INVO Fertility, Inc. Form 8-K Summary
Business Context and Reporting Period
Company: INVO Fertility, Inc. (Nasdaq: IVF)
Report Date: February 18, 2026
Event: Completion of the acquisition of Family Beginnings P.C. (the "Clinic"), a fertility practice located in Indianapolis, Indiana. The transaction was executed through the Company's wholly-owned subsidiary, Wood Violet Fertility LLC ("Buyer").
Key Financial Metrics and Transaction Details
Total Purchase Price: $760,000
Payment Structure:
- Cash: $360,000 paid at closing (net of a $150,000 holdback, resulting in a net cash outflow of $210,000).
- Equity: $400,000 paid via issuance of 400 shares of Series D Non-Voting Convertible Preferred Stock.
- Non-Medical Assets: Acquired by Buyer for the majority of the purchase price.
- Clinical Assets: Acquired by Fertility, P.A. (a Florida professional corporation) for a nominal price of $100 under a separate PC Asset Purchase Agreement.
- Property: 4,387 square feet in Indianapolis, Indiana.
- Term: Initial term ending July 31, 2033, with two optional 5-year renewals.
- Rent: $132,398.61 annually ($11,033.22/month), increasing by 2% annually starting in the 16th month.
- Term: 10 years, auto-renewing for 5-year terms.
- Fees: Management Fee equal to 20% of "Manager's Costs" (reimbursed expenses) plus full reimbursement of costs.
Material Changes and Equity Issuance
Series D Preferred Stock Issuance:
- Shares Issued: 400 shares of Series D Non-Voting Convertible Preferred Stock to the Seller.
- Stated Value: $1,000 per share (Total $400,000).
- Conversion Price: Initial price of $1.20 per share of common stock, subject to anti-dilution adjustments.
- Beneficial Ownership Limitation: Conversion is limited to prevent the holder from owning more than 4.99% of outstanding common stock (adjustable up to 9.99% with notice).
- Liquidation Preference: Ranks senior to common stock; entitled to pro rata payment on an as-converted basis.
- Dividends: Entitled to dividends on an as-converted basis (excluding stock-only dividends).
- Redemption: Company may redeem shares at Stated Value plus unpaid dividends with 5 days' notice.
- An amendment to the Asset Purchase Agreement corrected a typographical error regarding the equity consideration, clarifying the issuance of 400 shares (not 4,000) for a total value of $400,000.
Outlook, Risks, and Contingencies
Operational Integration: The Company has entered into a long-term MSA to manage the acquired clinic's operations, laboratory, and administrative functions for a minimum of 10 years.
Regulatory Risks: The MSA includes termination rights triggered by suspension or exclusion from Federal Healthcare Programs for either party or their personnel.
Financial Contingencies: A $150,000 holdback was retained from the cash portion of the purchase price, indicating potential future adjustments or liabilities related to the transaction.
Unregistered Securities: The Series D Preferred shares were issued without registration under the Securities Act of 1933, relying on Section 4(a)(2) and Rule 506 exemptions.
Key Facts for Investor Verification
- Holdback Status: Verify the conditions and timeline for the release of the $150,000 cash holdback.
- Dilution Impact: Assess the potential dilution from the conversion of 400 Series D shares at $1.20 per share (approx. 333,333 common shares) against current outstanding shares.
- Lease Obligations: Confirm the long-term fixed cost commitment of ~$132k annually for the Indianapolis facility.
- MSA Fee Structure: Review the definition of "Manager's Costs" to understand the variable 20% management fee exposure.
- Regulatory Compliance: Monitor the Clinic's standing with Federal Healthcare Programs, as exclusion could trigger immediate termination of the MSA.