Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to statements regarding:

·	our expectation that we will continue to incur operating losses and net cash outflows until such time we generate a level of revenue to support our cost structure;
·	our intention to fund ongoing activities by utilizing our current cash on hand and by raising additional capital through equity and/or debt financings;
·	our belief that if we are unable to raise sufficient additional capital, we may be compelled to reduce the scope of our operations and planned capital expenditures;
·	our substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued;
·	as part of our therapeutic strategy, our expectation to continue to seek strategic partners for late-stage development, regulatory preparation and commercialization of our products in key global markets;
·	our intention to continue to develop a treatment for bovine mastitis based on previous successful proof of concept studies using active materials derived from our proprietary algal culture;
·	our belief that one of the isolated and characterized biologically active molecules in the Company's portfolio may serve as an immune modulator with potential application in multiple disease situations as indicated in early in vitro studies involving human immune cells and in vivo studies performed in non-clinical species;
·	our plan to leverage the self-affirmed GRAS process into viable food and nutritional supplements for companion animals;
·	our plan to perform clinical efficacy claim studies for ingestible and topical products as we develop our algal biomass as a skin health ingredient;
·	our belief that our GRAS study and cGMP audit record with Alimenta Algae may be leveraged in the event the algal biomass is sold as a dietary supplement or dietary ingredient in a dietary supplement, in which case we would need to notify the FDA prior to sales, and which notification report would be required to include studies and reports that support a record of safe human consumption, safe manufacture, and marketing claims;
·	our belief that our existing cash will not be sufficient to fund our operating expenses through at least twelve months from the date of this filing;
·	our belief that in order to continue to fund operations, we will need to secure additional funding through public or private equity or debt financings, through collaborations or partnerships with other companies or other sources;
·	our belief that we may not be able to raise additional capital on terms acceptable to us, or at all and any failure to raise capital when needed could compromise our ability to execute on our business plan;
·	our ability that if we are unable to raise additional funds, or if our anticipated operating results are not achieved, planned expenditures may need to be reduced in order to extend the time period that existing resources can fund our operations;
·	our belief that if we are unable to obtain the necessary capital, it may have a material adverse effect on our operations and the development of our technology, or we may have to cease operations altogether;
·	our belief that our ability to successfully transition to profitability will be dependent upon achieving further regulatory approvals and achieving a level of product sales adequate to support our cost structure;
·	our estimation that we would require approximately $6.0 million in cash over the next twelve months in order to fund our basic operations, excluding our research and development initiatives;
·	our belief that if we are unable to raise the required capital, we will be forced to curtail our business operations, including our research and development activities; and
·	other factors described in the "Risk Factors" section of our Quarterly Reports on Form 10-Q and Annual Report on Form 10-K.

In some cases, you can identify forward-looking statements by terms such as "may", "will", "should", "could", "would", "expects", "plans", "anticipates", "believes", "estimates", "projects", "predicts", "potential", "likely" and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this report. Except as otherwise required by law, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this report to reflect any change in our expectations or any change in events, conditions or circumstances on which any of our forward-looking statements are based. We qualify all of our forward-looking statements by these cautionary statements.

You should refer to the section entitled "Risk Factors" of the Company's Annual Report on Form 10-K for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements will prove to be accurate. No forward-looking statement is a guarantee of future performance.

Overview:

We are a research and development company operating in both the biotech and agtech sectors, with an intellectual property portfolio comprised of 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.

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Biotech - ZIVO Product Candidates

ZIVO is developing bioactive compounds derived from its proprietary algal culture, targeting human and animal diseases, such as poultry coccidiosis, bovine mastitis, human cholesterol, and canine osteoarthritis. As part of its therapeutic strategy, ZIVO will continue to seek strategic partners for late-stage development, regulatory preparation and commercialization of its products in key global markets.

Review of isolated active materials derived from our proprietary algal culture and their potential treatment applications led us to identify a product candidate for treating coccidiosis in broiler chickens as the best option for most rapidly generating significant revenue because coccidiosis is a global poultry industry issue, and because the clinical testing cycle for chickens is shorter than for other species. Most of the global animal health companies have products for the coccidiosis market; however, they are mostly antibiotic- or ionophore-based with essentially no new technology having been introduced in the last 60 years.

Agtech - ZIVO's Algal Biomass

ZIVO's algal biomass is currently produced in Peru. ZIVO's algal biomass contains Vitamin A, protein, iron, important fatty acids, non-starch polysaccharides and other micronutrients that position the product as a viable functional food ingredient and nutritional enhancement for human and animal use and as a viable functional ingredient for skin care products.

Through our direction and technology, a site in Peru has been successful in consistently producing our proprietary algae. Our team has been working toward building commercial-scale algae ponds using a ZIVO proprietary design, and we are in the middle of a project to grow our algae in a penultimate scale pond. Once we are successful at this scale, we plan to invest in full commercial-scale ponds and product processing equipment.

The Company currently has contracts for the sale and production of its algal biomass. ZIVO has engaged an independent distributor, ZWorldwide, Inc., who has begun to sell the product, branded Zivolife^®, with an initial focus on the North American green powder food market with the product being grown in Peru.

Additional Indications

Pending additional funding, ZIVO may also pursue the following indications:

Biotech:

	o	Avian Influenza: A recent proof of concept study indicated that active materials derived from ZIVO's algal culture showed positive effects in chickens challenged with a low pathogenicity strain of the avian influenza virus.
	o	Bovine Mastitis: ZIVO intends to continue development of a treatment for bovine mastitis based on previous successful proof of concept studies using active materials derived from its proprietary algal culture.
	o	Canine Joint Health: Studies have indicated a chondroprotective effect when a compound fraction from ZIVO's algal culture was introduced into ex vivo canine joint tissues.
	o	Human Immune Modulation: Early in vitro studies involving human immune cells and in vivo studies performed in non-clinical species have indicated that one of the isolated and characterized biologically active molecules in the Company's portfolio may serve as an immune modulator with potential application in multiple disease situations.

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Agtech:

	o	Companion Animal Food Ingredient: The self-affirmed GRAS process was completed for ZIVO algal biomass in late 2018 and updated in early 2023 to validate its suitability for human consumption as an ingredient in foods and beverages. We plan to leverage this work into viable food and nutritional supplements for companion animals.
	o	Skin Health: ZIVO is developing its algal biomass as a skin health ingredient, the Company has engaged in some limited topical skin product testing started in the third quarter of 2020, and we plan to perform clinical efficacy claim studies planned for ingestible and topical products.
	o	NDI (New Dietary Ingredient): The algal biomass may also be sold as a dietary supplement or dietary ingredient in a dietary supplement, in which case it needs to notify the FDA prior to sales. The notification package includes studies and reports that support its record of safe human consumption, its safe manufacture, and marketing claims. ZIVO's GRAS study and cGMP audit record with Alimenta Algae may be leveraged for this work.

Results of Operations for the three months ended September 30, 2025 and 2024

The following table summarizes ZIVO's operating results for the periods indicated:

		Quarter ended September 30,
		2025				2024
Total revenue:		$	65,625			$	31,500
Total cost of goods sold			44,337				22,050
Gross margin			21,288				9,450
Costs and expenses:
Research and development			203,444				326,361
General and administrative			836,187				1,943,126
Total costs and expenses			1,039,631				2,269,487
Loss from operations			(1,018,343	)			(2,260,037	)
Other (expense):
Total other expense			(14,713	)			(8,560	)
Net loss		$	(1,033,056	)		$	(2,268,597	)

Revenue

During the three months ended September 30, 2025, the Company recorded commercial revenue of approximately $65,000 relating to sales of the Company's dried algal biomass product as a human food or food ingredient. This is a $34,000 increase from the same period last year. The increase is the result of higher product volumes sold in the three months ended September 30, 2024.

Costs of Goods Sold

Cost of goods sold for the three months ended September 30, 2025, was $44,337. This is $22,000 higher than the same period last year, fully attributable to the increased product volume this period versus the amount shipped in the three months ending September 30, 2024.

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Research and Development Expenses

For the three months ended September 30, 2025, the Company incurred approximately $205,000 in research and development expenses, as compared to approximately $325,000 for the comparable period in 2024.

In the quarter ended September 30, 2025, the Company had research and development spending of approximately $205,000; a $120,000 decrease in spending from the third quarter of 2024. Of these costs in the third quarter of 2025, $170,000 was attributable to labor and other internal research and development costs, a decrease of approximately $120,000 from the comparable prior year period. The decrease is entirely the result of lower non-cash equity compensation related costs and lower research and development headcount. Third party research and development spending of approximately $35,000 was approximately the same as the comparable prior year period due to a slight increase in third party research studies and third party laboratory testing services.

		Quarter ended September 30,				Quarter ended September 30,
		2025				2024
Labor and other internal expenses		$	169,440			$	290,245
External research expenses			34,004				36,116
Research and development		$	203,444			$	326,361

General and Administrative Expenses

General and administrative expenses were approximately $840,000 for the three months ended September 30, 2025, as compared to approximately $1.9 million for the comparable prior year period. The decrease of approximately $1.1 million in general and administrative expense versus the same period in 2024 is due to a decrease in labor related expenses of approximately $400,000, a decrease in professional services of $700,000, other overhead costs remained mostly unchanged. The $400,000 decrease in labor related costs is explained by a $400,000 decrease in non-cash equity related compensation awarded by the Board of Directors to certain Company employees. The $700,000 year over year decrease in professional services expense is primarily due to equity compensation awarded to the Board of Directors totalling approximately $600,000, and by lower legal and consulting expenses of approximately $110,000. Lower rent and insurance costs were offset by an increase in travel and entertainment expense.

Results of Operations for the nine months ended September 30, 2025 and 2024

The following table summarizes ZIVO's operating results for the periods indicated:

		Nine months ended September 30,
		2025				2024
Total revenue:		$	119,025			$	67,220
Total costs of goods sold			79,816				45,268
Gross margin			39,209				21,952
Costs and expenses:
Research and development			3,452,336				2,891,452
General and administrative			3,446,876				8,895,978
Total costs and expenses			6,899,212				11,787,430
Loss from operations			(6,860,003	)			(11,765,478	)
Other (expense):
Total other expense			(24,471	)			(17,973	)
Net loss		$	(6,884,474	)		$	(11,783,451	)

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Revenue

In the nine months ended on September 30, 2025 the Company recorded commercial revenue of approximately $120,000 for sales of the Company's dried algal biomass product as a human food or food ingredient. The $120,000 for the nine months ending September 30, 2025 is a $52,000 increase over the $67,000 in revenue in the nine-month period ended September 30, 2024. The amount is fully explained by increases in sales volumes versus last year's period.

Costs of Goods Sold

Cost of goods sold for the nine months ended September 30, 2025 was approximately $80,000. This is $35,000 higher than the same period last year, explained by the increase in sales volume.

Research and Development Expenses

For the nine months ended September 30, 2025, the Company incurred approximately $3.5 million in research and development expenses, as compared to approximately $2.9 million in the comparable period in 2024. In the nine months ended September 30, 2025, the Company's research and development spending included approximately $2.7 million of amortization of expenses related to the exchange agreements; there was no amortization of expenses related to the exchange agreements in the nine months ending September 30, 2024.

In the nine months ended September 30, 2025, excluding this amortization, the Company had gross research and development spending of approximately $710,000; a $2.2 million decrease in spending from the first nine months of 2024. Of these costs in the first nine months of 2025, approximately $640,000 was related to labor and other internal lab costs, a decrease of approximately $2.2 million from the comparable prior year period, primarily attributable to a decrease in non-cash compensation of $2.1 million, and lower headcount costs of $100,000. Third party research and development spending of approximately $70,000 was approximately $30,000 higher than the comparable prior year period due to a mild increase in third party research studies.

		Nine months ended September 30,				Nine months ended September 30,
		2025				2024
Labor and other internal expenses		$	643,628			$	2,855,500
External research expenses			70,426				35,952
Total gross R&D expenses			714,054				2,891,452
Amortization of exchange agreement expenses			2,738,282				-
Research and development		$	3,452,336			$	2,891,452

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General and Administrative Expenses

General and administrative expenses were approximately $3.4 million for the nine months ended September 30, 2025, a decrease from $8.9 million in the comparable prior year period. The decrease of approximately $5.5 million in general and administrative expense during 2025 is explained by lower labor related costs of approximately $3.4 million and $2.0 million lower professional services, and a reduction in other overhead of $55,000. The $3.4 million decrease in labor related expenses is attributable to lower non-cash equity related employee compensation of $3.8 million partially offset by increases in bonus expense of $400,000. Professional services expense decreases of $2.0 million is due to non-employee board of directors' compensation reductions of $2.0 million, and lower consultant expense of $100,000 and lower legal expense of $70,000 partially offset by higher accounting ($170,000) expenses. The approximately $55,000 reduction in other overhead is attributable to a $60,000 reduction in insurance expense, lower rent of $15,000, offset by increased spending on travel and entertainment of $20,000. The Board has determined, beginning August 20, 2025, to forgo compensation of non-employee directors until the Company's financial condition improves.

Liquidity and Capital Resources

As of September 30, 2025, our principal source of liquidity consisted of cash of $57,222. The Company expects to continue to incur significant expenses and increasing operating and net losses for the foreseeable future until and unless we generate an adequate level of revenue from potential commercial sales to cover expenses. The sources of cash to date have been limited proceeds from the issuances of notes with warrants, common stock with and without warrants and unsecured loans.

Convertible Loan Agreement

On July 4, 2025, the Company's Board of Directors approved by unanimous consent an unsecured convertible note program for up to $2 million of borrowings from investors. Subsequently, on July 8, 2025, the Company entered into a Convertible Loan Agreement (the "Loan Agreement") with an investor under this convertible note program. The investor loaned the Company $250,000 at an interest rate of 10% (effective interest rate of 15.1% including warrant costs) and a term of 24 months. Interest on the loan accrues and is due along with the principal at the end of the term. The conversion price will be equal to the lower of $13.94 per share or the price per share of the Company's Common Stock as determined in change of control event. Concurrently, the Company issued a warrant to the investor which allows the investor to purchase 1,793 shares of the Company's Common Stock at a fixed price of $13.94 per share, the market price on the day of the loan agreement. See NOTE 3 - DEBT.

Participation Agreements

From April 13, 2020, through May 14, 2021, the Company entered into twenty-one License Co-Development Participation Agreements (the "Participation Agreements") with certain accredited investors ("Participants") for an aggregate of $2,985,000. The Participation Agreements provide for the issuance of warrants to such Participants and allows the Participants to participate in the fees (the "Fees") from licensing or selling bioactive ingredients or molecules derived from ZIVO's algae cultures. Specifically, ZIVO has agreed to provide to the Participants a 44.775% "Revenue Share" of all license fees generated by ZIVO from any licensee.

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 (40%) or fifty percent (50%) if the option is exercised more than 18 months following execution. Pursuant to the terms of twelve of the Participation Agreements, the Company may not exercise its option until it has paid the Participants a revenue share equal to a minimum of thirty percent (30%) of the amount such Participant's total payment amount. Pursuant to the terms of the one of the Participation Agreements, the Company may not exercise its option until it has paid the Participant a revenue share equal to a minimum of one hundred forty percent (140%) of the amount such Participant's total payment amount. Five of the Participation Agreements have no minimum threshold payment. Once this minimum threshold is met, the Company may exercise its option by delivering written notice to a Participant of its intent to exercise the option, along with repayment terms of the amount funded, which may be paid, in the Company's sole discretion, in one lump sum or in four (4) equal quarterly payments. If the Company does not make such quarterly payments timely for any quarter, then the Company shall pay the prorate Revenue Share amount, retroactive on the entire remaining balance owed, that would have been earned during such quarter until the default payments have been made and the payment schedule is no longer in default.

Exchange Agreements

From January 9, 2025, through April 16, 2025, the Company has entered into a series of seventeen Exchange Agreements ("Exchange Agreements") with Participants to the Participation Agreements. Under the Participation Agreements, the Company had a buy-out option pursuant to which it could purchase the Investors' right, title and interest in the revenue share for an aggregate minimum purchase price of $5,306,500. The Company's board of directors approved Exchange Agreements that would provide for the cancellation of the Purchase Agreements and accompanying forfeiture of each Investor's right to earn certain cash from the revenue share and buy-out option in exchange for the Company's common stock. As of September 30, 2025, four of the original Participation Agreements remained outstanding. See NOTE 4 - DEFERRED R&D OBLIGATIONS - PARTICIPATION AGREEMENTS

Funding Requirements

Management has noted the existence of substantial doubt about our ability to continue as a going concern. Our existing cash will not be sufficient to fund our operating expenses through at least twelve months from the date of this filing. To continue to fund operations, we will need to secure additional funding through public or private equity or debt financings, through collaborations or partnerships with other companies or other sources. We may not be able to raise additional capital on terms acceptable to us, or at all. Any failure to raise capital when needed could compromise our ability to execute on our business plan. If we are unable to raise additional funds, or if our anticipated operating results are not achieved, we believe planned expenditures may need to be reduced in order to extend the time period that existing resources can fund our operations. If we are unable to obtain the necessary capital, it may have a material adverse effect on our operations and the development of our technology, or we may have to cease operations altogether.

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Our material cash requirements relate to the funding of our ongoing product development and for payment of significant levels of accounts payable and accrued executive and employee bonuses. The development of our product candidates is subject to numerous uncertainties, and we could use our cash resources sooner than we expect. Additionally, the process of development is costly, and the timing of progress in pre-clinical tests and clinical trials is uncertain. Our ability to successfully transition to profitability will be dependent upon achieving further regulatory approvals and achieving a level of product sales adequate to support our cost structure. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Statement of Cash Flows

Cash Flows from Operating Activities. During the nine months ended September 30, 2025, our operating activities used $2.2 million in cash, a decrease of cash used of approximately $1.2 million from the comparable prior year period when the Company used approximately $3.4 million for operating activities. After adjusting the comparison period's net income for non-cash expenses including equity-based compensation and amortization of lease liabilities, the Company incurred approximately $100,000 more of additional cash net loss than in the comparable prior year period. In addition, for the nine months ended September 30, 2024, the Company generated about $1.3 million more cash than the prior year period through changes in working capital accounts.

Cash Flows from Investing Activities. During the nine months ended September 30, 2025, and 2024, there were no investing activities.

Cash Flows from Financing Activities. During the nine months ended September 30, 2025, our financing activities generated approximately $700,000, a decrease of approximately $2.3 million from the comparable prior year period when the Company generated approximately $3.3 million from financing activities. In the nine months ending September 30, 2025, the Company received proceeds of $400,000 through direct sales of common stock and warrants, raised a net $150,000 from proceeds of a short-term financing agreement, issued convertible notes for approximately $250,000, and paid $100,000 to repay an outstanding loan. In the nine months ended September 30, 2024, the Company received net proceeds of $3.2 million from direct sales of common equity to investors, and raised a net $100,000 from proceeds of a short term financing agreement.

		Nine months ended September 30,
		2025				2024
Net cash provided by (used in):
Operating activities		$	(2,173,204	)		$	(3,407,788	)
Investing activities			-				-
Financing activities			687,984				3,292,811
Net increase (decrease) in Cash		$	(1,485,220	)		$	(114,977	)

We estimate that we would require approximately $6.0 million in cash over the next 12 months in order to fund our basic operations, excluding our research and development initiatives. Based on this cash requirement, we have a near term need for additional funding to continue to develop our products and intellectual property. Historically, we have had substantial difficulty raising funds from external sources. If we are unable to raise the required capital, we will be forced to curtail our business operations, including our research and development activities.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the balance sheets and the reported amounts of revenue and expenses during the reporting periods. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances at the time such estimates are made. Actual results may differ materially from our estimates and judgments under different assumptions or conditions. We periodically review our estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in our financial statements prospectively from the date of the change in estimate.

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For a discussion of our critical accounting estimates, please read Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 18, 2025. There have been no material changes to the critical accounting estimates previously disclosed in our Annual Report on Form 10-K.