zivo_10q.htm

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐ 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: 001-40449

Zivo Bioscience, Inc.

(Exact name of registrant as specified in its charter)

Nevada

87-0699977

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

21 E. Long Lake Road, Suite 100, Bloomfield Hills, MI 48304

(Address of principal executive offices) (Zip code)

(248) 452 9866

(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

Common Stock, par value $0.001 per share

ZIVO

The Nasdaq Stock Market LLC

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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
☒	Non-accelerated filer

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 ☐ No ☒

There were 9,419,660 shares of common stock, $0.001 par value, outstanding at August 1, 2022.

FORM 10-Q

ZIVO BIOSCIENCE, INC.

INDEX

		Page
PART I - FINANCIAL INFORMATION		3

Item 1.	Financial Statements (Unaudited)	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

PART II - OTHER INFORMATION		34

Item 1.	Legal Proceedings	34

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 3.	Defaults upon Senior Securities	34

Item 4.	Mine Safety Disclosures	34

Item 5.	Other Information	34

Item 6.	Exhibits	35

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	June 30, 2022			December 31, 2021

ASSETS
CURRENT ASSETS:
Cash	$	5,083,720		$	8,901,875
Prepaid expenses		517,114			58,078
Total current assets		5,600,834			8,959,953

PROPERTY AND EQUIPMENT, NET		-			-

OTHER ASSETS
Operating lease – right of use asset		231,716			27,225
Security deposit		32,058			3,000
Total other assets		263,774			30,225

TOTAL ASSETS	$	5,864,608		$	8,990,178

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	407,838		$	654,333
Current portion of long-term operating lease		86,364			15,178
Convertible debentures payable		240,000			240,000
Deferred R&D obligations - participation agreements		801,061			1,106,320
Deferred R&D obligations - participation agreements related parties		267,211			369,037
Accrued interest		97,076			95,886
Accrued liabilities - payroll and directors fees		448,409			467,215
Note payable		349,222			-
Total Current Liabilities		2,697,181			2,947,969

LONG-TERM LIABILITIES:
Long-term operating lease, net of current portion		157,004			-
Total long-term liabilities		157,004			-

TOTAL LIABILITIES		2,854,185			2,947,969
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value, 150,000,000 shares authorized; 9,419,660 and 9,419,660 issued and outstanding at June 30, 2022 and December 31, 2021		9,420			9,420
Additional paid-in capital		115,328,203			114,259,830
Accumulated deficit		(112,327,200	)		(108,227,041	)
Total stockholders' equity		3,010,423			6,042,209
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	5,864,608		$	8,990,178

See accompanying notes to unaudited condensed consolidated financial statements.

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ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months ended June 30, 2022			For the Three Months ended June 30, 2021			For the Six Months ended June 30, 2022			For the Six Months ended June 30, 2021
REVENUES:
Service revenue	$	-		$	-			-		$	-
Total revenues		-			-			-			-

COSTS AND EXPENSES:
General and Administrative		1,629,553			1,281,488			2,976,295			2,718,310
Research and Development		438,048			467,918			1,117,821			1,114,670

Total costs and expenses		2,067,601			1,749,406			4,094,116			3,832,980

LOSS FROM OPERATIONS		(2,067,601	)		(1,749,406	)		(4,094,116	)		(3,832,980	)

OTHER EXPENSE:
Interest expense		4,238			18,582			6,043			43,043
Interest expense - related parties		-			77,660			-			188,604
Total other expense		4,238			96,242			6,043			231,647

NET LOSS	$	(2,071,839	)	$	(1,845,648	)	$	(4,100,159	)	$	(4,064,627	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.22	)	$	(0.28	)	$	(0.44	)	$	(0.70	)
WEIGHTED AVERAGE BASIC AND DILUTED SHARES OUTSTANDING		9,419,660			6,490,505			9,419,660			5,846,011

See accompanying notes to unaudited condensed consolidated financial statements.

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ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND JUNE 30, 2021

(UNAUDITED)

						Additional
	Common Stock					Paid in			Accumulated
	Shares			Amount		Capital			Deficit			Total

Balance, March 31, 2021		5,263,983		$	5,264	$	89,853,620		$	(101,282,653	)	$	(11,423,769	)

Issuance of warrants for services		-			-		369,965			-			369,965
Issuance of common stock for cash		43,090			43		474,926			-			474,970
Issuance of warrants pursuant to the participation agreements		-			-		14,898			-			14,898
Common stock issued on cashless warrant exercise		54,361			54		(54	)		-			-
Public offering issuance of stock and warrants		2,760,000			2,760		13,797,240			-			13,800,000
Fractional shares from split		(99	)		-		-			-			-
Underwriting and other expenses for public offering		-			-		(1,622,638	)		-			(1,622,638	)
Warrants sold as part of the public offering		-			-		4,240			-			4,240
Common stock issued on conversion of 11% Convertible Debt and accrued interest		942,322			942		7,537,614			-			7,538,556
Stock issued for services		5,000			5		22,395			-			22,400
Net loss for the three months ended June 30, 2021		-			-		-			(1,845,648	)		(1,845,648	)
Balance, June 30, 2021		9,068,657		$	9,069	$	110,452,205		$	(103,128,302	)	$	7,332,972

					Additional
	Common Stock				Paid in		Accumulated
	Shares		Amount		Capital		Deficit			Total

Balance, March 31, 2022		9,419,660	$	9,420		114,830,459	$	(110,255,361	)	$	4,584,518
Employee and director equity based compensation		-		-		497,744		-			497,744
Net loss for the three months ended June 30, 2022		-		-		-		(2,071,839	)		(2,071,839	)
Balance, June 30, 2022		9,419,660	$	9,420	$	115,328,203	$	(112,327,200	)	$	3,010,423

See accompanying notes to unaudited condensed consolidated financial statements.

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ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND JUNE 30, 2021

(UNAUDITED)

						Additional
	Common Stock					Paid in			Accumulated
	Shares			Amount		Capital			Deficit			Total

Balance, December 31, 2020		5,162,945		$	5,163	$	87,747,898		$	(99,063,675	)	$	(11,310,614	)
Issuance of warrants for services							1,344,989						1,344,989
Issuance of common stock for cash – related party		4,464			4		49,996						50,000
Issuance of common stock for cash		139,664			140		1,514,829						1,514,969
Issuance of warrants pursuant to the participation agreements							55,697						55,697
Common stock issued on cashless warrant exercise		54,361			54		(54	)					-
Public offering issuance of stock and warrants		2,760,000			2,760		13,797,240						13,800,000
Fractional shares from split		(99	)		-		-			-			-
Underwriting and other expenses for public offering							(1,622,638	)					(1,622,638	)
Warrants sold as part of the public offering							4,240						4,240
Common stock issued on conversion of 11% Convertible Debt and accrued interest		942,322			942		7,537,615						7,538,557
Stock issued for services		5,000			5		22,395						22,400
Net loss for the six months ended June 30, 2021										(4,064,627	)		(4,064,627	)
Balance, June 30, 2021		9,068,657		$	9,069	$	110,452,205		$	(103,128,302	)	$	7,332,972

					Additional Paid in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance, December 31, 2021		9,419,660	$	9,420	$	114,259,830	$	(108,227,041	)	$	6,042,209
Employee and director equity based compensation		-		-		1,068,373		-			1,068,373
Net loss for the six months ended June 30, 2022		-		-		-		(4,100,159	)		(4,100,159	)
Balance, June 30, 2022		9,419,660	$	9,420	$	115,328,203	$	(112,327,200	)	$	3,010,423

See accompanying notes to unaudited condensed consolidated financial statements.

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ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	For the Six Months Ended June 30, 2022			For the Six Months Ended June 30, 2021
Cash Flows for Operating Activities:
Net loss	$	(4,100,159	)	$	(4,064,627	)
Adjustments to reconcile net loss to net cash used by operating activities:
Non cash lease expense		41,297			10,622
Amortization of deferred R&D obligations participation agreements		(407,085	)		-
Employee and director equity compensations		1,068,373			1,367,389
Changes in assets and liabilities:
Prepaid expenses		(459,036	)		(128,661	)
Accounts payable		(246,495	)		(641,281	)
Lease liabilities		(17,598	)		(10,851	)
Security deposits		(29,058	)		-
Advanced payments for R&D obligations - participation agreements		-			85,304
Accrued liabilities		(17,616	)		281,738
Net cash (used in) operating activities		(4,167,377	)		(3,100,368	)

Cash Flows from Investing Activities:
Net cash from by investing activities	$	-		$	-

Cash Flow from Financing Activities:
Proceeds of notes payable, other		628,600			190,500
Payments of notes payable, other		(279,378	)		(127,000	)
Proceeds from public sale of common stock and warrants		-			13,804,240
Expenses related to the public offering		-			(1,622,639	)
Proceeds from sale of common stock warrants – participation agreements		-			55,697
Proceeds from sale of common stock – related party		-			50,000
Proceeds from sales of common stock		-			1,514,973
Net cash provided by financing activities		349,222			13,865,770

Increase/(Decrease) in Cash		(3,818,155	)		10,765,402
Cash at Beginning of Period		8,901,875			137,862
Cash at End of Period	$	5,083,720		$	10,903,264

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	4,853		$	2,056
Income Taxes	$	-		$	-

See accompanying notes to unaudited condensed consolidated financial statements.

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ZIVO BIOSCIENCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED) (Continued)

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Six Months Ended June 30, 2022:

During the six months ended June 30, 2022, the Company had no non-cash investing or financing transactions.

Six Months Ended June 30, 2021:

During the six months ended June 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 six months ended June 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 5 – Convertible Debt for additional information.

See accompanying notes to unaudited condensed consolidated financial statements.

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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 June 30, 2022, and has an accumulated deficit of $112,327,200. The Company has historically financed its operations primarily through the issuance of common stock, warrants, and debt.

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 - 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, 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.

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

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 $250,000. At times, balances in certain bank accounts may exceed the FDIC insured limits. Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased. At June 30, 2022, the Company did not have any cash equivalents.

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 June 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 consist of fees, charges, and related expenses incurred in the conduct business with Company development by independent outside contractors. For the three months ended June 30, 2022, and June 30, 2021, the company had external clinical expenses of $381,000 and $281,000 respectively; and internal expenses, composed primarily of staff salaries of $327,000 and $187,000 respectively. These costs were reduced by the amortization of the R&D obligation of $270,000 and $0 for the three months ended June 30, 2022, and June 30, 2021, respectively. External clinical studies expenses were $644,000 and $520,000 for the six months ended June 30, 2022 and June 30, 2021, respectively. Internal expenses, composed of staff salaries compose $881,000 and $595,000 for the six months ended June 30, 2022 and 2021, respectively. These costs were offset by the amortization of the R&D obligation of $407,085 and $0 for the six months ended June 30, 2022 and June 30, 2021, respectively (see “Note 6 - Deferred R&D Obligations - Participation Agreements”).

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NOTE 2 - 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 June 30, 2022 and 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 June 30, 2022, and 2021 no options were granted to employees, consultants, or directors of the Company. The Company recorded compensation expense for previous grants in the amount of $497,744 and $392,365 for these periods, respectively. During the six months ended June 30, 2022 and 2021, stock options were granted to employees of the Company. As a result of these and previous grants, the Company recorded compensation expense of $1,068,374 and $1,367,389 for these periods, respectively.

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 (no options were granted in the three months ending June 30, 2022 and June 30, 2021):

	Six Months Ended June 30,
	2022			2021
Expected volatility		135.32	%	144.80% to 153.25		%
Expected dividends		0	%		0	%
Expected term	10 years			5 to 10 years
Risk free rate		1.94	%	0.29% to 1.45		%

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.

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NOTE 2 - 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 June 30, 2022, consisted of 53,309 shares of common stock from convertible debentures and related accrued interest and 6,084,205 shares of common stock underlying outstanding options and warrants. Potentially dilutive securities as of June 30, 2021 consisted of 52,839 shares of common stock underlying convertible debentures and related accrued interest and 6,344,868 shares of common stock from outstanding options and warrants. For the three months and six months ended June 30, 2022 and 2021, diluted and basic weighted average shares were the same, as potentially dilutive shares are anti-dilutive.

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 June 30, 2022.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment at June 30, 2022 and December 31, 2021 consisted of the following:

	June 30, 2022			December 31, 2021

Furniture and fixtures	$	20,000		$	20,000
Equipment		80,000			80,000
Total		100,000			100,000
Less accumulated depreciation and amortization		(100,000	)		(100,000	)
Property and equipment, net	$	-		$	-

There were no depreciation and amortization expenses for the three and six months ended June 30, 2022 and 2021 respectively.

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NOTE 4 – 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 February 1, 2021. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Rent is $3,291 per month from January 15, 2021 to January 31, 2022 and $1,154 from February 1, 2022 to January 31, 2023. On June 5, 2022, the Company exercised an option to extend the lease through December 31, 2024. The lease extension rent is $2,261 per month for calendar year 2023, and $2,300 per month for calendar year 2024, and totals an additional rent obligation of $54,743 of rent over the extension period.

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 $232,464. Occupancy of the property commenced on January 29, 2022, there was a three-month rent holiday with a rent commencement date of April 29, 2022. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Rent is $7,265 per month from commencement to November 30, 2022, $7,466 from November 30, 2022 to November 30, 2023, and $7,668 from November 30, 2023 to the lease end date.

The balances for our operating lease where we are the lessee are presented as follows within our condensed consolidated balance sheet:

Operating leases:

Assets:	June 30, 2022		December 31, 2021
Operating lease right-of-use asset	$	231,716	$	27,225

Liabilities:
Current portion of long-term operating lease	$	86,364	$	15,178
Long-term operating lease, net of current portion

SEC Form 10-Q filed by Zivo Bioscience Inc.