INVO Fertility (IVF) risk factors, FY2024 10-K

Risks Related to Our Financial Condition and Our Need for Additional Capital

1. 01Our financial situation creates doubt whether we will continue as a going concern
2. 02We have substantial indebtedness outstanding, and our operations are significantly leveraged. If we were unable to service our indebtedness, our business would be adversely affected
3. 03We will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate operations
4. 04Even if we can raise additional funding, we may be required to do so on terms that are dilutive to you

Risks Related to the Acquisition of NAYA Therapeutics

1. 05NAYA Therapeutics has a limited operating history and has no products approved for commercial sale, which may make it difficult for you to evaluate the success of NAYA Therapeutics business to date and to assess its future viability

Risks Related to the Acquisition of Wisconsin Fertility Institute

1. 06We may not be able to successfully manage Wisconsin Fertility Institute and to achieve the benefits expected to result from the acquisition
2. 07The acquisition of WFI may present challenges to management, including the integration of our operations and personnel and that of WFI, continued management of the clinic and special risks, including possible unanticipated liabilities, unanticipated integration costs and diversion of management attention
3. 08If we fail to make the required $7.5 million in additional payments required in our acquisition of WFI, our business would be adversely affected
4. 09We may incur additional debt financing to provide the cash proceeds necessary to acquire WFI. If we were unable to service any such debt, our business would be adversely affected

Risks Relating to Our Business

1. 10Our business has posted net operating losses, has a limited operating history, and needs additional capital to grow and finance its operations
2. 11We are subject to risks associated with doing business globally
3. 12Failure to comply with the United States Foreign Corrupt Practices Act or similar laws could subject us to penalties and other adverse consequences
4. 13We are subject to significant domestic and international governmental regulation
5. 14We are subject to risks relating to federal and state healthcare fraud, waste, and abuse laws
6. 15At present, our products and services are not reimbursable under any federal healthcare program. If, however, that changes in the future and it were determined that we were not in compliance with these federal fraud, waste, and abuse laws, we would be subject to liability
7. 16Additionally, to the extent that our product is sold or our services are provided in a foreign country, we may be subject to similar foreign laws
8. 17We may not be able to develop or continue our business if we fail to retain key personnel
9. 18Currency exchange rate fluctuations may affect the results of our operations
10. 19We are subject to risks in connection with changes in international, national, and local economic and market conditions
11. 20Changes in the healthcare industry may require us to decrease the selling price for our products or could result in a reduction in the available market size
12. 21If we are unable to effectively adapt to changes in the healthcare industry, our business may be harmed
13. 22Recent economic trends could adversely affect our financial performance
14. 23Social media platforms present risks and challenges
15. 24We are susceptible to cybersecurity breaches and cyber-related fraud

Risks Related to Our Fertility Business

1. 25Our fertility business is subject to significant competition
2. 26We need to manage growth in our fertility operations, and we may not be successful in implementing our growth strategy
3. 27We may not be successful at managing clinics
4. 28We face potential liability as a provider of a medical device. These risks may be heightened in the area of artificial reproduction
5. 29If we fail to maintain adequate quality standards for our products, our reputation and business may be adversely affected and harmed
6. 30We heavily rely on third party package delivery services, and a significant disruption in these services or significant increases in prices may disrupt our ability to import or export materials, increase our costs and negatively affect our ability to achieve and maintain profitability
7. 31We will need additional, qualified personnel in order to expand our fertility business. Without additional personnel, we will not be able to expand our fertility business

Risks Related to the Fertility Industry

1. 32The FDA regulatory review process for medical devices is expensive, time-consuming and uncertain, and the failure to obtain and maintain required regulatory clearances and approvals could prevent us from commercializing our products
2. 33Improper marketing and promotion or off-label use of our product could lead to investigations and enforcement by governmental bodies including product recalls or market withdrawal, may harm our reputation and business, and could result in product liability suits
3. 34We are subject to continuing regulation by the FDA, and failure to comply may materially harm our business
4. 35In order to sell our products in foreign countries, generally we must obtain regulatory approvals and comply with the regulations of those countries. These regulations, including the requirements for approvals or clearances and the time required for regulatory review, vary from country-to-country
5. 36If third-party payers do not provide adequate coverage and reimbursement for INVOcell and the IVC procedure, we may be unable to generate significant revenue

Risks Related to Our Therapeutics Business and Industry

1. 37Our ability to develop proprietary technology platforms and products and our future growth depend on retaining NAYA Therapeutics’ key personnel and recruiting additional qualified personnel
2. 38The regulatory processes that will govern the approval of our product candidates are complex and changes in regulatory requirements could result in delays or discontinuation of development or unexpected costs in obtaining regulatory approval
3. 39Additionally, any delay in, or termination of, our future clinical trials will delay the submission of a BLA to the FDA or other equivalent applications with other relevant foreign regulatory authorities and, ultimately, our ability to commercialize our product candidates, if approved, and generate product revenue
4. 40Our fully integrated product candidates represent new therapeutic approaches that could result in heightened regulatory scrutiny, delays in clinical development or delays in or our inability to achieve regulatory approval, commercialization, or payor coverage of our product candidates
5. 41Even if any of our product candidates receive marketing approval, we may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success
6. 42Even if we obtain and maintain approval for our product candidates from the FDA, we may never obtain approval outside the United States, which would limit our market opportunities
7. 43Any delay or difficulties in the manufacturing and/or clinical supply of NY-303 and NY-338, or any of our other current or future product candidates would adversely affect our therapeutics business and operations
8. 44Clinical product candidate development involves a lengthy and expensive process and involve uncertain outcomes. We may incur additional costs and encounter substantial delays or difficulties in our therapeutics clinical trials
9. 45If we encounter difficulties in enrolling patients in our future clinical trials, our clinical development activities could be delayed or otherwise adversely affected
10. 46We may not be able to file Investigational New Drug Applications to commence future clinical trials on the timelines it expects, and even if it is able to, the FDA or comparable foreign authority may not permit us to proceed
11. 47Interim, “top-line” and preliminary data from our clinical trials that it announces or publishes from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data
12. 48We face significant competition from other biotechnology and pharmaceutical companies, which may result in others discovering, developing, or commercializing products before or more successfully than we do
13. 49We face substantial competition from multiple sources, including large and specialty pharmaceutical, biopharmaceutical and biotechnology companies, academic research institutions and governmental agencies and public and private research institutions
14. 50NY-500 may not surpass the current standard of care or that sales of NY-500, if ever approved, will approach or surpass the market leader
15. 51We may not identify or discover other product candidates and may fail to capitalize on programs or product candidates that may present a greater commercial opportunity or for which there is a greater likelihood of success
16. 52If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates

Risks Related to Our Therapeutics Manufacturing

1. 53The manufacturing of our product candidates will be very complex. We are subject to a multitude of manufacturing risks, any of which could substantially increase our costs, delay our programs or limit supply of our product candidates
2. 54As a result, we may not be able to conduct these corporate collaborations in the manner or on the time schedule it currently contemplates, which may negatively impact our therapeutics business operations
3. 55We work with several third-party manufacturers and suppliers for the production of our antibody and cell product candidates. We have a long-term relationship with STC Biologics for the manufacturing of our NY-303 and NY-338 products
4. 56Our product candidates rely on the availability of specialty raw materials, which may not be available to us on acceptable terms or at all
5. 57We also face competition for supplies from other cell therapy companies. Such competition may make it difficult for us to secure raw materials or the testing of such materials on commercially reasonable terms or in a timely manner
6. 58If conflicts arise between us and our collaborators or strategic partners, these parties may act in a manner adverse to us and could limit our ability to implement its strategies
7. 59We may seek to form collaborations in the future with respect to our product candidates, but may not be able to do so, which may cause us to alter our development and commercialization plans
8. 60Our business involves the use of hazardous materials which requires that we, and our third-party manufacturers and suppliers must comply with environmental, health and safety laws and regulations, which can be expensive and restrict or interrupt its business
9. 61Furthermore, if our suppliers fail to meet contractual requirements, and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical trials may be delayed or we could lose potential revenue
10. 62The Chinese government also exercises significant control over Chinese economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies

Risks Related to Our Intellectual Property

1. 63Our products incorporate intellectual property rights developed by us that may be difficult to protect or may be found to infringe on the rights of others
2. 64We may be forced to defend our intellectual property rights from infringement through expensive legal action
3. 65Any failure to obtain, maintain, protect, or enforce our intellectual property and proprietary rights, or if the scope of intellectual property protection we obtain are not sufficiently broad, that could impair our ability to compete or protect its proprietary technology and brand
4. 66We have entered into license agreements with third parties and may need to obtain additional licenses from our existing licensors and others to advance our research or allow commercialization of product candidates and technologies we may develop
5. 67Third-party claims of intellectual property infringement may prevent or delay our product discovery and development efforts
6. 68We may be subject to claims asserting that our employees, consultants, or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property
7. 69We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful. Further, our issued patents could be found invalid or unenforceable if challenged in court
8. 70Changes in U.S. patent law or the patent law of other countries or jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our current and any future product candidates
9. 71Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time. If we or our licensors do not obtain patent term extension for our product candidates, our business may be materially harmed
10. 72We may not be able to protect our intellectual property rights throughout the world
11. 73We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope, or expiration of a third-party patent, which might adversely affect our ability to develop, manufacture, and eventually market product candidates
12. 74Obtaining and maintaining our patent rights depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements
13. 75If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed
14. 76Any trademarks we may obtain may be infringed or successfully challenged, resulting in harm to our business
15. 77Intellectual property rights do not necessarily address all potential threats to our business

Risks Related to Our Common Stock

1. 78Our secured debt instruments and preferred stock contain numerous restrictive covenants that limit management’s discretion to operate our business
2. 79If we are unable to maintain compliance with all applicable continued listing requirements and standards of Nasdaq, our common stock will be delisted from Nasdaq
3. 80On November 4, 2024, we received a notice from Nasdaq’s Listing Qualifications Staff stating that we had determined that we have demonstrated compliance with the equity requirement of the Equity Rule but that we will be subject to a Mandatory Panel Monitor for a period of one year from October 14, 2024
4. 81On March 25, 2025, we were notified by the Staff that because we did not evidence compliance with the Minimum Bid Rule by March 17, 2025, the Staff determined that our securities should be delisted from Nasdaq
5. 82The letter had no immediate effect on the listing of our common stock
6. 83Our common stock is subject to risks arising from restrictions on reliance on Rule 144 by shell companies or former shell companies
7. 84Our directors have the right to authorize the issuance of shares of our preferred stock and additional shares of our common stock
8. 85The indemnification rights provided to our directors, officers and employees may result in substantial expenditures by us and may discourage lawsuits against its directors, officers and employees
9. 86We have a trading symbol for our common stock (“IVF”) and our common stock is currently listed on the Nasdaq Capital Market
10. 87We do not expect to pay any dividends to shareholders
11. 88Our revenue and operating results could fluctuate significantly from quarter to quarter, which may cause our stock price to decline
12. 89We may have difficulty raising the necessary capital to fund operations and the required additional payments for the Wisconsin Fertility acquisition because of the thin market and market price volatility for our shares of common stock
13. 90An active trading market for our common stock may not be sustained. If an active trading market is not sustained, our ability to raise capital in the future may be impaired
14. 91Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price
15. 92Our business may be affected by new tariffs, U.S. trade policy, and trade wars
16. 93Our business is affected by macroeconomic conditions, including rising inflation, interest rates and supply chain constraints
17. 94We are a Smaller Reporting Company, or SRC, and the reduced disclosure requirements applicable to SRCs may make our common stock less attractive to investors
18. 95We have broad discretion over the use of our cash and cash equivalents and may not use them effectively
19. 96If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline
20. 97Stockholders may be diluted significantly through our efforts to obtain financing and from issuance of additional shares of our common stock, including such issuances of shares for services
21. 98We are subject to the reporting requirements of U.S. federal securities laws, which can be time consuming and expensive
22. 99Failure to comply with internal control attestation requirements could lead to loss of public confidence in our financial statements and negatively impact our stock price