Securities and Exchange Commission
Washington, D.C. 20549
Form
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____to_____
Commission file number:
(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(Address of principal executive offices) (Zip code)
(
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
The | ||||
Warrants | ZIVOW | The Nasdaq Stock Market LLC |
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of regulation ST (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Smaller reporting company | |
Accelerated filer | ☐ | Emerging growth company | |
☒ |
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act). Yes
There were
FORM 10-Q
ZIVO BIOSCIENCE, INC.
INDEX
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2 |
Table of Contents |
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
|
| September 30, 2022 |
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| December 31, 2021 |
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ASSETS |
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CURRENT ASSETS: |
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Cash |
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Prepaid expenses |
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Total current assets |
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PROPERTY AND EQUIPMENT, NET |
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OTHER ASSETS |
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Operating lease – right of use asset |
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Security deposit |
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Total other assets |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
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Accounts payable |
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Current portion of long-term operating lease |
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Convertible debentures payable |
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Deferred R&D obligations - participation agreements |
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Deferred R&D obligations - participation agreements related parties |
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Accrued interest |
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Accrued liabilities - payroll and directors fees |
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Note payable |
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Total Current Liabilities |
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LONG-TERM LIABILITIES: |
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Long-term operating lease, net of current portion |
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Total long-term liabilities |
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TOTAL LIABILITIES |
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COMMITMENTS AND CONTINGENCIES |
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STOCKHOLDERS' EQUITY: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders' equity |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ |
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| $ |
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See accompanying notes to unaudited condensed consolidated financial statements.
3 |
Table of Contents |
ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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| For the Three Months ended September 30, 2022 |
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| For the Three Months ended September 30, 2021 |
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| For the Nine Months ended September 30, 2022 |
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| For the Nine Months ended September 30, 2021 |
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REVENUES: |
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Service revenue |
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| $ |
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| $ |
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| $ |
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Total revenues |
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COSTS AND EXPENSES: |
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General and Administrative |
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Research and Development |
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Total costs and expenses |
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LOSS FROM OPERATIONS |
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OTHER INCOME / (EXPENSE): |
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Gain on forgiveness of debt |
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Interest expense |
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Interest expense - related parties |
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Total other expense |
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NET LOSS |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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BASIC AND DILUTED LOSS PER SHARE |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
WEIGHTED AVERAGE BASIC AND DILUTED SHARES OUTSTANDING |
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See accompanying notes to unaudited condensed consolidated financial statements.
4 |
Table of Contents |
ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND SEPTEMBER 30, 2021
(UNAUDITED)
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| Additional |
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| Common Stock |
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| Paid in |
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| Accumulated |
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| Shares |
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| Amount |
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| Capital |
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| Deficit |
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| Total |
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Balance, June 30, 2021 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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Issuance of warrants for services |
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| - |
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| - |
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| 224,206 |
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| - |
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| 224,206 |
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Common stock issued on registered warrant exercise |
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Public offering of stock - overallotment |
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Underwriting and other expenses for public offering |
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| - |
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Net loss for the three months ended September 30, 2021 |
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| - |
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Balance, September 30, 2021 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| Additional |
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| Common Stock |
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| Accumulated |
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| Shares |
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| Amount |
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| Capital |
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| Total |
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Balance, June 30, 2022 |
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| $ |
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| $ | ( | ) |
| $ |
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Employee and director equity based compensation |
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| - |
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Net loss for the three months ended September 30, 2022 |
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| - |
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Balance, September 30, 2022 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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See accompanying notes to unaudited condensed consolidated financial statements.
5 |
Table of Contents |
ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND SEPTEMBER 30, 2021
(UNAUDITED)
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| Additional |
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| Common Stock |
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| Accumulated |
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| Shares |
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| Amount |
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| Capital |
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| Deficit |
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| Total |
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Balance, December 31, 2020 |
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| $ |
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| $ |
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| $ | ( | ) |
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Issuance of warrants for services |
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| - |
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| - |
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| 1,443,788 |
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| 1,443,788 |
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Issuance of common stock for cash – related party |
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Issuance of common stock for cash |
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Issuance of warrants pursuant to the participation agreements |
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Common stock issued on cashless warrant exercise |
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Public offering issuance of stock and warrants |
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Fractional shares from split |
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Underwriting and other expenses for public offering |
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| - |
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Warrants sold as part of the public offering |
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Common stock issued on registered warrant exercise |
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Common stock issued on conversion of 11% Convertible Debt and accrued interest |
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Stock issued for services |
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Net loss for the nine months ended September 30, 2021 |
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| - |
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Balance, September 30, 2021 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| Additional Paid in |
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| Accumulated |
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| Shares |
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| Amount |
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| Capital |
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| Deficit |
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| Total |
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Balance, December 31, 2021 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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Employee and director equity-based compensation |
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Net loss for the nine months ended September 30, 2022 |
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Balance, September 30, 2022 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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See accompanying notes to unaudited condensed consolidated financial statements.
6 |
Table of Contents |
ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
|
| For the Nine Months Ended September 30, 2022 |
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| For the Nine Months Ended September 30, 2021 |
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Cash Flows for Operating Activities: |
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Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used by operating activities: |
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Non cash lease expense |
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Gain on forgiveness of debt |
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Amortization of deferred R&D obligations participation agreements |
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Employee and director equity-based compensation expense |
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Changes in assets and liabilities: |
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Prepaid expenses |
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Accounts payable |
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Lease liabilities |
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Security deposits |
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Advanced payments for R&D obligations - participation agreements |
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Accrued liabilities |
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Net cash (used in) operating activities |
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Cash Flows from Investing Activities: |
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Net cash from by investing activities |
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Cash Flow from Financing Activities: |
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Proceeds of notes payable, other |
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Payments of notes payable, other |
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Proceeds from public sale of common stock and warrants |
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Proceeds from exercise of registered warrants |
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Expenses related to the public offering |
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Proceeds from sale of common stock warrants – participation agreements |
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Proceeds from sale of common stock – related party |
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Proceeds from sales of common stock |
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Net cash provided by financing activities |
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Increase/(Decrease) in Cash |
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Cash at Beginning of Period |
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Cash at End of Period |
| $ |
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| $ |
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Supplemental Disclosures of Cash Flow Information: |
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Cash paid during the period for: |
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Interest |
| $ |
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| $ |
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Income Taxes |
| $ |
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| $ |
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See accompanying notes to unaudited condensed consolidated financial statements.
7 |
Table of Contents |
ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED) (Continued)
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Nine Months Ended September 30, 2022:
During the nine months ended September 30, 2022, the Company had no non-cash investing or financing transactions.
Nine Months Ended September 30, 2021:
During the nine months ended September 30, 2021, a related party applied the proceeds of a Loan Payable in the principal amount of $9,000, against an investment in a Participation Agreement.
During the nine months ended September 30, 2021, warrants to purchase 139,100 shares of the Company’s common stock were exercised on a “cashless” basis resulting in the issuance of 54,361 shares of common stock.
On June 2, 2021, pursuant to the terms of several Debt Extension and Conversion Agreements with holders of our 11% convertible debt, a total of $7,538,557 comprised of outstanding principal of $4,940,342 and interest of $2,598,215 our convertible notes were automatically converted into 942,322 shares of common stock at $8.00 per share. See Note 6 – Debt for additional information.
See accompanying notes to unaudited condensed consolidated financial statements.
8 |
Table of Contents |
ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements include the accounts of Zivo Bioscience, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The condensed consolidated financial statements have also been prepared on a basis substantially consistent with, and should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2021 and the notes thereto, included in its Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on April 22, 2022.
Going Concern
The Company has incurred net losses since inception, experienced negative cash flows from operations for the quarter ended September 30, 2022 and has an accumulated deficit of $
The Company expects to continue to incur operating losses and net cash outflows until such time as it generates a level of revenue to support its cost structure. There is no assurance that the Company will achieve profitable operations, and, if achieved, whether it will be sustained on a continued basis. The Company intends to fund ongoing activities by utilizing its current cash on hand and by raising additional capital through equity or debt financings. There can be no assurance that the Company will be successful in raising that additional capital or that such capital, if available, will be on terms that are acceptable to the Company. If the Company is unable to raise sufficient additional capital, the Company may be compelled to reduce the scope of its operations and planned capital expenditures.
These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. The Company’s condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business; no adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.
NOTE 2 - REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
Management identified errors made in its historical financial statements related to the valuation and expense of equity-based compensation for management and members of the Company’s board of directors. The Company accounts for stock-based compensation in accordance with ASC 718. Under the provisions of ASC 718, stock-based compensation cost is estimated at the grant date based on the award’s fair value and is recognized as expense over the requisite service period. At the date of grant, the Company determines the fair value of the stock option award using the Black Scholes option pricing model.
The Company made errors in the application of the Black Scholes option valuation model by applying an inappropriate methodology in determining the expected term of granted options. Based on the limited history relating to exercises of options, the Company determined that the expected life of an option grant should be calculated using the simplified method. After recalculating the valuations and reviewing the periodic reported expense for all the options issued as equity-based compensation, the Company concluded that, in aggregate, it had overstated the equity-based compensation. In accordance with SEC Staff Accounting Bulletin No. 99, Materiality, and SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements; the Company evaluated the error quantitatively and qualitatively and has determined that the related impact was not material to any previously presented financial statements. As such the Company corrected the error in the consolidated financial statements for the years ended December 31, 2020 and 2021, and the condensed consolidated financial statements for the three month period ended March 31, 2021, the three month and six month periods ended June 30, 2021, and the three month and nine month period ended September 30, 2021.
9 |
Table of Contents |
The impact of the revision on the Company’s previously released financial statements that are reference in this form 10Q are reflected in the following tables. The adjustment below include immaterial footing corrections in certain previously reported balances.
CONSOLIDATED BALANCE SHEET as of December 31, 2020 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Additional paid-in capital |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Accumulated deficit |
|
| ( | ) |
|
|
|
|
| ( | ) |
CONSOLIDATED STATEMENT OF OPERATIONS for the Year Ending December 31, 2020 |
|
|
|
|
|
| ||||||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
General and Administrative |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Research and Development |
|
|
|
|
| ( | ) |
|
|
| ||
Total costs and expenses |
|
|
|
|
| ( | ) |
|
|
| ||
LOSS FROM OPERATIONS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
NET LOSS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
BASIC AND DILUTED LOSS PER SHARE |
| $ | ( | ) |
| $ | |
|
| $ | ( | ) |
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the Year Ended December 31, 2020 |
|
|
|
|
|
| ||||||
|
| As Previously |
|
|
|
|
| |||||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Balance, December 30, 2019 – Additional Paid in Capital |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Balance, December 30, 2019 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Employee and director equity-based compensation – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Employee and director equity-based compensation - Total |
|
|
|
|
| ( | ) |
|
|
| ||
Net loss for the year ended December 31, 2020 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Net loss for the year ended December 31, 2020 - Total |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Balance, December 31, 2020 – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Balance, December 31, 2020 - Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) |
CONSOLIDATED STATEMENT OF CASH FLOWS for the Year Ended December 31, 2020 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Net Loss |
| $ | ( | ) |
| $ |
|
| $ | ( | ) | |
Employee and director equity-based compensations |
|
|
|
|
| ( | ) |
|
|
|
10 |
Table of Contents |
CONDENSED CONSOLIDATED BALANCE SHEET as of March 31, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Additional paid-in capital |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Accumulated deficit |
|
| ( | ) |
|
|
|
|
| ( | ) |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS for the Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
General and Administrative |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Research and Development |
|
|
|
|
| ( | ) |
|
|
| ||
Total costs and expenses |
|
|
|
|
| ( | ) |
|
|
| ||
LOSS FROM OPERATIONS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
NET LOSS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
BASIC AND DILUTED LOSS PER SHARE |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Balance, December 30, 2020 – Additional Paid in Capital |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Balance, December 30, 2020 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Issuance of warrants for services – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Issuance of warrants for services - Total |
|
|
|
|
| ( | ) |
|
|
| ||
Net loss for the three months ended March 31, 2021 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Net loss for the three months ended March 31, 2021 - Total |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Balance, March 31, 2021 – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Balance, March 31, 2021 - Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Net Loss |
| $ | ( | ) |
| $ |
|
| $ | ( | ) | |
Employee and director equity-based compensation expense |
|
|
|
|
| ( | ) |
|
|
|
11 |
Table of Contents |
CONDENSED CONSOLIDATED BALANCE SHEET as of June 30, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Additional paid-in capital |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Accumulated deficit |
|
| ( | ) |
|
|
|
|
| ( | ) |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS for the Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
General and Administrative |
| $ |
|
| $ |
|
| $ |
| |||
Research and Development |
|
|
|
|
| ( | ) |
|
|
| ||
Total costs and expenses |
|
|
|
|
| (48,475 | ) |
|
|
| ||
LOSS FROM OPERATIONS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
NET LOSS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
BASIC AND DILUTED LOSS PER SHARE |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS for the Six Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
General and Administrative |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Research and Development |
|
|
|
|
| ( | ) |
|
|
| ||
Total costs and expenses |
|
|
|
|
| ( | ) |
|
|
| ||
LOSS FROM OPERATIONS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
NET LOSS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
BASIC AND DILUTED LOSS PER SHARE |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
12 |
Table of Contents |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Balance, March 31, 2021 – Additional Paid in Capital |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Balance, March 31, 2021 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Issuance of warrants for services – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Issuance of warrants for services - Total |
|
|
|
|
| ( | ) |
|
|
| ||
Net loss for the three months ended June 30, 2021 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Net loss for the three months ended June 30, 2021 - Total |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Balance, June 30, 2021 – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Balance, June 30, 2021 - Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the Six Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Balance, December 31, 2020 – Additional Paid in Capital |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Balance, December 31, 2020 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Issuance of warrants for services – Additional Paid in Capital |
| 1,344,989 |
|
|
| ( | ) |
|
|
| ||
Issuance of warrants for services - Total |
|
|
|
|
| ( | ) |
|
|
| ||
Net loss for the six months ended June 30, 2021 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Net loss for the six months ended June 30, 2021 - Total |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Balance, June 30, 2021 – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Balance, June 30, 2021 - Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the Six Months Ended June 30, 2021 |
|
|
|
|
|
| ||||||
|
| As Previously |
|
|
|
|
| |||||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Net Loss |
| $ | ( | ) |
| $ |
|
| $ | ( | ) | |
Employee and director equity-based compensation expense |
|
|
|
|
| ( | ) |
|
|
|
13 |
Table of Contents |
CONDENSED CONSOLIDATED BALANCE SHEET as of September 30, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Additional paid-in capital |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Accumulated deficit |
|
| ( | ) |
|
|
|
|
| ( | ) |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS for the Three Months Ended September 30, 2021 |
|
|
|
|
|
| ||||||
|
| As Previously |
|
|
|
|
| |||||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
General and Administrative |
| $ |
|
| $ |
|
| $ |
| |||
Research and Development |
|
|
|
|
| ( | ) |
|
|
| ||
Total costs and expenses |
|
|
|
|
| ( | ) |
|
|
| ||
LOSS FROM OPERATIONS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
NET LOSS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
BASIC AND DILUTED LOSS PER SHARE |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS for the Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
General and Administrative |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Research and Development |
|
|
|
|
| ( | ) |
|
|
| ||
Total costs and expenses |
|
|
|
|
| ( | ) |
|
|
| ||
LOSS FROM OPERATIONS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
NET LOSS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
BASIC AND DILUTED LOSS PER SHARE |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
14 |
Table of Contents |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Balance, June 30, 2021 – Additional Paid in Capital |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Balance, June 30, 2021 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Issuance of warrants for services – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Issuance of warrants for services - Total |
|
|
|
|
| ( | ) |
|
|
| ||
Net loss for the three months ended September 30, 2021 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Net loss for the three months ended September 30, 2021 - Total |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Balance, September 30, 2021 – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Balance, September 30, 2021 - Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Balance, December 30, 2020 – Additional Paid in Capital |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Balance, December 30, 2020 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Issuance of warrants for services – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Issuance of warrants for services - Total |
|
|
|
|
| ( | ) |
|
|
| ||
Net loss for the nine months ended September 30, 2021 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Net loss for the nine months ended September 30, 2021 - Total |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Balance, September 30, 2021 – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Balance, September 30, 2021 - Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the Nine Months Ended of September 30, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Net Loss |
| $ | ( | ) |
| $ |
|
| $ | ( | ) | |
Employee and director equity-based compensation expense |
|
|
|
|
| ( | ) |
|
|
|
15 |
Table of Contents |
CONSOLIDATED BALANCE SHEET as of December 31, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Additional paid-in capital |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Accumulated deficit |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
CONSOLIDATED STATEMENT OF OPERATIONS for the Year Ended December 31, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
General and Administrative |
| $ |
|
| $ | ( |
|
| $ |
| ||
Research and Development |
|
|
|
|
| ( |
|
|
|
| ||
Total costs and expenses |
|
|
|
|
| ( |
|
|
|
| ||
LOSS FROM OPERATIONS |
|
| ( | ) |
|
|
|
|
| ( | ) | |
NET LOSS |
|
| ( | ) |
|
|
|
|
| (8,755,881 | ) | |
BASIC AND DILUTED LOSS PER SHARE |
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) for the Year Ended December 31, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Balance, December 30, 2020 – Additional Paid in Capital |
| $ |
|
| $ | ( | ) |
| $ |
| ||
Balance, December 30, 2020 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Employee and director equity-based compensation – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Employee and director equity-based compensation - Total |
|
|
|
|
| ( | ) |
|
|
| ||
Net loss for the year ended December 31, 2021 – Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Net loss for the year ended December 31, 2021 - Total |
|
| ( | ) |
|
|
|
|
| ( | ) | |
Balance, December 31, 2021 – Additional Paid in Capital |
|
|
|
|
| ( | ) |
|
|
| ||
Balance, December 31, 2021 - Accumulated Deficit |
|
| ( | ) |
|
|
|
|
| ( | ) |
CONSOLIDATED STATEMENT OF CASH FLOWS for the Year Ended December 31, 2021 |
|
|
|
|
|
|
|
|
| |||
|
| As Previously |
|
|
|
|
|
|
| |||
|
| Reported |
|
| Adjustment |
|
| As Revised |
| |||
Net Loss |
| $ | ( | ) |
| $ |
|
| $ | (8,755,881 | ) | |
Employee and director equity-based compensation |
|
|
|
|
| ( | ) |
|
|
|
16 |
Table of Contents |
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of Zivo Bioscience, Inc. and its wholly-owned subsidiaries, ZIVOLife LLC, Health Enhancement Corporation, HEPI Pharmaceuticals, Inc., Wellmetrix, LLC, Wellmetris, LLC, Zivo Bioscience, LLC, Zivo Biologic, Inc., and Zivo Zoologic, Inc. All significant intercompany transactions and accounts have been eliminated in consolidation.
Accounting Estimates
The Company’s condensed consolidated financial statements have been prepared in conformity with US GAAP, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management uses its best judgment in valuing these estimates and may, as warranted, solicit external professional advice and other assumptions believed to be reasonable.
Cash
Cash equivalents include time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. The Company maintains cash and cash equivalents balances at financial institutions and are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $
Property and Equipment
Property and equipment consist of furniture and office equipment and are carried at cost less allowances for depreciation and amortization. Depreciation and amortization are determined by using the straight-line method over the estimated useful lives of the related assets. Repair and maintenance costs that do not improve service potential or extend the economic life of an existing fixed asset are expensed as incurred.
Leases
ASC 842, Leases, requires the recognition of a right-of-use (“ROU”) and a corresponding lease liability on the balance sheet. ROU assets represent the right to use an underlying asset over the lease term and lease liabilities represent the obligation to make lease payments resulting from the lease agreement. ROU assets and lease liabilities are recognized on commencement of the lease agreement.
ROU assets are included within operating lease right-of-use assets, and the corresponding operating lease liabilities are recorded as current portion of long-term operating lease, and within long-term liabilities as long-term operating lease, net of current portion on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2022.
Lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date and or extension date. Because the Company’s lease does not provide an implicit rate of return, the Company used its incremental borrowing rate in determining the present value of lease payments.
Research and Development
Research and development (“R&D”) costs are expensed as incurred. The Company’s R&D costs, including internal expenses, consist of clinical study expenses as it relates to the biotech business and the development and growing of algae as it relates to the agtech business. These costs consist of fees, charges, and related expenses incurred in the conduct business with Company development by independent outside contractors. External clinical studies expenses were $
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NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Income Taxes
Deferred income taxes are determined using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The tax effects of temporary differences that gave rise to the deferred tax assets and deferred tax liabilities at September 30, 2022 and December 31, 2021 were primarily attributable to net operating loss carry forwards. Since the Company has a history of losses, and it is more likely than not that some portion or all of the deferred tax assets will not be realized, a full valuation allowance has been established. In addition, utilization of net operating loss carry-forwards is subject to a substantial annual limitation due to the “change in ownership” provisions of the Internal Revenue Code. The annual limitation may result in the expiration of net operating loss carry-forwards before utilization.
Stock Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718. Under the provisions of ASC 718, stock-based compensation cost is estimated at the grant date based on the award’s fair value and is recognized as expense over the requisite service period. The Company generally issues grants to its employees, consultants and board members. At the date of grant, the Company determines the fair value of the stock option or warrant award and recognizes compensation expense over the requisite service period. The fair value of the stock option or warrant award is calculated using the Black Scholes option pricing model.
During the three months ended September 30, 2022,
The fair value of stock options was estimated on the date of grant using the Black-Scholes option-pricing model based on the following weighted average assumptions:
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The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of highly subjective assumptions, including the expected stock price volatility, the risk free rate, and the result of the simplified method used to determine the expected term.
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NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Income (Loss) Per Share
Basic loss per share is computed by dividing the Company’s net loss by the weighted average number of shares of common stock outstanding during the period presented. Diluted loss per share is based on the treasury stock method and includes the effect from potential issuance of common stock such as shares issuable pursuant to the exercise of options and warrants and conversions of debentures. Potentially dilutive securities as of September 30, 2022, consisted of
Segment Reporting
The Company’s Chief Executive Officer, who is considered to be the chief operating decision maker (CODM), reviews financial information presented on a consolidated basis, accompanied by information about operating segments for purposes of making operating decisions and assessing financial performance. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the CODM in deciding how to allocate resources and in assessing performance.
Recently Enacted Accounting Standards
No new Accounting Standards were adopted during the quarter ended September 30, 2022.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment at September 30, 2022 and December 31, 2021 consisted of the following:
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There were no depreciation and amortization expenses for the three and nine months ended September 30, 2022 and 2021 respectively.
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NOTE 5 – LEASES
On December 17, 2020, the Company entered into a 25 ½ month lease agreement for a 2,700-square-foot facility that contains office, warehouse, lab and R&D space in Ft. Myers, Florida. The lease agreement commenced on December 17, 2020 and ends on January 31, 2023. The agreement provided for a total rent of $54,993 over the period. Occupancy of the property commenced on December 17, 2020, there was a 6-week rent holiday and a commencement date of
On January 14, 2022, the Company entered into a 34-month sublease agreement for a 4,843 square-foot office in Bloomfield Hills, Michigan. The Company moved its headquarters to this location. The agreement commenced on January 29, 2022 and ends on November 30, 2024. The agreement provided for a total rent of $
The balances for our operating lease where we are the lessee are presented as follows within our condensed consolidated balance sheet:
Operating leases:
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The components of lease expense are as follows within our condensed consolidated statement of operations:
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Other information related to leases where we are the lessee is as follows:
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NOTE 5 – LEASES - Continued
Supplemental cash flow information related to leases where we are the lessee is as follows:
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As of September 30, 2022, the maturities of our operating lease liability are as follows:
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NOTE 6 –DEBT
11% Convertible Notes
On December 2, 2011, the Company and HEP Investments entered into the following documents, effective as of December 1, 2011, as amended through May 16, 2018: (i) a Loan Agreement under which the HEP Investments agreed to advance up to $
On June 2, 2021, in accordance with the Debt Extension and Conversion Agreement, all of the outstanding debt and accrued interest for the Convertible Notes was automatically converted into common stock of the Company. The principal amount of $
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NOTE 6 –DEBT – Continued
Paulson Investment Company, LLC – Related Debt
On August 24, 2016, the Company entered into a Placement Agent Agreement with Paulson Investment Company, LLC (“Paulson”). The Placement Agent Agreement provided that Paulson could provide up to $
On September 24, 2018, one New Lender converted $
On January 15, 2020, two New Lenders converted $
In May 2021, each of the remaining New Lenders entered into a Debt Extension and Conversion Agreement with the Company. These agreements provided that the New Lender Notes, including principal and accrued interest, would automatically convert into shares of common stock upon consummation of an underwritten public offering of the Company’s common stock.
On June 2, 2021, in accordance with the Debt Extension and Conversion Agreement between the remaining New Lenders and the Company, all of the remaining outstanding debt and accrued interest for the New Lenders Notes were automatically converted to common stock. The principal amount of $
Other Debt
Convertible debt consists of the following:
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NOTE 6 –DEBT – Continued
Paycheck Protection Program Loan
On May 7, 2020, the Company received $
Under the terms of the Note and the PPP Loan, interest accrues on the outstanding principal at the rate of
The CARES Act and the PPP provide a mechanism for forgiveness of up to the full amount borrowed. Under the PPP, the Company was eligible to apply for forgiveness for all or a part of the PPP Loan. The amount of loan proceeds eligible for forgiveness, as amended, was based on a formula that takes into account a number of factors, including: (i) the amount of loan proceeds that are used by the Company during the covered period after the loan origination date for certain specified purposes including payroll costs, interest on certain mortgage obligations, rent payments on certain leases, and certain qualified utility payments, provided that at least
In August 2021, the Company applied to the SBA for forgiveness of the outstanding loan principal and accrued interest under the CARES Act. On September 9, 2021, the Company received a Notification of Paycheck Protection Program Forgiveness Payment letter from the SBA confirming that the full amount of the principal, $
Short Term Loan
On February 21, 2022, the Company entered into a short-term, unsecured loan agreement to finance a portion of the Company’s directors’ and officers’ insurance premiums. The note in the amount of $
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The Company entered into twenty-one (
According to the terms of the Participation Agreements, and pursuant to ASC 730-20-25 the Company has bifurcated the proceeds of $
The Participation Agreements allow the Company the option to buy back the right, title and interest in the Revenue Share for an amount equal to the amount funded plus a forty percent (40%) premium, if the option is exercised less than 18 months following execution, and for either forty (
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NOTE 7 - DEFERRED R&D OBLIGATIONS - PARTICIPATION AGREEMENTS - Continued
See below a summary of the Participation Agreements:
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