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Zivo Bioscience, Inc. (OTCQB:ZIVO), a small-cap biotech company with a market capitalization of $51.53 million, announced Monday that it has entered into a new convertible debt offering to raise up to $2 million. According to InvestingPro data, the company currently operates with a moderate debt level but faces challenges with short-term liquidity, as its current ratio stands at 0.39. According to a press release statement based on a recent SEC filing, the company issued a bridge promissory note in the principal amount of $250,000 and an accompanying warrant to purchase 1,793 shares of its common stock to an accredited investor on July 8.
The offering consists of unsecured convertible notes, each with an annual interest rate of 10%, compounded annually. The notes are due upon the investor’s request on or after the earlier of a qualified equity financing of at least $5 million or two years from the date of issuance. This financing comes at a crucial time, as InvestingPro analysis shows the company generated only $0.12 million in revenue over the last twelve months and maintains a total debt of $0.97 million. If a note remains outstanding at that time, the principal and accrued interest will automatically convert into common shares at the lower of the closing price on the date of issuance or 80% of the price per share in the qualified financing.
Investors may also elect to convert their notes upon a change of control of the company, at a conversion price equal to the lower of the closing price on the date of issuance or the price per share in the change of control transaction. If investors do not elect to convert in such a scenario, the company is required to repay the outstanding principal and interest upon closing.
Prepayment of the notes by Zivo Bioscience requires majority holder consent or 30 days’ prior written notice, and must be at 115% of the outstanding principal plus accrued interest. The notes are unsecured and rank junior to all secured company debt. In the event of default or bankruptcy, the notes become immediately due.
Each warrant issued as part of the offering allows for the purchase of common stock equal to 10% of the original note principal divided by the common stock’s closing price at issuance. The warrants have a five-year term, an exercise price set at the closing price on the date of issuance, and are exercisable immediately.
This information is based on a press release statement and details disclosed in the company’s SEC filing.
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