Note 5 – Variable Interest Entities

Consolidated VIEs

Bloom INVO, LLC

On June 28, 2021, INVO Centers LLC (“INVO CTR”) entered into a limited liability company agreement (the “Bloom Agreement”) with Bloom Fertility, LLC (“Bloom”) to establish a joint venture entity, formed as “Bloom INVO LLC” (the “Georgia JV”), for the purposes of commercializing INVOcell, and the related IVC procedure, through the establishment of an INVO Center in the Atlanta, Georgia metropolitan area (the “Atlanta Clinic”).

In consideration for the Company’s commitment to contribute up to $800,000 within the 24-month period following the execution of the Bloom Agreement to support the start-up operations of the Georgia JV, the Georgia JV issued 800 of its units to INVO CTR and in consideration for Bloom’s commitment to contribute physician services having an anticipated value of up to $1,200,000 over the course of a 24-month vesting period, the Georgia JV issued 1,200 of its units to Bloom.

The responsibilities of Bloom include providing all medical services required for the operation of the Atlanta Clinic. The responsibilities of INVO CTR include providing certain funding to the Georgia JV, lab services quality management, and providing access to and being the exclusive provider of the INVOcell to the Georgia JV. INVO CTR also performs all required, industry specific compliance and accreditation functions, and product documentation for product registration.

The Bloom Agreement provides Bloom with a “profits interest” in the Georgia JV and, in connection with such profits interest, states that profits and losses be allocated to its members based on a hypothetical liquidation of the Georgia JV. In such a scenario, liquidation proceeds would be distributed in the following order: (a) to INVO CTR until the difference between its capital contributions and distributions (the “Hurdle Amount”) equals $0; (b) to Bloom until its distributions equal 150% of the liquidation amounts distributed to INVO CTR (a “catch-up” to rebalance the distributions between members); and (c) thereafter on a pro rata basis. The Georgia JV had no assets or liabilities at the time the units were issued, and, as of December 31, 2025, INVO CTR had made capital contributions greater than the net loss of the Georgia JV. As such, the entire net loss was allocated to INVO CTR, and no loss was allocated to the noncontrolling interest of Bloom.

The Company determined the Georgia JV is a VIE, and that the Company is its primary beneficiary because the Company has an obligation to absorb losses that are potentially significant and the Company controls the majority of the activities that impact the Georgia JV’s economic performance, specifically control of the INVOcell and lab services quality management. As a result, the Company consolidated the Georgia JV’s results with its own. As of December 31, 2025, the Company invested $0.9 million in the Georgia JV in the form of capital contributions as well as $0.5 million in the form of a note. For the years ended December 31, 2025 and 2024, the Georgia JV recorded a net gain of $0.1 million and net loss of $0.2 million, respectively. Noncontrolling interest in the Georgia JV was $0.

Unconsolidated VIEs

HRCFG INVO, LLC

On March 10, 2021, INVO CTR entered into a limited liability company agreement with HRCFG, LLC (“HRCFG”) to form a joint venture for the purpose of establishing an INVO Center in Birmingham, Alabama. The name of the joint venture entity is HRCFG INVO, LLC (the “Alabama JV”). The Company also provides certain funding to the Alabama JV. Each party owns 50% of the Alabama JV.

The Company determined that the Alabama JV is a variable interest entity (“VIE”) for which no party is the primary beneficiary. Although the Company has potentially significant economic exposure as the Alabama JV’s primary funding source, it does not have unilateral power to direct the activities that most significantly impact the Alabama JV’s economic performance, as such power is shared between the parties under the Alabama JV’s operating agreement. Accordingly, the Company accounts for its interest in the Alabama JV under the equity method.

The Company funded the Alabama JV in the form of a $1.7 million note receivable issued by HRCFG (the “Alabama JV Note Receivable”). The Alabama JV Note Receivable has an annual interest rate of 1.5% and repayment is to be made from 30% of the Alabama JV’s operating profit. Beginning in May 2022, the principal Alabama JV Note Receivable was reduced by $15,000 each month in exchange for consulting services provided by the members of HRCFG. The consulting agreement was terminated in the third quarter of 2025. As of December 31, 2025 and 2024 the principal balance of the Alabama JV Note Receivable was $1.2 million and $1.1 million respectively.

The Company co-signed a lease with HRCFG to provide facilities for the Alabama JV’s clinical operations. The Alabama JV is responsible for the lease payments and controls the use of the leased premises. The Company is obligated to satisfy the lease payments only in the event the Alabama JV is unable to do so. The remaining lease payments as of December 31, 2025 and 2024 were $0.3 million and $0.4 million, respectively.

For the years ended December 31, 2025 and 2024, the Alabama JV recorded net income of $0.06 million and $0.02 million, respectively, of which the Company recognized gains from equity method investments of $0.03 million and $0.01 million, respectively. The negative carrying value of the Alabama JV as of December 31, 2025 and 2024 was $(0.4) million and $(0.5) million, respectively.

The following table summarizes our investments in unconsolidated VIEs:

 Schedule of Investments in Unconsolidated Variable Interest Entities 

Earnings from investments in unconsolidated VIEs were as follows:

 Schedule of Earnings from Investments in Unconsolidated Variable Interest Entities 

The following tables summarize the combined unaudited financial information of our investments in unconsolidated VIEs:

 Schedule of Financial Information of Investments in Unconsolidated Variable Interest Entities