10-Q: Zivo Bioscience Reports Q1 2025 Results, Cites Increased R&D Expenses and Ongoing Going Concern Uncertainty

Zivo Bioscience's Q1 2025 results reveal a significant net loss and increased R&D spending, alongside concerns about the company's ability to continue as a going concern.

Summary

• Zivo Bioscience reported its financial results for the quarter ended March 31, 2025.
• The company incurred a net loss of $4,211,188, compared to a net loss of $1,278,486 for the same period in 2024.
• There were no product revenues in Q1 2025, a decrease from $35,720 in Q1 2024.
• Research and development expenses increased significantly to $2,769,236 from $312,767 in the prior year, primarily due to costs associated with extinguishing Participation Agreements.
• General and administrative expenses increased to $1,439,552 from $975,574 in the prior year.
• The company's cash balance as of March 31, 2025, was $517,189, down from $1,542,442 at the end of 2024.
• Zivo Bioscience acknowledges substantial doubt about its ability to continue as a going concern and will need additional funding to sustain operations.
• The company is focusing on developing bioactive compounds from its proprietary algal culture for human and animal health applications.
• Zivo is also working on scaling up its algal biomass production in Peru for use as a functional food ingredient.
• The company extinguished fifteen License Co-Development Participation Agreements by issuing 131,380 shares of common stock.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the significant net loss, lack of revenue, increased expenses, dwindling cash reserves, and concerns about the company's ability to continue as a going concern. The ongoing material weaknesses in internal control over financial reporting further contribute to the negative sentiment.

Positives

• Zivo Bioscience is actively working to develop bioactive compounds for various applications in human and animal health.
• The company is focused on scaling up its algal biomass production in Peru.
• Zivo Bioscience extinguished fifteen License Co-Development Participation Agreements, simplifying its capital structure.
• Cash used in operating activities decreased by roughly $300,000 from the comparable prior period.

Negatives

• Zivo Bioscience reported a significant net loss of $4,211,188 for Q1 2025.
• The company had no product revenue in Q1 2025.
• Research and development expenses increased substantially.
• The company's cash reserves are dwindling, raising concerns about its ability to continue as a going concern.
• Material weaknesses in internal control over financial reporting continue to exist as of March 31, 2025.

Risks

• The company's ability to continue as a going concern is uncertain and dependent on securing additional funding.
• Failure to raise additional capital could compromise the company's ability to execute its business plan.
• The development of product candidates is subject to numerous uncertainties and costly processes.
• The company may be unable to achieve profitability or generate positive cash flow from operating activities.
• Material weaknesses in internal control over financial reporting could lead to material misstatements of account balances or disclosures.

Future Outlook

The company expects to continue incurring significant expenses and increasing operating and net losses for the foreseeable future until it generates an adequate level of revenue from potential commercial sales to cover expenses.

Industry Context

The company operates in the biotech and agtech sectors, focusing on developing bioactive compounds and algal biomass for human and animal health applications. The report mentions the coccidiosis market in the poultry industry, where Zivo aims to introduce new technology to compete with existing antibioticor ionophore-based products.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or comparable companies.
• However, it mentions that most global animal health companies have products for the coccidiosis market, suggesting that Zivo is targeting a well-established market with existing competitors.

Related Party Transactions

• During the quarter ended March 31, 2024, the Company sold common stock in 20 private unregistered transactions resulting in total proceeds of $1,103,376 and the issuance of 407,299 shares of common stock.
• Included in the totals are 56,666 shares of common stock sold to related parties for proceeds of $130,782.
• Four of the Exchange Agreements were consummated with Related Parties resulting in the issuance of 47,320 new shares of Common Stock.
• The four Exchange Agreements signed with Related Parties were recognized by the Company for a value of $862,473.
• The Company also exchanged $194,762 of accounts payable to related parties into 32,996 shares of common stock.

Stakeholder Impact

• Shareholders face the risk of further dilution if the company raises additional capital through equity financings.
• Employees may be affected by potential reductions in planned expenditures if the company is unable to obtain necessary capital.
• Customers may experience disruptions in product availability if the company faces financial difficulties.
• Suppliers and creditors face increased risk of non-payment if the company's financial condition deteriorates.

Next Steps

• The company intends to fund ongoing activities by utilizing its current cash on hand and by raising additional capital through equity and/or debt financings.
• The company plans to invest in full commercial-scale ponds and product processing equipment for algal biomass production.
• The company expects its R&D costs to grow as it works to complete research in the development of natural bioactive compounds.
• Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated.

Key Dates

Keywords

Zivo Bioscience, financial results, net loss, research and development, algal biomass, going concern, participation agreements, biotech, agtech, liquidity