UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.01 | Entry into a Material Definitive Agreement. |
On March 23, 2023, INVO Bioscience, Inc., a Nevada corporation (the “Company”), entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 1,380,000 shares (the “Shares”) of common stock, par value $0.0001 per share (the “Common Stock”), of the Company, and pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 2,300,000 shares of Common Stock, at an exercise price of $0.01 per share of Common Stock, and (ii) in a concurrent private placement, common stock purchase warrants (the “Private Placement Warrants”), exercisable for an aggregate of up to 5,520,000 shares of Common Stock, at an exercise price of $0.63 per share of Common Stock. The securities to be issued in the registered direct offering (priced at the marked under Nasdaq rules) were offered pursuant to the Company’s shelf registration statement on Form S-3 (File 333-255096) (the “Shelf Registration Statement”), initially filed by the Company with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), on April 7, 2021 and declared effective on April 16, 2021. The Pre-Funded Warrants are exercisable upon issuance and will remain exercisable until all of the Pre-Funded Warrants are exercised in full.
The Private Placement Warrants (and the shares of Common Stock issuable upon the exercise of the Private Placement Warrants) were not registered under the Securities Act, and were offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder. The Private Placement Warrants are immediately exercisable upon issuance, will expire eight years from the date of issuance, and in certain circumstances may be exercised on a cashless basis.
On March 27, 2023, the Company closed the offering, raising gross proceeds of approximately $3 million before deducting placement agent fees and other offering expenses payable by the Company. In the event that all Private Placement Warrants are exercised for cash, the Company would receive additional gross proceeds of approximately $3.5 million. The Company may use a portion of the net proceeds of the offering to repay the outstanding principal amount (at 105%) of those convertible debentures in the original principal amount of $500,000 issued to accredited investors in February 2023 (the “February Investors”) if requested by such February Investors as permitted under the terms of such convertible debentures. In addition, the Company may use a portion of the proceeds to pay the down payment for the acquisition of Wisconsin Facility Institute. The remainder of the net proceeds will be used for working capital, capital expenditures, and other general corporate purposes.
Under the Purchase Agreement, the Company is required within 30 days of the closing date of the offering to file a registration statement on Form S-1 (the “Resale Registration Statement”) registering the resale of the shares of Common Stock issued and issuable upon the exercise of the Private Placement Warrants. The Company is required to use commercially reasonable efforts to cause such registration to become effective within 75 days of the closing date of the offering (or 120 days if the registration statement is subject to a full-review by the SEC), and to keep such registration statement effective at all times until no investor owns any Private Placement Warrants or shares issuable upon exercise thereof.
Also in connection with the offering, on March 23, 2023, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with Maxim Group LLC (the “Placement Agent”), pursuant to which (i) the Placement Agent agreed to act as placement agent on a “best efforts” basis in connection with the offering and (ii) the Company agreed to pay the Placement Agent an aggregate fee equal to 5.0% of the gross proceeds raised in the offering and warrants to purchase up to 147,200 shares of Common Stock at an exercise price of $0.8965 (the “Placement Agent Warrants”). The Placement Agent Warrants (and the shares of Common Stock issuable upon the exercise of the Placement Agent Warrants) were not registered under the Securities Act, and were offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.
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The Placement Agency Agreement and the Purchase Agreement contain customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, the Placement Agent, or the investors, as the case may be, other obligations of the parties and termination provisions. Pursuant to the terms of the Purchase Agreement, from the date hereof until 45 days after the after the effective date of the Resale Registration Statement, subject to certain exceptions, we may not issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or common stock equivalents, or file any registration statement or any amendment or supplement thereto, other than (A) this prospectus supplement and (B) a Resale Registration Statement. In addition, from the date of this prospectus supplement until the one year anniversary of the closing date of the offering, we are prohibited from effecting or entering into an agreement to effect any issuance of common stock or common stock equivalents involving a variable rate transaction (as defined in the securities purchase agreement); provided, that an “at the market offering” shall not constitute a variable rate transaction.
In addition, pursuant to certain “lock-up” agreements, our officers and directors have agreed, for a period of 180 days from the date of the offering, not to engage in any of the following, whether directly or indirectly, without the consent of the purchaser under the Purchase Agreement: offer to sell, sell, contract to sell pledge, grant, lend, or otherwise transfer or dispose of our common stock or any securities convertible into or exercisable or exchangeable for Common Stock (the “Lock-Up Securities”); enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities; make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any Lock-Up Securities; enter into any transaction, swap, hedge, or other arrangement relating to any Lock-Up Securities subject to customary exceptions; or publicly disclose the intention to do any of the foregoing.
The foregoing does not purport to be a complete description of each of the Placement Agency Agreement, the Pre-Funded Warrants, the Private Placement Warrants and the Purchase Agreement and is qualified in its entirety by reference to the full text of each of such document, which are filed as Exhibits 1.1, 4.1, 4.2, 4.3 and 10.1, respectively, to this Current Report on Form 8-K (this “Form 8-K”) and incorporated herein by reference.
Sheppard Mullin Richer & Hampton LLP, counsel to the Company, delivered an opinion as to the validity of the Shares, Pre-Funded Warrants and shares of Common Stock issuable upon exercise of the Pre- Funded Warrants, a copy of which is attached to this Form 8-K as Exhibit 5.1 and is incorporated herein by reference.
| Item 2.04. | Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. |
The applicable information set forth in Item 1.01 of this Form 8-K with respect to the potential use of proceeds of the offering is incorporated herein by reference.
| Item 3.02. | Unregistered Sale of Equity Securities. |
The applicable information set forth in Item 1.01 of this Form 8-K with respect to the issuance of Private Placement Warrants and the Placement Agent Warrant is incorporated herein by reference.
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Cautionary Statement Regarding Forward-Looking Statements
This Form 8-K contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements that express the Company’s intentions, beliefs, expectations, strategies, predictions or any other statements related to the Company’s future activities, or future events or conditions, which can be identified by terminology such as “may,” “will,” “expects,” “anticipates,” “aims,” “potential,” “future,” “intends,” “plans,” “believes,” “estimates,” “continue,” “likely to” and other similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements are not historical facts and are based on current expectations, estimates and projections about the Company’s business based, in part, on assumptions made by its management, including, without limitation, the intended use of proceeds upon consummation of the offering. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict, many of which are beyond the Company’s control, including, among other things, the Company’s ability to maintain its listing of Common Stock on the Nasdaq Capital Market, and those risks that may be included in the periodic reports and other filings that the Company files from time to time with the SEC, which may cause the Company’s actual results, performance and achievements to differ materially from those contained in any forward-looking statement. Any forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 8-K, except as required by applicable law.
| Item 7.01. | Regulation FD Disclosure. |
The Company issued press releases announcing the pricing and closing of the offering on Mach 24, 2023 and March 27, 2023, respectively. Copies of such press releases are furnished herewith as Exhibit 99.1 and Exhibit 99.2 and incorporated herein by reference. The information in this Item 7.01, including Exhibit 99.1 and Exhibit 99.2, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any of the Company’s filings under the Securities Act or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference to this Form 8-K in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
Exhibit No. |
Description | |
| 1.1 | Placement Agency Agreement by and between the Company and the Placement Agent dated March 23, 2023. | |
| 4.1 | Form of Pre-Funded Warrant. | |
| 4.2 | Form of Private Placement Warrant. | |
| 4.3 | Form of Placement Agent Warrant | |
| 5.1 | Opinion of Sheppard Mullin Richter & Hampton LLP, dated March 27, 2023. | |
| 10.1 | Form of Securities Purchase Agreement by and between the Company and the certain institutional investors dated March 23, 2023. | |
| 23.1 | Consent of Sheppard Mullin Richter & Hampton LLP (contained in Exhibit 5.1 above). | |
| 99.1 | Pricing Press Release dated March 24, 2023. | |
| 99.2 | Closing Press Release dated March 27, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document.) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: March 28, 2023 | INVO BIOSCIENCE, INC. |
| /s/ Steven Shum | |
| Steven Shum | |
| Chief Executive Officer |
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