertilization and early embryo development. As an alternative to traditional in Vitro Fertilization (IVF), the revolutionary in vivo method of vaginal incubation offers patients a more natural and intimate experience. INVO Bioscience is headquartered in Sarasota, FL. For more information, please visit http://invobioscience.com/
Safe Harbor Statement
This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company invokes the protections of the Private Securities Litigation Reform Act of 1995. All statements regarding our expected future financial position, results of operations, cash flows, financing plans, business strategies, products and services, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will,” and other similar expressions are forward-looking statements. All forward-looking statements involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. Factors that may cause actual results to differ materially from those in the forward-looking statements include those set forth in our filings at www.sec.gov. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.
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INVO BIOSCIENCE, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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June 30, |
December 31, |
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|
2020 |
2019 |
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|
ASSETS |
(unaudited) |
|||
|
Current Assets |
||||
|
Cash |
$ 1,503,951 |
$ 1,238,585 |
||
|
Accounts receivable, net |
71,199 |
7,558 |
||
|
Inventory, net |
244,108 |
101,387 |
||
|
Prepaid expenses and other current assets |
221,790 |
195,910 |
||
|
Total Current Assets |
2,041,048 |
1,543,440 |
||
|
Property and equipment, net |
108,528 |
93,055 |
||
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Other Assets |
||||
|
Capitalized patents, net |
6,331 |
7,234 |
||
|
Leasehold right of use, net |
90,785 |
101,883 |
||
|
Trademarks |
59,069 |
49,867 |
||
|
Total other assets |
156,185 |
158,984 |
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Total assets |
$ 2,305,761 |
$ 1,795,479 |
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LIABILITIES AND STOCKHOLDERS’ DEFICIENCY |
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Current liabilities |
||||
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Accounts payable and accrued liabilities, including related parties |
$ 309,460 |
$ 371,530 |
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|
Accrued compensation |
575,174 |
393,017 |
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|
Deferred revenue |
714,286 |
714,286 |
||
|
Current portion of leasehold liability |
22,049 |
21,365 |
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|
Income taxes payable |
– |
912 |
||
|
Total current liabilities |
1,620,969 |
1,501,110 |
||
|
Commitments and contingencies (Note 12) |
– |
– |
||
|
Leasehold liability |
70,326 |
81,494 |
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Deferred revenue |
3,214,286 |
3,571,429 |
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|
Convertible notes, net of discount |
997,911 |
325,784 |
||
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Convertible notes, net of discount – related party |
– |
28,824 |
||
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Deferred tax liabilities |
433 |
433 |
||
|
Total liabilities |
5,903,925 |
5,509,074 |
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Stockholders’ Deficiency |
||||
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Preferred Stock, $.0001 par value; 100,000,000 shares authorized; |
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No shares issued and outstanding as of December 31, 2019 and |
||||
|
2018, respectively |
– |
– |
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|
Common Stock, $.0001 par value; 200,000,000 shares authorized; |
||||
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7,900,255 and 7,815,806 shares issued and outstanding as |
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of June 30, 2020 and December 31, 2019, respectively |
790 |
782 |
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Additional paid-in capital |
23,057,085 |
20,174,389 |
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Accumulated deficit |
(26,656,039) |
(23,888,766) |
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Total stockholders’ deficiency |
(3,598,164) |
(3,713,595) |
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Total liabilities and stockholders’ deficiency |
$ 2,305,761 |
$ 1,795,479 |
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INVO BIOSCIENCE, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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For the Three |
For the Three |
For the Six |
For the Six |
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Months Ended |
Months Ended |
Months Ended |
Months Ended |
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June 30, |
June 30, |
June 30, |
June 30, |
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2020 |
2019 |
2020 |
2019 |
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Revenue: |
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Product Revenue |
$ 67,500 |
$ 480,067 |
$ 147,500 |
$ 490,927 |
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License Revenue |
178,572 |
178,571 |
357,143 |
357,143 |
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Total Revenue |
246,072 |
658,638 |
504,643 |
848,070 |
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Cost of Goods Sold |
21,170 |
55,282 |
51,164 |
66,260 |
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Gross Profit |
224,902 |
603,356 |
453,479 |
781,810 |
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Research and development costs |
34,890 |
– |
64,940 |
– |
|||
|
Selling, general, and administrative expenses |
1,252,939 |
669,152 |
2,847,985 |
1,196,717 |
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Total operating expenses |
1,287,829 |
669,152 |
2,912,925 |
1,196,717 |
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Loss from operations |
(1,062,927) |
(65,796) |
(2,459,446) |
(414,907) |
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Other (income) expense: |
|||||||
|
Interest (income) expense |
259,954 |
175,756 |
307,827 |
285,215 |
|||
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Total other (income) expenses |
259,954 |
175,756 |
307,827 |
285,215 |
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Loss before income taxes |
(1,322,881) |
(241,552) |
(2,767,273) |
(700,122) |
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Provision for income taxes |
– |
– |
– |
– |
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Net Loss |
$ (1,322,881) |
$ (241,552) |
$ (2,767,273) |
$ (700,122) |
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Basic net loss per weighted average shares of common stock |
$ (0.17) |
$ (0.03) |
$ (0.35) |
$ (0.09) |
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|
Diluted net loss per weighted average shares of common stock |
$ (0.17) |
$ (0.03) |
$ (0.35) |
$ (0.09) |
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|
Basic weighted average number of shares of common stock |
7,892,707 |
7,763,048 |
7,880,751 |
7,743,685 |
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|
Diluted weighted average number of shares of common stock |
7,892,707 |
7,763,048 |
7,880,751 |
7,743,685 |
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INVO BIOSCIENCE, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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For the Six |
For the Six |
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Months Ended |
Months Ended |
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June 30, |
June 30, |
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2020 |
2019 |
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Cash flows from operating activities: |
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Net Loss |
$ (2,767,273) |
$ (700,122) |
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Adjustments to reconcile net loss to net cash provided by operating activities: |
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Non-cash stock compensation issued for services |
60,800 |
26,600 |
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Non-cash stock compensation issued to employees |
345,972 |
– |
|
|
Fair value of stock options issued to employees |
596,390 |
– |
|
|
Amortization of discount on notes payable |
208,071 |
256,703 |
|
|
Amortization of discount on notes payable options |
15,555 |
– |
|
|
Amortization of discount on notes payable warrants |
18,742 |
– |
|
|
Amortization of discount on notes payable issuance costs |
20,577 |
– |
|
|
Amortization of leasehold right of use asset |
11,098 |
3,614 |
|
|
Depreciation and amortization |
5,958 |
3,465 |
|
|
Changes in assets and liabilities: |
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|
Accounts receivable |
(63,641) |
(14,315) |
|
|
Inventories |
(142,721) |
(32,962) |
|
|
Prepaid expenses and other current assets |
(25,880) |
53,974 |
|
|
Accounts payable and accrued expenses |
(62,070) |
1,280 |
|
|
Leasehold liability |
(10,484) |
(3,370) |
|
|
Deferred revenue |
(357,143) |
4,636,937 |
|
|
Accrued interest |
(49,610) |
24,458 |
|
|
Accrued compensation |
182,157 |
(1,546,030) |
|
|
Income taxes payable |
(912) |
– |
|
|
Net cash provided by (used in) operating activities |
(2,014,414) |
2,710,232 |
|
|
Cash from investing activities: |
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|
Payments to acquire property, plant, and equipment |
(20,528) |
(64,839) |
|
|
Payments to acquire trademarks |
(9,202) |
– |
|
|
Net cash used in investing activities |
(29,730) |
(64,839) |
|
|
Cash from financing activities: |
|||
|
Proceeds from sale of notes payable, net of issuance costs |
2,644,510 |
– |
|
|
Principal payment on notes payable |
(295,000) |
(131,722) |
|
|
Principal payment on notes payable – related parties |
(40,000) |
(62,743) |
|
|
Net cash provided by (used in) financing activities |
2,309,510 |
(194,465) |
|
|
Increase in cash and cash equivalents |
265,366 |
2,450,928 |
|
|
Cash and cash equivalents at beginning of period |
1,238,585 |
212,243 |
|
|
Cash and cash equivalents at end of period |
$ 1,503,951 |
$ 2,663,171 |
|
|
Supplemental disclosure of cash flow information: |
|||
|
Cash paid during the period for: |
|||
|
Interest |
$ 78,456 |
$ 9,823 |
|
|
Taxes |
$ 1,062 |
$ – |
|
|
Leasehold right of use asset and leasehold liability upon adoption of ASU 2016-02, lease (Topic 842) |
$ – |
$ 116,441 |
|
|
Common stock issued upon note payable and accrued interest conversion |
$ – |
$ 238,723 |
|
|
Common stock issued for prepaid services |
$ – |
$ – |
|
|
Common stock issued for accrued compensation |
$ – |
$ – |
|
|
Beneficial conversion feature on convertible notes |
$ 182,460 |
$ – |
|
|
Fair value of options issued with debt |
$ 767,160 |
$ – |
|
|
Fair value of warrants issued with debt |
$ 929,922 |
$ – |
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SOURCE INVO Bioscience, Inc.