Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as may be amended, supplemented, or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.

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

Overview

We are a healthcare services and technology company focused on the fertility marketplace and dedicated to expanding access to assisted reproductive technology ("ART") care to patients in need. Our principal commercial strategy is focused on acquiring, establishing, and operating fertility clinics and related businesses and technologies. Our acquisition strategy focuses on US-based, profitable fertility clinics. Our clinics offer a variety of fertility services including in vitro fertilization ("IVF") and the intravaginal culture ("IVC") procedure enabled by INVOcell. As of the date of this filing, we have four fertility clinics in the United States. We also continue to engage in the sale and distribution of our INVOcell technology solution into third-party owned and operated fertility clinics. We also intend to seek out additional, innovative fertility-focused technologies, to license or acquire in order to utilize within our clinics.

Fertility Clinics

On February 18, 2026, we completed our acquisition of Family Beginnings, P.C., an Indiana based fertility clinic that offers both IVF and IVC ("Family Beginnings" or the "Indiana Clinic").

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

On March 10 and June 28, 2021, we established joint ventures to open INVO Centers in Birmingham, Alabama, and Atlanta, Georgia, respectively. We established these clinics to increase use of the INVOcell, to accelerate the growth and awareness of the IVC procedure, and to expand the availability of statistical and clinical data supporting its use. These clinics also represent our initial entry into clinic-based fertility operations and enabled us to expand our revenue per fertility cycle from hundreds of dollars (from the sale of each INVOcell device) to thousands of dollars, and to significantly advance our path to building greater scale in our overall operations and to reaching profitability. We acquired 100% of the INVO Center in Birmingham in June 2026.

INVOcell Device

Our proprietary INVOcell® device enables fertilization and early embryo development to occur in vivo within the woman's body - the world's first IVC technique of its kind. Unlike IVF, which relies on expensive laboratory incubators, the INVOcell allows fertilization and early embryo development to take place in the woman's body and has demonstrated equivalent pregnancy success and live birth rates as IVF.

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

Operations

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

Wisconsin Fertility Institute and Family Beginnings

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

Alabama JV

HRCFG INVO, LLC (the "Alabama JV") was originally established as a partnership with HRCFG, LLC ("HRCFG"). On June 24, 2026, we acquired HRCFG and the Alabama JV became a wholly owned subsidiary. The day to day clinical operations are handled by on site staff. Our corporate staff manages finance, billing, accounting, human resources and other overhead responsibilities.

Georgia JV

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

INVOcell

To date, we have completed a series of important steps in the successful development and manufacturing of the INVOcell:

●	Manufacturing: We are ISO 13485:2016 certified and manage all aspects of production and manufacturing with qualified suppliers. Our key suppliers, which include NextPhase Medical Devices, R.E.C. Manufacturing Corporation, and Casco Bay Molding, have been steadfast partners since our company first began and can provide us with virtually an unlimited capability to support our growth objectives, with all manufacturing performed in the New England region of the U.S.
●	Raw Materials: All raw materials utilized for the INVOcell are medical grade and commonly used in medical devices (e.g., medical grade silicone, medical grade plastic). Our principal molded component suppliers, Casco Bay Molding and R.E.C. Manufacturing Corporation, are well-established companies in the molding industry and are either ISO 13485 or ISO 9001 certified. The molded components are supplied to our contract manufacturer for assembly and packaging of the INVOcell system. The contract manufacturer is ISO 13485 certified, and U.S. Food & Drug Administration ("FDA") registered.
●	US Marketing Clearance: The safety and efficacy of the INVOcell have been demonstrated and cleared for marketing and use by the FDA in November 2015.
●	Clinical: In June 2023, we received FDA 510(k) clearance to expand the labeling on the INVOcell device and its indication for use to provide for a 5-day incubation period. The data supporting the expanded 5-day incubation clearance demonstrated improved patient outcomes.

Market Opportunity

Fertility Clinics and INVOcell Device

The global ART marketplace is a large and growing, multi-billion-dollar industry across the world as increased infertility rates, greater patient awareness and improving financial incentives, such as insurance and governmental assistance, continue to drive demand. According to the European Society for Human Reproduction 2024 ART Fact Sheet, one in six couples worldwide experience fertility challenges. Additionally, the worldwide market remains vastly underserved as a high percentage of patients in need of care continue to go untreated each year for many reasons, but key among them are capacity constraints and cost barriers. There have been large increases in the use of IVF, with current estimates of approximately 4 million ART cycles performed globally each year, producing around 1 million babies. Regrettably, this only amounts to less than 5% of the infertile couples worldwide being treated and less than 2% of such couples having a child though IVF. The industry remains capacity constrained which creates challenges in providing access to care for the volume of patients in need. A survey by "Resolve: The National Infertility Association" indicates the two main reasons couples do not use IVF is cost and geographical availability (and/or capacity).

In the United States, infertility affects an estimated 10%-15% of the couples of childbearing-age, according to the American Society of Reproductive Medicine (2017). According to the Centers for Disease Control ("CDC"), there are approximately 6.7 million women with impaired fertility. Based on 2022 data from the CDC's National ART Surveillance System, approximately 435,000 IVF cycles were performed across ~500 IVF centers, leaving the U.S. with a large, underserved patient population, similar to most markets around the world.

Our corporate development strategy, which includes acquiring established existing practices, building new clinics, and expanding our INVOcell device, is designed to take advantage of the attractive fertility market dynamics of supply and demand.

Competitive Advantages

INVOcell Device and Fertility Clinics

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

While a smaller part of our current business, we continue to believe that our INVOcell device, and the IVC procedure it enables, can play a key role in making advanced fertility care more affordable and accessible. We continue to engage with third-party clinics that share our same vision and that use our one-of-a-kind INVOcell device.

Unlike IVF, where the oocytes and sperm develop into embryos in a laboratory incubator, the INVOcell allows fertilization and early embryo development to take place in the woman's body. We believe that the IVC procedure can provide the following benefits:

	●	May reduce lab procedures, helping clinics and doctors to increase patient capacity, lower costs and offer a more affordable advanced fertility treatment option;
	●	A natural and stable incubation environment; and
	●	A more personal, intimate experience in creating a baby.

In both current utilization of the INVOcell, and in clinical studies, the IVC procedure has demonstrated equivalent pregnancy success and live birth rates as IVF and generally may be offered at a significant discount to IVF cycles.

We will also continue seek out additional, innovative technologies that we can utilize to further benefit patients and enhance our clinic operations.

Sales and Marketing

Fertility Clinics

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

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

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

INVOcell Device

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

Recent Developments

Any Market Purchase Agreement

On July 24, 2026, we entered into an Any Market Purchase Agreement (the "AMPA") with Alumni Capital LP ("Alumni"), pursuant to which we have the right, but not the obligation, to sell to Alumni up to $15 million of shares of our common stock (the "Commitment Amount"), which may be increased to up to $50 million by mutual written agreement of the parties. Sales under the AMPA, and their timing, are solely at our discretion, and we intend to use the proceeds to support our expansion efforts, which are primarily focused on acquiring additional established, profitable fertility clinics, as well as for general corporate purposes.

Our right to require purchases was conditioned on the effectiveness of a registration statement on Form S-1 covering the underlying shares. We filed the registration statement with the SEC on July 24, 2026, and the SEC declared it effective on August 4, 2026 (the "Effectiveness Date"), satisfying this condition. Following the Effectiveness Date, we may deliver purchase notices electing among three pricing mechanisms: (i) 94% of the lowest daily VWAP over the preceding five business days, (ii) 97% of the lowest traded price over the preceding business day, or (iii) 85% of the lowest traded price over the preceding five business days if the common stock is not trading on an Eligible Market. Closings occur one to five business days after a purchase notice, depending on the pricing option elected.

Issuances under the AMPA are subject to a Nasdaq exchange cap of 19.99% of shares outstanding immediately prior to signing, unless stockholder approval is obtained or an exception applies; our stockholders approved issuances in excess of this cap on July 23, 2026. Alumni's beneficial ownership is separately capped at 9.99% of outstanding common stock (adjustable by mutual agreement up to that limit), and Alumni has agreed not to engage in short selling or hedging of the common stock during specified periods.

We agreed to pay Alumni a commitment fee equal to 1% of the Commitment Amount (and, if applicable, 1% of any additional Commitment Amount), payable, at our election, in cash or in shares of common stock (or pre-funded warrants, at Alumni's election) within five business days following the Effectiveness Date, with any share-based fee valued using the average VWAP for the five business days preceding August 4, 2026. On August 7, 2026, we issued 157,934 shares of common stock to Alumni as the commitment fee. The AMPA contains customary representations, warranties, covenants, and indemnification obligations, and includes no rights of first refusal, participation rights, penalties, or liquidated damages provisions.

The AMPA terminates on the earliest of June 30, 2028, the date Alumni has purchased shares equal to the full Commitment Amount, the date the common stock ceases trading on an Eligible Market, or the commencement of certain bankruptcy proceedings. As of the date of this report, we cannot determine the number of shares that may ultimately be issued under the AMPA, as this will depend on future purchase prices and whether the Commitment Amount is increased.

Increase in Authorized Common Stock (July 2026)

On July 23, 2026, our stockholders approved an amendment to our Amended and Restated Articles of Incorporation to increase our number of authorized shares of common stock from 50,000,000 to 250,000,000, and we filed a Certificate of Amendment to our Articles of Incorporation to increase our authorized shares of common stock for the same.

Amendment to Stock Incentive Plan

On July 23, 2026, our stockholders approved a fifth amendment to its Stock Incentive Plan to increase the number of shares of common stock available for issuance thereunder to a total amount of 1,000,000, equal to approximately 20% of the total issued and outstanding stock on a fully-diluted basis.

Acquisition of HRCFG

INVO Centers, LLC, a Delaware limited liability company ("INVO Centers" or "Purchaser"), our wholly owned subsidiary, is a party to that certain limited liability company agreement of HRCFG INVO LLC ("HRCFG INVO") with HRCFG, LLC ("HRCFG") to establish a joint venture partnership for a fertility clinic in Birmingham, Alabama (the "Alabama JV"). As a joint venture partner, HRCFG operated and managed the clinic under the name of Innovative Fertility Specialists.

On June 23, 2026, we consummated the acquisition of one-hundred percent (100%) of the membership interests of HRCFG pursuant to that certain Membership Interest Transfer Agreement (the "MITA") by and among Purchaser, Karen Hammond ("Hammond"), Lisa Ray ("Ray") and Nicholas Cataldo ("Cataldo" and collectively with Hammond and Ray, "Sellers"). Pursuant to the MITA, Sellers transferred all rights, title and interest in their respective membership interests (the "Membership Interests") of HRCFG to Purchaser for a combined purchase price of $175,001, of which $1.00 was paid in cash on the closing date and $175,000 as additional consideration, $48,000 of which shall be payable to Sellers pro rata in equal monthly installments over a nine (9) month period starting in October 2026 and $127,000 of which shall be paid from HRCFG's free cash flow.

Pursuant to the MITA, each Seller transferred, granted, conveyed, assigned and relinquished exclusively to HRCFG all of such Seller's right, title, and interest in and to any assets, rights, or property of any kind that are primarily used in or necessary for the operation and management of the Alabama JV, including, without limitation, any intellectual property rights (collectively, the "Business Properties"). Under the MITA, for a period of approximately four (4) months (the "Transition Period"), Sellers will provide transition services to Purchaser, and for a period of twelve (12) months following the Transition Period (the "Support Period"), Sellers shall make themselves available to support HRCFG.

The Alabama JV is one of our four existing clinics. As a result of the acquisition, we now include the accounts of the Alabama JV in our consolidated financial statements on a prospective basis.

JAG Amendment

On May 27, 2026, we entered into a letter agreement (the "JAG May 2026 Letter") with JAG Multi Investments LLC ("JAG") pursuant to which (i) the maturity date of certain previously issued convertible notes with a principal balance of $660,000 (the "JAG Notes") was extended until December 31, 2026, (ii) we agreed to repay the JAG Notes in monthly installments of $50,000 starting in April 2026 with a balloon payment at the end of December 2026, (iii) confirmation that if we raise more than $3,000,000 after the date of the JAG May 2026 Letter, we shall pay ten percent (10%) of any proceeds in excess of $3,000,000 to accelerate repayment of the JAG Notes, (iv) the conversion price of the JAG Notes was reset to $1.60, (v) we agreed to issue to JAG a new warrant (the "JAG May 2026 Warrant") to purchase up to 150,000 shares of our common stock at an exercise price of $1.60 per share, exercisable for five years from the date of issuance, and (vi) we agreed to the reset of the conversion and exercise prices of the JAG Notes and JAG May 2026 Warrant, respectively, to equal the price of any future financing based on a share price that is lower than the conversion and exercise prices then in effect.

Nasdaq

On April 23, 2026, we received a letter (the "10-K Letter") from the Listing Qualifications staff (the "Staff") of The Nasdaq Stock Market LLC ("Nasdaq") indicating that we failed to file our Annual Report on Form 10-K for the year ended December 31, 2025 (the "10- K Filing"), on a timely basis and, as such, no longer satisfies Nasdaq Listing Rule 5250(c)(1) (the "Timely Filing Rule").

On May 27, 2026, we received an additional letter (the "10-Q Letter") from the Staff indicating that we failed to file our Quarterly Report on Form 10-Q for the period ended March 31, 2026 (the "10-Q Filing"), on a timely basis.

On June 2, 2026, we filed the 10-K Filing with the SEC, and on June 22, 2026, we filed the 10-Q Filing with the SEC. On June 23, 2026, the Staff notified us that we complied with the Timely Filing Rule and the matter was closed.

Reverse Stock Split (March 2026)

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

Closing of Family Beginnings Acquisition

On February 18, 2026, we completed the acquisition of Family Beginnings. The transaction was executed through our wholly owned subsidiary Wood Violet Fertility, LLC ("Wood Violet"). The total purchase price was approximately $760,000, consisting of $360,000 in cash, of which $210,000 was paid at closing, $150,000 is a holdback to be released six months from the closing date, and $400,000 in Series D Preferred Stock.

As part of the acquisition structure, we acquired the clinic's non-medical business assets through Wood Violet, while the clinic's medical assets were acquired by Fertility, P.A., which entered into a long-term Management Services Agreement with Wood Violet. Under this agreement, Wood Violet will provide management, administrative, laboratory, and operational support services to the clinic for an initial 10-year term, renewable for additional five-year periods. Fertility, P.A. agreed to reimburse Wood Violet for costs incurred in providing such services plus twenty percent (20%).

In connection with the acquisition, we also entered into a lease for approximately 4,387 square feet of clinic and office space in Indianapolis, effective March 1, 2026, with an initial term through July 31, 2033.

Founded more than a decade ago, Family Beginnings has built a strong reputation for delivering comprehensive fertility services with a highly personalized, patient-first approach. The clinic offers a full suite of reproductive services, including in vitro fertilization, intravaginal culture (as an early adopter of our INVOcell solution), ovulation induction, intrauterine insemination, fertility preservation, and diagnostic testing, supported by an experienced clinical and embryology team. The acquisition expands INVO's clinical footprint and is expected to support continued growth of our fertility services platform.

Warrant Inducement (January 2026)

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

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

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

We registered the resale of the shares underlying such new warrants pursuant to a registration statement on Form S-1 (File No. 333-293135), which was declared effective by the SEC on February 12, 2026, and we agreed to observe customary limitations on additional issuances of common stock and variable-rate financing arrangements for a limited period following the warrant inducement transaction.

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

Maxim Group LLC ("Maxim") acted as our financial advisor in connection with the inducement transaction.

Increase in Authorized Common Stock (Jan 2026)

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

Private Placement (December 2025)

On December 2, 2025, we entered into a securities purchase agreement with an institutional investor for a private placement of approximately $4.0 million in securities, comprised of 47,000 shares of Common Stock, pre-funded warrants to purchase 426,373 shares of Common Stock (the "Pre-Funded Warrants"), and common warrants to purchase 946,746 shares of Common Stock (the "Common Warrants"). The Common Warrants became exercisable on January 22, 2026 upon receipt of approval from the stockholders of INVO to increase the number of authorized shares of common stock available for issuance thereunder and as required by the applicable rules and regulations of the Nasdaq Capital Market (or any successor entity) with respect to issuance of all of such new warrants and the shares of common stock upon the exercise thereof, expired five years thereafter, and carried an exercise price of $8.45 per share. The Pre-Funded Warrants were immediately exercisable at $0.0005 per share until exercised in full.

In connection with the foregoing private placement, we entered into a placement agency agreement with Maxim on a reasonable best efforts basis, pursuant to which we agreed to pay the Placement Agent a fee equal to 8.0% of gross proceeds, warrants to purchase 23,669 shares of Common Stock at $10.5625 per share, and reimbursement of expenses up to $50,000.

Net proceeds from the private placement are being used to support our growth and liquidity needs, including funding a portion of the Family Beginnings P.C. acquisition, paying certain outstanding debt obligations, and providing additional working capital.

Results of Operations

As we continue to build and grow the business, our primary focus has been strengthening the balance sheet, seeking out additional acquisition opportunities, and driving revenue within our existing operating clinics. During the first half of 2026 we believe we made substantial progress toward these key objectives. In January 2026, we raised net proceeds of approximately $7.1 million through a warrant inducement offering, which we used in part to satisfy $2.2 million in deferred consideration obligations related to the WFI acquisition. Also in January 2026, all outstanding shares of our Series C-2 Convertible Preferred Stock were converted into common stock, further simplifying our capital structure. Building on this balance sheet momentum, we closed on the acquisition of Family Beginnings in Indiana during February 2026 (see Recent Developments for additional information), and we have developed a robust pipeline of additional acquisition opportunities, which we are actively pursuing. Further, we acquired 100% of our INVO Center in Birmingham in June 2026. We also experienced improved revenues across our existing operating clinics during the first half of this year.

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

Although we anticipate our clinic operations will dominate our commercial efforts and revenue, we also will continue to work on growing INVOcell, both within our own clinics as well as to third party fertility clinics. We also intend to seek out additional, innovative technologies that we can utilize to benefit patients and enhance our clinic operations.

From a macro perspective, we believe we will benefit from the ongoing growth in the ART market, which continues to experience positive trends, including (1) an under-served patient population, (2) increasing infertility rates around the world, (3) growing awareness and education of fertility treatment options, (4) a growing acceptance of fertility treatment, (5) improvements in procedure techniques and hence improvements in pregnancy success rates, (6) generally improving insurance (private and public) reimbursement trends, and (7) an administration that supports increased access to fertility treatments.

Comparison of the Three Months Ended June 30, 2026, and 2025

Revenue

Revenue for the three months ended June 30, 2026, was approximately $2.2 million, compared to approximately $1.8 million for the three months ended June 30, 2025. The increase of approximately $0.3 million, or 18%, was primarily attributable to the addition of the Indiana Clinic.

Cost of Services

Cost of services for the three months ended June 30, 2026, was approximately $1.4 million, compared to approximately $1.1 million for the three months ended June 30, 2025. An increase of approximately $0.4 million, or 24%, of which, approximately $0.3 million was attributable to the addition of the Indiana Clinic and approximately $0.1 million was attributable to one time staffing costs at the Georgia JV.

Cost of Goods Sold

Cost of goods sold for the three months ended June 30, 2026, was approximately $60 thousand, compared to approximately $3 thousand for the three months ended June 30, 2025. This increase of approximately $57 thousand was primarily attributable to an allowance for expired product.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses for the three months ended June 30, 2026, were approximately $1.9 million, compared to approximately $2.2 million for the three months ended June 30, 2025. The decrease of approximately $0.3 million was primarily related to decreased professional services expenses. Non-cash, stock-based compensation expense was $0.1 million in the period, compared to $0.7 million for the same period in the prior year.

Impairment Loss

There was no impairment loss for the three months ended June 30, 2026 compared to approximately $1.4 million for the three months ended June 30, 2025. The impairment loss in 2025 was due to an impairment related to the terms of a settlement agreement under which we released Dr. Pritts from her noncompetition commitment.

Gain on remeasurement

Gain on the remeasurement of note receivable was aproximately $2.5 million for the three months ended June 30, 2026 compared to $0 for the three months ended June 30, 2025. The gain consisted of approximately $0.5 million on the remeasurement of the Alabama Note Receivable and approximately $2.0 million on the measurement of the previously held 50% membership equity related to the acquisition of HRCFG.

Gain on change in fair value of warrant liability

Gain on the change in fair value of warrant liability was $0 for the three months ended June 30, 2026 compared to approximately $1.7 million for the three months ended June 30, 2025. The gain in 2025 was due the fair value measurement of certain liability classified warrants at period end.

Loss from debt extinguishment

Loss from debt extinguishment was $0.2 million for the three months ended June 30, 2026 compared $0.7 million for the three months ended June 30, 2025. This debt extinguishment expense in 2025 was primarily related to the Amended and Restated Debenture.

Gain on settlement

Gain on settlement for the three months ended June 30, 2026 was $0 compared to $0.9 million for the three months ended June 30, 2025. The gain in 2025 was due to a settlement agreement with Dr. Pritts under with the purchase price for WFI was reduced.

Interest Expense and Financing Fees

Interest expense and financing fees were approximately $0.2 million for the three months ended June 30, 2026, compared to approximately $0.4 million for the three months ended June 30, 2025.

Interest Income

Interest income was $0.1 million for the three months ended June 30, 2026 compared to $0 for the three months ended June 30, 2025. The interest was accrued from the NAYA Note Receivable.

Loss on Discontinued Operations

Loss on discontinued operations was $0 for the three months ended June 30, 2026, compared to $2.1 million for the three months ended June 30, 2025. The loss in 2025 consists of approximately $0.6 million from the loss from operations of NTI and approximately $1.5 million from the loss on disposal of NTI.

Comparison of the Six Months Ended June 30, 2026, and 2025

Revenue

Revenue for the six months ended June 30, 2026 was approximately $4.2 million, compared to approximately $3.5 million for the six months ended June 30, 2025. The increase of approximately $0.7 million, or 20%, was primarily attributable to increased revenue of $0.3 million from growth initiatives at WFI and the Georgia JV and $0.4 million the addition of Family Beginnings.

Cost of Services

Cost of services for the six months ended June 30, 2026 was approximately $2.6 million, compared to approximately $2.1 million for the six months ended June 30, 2025. An increase of approximately $0.6 million or 24%, of which approximately $0.4 million was attributable to the addition of the Indiana Clinic, approximately $0.1 million was attributable to one time staffing costs at the Georgia JV and approximately $0.1 million directly correlates to the increase in revenue at WFI and the Georgia JV.

Cost of Goods Sold

Cost of goods sold for the six months ended June 30, 2026, was approximately $65 thousand, compared to approximately $7 thousand for the six months ended June 30, 2025. This increase of approximately $58 thousand was primarily attributable to an allowance for expired product.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses for the six months ended June 30, 2026 were approximately $4.1 million, compared to approximately $3.8 million for the six months ended June 30, 2025. The increase of approximately $0.3 million, or approximately 9%, of which, $0.1 million was related to increased professional fees, $0.1 million was related to increased personnel costs, and $0.1 million was related to increased general administrative operating expenses.

Impairment Loss

There was no impairment loss for the six months ended June 30, 2026 compared to approximately $1.4 million for the six months ended June 30, 2025. The impairment loss in 2025 was due to an impairment related to the terms of a settlement agreement under which we released Dr. Pritts from her noncompetition commitment.

Gain on Remeasurement

Gain on the remeasurement was approximately $2.5 million for the six months ended June 30, 2026 compared to $0 for the six months ended June 30, 2025. The gain consisted of approximately $0.5 million on the remeasurement of the Alabama Note Receivable and approximately $2.0 million on the measurement of the previously held 50% membership equity related to the acquisition of HRCFG.

Gain (loss) on Change in Fair Value of Warrant Liability

Gain (loss) on change in fair value of warrants was approximately $(3.8) million for the six months ended June 30, 2026, compared to approximately $1.6 million for the six months ended June 30, 2025. The 2026 loss reflects the remeasurement of liability classified warrants to fair value immediately prior to their reclassification to equity during the first quarter. The gain in 2025 was due the fair value measurement of certain liability classified warrants at period end.

Interest Expense and Financing Fees

Interest expense and financing fees were approximately $0.4 million for the six months ended June 30, 2026, compared to approximately $0.7 million for the six months ended June 30, 2025.

Interest Income

Interest income was $0.1 million for the six months ended June 30, 2026 compared to $0 for the six months ended June 30, 2025. The interest was accrued from the NAYA Note Receivable.

Loss from Discontinued Operations

Loss from discontinued operations for the six months ended June 30, 2026 and 2025 were none and $18.0 million, respectively. The loss in 2025 was directly related to the divesture of NAYA Therapeutics.

Liquidity and Capital Resources

For the six months ended June 30, 2026, and 2025, we had net losses of approximately $4.7 million and $21.0 million, respectively, and an accumulated deficit of approximately $96.0 million as of June 30, 2026. Approximately $2.1 million of the net loss was related to non-cash expenses for the six months ended June 30, 2026, compared to approximately $3.0 million for the six months ended June 30, 2025. We had negative working capital of approximately $1.9 million as of June 30, 2026, compared to negative working capital of approximately $7.6 million as of December 31, 2025. As of June 30, 2026, we had stockholder's equity of approximately $16.5 million compared to stockholder's equity of approximately $7.2 million as of December 31, 2025.

We have been dependent on raising capital through debt and equity financing to secure the cash required to fund our operating expenses and investing activities. During the first six months of 2026, we received net proceeds of approximately $7.1 million from the exercise of warrants, which was partially used to repay approximately $2.0 million of deferred acquisition consideration and approximately $0.2 million in debt.

Over the next twelve months, our plan includes growing our clinic revenue organically and pursuing additional profitable fertility clinic acquisitions. Until we can generate a sufficient amount of cash from operations, we will need to raise additional funding to meet our liquidity needs and to execute our business strategy. As in the past, we will seek debt and/or equity financing, which may not be available on reasonable terms, if at all.

These factors, among others, raise substantial doubt about our ability to continue as a going concern. If we are unable to raise additional funding to meet our working capital needs in the future, we will be forced to delay or reduce the scope of our growth and acquisition plans and/or limit or cease our operations. If we cannot continue as a going concern, our stockholders would likely lose most or all of their investment in INVO. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Cash Flows

The following table shows a summary of our cash flows for the six months ended June 30, 2026 and 2025:

		2026				2025
Cash (used in) provided by:
Operating activities			(3,018,022	)			(5,263,155	)
Investing activities			(212,216	)			(30,096	)
Financing activities			4,885,341				5,101,036

Cash Flows from Operating Activities

As of June 30, 2026, we had approximately $3.7 million in cash, compared to approximately $0.5 million as of June 30, 2025. Net cash used in operating activities for the first six months of 2026 was approximately $3.0 million, compared to approximately $5.3 million for the same period in 2025. The decrease in net cash used in operating activities was primarily due to changes in the business from the divesture of NAYA Therapeutics.

Cash Flows from Investing Activities

During the six months ended June 30, 2026, cash used in investing activities of approximately $0.2 million was primarily related to the acquisition of Family Beginnings. During the six months ended June 30, 2025, cash used in investing activities of $30 thousand was primarily related to the purchase of equipment for WFI.

Cash Flows from Financing Activities

During the six months ended June 30, 2026, cash provided by financing activities of approximately $4.9 million was primarily related to approximately $7.1 million of net proceeds from warrant exercises which was partially offset by approximately $2.0 million for deferred consideration payments for WFI and approximately $0.2 million of debt repayment. During the six months ended June 30, 2025, cash provided by financing activities of approximately $5.1 million was primarily related to approximately $8.7 million of net proceeds from a public offering which was partially offset by a $4 million redemption of the C-2 Preferred Stock and approximately $1.1 million in debt repayment.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition presented in this section is based upon our unaudited consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. During the preparation of the financial statements, we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate, based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, our results, which allows us to form a basis for making judgments on the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates based on variance with our assumptions and conditions. A summary of significant accounting policies is included below. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

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

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 4 - Variable Interest Entities for additional information on the Company's consolidated VIEs.

Equity Method Investments

Investments in unconsolidated affiliates, over which the Company exerts significant influence but does not control or otherwise consolidate, are accounted for using the equity method. Equity method investments are initially recorded at cost. These investments are included in investment in joint ventures in the accompanying consolidated balance sheets. The Company's share of the profits and losses from these investments is reported in loss from equity method joint venture in the accompanying consolidated statements of operations. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the investees and records reductions in carrying values when necessary. See Note 4 - Variable Interest Entities for additional information on the Company's equity method VIE's.

Fair Value of Financial Instruments

The Company's financial instruments consist primarily of cash, accounts receivable, accounts payable, notes payable, convertible preferred stock, and warrants. The carrying value of cash, accounts receivable, accounts payable and notes payable, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. The Company measures the fair value of its liability-classified warrants at the end of each reporting period using a Black-Scholes option pricing model, and changes in fair value are recognized in the consolidated statements of operations.

Derivatives

The Company reviews the conversion features of all liability and equity instruments based on the requirements of ASC 815, "Derivatives and Hedging" to determine if the conversion feature represents an embedded derivative.

Recently Issued Accounting Standards Not Yet Effective or Adopted

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