Zivo Bioscience, Inc. (ZIVOW) is a pioneering biotech and agtech company dedicated to developing therapeutic, medicinal, and nutritional product candidates derived from its proprietary algal cultures. With a diverse pipeline spanning animal health, human health, and skin care applications, Zivo is leveraging its innovative science to address a wide range of market opportunities.

Business Overview and History

Zivo Bioscience was founded in 1998 as a research and development company operating in both the biotech and agtech sectors. The company has built an extensive intellectual property portfolio over the years, comprising proprietary algal and bacterial strains, biologically active molecules and complexes, production techniques, cultivation techniques, and patented or patent-pending inventions for applications in human and animal health.

In the early years, Zivo focused on developing its proprietary algal culture and exploring potential applications. A significant milestone was achieved in 2014 when the company completed the self-affirmed GRAS (Generally Recognized as Safe) process, validating the suitability of its algal biomass for human consumption as an ingredient in foods and beverages. This accomplishment opened up new opportunities for Zivo to leverage its algal biomass in the companion animal food ingredient market.

Throughout its history, Zivo has faced several challenges in advancing its research and development efforts. One significant hurdle has been securing the necessary funding to continue its operations and R&D initiatives. The company has historically financed its activities primarily through the issuance of common stock, warrants, and debt, which has been an ongoing challenge.

Another obstacle Zivo has encountered is navigating the complex regulatory landscape for both human and animal health products. This has required significant resources and time, necessitating careful planning and execution of clinical testing and regulatory approval strategies to ensure compliance.

Despite these challenges, Zivo has achieved several important milestones. In 2020, the company entered into a distribution agreement for its algal biomass, branded as Zivolife™, focusing on the North American green powder food market. Additionally, Zivo has identified several promising product candidates, including treatments for poultry coccidiosis, bovine mastitis, and canine joint health, which it has been actively developing and testing.

Financial Performance and Ratios

Zivo Bioscience's financial performance has been mixed, reflecting the company's developmental stage and ongoing investment in research and development. For the nine months ended September 30, 2024, the company reported revenues of $67,220, up from $15,850 in the same period of the prior year. This increase can be attributed to higher sales volumes of the company's algal biomass product.

However, Zivo's net loss for the nine-month period was $11.78 million, compared to a net loss of $5.87 million in the prior-year period. This widening of the net loss is primarily due to increased research and development expenses, as well as higher general and administrative costs associated with the company's growth initiatives.

Key financial ratios for Zivo Bioscience as of September 30, 2024, include:

• Current Ratio: 0.17

• Quick Ratio: 0.17
• Debt-to-Equity Ratio: -0.01
• Gross Profit Margin: 33.00%
• Operating Profit Margin: -172.89%
• Net Profit Margin: -173.27%

These ratios highlight Zivo's liquidity position and high debt coverage. However, the company's profitability ratios remain negative, reflecting the ongoing investments in research and development required to advance its product pipeline.

For the most recent quarter (Q3 2024), Zivo reported revenue of $31,500, representing a 167% year-over-year increase due to increased production capacity at the contract grower in Peru. The net loss for the quarter was $2,268,597, with operating cash flow (OCF) and free cash flow (FCF) both at -$1,085,016. The significant net loss and negative cash flows are attributed to ongoing research and development expenses and high general and administrative costs.

As of September 30, 2024, Zivo had $159,400 in cash. The company's debt-to-equity ratio stands at -0.01, while both the current ratio and quick ratio are 0.17.

Product Segments and Pipeline

Zivo Bioscience operates in two main product segments: Biotech and Agtech.

Biotech Product Candidates: 1. Poultry Coccidiosis Treatment: Zivo's lead product candidate, derived from its proprietary algal culture, targets coccidiosis in broiler chickens. This represents the company's best near-term revenue opportunity due to the shorter clinical testing cycle for chickens compared to other species.

2. Bovine Mastitis Treatment: The company is developing a treatment for bovine mastitis, an infection of the udder in dairy cows, also derived from its proprietary algal culture.

3. Canine Joint Health: Studies have indicated the potential of a Zivo compound fraction to have chondroprotective properties when introduced into ex vivo canine joint tissues, suggesting applications for canine joint health.

4. Human Immune Modulation: Early human immune cell in vitro and in vivo studies have shown that one of Zivo's isolated and characterized biologically active molecules may serve as an immune modulator with potential applications in multiple disease situations.

Agtech - Zivo's Algal Biomass: Zivo's proprietary algal biomass contains various nutrients and compounds, positioning it as a viable functional food ingredient and nutritional enhancement for human and animal use, as well as a functional ingredient for skin care products. The company has contracts for the sale and production of its algal biomass, which is grown in Peru. Zivo has engaged a distributor, ZWorldwide, Inc., to sell the algal biomass product, branded as Zivolife, with an initial focus on the North American green powder food market.

Outlook and Potential Catalysts

Zivo Bioscience is well-positioned for growth in the coming years, with several key catalysts on the horizon. The company's lead animal health product candidate targeting coccidiosis in broiler chickens is a significant opportunity, as the global animal health market continues to demand innovative, non-antibiotic solutions. The successful completion of the 42-day confirmatory study and the expected finalization of an exclusive licensing agreement with a major global animal health company in the first quarter of 2025 could provide a substantial boost to Zivo's revenue and profitability.

In the human health and wellness space, Zivo's bioactive compounds and algal biomass offer promising potential in areas such as cholesterol management, immune modulation, and joint health. The company's self-affirmed GRAS (Generally Recognized as Safe) status for its algal biomass also opens up opportunities in the functional food and nutritional supplement markets.

Zivo's diversified product pipeline, strategic partnerships, and growing intellectual property portfolio position the company for long-term success. As the company continues to advance its research and development efforts, investors can expect to see further progress in both its animal health and human health initiatives.

Risks and Challenges

Despite Zivo Bioscience's promising outlook, the company faces several key risks and challenges that investors should consider:

1. Regulatory Hurdles: Obtaining regulatory approvals for Zivo's product candidates, particularly in the human health and wellness space, can be a lengthy and costly process, which could delay commercialization and impact the company's financial performance.

2. Competitive Landscape: Zivo operates in highly competitive markets, with both pharmaceutical and agricultural companies vying for market share. The company's ability to differentiate its products and maintain a competitive edge will be crucial for long-term success.

3. Reliance on Key Partnerships: Zivo's success is heavily dependent on the successful execution of its strategic partnerships, particularly the expected licensing agreement for its coccidiosis treatment. Any delays or setbacks in these partnerships could significantly impact the company's financial and operational outlook.

4. Ongoing Cash Burn: Zivo's ongoing investments in research and development, as well as its need for additional funding to support its growth initiatives, may result in continued cash burn and liquidity challenges in the near term.

Conclusion

Zivo Bioscience is a diversified biotech and agtech player with a promising pipeline of product candidates targeting animal health, human health, and skin care applications. The company's lead coccidiosis treatment, its advancing human health initiatives, and its self-affirmed GRAS status for its algal biomass position Zivo for significant growth opportunities in the coming years.

However, investors should carefully consider the regulatory hurdles, competitive landscape, reliance on key partnerships, and ongoing cash burn that the company faces. As Zivo continues to navigate these challenges and advance its product pipeline, it will be crucial for the company to execute its strategy effectively and capitalize on the emerging opportunities in its target markets.

The company's recent financial performance, including the 167% year-over-year revenue growth in Q3 2024, demonstrates progress in commercializing its algal biomass product. However, the significant net losses and negative cash flows underscore the ongoing need for careful financial management and strategic execution as Zivo works towards bringing its key product candidates to market.