10-Q: ZIVO Bioscience Q3 2025: Revenue Up, Losses Persist

ZIVO Bioscience reported increased product revenue for Q3 2025, but continued to face significant operating losses and a going concern warning, necessitating further capital raises.

Summary

• Net loss for Q3 2025 was $(1,033,056), an improvement from $(2,268,597) in Q3 2024.
• Net loss for the nine months ended September 30, 2025, was $(6,884,474), an improvement from $(11,783,451) for the same period in 2024.
• Product revenue for Q3 2025 increased to $65,625 from $31,500 in Q3 2024.
• Product revenue for the nine months ended September 30, 2025, increased to $119,025 from $67,220 in the same period in 2024.
• Cash balance as of September 30, 2025, was $57,222, down from $1,542,442 at December 31, 2024.
• Accumulated deficit reached $(143,851,025) as of September 30, 2025.
• The company requires approximately $6.0 million in cash over the next 12 months for basic operations, excluding R&D.
• Material weaknesses in internal control over financial reporting persist as of September 30, 2025.

Sentiment

Score: 2

Explanation: The company faces severe liquidity issues, with a cash balance of only $57,222 and an explicit "going concern" warning. While revenue increased and net losses decreased, these improvements are overshadowed by the critical need for $6.0 million in additional capital within 12 months and persistent material weaknesses in internal controls. The significant accumulated deficit and increasing total liabilities further underscore the precarious financial position.

Positives

• Product revenue increased by $34,000 (107.9%) for Q3 2025 compared to Q3 2024, reaching $65,625.
• Product revenue for the nine months ended September 30, 2025, increased by $52,000 (77.3%) to $119,025 compared to the same period in 2024.
• Net loss significantly decreased for both the three-month period (from $(2,268,597) to $(1,033,056)) and the nine-month period (from $(11,783,451) to $(6,884,474)) year-over-year.
• Operating loss decreased from $(2,260,037) in Q3 2024 to $(1,018,343) in Q3 2025.
• Operating loss decreased from $(11,765,478) in the nine months ended September 30, 2024, to $(6,860,003) for the same period in 2025.
• General and administrative expenses decreased by approximately $1.1 million in Q3 2025 and $5.5 million for the nine months ended September 30, 2025, primarily due to lower non-cash equity compensation and professional services.
• Research and development expenses decreased by $120,000 in Q3 2025, mainly due to lower non-cash equity compensation and headcount.
• Successful completion of 17 Exchange Agreements, converting $3,666,500 of future revenue share rights into 146,660 shares of common stock, reducing future cash obligations.
• The Board of Directors has determined to forgo compensation of non-employee directors beginning August 20, 2025, until the company's financial condition improves, indicating cost-saving measures.

Negatives

• The company has incurred net losses since inception and has an accumulated deficit of $(143,851,025) as of September 30, 2025.
• Experienced negative cash flows from operations for the quarter ended September 30, 2025.
• Cash balance significantly decreased from $1,542,442 at December 31, 2024, to $57,222 at September 30, 2025.
• Substantial doubt exists about the company's ability to continue as a going concern within one year.
• Existing cash is not sufficient to fund operating expenses through at least the next twelve months.
• Material weaknesses in internal control over financial reporting persist, including issues with control environment, risk assessment, monitoring, control activities, and information/communication.
• The company has historically had substantial difficulty raising funds from external sources.
• Significant levels of accounts payable ($992,990) and accrued executive and employee bonuses ($1,613,940) as of September 30, 2025.
• Total liabilities increased from $2,158,020 at December 31, 2024, to $3,846,055 at September 30, 2025.

Risks

• Inability to raise sufficient additional capital could compel the company to reduce the scope of operations and planned capital expenditures.
• Substantial doubt about the company's ability to continue as a going concern within one year.
• No assurance that the company will achieve profitable operations, or that profitability, if achieved, will be sustained.
• Inability to raise additional capital on acceptable terms, or at all, which could compromise the business plan.
• Failure to achieve anticipated operating results may necessitate reducing planned expenditures to extend existing resources.
• Inability to obtain necessary capital could have a material adverse effect on operations and technology development, or lead to cessation of operations.
• Product development is subject to numerous uncertainties, and cash resources could be used sooner than expected.
• The development process is costly, and the timing of progress in pre-clinical tests and clinical trials is uncertain.
• Successful transition to profitability is dependent upon achieving further regulatory approvals and adequate product sales.
• Material weaknesses in internal control over financial reporting persist, which could affect the reliability of financial reporting.

Future Outlook

The company expects to continue incurring operating losses and net cash outflows until sufficient revenue is generated to support its cost structure. It intends to fund ongoing activities using current cash and by raising additional capital through equity and/or debt financings. If unable to raise sufficient additional capital, the company may be compelled to reduce the scope of operations and planned capital expenditures. As part of its therapeutic strategy, the company expects to continue seeking strategic partners for late-stage development, regulatory preparation, and commercialization of products in key global markets. It intends to continue developing a treatment for bovine mastitis and plans to leverage the self-affirmed GRAS process into viable food and nutritional supplements for companion animals. The company also plans to perform clinical efficacy claim studies for ingestible and topical products for skin health and believes its GRAS study and cGMP audit record with Alimenta Algae may be leveraged if algal biomass is sold as a dietary supplement, requiring FDA notification. Existing cash will not be sufficient to fund operating expenses through at least the next twelve months, and approximately $6.0 million in cash is required for basic operations (excluding R&D initiatives) over this period. If unable to raise required capital, the company will be forced to curtail business operations, including R&D activities.

Management Comments

• The financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein.
• Management has determined that the Company had the following material weaknesses in its internal control over financial reporting... continue to exist as of September 30, 2025.
• After giving full consideration to these material weaknesses, and the additional analyses and other procedures that we performed to ensure that our consolidated financial statements included in this Quarterly Report on Form 10-Q were prepared in accordance with U.S. GAAP, our management has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. GAAP.
• Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively.
• In the opinion of management, there are no pending legal matters involving the Company that would have a material adverse effect upon the Company’s financial condition, results of operation or cash flows.

Industry Context

The company operates in the biotech and agtech sectors, focusing on microalgae technology for human and animal health. Its coccidiosis treatment candidate targets a global poultry industry issue, where existing products are mostly antibioticor ionophore-based with little new technology in 60 years, suggesting a potential market opportunity for novel solutions. The development of algal biomass as a functional food ingredient, nutritional enhancement, and skin care product aligns with growing consumer interest in natural, plant-based, and sustainable ingredients in food, feed, and cosmetics. The pursuit of GRAS status and NDI notification for its algal biomass indicates an effort to enter regulated markets for dietary supplements and food ingredients, reflecting industry trends towards validated health claims and safety.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to global benchmarks. It mentions that most global animal health companies have products for the coccidiosis market, but they are mostly antibioticor ionophore-based with essentially no new technology having been introduced in the last 60 years. This implies ZIVO's approach could be a differentiator but no specific comparison is made.

Management Changes

Corporate Governance

Legal Proceedings

• In the opinion of management, there are no pending legal matters involving the Company that would have a material adverse effect upon the Company’s financial condition, results of operation or cash flows.

Related Party Transactions

• Accounts payable related party: $333,117 as of September 30, 2025 (vs $194,762 at Dec 31, 2024).
• During the three months ended September 30, 2025, the company sold common stock in one private unregistered transaction to a related party, resulting in total proceeds of $245,000 and the issuance of 15,322 shares.
• During the nine months ended September 30, 2025, two private unregistered transactions were to related parties for proceeds of $295,000 and the issuance of 18,810 shares of common stock.
• Four of the seventeen Exchange Agreements were consummated with Related Parties, resulting in the issuance of 47,320 new shares of Common Stock, valued at $862,473.
• The company exchanged $194,762 of accounts payable to related parties into 32,996 shares of common stock during the nine months ended September 30, 2025.
• In October 2025 (subsequent event), three of five equity and warrant transactions were to related parties, accounting for 45,600 shares of common stock and warrants to purchase 2,025 shares, raising $270,000 cash and eliminating the entire $284,433 related party payable.

Stakeholder Impact

• Shareholders: Potential for significant dilution due to ongoing equity raises and conversions of debt/obligations into common stock. Risk of substantial loss of investment due to "going concern" warning and need for significant additional capital.
• Employees: Lower headcount in R&D and reduced non-cash equity compensation. Accrued employee bonuses of $1,613,940 indicate potential payment delays or issues.
• Creditors: Unsecured convertible notes and short-term loans indicate reliance on debt. The "going concern" warning raises concerns about the company's ability to repay debts.
• Customers: Increased product revenue suggests continued sales of algal biomass, but the company's overall financial instability could impact long-term supply or product development.
• Suppliers: Increased accounts payable could indicate slower payments to suppliers.

Next Steps

• Continue to seek strategic partners for late-stage development, regulatory preparation, and commercialization of therapeutic products in key global markets.
• Continue to develop a treatment for bovine mastitis.
• Leverage GRAS process into viable food and nutritional supplements for companion animals.
• Perform clinical efficacy claim studies for ingestible and topical products for skin health.
• Notify the FDA prior to sales if algal biomass is sold as a dietary supplement or ingredient.
• Remediate material weaknesses in internal control over financial reporting, including developing training programs, implementing risk assessment, developing internal controls documentation, enhancing policies, engaging external resources for complex accounting, developing monitoring activities, and segregating key functions.
• Raise approximately $6.0 million in additional capital over the next 12 months to fund basic operations (excluding R&D).
• Invest in full commercial-scale ponds and product processing equipment once successful at penultimate scale.

Key Dates

Recommendation

The company faces severe financial distress, explicitly stating "substantial doubt about our ability to continue as a going concern" and a critical need for $6.0 million in additional capital within the next 12 months, which it has historically struggled to raise. The cash balance is critically low at $57,222, and total liabilities have significantly increased. Persistent material weaknesses in internal controls further compound the risk. Despite some revenue growth and reduced net losses, the fundamental liquidity and solvency issues, coupled with the high risk of dilution from ongoing capital raises, make this a highly speculative and risky investment. A seasoned investor would likely view the company as facing existential threats without immediate and substantial external funding.

Keywords

Microalgae technology, Biotech, Agtech, Algal biomass, Coccidiosis, Bovine mastitis, Human cholesterol, Canine osteoarthritis, Immune modulator, GRAS (Generally Recognized As Safe), Dietary supplement, Skin health, SEC filing, 10-Q, Going concern, Research and development, Financial reporting, Equity financing, Debt financing