UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.)
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Preliminary Proxy
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Definitive Proxy
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Revised
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Definitive
Additional Materials
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Soliciting Material
Under §240.14a-12
Zivo Bioscience, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
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transaction:
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offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously. Identify
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EXPLANATORY NOTE
This
revised defintive proxy statement (this “Proxy
Statement”) of Zivo Bioscience, Inc. (“ZIVO” or
the “Company”) amends, restates and supersedes the
definitive proxy statement filed by the Company with the Securities
and Exchange Commission on April 29, 2020 (the “original
proxy statement”), which was filed in connection with the
Company’s 2020 annual meeting of shareholders (the
“Annual Meeting”).
This
proxy statement is being filed: (1) to add a proposal to
authorize a reverse stock split of the issued and outstanding
shares of ZIVO common stock; (2) to add a proposal to authorize a
decrease in the authorized shares of ZIVO common stock; (3) to
change the date of the Annual Meeting from November 4, 2020 to
November 11, 2020; and (4) to change the format of the Annual
Meeting to a virtual-only format to be held at http://www.issuerdirect.com/virtualevent/zivo.
This
Proxy Statement should be read in place of the original proxy
statement, and amends, restates and supersedes the original proxy
statement in all respects.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
Zivo Bioscience, Inc.
To be held November 11, 2020
TO THE
SHAREHOLDERS OF
Zivo Bioscience, Inc.:
We are
pleased to invite you to attend our 2020 Annual Meeting of
Shareholders to be held on Wednesday, November 11, 2020, at 10:00
a.m. EST. In light of public health concerns regarding the
coronavirus (COVID-19) outbreak, the Annual Meeting will be held in
a virtual format only. The Board of Directors has fixed the close
of business on September 18, 2020 as the record date for the
determination of shareholders entitled to receive notice of, and to
vote at, the Annual Meeting.
The
attached Proxy Statement describes the matters proposed by your
Board of Directors to be considered and voted upon by our
shareholders at our Annual Meeting. These items are more fully
described in the following pages, which are hereby made part of
this Notice.
The
Company’s Proxy Statement and Proxy Card accompany this
Notice. The Annual Meeting will be held for the following
purposes:
1.
To elect five
members of the board of directors, each to serve until the Annual
Meeting of shareholders in 2021 and until his or her respective
successor is elected and qualified;
2.
To approve (on an
advisory basis) the compensation of our named executive
officers;
3.
To approve (on an
advisory basis) whether an advisory vote on the compensation of our
named executive officers should occur once every one, two or three
years;
4.
To approve an
amendment to our Articles of Incorporation, as amended (the
“Articles of Incorporation”) to effect, at the option
of the Board of Directors, a reverse stock split of our common
stock at a reverse stock split ratio ranging from one-for-twenty
five (1:25) to one-for-one-hundred twenty (1:120), with the
effectiveness of such amendment to be determined by the Board of
Directors prior to November 11, 2021;
5.
To approve an
amendment to our Articles of Incorporation to effect, if and only
if Proposal 4 is both approved and implemented, a reduction in the
total number of authorized shares of our common stock, with the
specific number of authorized shares determined by a formula that
is based on 1/10th of the ratio utilized for the reverse stock
split; and
6.
To consider and act
upon such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The
Board of Directors has fixed the close of business on September 18,
2020 as the record date for determination of the shareholders
entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. Only holders of common stock of record at the
close of business on September 18, 2020 will be entitled to notice
of, and to vote at, the Annual Meeting or at any adjournment or
adjournments thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL
MEETING REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. WHETHER OR NOT
YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. THE PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO THE ANNUAL MEETING BY FILING WITH THE
SECRETARY OF THE COMPANY A WRITTEN REVOCATION, BY EXECUTING A PROXY
WITH A LATER DATE, OR BY ATTENDING AND VOTING AT THE ANNUAL
MEETING.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON NOVEMBER 11, 2020:
The Proxy Statement, the ZIVO Annual Report for the fiscal year
ended December 31, 2019 and the Proxy Card are available
at https://www.iproxydirect.com/index.php/ZIVO.
Zivo Bioscience, Inc.
2804 Orchard Lake Rd, Suite 202
Keego Harbor, MI 48320
(248) 452-9866
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 11, 2020
INFORMATION CONCERNING SOLICITATION AND VOTING
This
Proxy Statement is furnished to you as a holder of outstanding
shares of Zivo Bioscience, Inc. common stock, par value $.001 per
share (“Common Stock”), in connection with the
solicitation of proxies by the Board of Directors of the Company
(“Board of Directors” or “Board”), for use
at the Annual Meeting of Shareholders to be held virtually on
November 11, 2020 at 10:00 a.m. EST. Accompanying this Proxy
Statement is the proxy card which you may use to indicate your vote
as to the proposals described in this Proxy Statement. Our Annual
Report on Form 10-K for the year ended December 31, 2019 also
accompanies this Proxy Statement but does not constitute part of
these proxy soliciting materials. We anticipate that this Proxy
Statement and the accompanying proxy card will be mailed to our
shareholders on or about October 19, 2020.
In
light of public health concerns regarding the coronavirus
(COVID-19) outbreak, the Annual Meeting will be held in a virtual
format only, at
https://www.issuerdirect.com/virtualevent/zivo. To participate in our Annual
Meeting, including casting your vote during the meeting, access the
meeting website at https://www.issuerdirect.com/virtual-event/zivo
and entering in your shareholder information provided on your
ballot or proxy information previously mailed to you. If you attend
the Annual Meeting virtually, you may revoke your proxy prior to
its exercise and vote virtually at the Annual Meeting. In the event
that there are not sufficient stockholders present for a quorum or
sufficient votes to approve a proposal at the time of the Annual
Meeting, the Annual Meeting may be adjourned from time to time in
order to permit further solicitation of proxies by the
Company.
Voting of Shares by Proxy
Shareholders
may vote at the Annual Meeting by attending virtually or by proxy.
Execution of a proxy will not in any way affect a
shareholder’s right to attend and vote at the Annual Meeting.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it any time before it is voted. Proxies may be
revoked by (1) filing with our Secretary, before the taking of
the vote at the Annual Meeting, a written notice of revocation
bearing a date later than the date of such proxy, (2) duly
executing a later dated proxy relating to the same shares and
delivering it to our Secretary before the taking of the vote at the
Annual Meeting or (3) attending and voting at the Annual
Meeting (although attendance at the Annual Meeting will not in and
of itself constitute a revocation of a proxy). If your shares are
held in “street name,” that is, you hold your shares in
an account with a bank, broker or other holder of record, you must
obtain a proxy, executed in your favor, from your broker or other
holder of record, to be able to vote at the Annual Meeting. Any
written notice of revocation or subsequent proxy should be sent to
Zivo Bioscience, Inc., 2804 Orchard Lake Rd, Suite 202, Keego
Harbor, MI 48320, attention: Corporate Secretary, at or before the
taking of the vote at the Annual Meeting.
Record Date
The
close of business on September 18, 2020 has been fixed as the
record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting or any adjournments
thereof. As of September 18, 2020, we had outstanding 406,914,909
of Common Stock. A shareholder is entitled to cast one vote for
each share held on the record date on all matters to be considered
at the Annual Meeting.
Quorum and Votes Required
The
representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Annual
Meeting is necessary to establish a quorum for the transaction of
business at the Annual Meeting. Votes withheld from a nominee,
abstentions and broker “non-votes” are counted as
present or represented for purposes of determining the presence or
absence of a quorum. A “non-vote” occurs when a broker
holding shares for a beneficial owner does not vote on a proposal
because the broker does not have discretionary voting power and has
not received instructions from the beneficial owner.
Directors
will be elected, and the frequency of our future
“say-on-pay” votes will be determined, by a plurality
of the votes cast by shareholders entitled to vote at the Annual
Meeting. The proposal to approve, on an advisory basis, the
compensation of our executive officers requires the affirmative
vote of the majority of the votes cast at the Annual Meeting. The
proposal to authorize the reverse stock split and the proposal to
authorize a decrease in authorized shares each requires the
affirmative vote of the outstanding shares of Common
Stock.
An
automated system administered by our transfer agent tabulates the
votes. The vote on each matter submitted to shareholders is
tabulated separately. Abstentions and broker
“non-votes” are included in the number of shares
present or represented for purposes of determining whether there is
a quorum, but are not considered as shares voting or as votes cast
with respect to any matter presented at the Annual Meeting. As a
result, abstentions and broker “non-votes” will not
have any effect on the proposal to elect directors, the say-on-pay
vote or the vote to determine the frequency of future say-on-pay
votes and will have the same effect as votes “against”
the proposal to approve and adopt the amendment to our Articles of
Incorporation, as amended. Additionally, abstentions and broker
“non-votes” will have the same effect as a vote
“against” the proposal to authorize the reverse stock
split and the proposal to authorize a decrease in authorized
shares.
The
persons named as the proxies, Philip M. Rice II and Andrew A. Dahl,
were selected by the Board of Directors and are executive officers.
All properly executed proxy cards returned in time to be counted at
the Annual Meeting will be voted. Any shareholder giving a proxy
has the right to withhold authority to vote for any individual
nominee to the Board of Directors by writing that nominee’s
name in the space provided on the proxy card.
All proxies will be voted in accordance with the
shareholders’ instructions, and if no choice is specified,
the enclosed proxy card (or any signed and dated copy thereof) will
be voted in favor of the matters set forth in the accompanying
notice of Annual Meeting of shareholders.
By
order of the Board of Directors
Zivo
Bioscience, Inc.
/s/ Philip M. Rice II
Philip M. Rice II
Chief Financial Officer
October 19, 2020
YOU MAY
RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY STATEMENT.
ZIVO HAS NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT
FROM THAT CONTAINED IN THIS PROXY STATEMENT. THE DELIVERY OF THIS
PROXY STATEMENT DOES NOT MEAN THAT INFORMATION CONTAINED IN THIS
PROXY STATEMENT IS CORRECT AFTER THE DATE OF THIS PROXY STATEMENT.
THIS PROXY STATEMENT IS NOT AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH THE
OFFER OR SOLICITATION IS UNLAWFUL.
TABLE OF CONTENTS
DESCRIPTION
|
PAGE
|
QUESTIONS
AND ANSWERS
|
1
|
GENERAL
INFORMATION
|
3
|
PROPOSAL
NO. 1 -- ELECTION OF DIRECTORS
|
4
|
INFORMATION
WITH RESPECT TO THE BOARD OF DIRECTORS
|
6
|
MANAGEMENT
|
9
|
EXECUTIVE
COMPENSATION
|
11
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
SHAREHOLDER MATTERS
|
16
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
18
|
PROPOSAL
NO. 2 — ADVISORY VOTE ON NAMED EXECUTIVE OFFICER
COMPENSATION
|
19
|
PROPOSAL
NO. 3 — ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON
NAMED EXECUTIVE OFFICER COMPENSATION
|
20
|
PROPOSAL
NO. 4 — REVERSE STOCK SPLIT
|
21
|
PROPOSAL
NO. 5 — AUTHORIZED SHARE REDUCTION
|
25
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OTHER
MATTERS
|
28
|
FINANCIAL
MATTERS AND FORM 10-K REPORT
|
29
|
IMPORTANT
NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON NOVEMBER 11, 2020
|
29
|
QUESTIONS AND ANSWERS
Q: What
may I vote on?
A.
You may vote on the
following proposals:
There
are five nominees for election to the Company’s Board of
Directors this year (each to serve until the annual meeting of
shareholders in 2021 and until their respective successors are duly
elected and qualified).
Your Board recommends a vote FOR each of the nominees.
2.
ADVISORY VOTE ON
COMPENSATION
We are
requesting that shareholders approve, on an advisory basis, the
compensation of our named executive officers.
Your Board recommends a vote FOR the approval of the compensation
of our named executive officers.
3.
FREQUENCY OF
SAY-ON-PAY VOTES
We are
requesting shareholders to determine whether future votes to
approve, on an advisory basis, the compensation of our named
executive officers will be held every one, two or three
years.
Your Board recommends a vote for EVERY THREE YEARS.
We are
requesting that shareholders approve an amendment to our Articles
of Incorporation to effect a reverse stock split, or “Reverse
Stock Split,” of our Common Stock at a ratio ranging from
one-for-twenty five (1:25) to one-for-one-hundred twenty (1:120),
with the exact ratio as may be determined at a later date by our
Board of Directors, which may abandon the amendment in its
discretion before November 11, 2021.
Your Board recommends a vote FOR the approval of the Reverse Stock
Split.
5.
AUTHORIZED SHARE
REDUCTION
We are
requesting that shareholders approve an amendment to our Articles
of Incorporation to effect, if and only if the Reverse Stock Split
is both approved and implemented, a reduction in the total number
of authorized shares of our Common Stock, or “Authorized
Shares Reduction,” with the specific number of authorized
shares determined by a formula that is based on 1/10th of the ratio
utilized for the Reverse Stock Split.
Your Board recommends a vote FOR the approval of the Authorized
Share Reduction.
Q Who
is entitled to vote?
A:
Shareholders of
record as of the close of business September 18, 2020 are entitled
to vote at the Annual Meeting.
Q How
do I vote?
A:
You
may vote either at the Annual Meeting or by proxy. If you choose to
vote by proxy, sign and date the proxy card you receive and return
it in the prepaid envelope. If you return your signed proxy card
but do not mark the boxes showing how you wish to vote, your shares
will be voted as follows: (i) FOR each nominee, (ii) FOR the
approval of the compensation of our named executive officers, (iii)
for the approval of the compensation of our named executive
officers to take place EVERY THREE YEARS, (iv) FOR the approval of
the Reverse Stock Split, and (v) FOR the approval of the Authorized
Shares Reduction.
Q: How
does discretionary authority apply?
A:
If you sign your
proxy card, but do not make any selections, you give authority to
Philip M. Rice II, Chief Financial Officer and Andrew A. Dahl,
Chief Executive Officer, to
vote in their discretion on each proposal and any other matter that
may properly come before the Annual Meeting.
Q: What
does it mean if I get more than one proxy card?
A:
If
your shares are registered differently and are in more than one
account, you will receive more than one proxy card. Sign and return
all proxy cards to ensure that all of your shares are voted. We
encourage you to have all accounts registered in the same name and
address (whenever possible).
You can
accomplish this by contacting our transfer agent, Issuers Direct
Corporation at (801) 272-9294.
Q: How
many shares can vote?
A:
As of the close of business on the record date,
September 18, 2020, there were 406,914,909 shares of Common
Stock issued and outstanding. Every
holder of Common Stock as of
the close of business on September 18, 2020, the record date, is
entitled to one vote for each share held.
Q: What
is a “quorum?”
A:
The presence of the
holders of a majority of the outstanding shares of Common Stock entitled
to vote at the Annual Meeting, whether in person or by proxy,
constitutes a “quorum” at the Annual Meeting. There
must be a quorum for the Annual Meeting to be held.
Q: Who
can attend the Annual Meeting?
A:
All
shareholders that held shares of our Common Stock on September 18,
2020, the record date, are entitled to attend.
Q: How
will voting on any other business be conducted?
A:
Although
we do not know of any business to be considered at the Annual
Meeting other than the proposals described in this Proxy Statement,
if any other business is presented at the Annual Meeting, your
signed proxy card gives authority to Philip M. Rice II, Chief
Financial Officer and Andrew A. Dahl, Chief Executive Officer, to
vote on such matters at their discretion.
Q: Can
a shareholder nominate someone to be a director of
ZIVO?
A:
Our
bylaws do provide a procedure for shareholders to nominate
directors. Nominations for the election of directors may be made by
the board of directors or by any shareholder entitled to vote for
the election of directors. Subject to compliance with applicable
United States securities laws and the rules and regulations of the
Securities and Exchange Commission (“SEC”), nominations
by shareholders may be made by notice in writing to the secretary
of the corporation not less than 14 days nor more than 60 days
prior to any meeting of the shareholders called for the election of
directors; provided, however, that if less than 21 written
days’ notice of the meeting is given to shareholders, such
notice of nomination by a shareholder shall be given to the
secretary of the corporation not later than the close of the fifth
day following the day on which notice of the meeting was mailed to
shareholders.
The
Board of Directors has a standing Nominating and Corporate
Governance Committee. The Nominating and Corporate Governance
Committee, in selecting individuals to be nominated for election to
the Board of Directors, considers, among other things, the
following qualifications in nominating an individual: diversity in
background, age, experience, qualifications, attributes and skills,
independence, integrity, business experience and acumen, education,
accounting and financial expertise, reputation, civic and community
relationships and industry knowledge and relationships. In
nominating an existing director for re-election to the Board of
Directors, the Board of Directors will consider and review an
existing director’s attendance, performance and length of
service.
Q: Who
is soliciting proxies?
A:
The enclosed proxy is being solicited by the Board
of Directors of ZIVO on behalf of ZIVO. The cost of the
solicitation shall be borne by the Company. It is anticipated that
solicitations of proxies for the meeting will be made only by use
of the mail; however, we may use the services of
our directors, officers
and employees to solicit proxies personally or by telephone,
without additional salary or compensation to them. Brokerage
houses, custodians, nominees and fiduciaries will be requested to
forward the proxy soliciting materials to the beneficial owners of
our shares held of record by such persons, and we will reimburse
such persons for their reasonable out-of-pocket expenses incurred
in the performance of that task.
Q: How
can I access the Company’s proxy materials and annual report
on Form 10-K?
A:
The
“Investors” section of the Company’s
website, http://www.zivobioscience.com, provides access, free
of charge, to SEC reports as soon as reasonably practicable after
the Company electronically files such reports with, or furnishes
such reports to, the SEC, including proxy materials, Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and amendments to these reports. In addition, a copy of
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2019 will be sent to any shareholder, without charge,
upon written request sent to the Company, addressed to Philip M.
Rice II, Chief Financial Officer, Zivo Bioscience, Inc., 2804
Orchard Lake Rd, Suite 202, Keego Harbor, MI 48320. Alternatively,
the Company’s Annual Report on Form 10-K and the proxy
statement may be accessed at:
https://www.iproxydirect.com/index.php/zivo.
The
references to the website addresses of the Company in this proxy
statement are not intended to function as a hyperlink and, except
as specified herein, the information contained on such websites is
not part of this proxy statement.
GENERAL INFORMATION
Zivo
Bioscience, Inc., a Nevada corporation, is a health and wellness
company engaged in the development of natural products derived from
algae cultures for use as dietary supplements and food ingredients
as well developing, manufacturing, marketing, and selling tests
that the Company believes will allow people to optimize their
health and identify future health risks. Our principal offices are
located at 2804 Orchard Lake Rd, Suite 202, Keego Harbor, MI 48320,
and our telephone number is (248) 452-9866.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
Introduction
Andrew
A. Dahl (Chief Executive Officer), Christopher D. Maggiore, Nola E.
Masterson, John B. Payne and Robert O. Rondeau Jr., each existing
Directors, have been nominated to be elected as members of the
Board of Directors at the Annual Meeting. Each of the nominees, if
elected, will serve as a Director until the next annual meeting of
shareholders in 2021 and until his or her successor has been
elected and qualified. All directors are elected annually and serve
a one-year term until the next annual meeting. Each of the nominees
has consented to serve as a director if elected; however, if any
nominee is unable or declines to serve, which we do not expect to
happen, proxy holders may vote the proxies in accordance with their
best judgment for another qualified nominee. If any of the nominees
becomes unavailable to stand for re-election at the Annual Meeting,
the Board of Directors may designate a substitute and proxies not
withholding votes for the original nominee will be cast for the
substitute. Proxies may not be voted for a greater number of
persons to the Board of Directors than the number of nominees named
herein.
Nominees
Andrew A. Dahl
Age:
66
Director
since 2020
Mr.
Dahl was appointed President / Chief Executive Officer on December 16, 2011. Mr. Dahl is
managing member and principal consultant at Great Northern &
Reserve Partners, a management consulting firm he founded in 2005
that provides marketing and business consulting services to
biotech, biomedical and information technology companies.
Previously, Mr. Dahl served as President of Dawber & Company,
formerly one of the oldest and largest independent marketing &
consulting firms in the Midwest, with an extensive Fortune 500
client roster that included GM, Ford, AT&T, Compuware and
Xerox, among others. Mr. Dahl was employed by Dawber & Company
for nearly 20 years until its partners dissolved the firm in 2005.
He attended the College for Creative Studies and Wayne State
University. Mr. Dahl holds three US patents for interactive
multimedia and is a named inventor in nine recent biomedical patent
applications. Mr. Dahl provides the Company with extensive
expertise regarding our industry and our products.
Christopher D. Maggiore
Age: 54
Director since 2013
Mr.
Maggiore was appointed in August, 2013 to serve as a director of
the Company. Mr. Maggiore is a successful private investor and has
been involved in real estate development, building and management
of businesses for over 25 years. He currently owns and manages a
portfolio of businesses and investments. Mr. Maggiore provides the
Board of Directors with experiences as a successful entrepreneur
and builder of business organizations.
Nola E. Masterson
Age: 73
Director since 2014
Ms.
Masterson was appointed in September 2014 to serve as a director of
the Company. She severs on the Compensation Committee as Chair.
Since 1983, she has been the chief executive officer of Science
Futures, Inc., an investment and advisory firm. Ms. Masterson is
currently managing member and general partner of Science Futures
LLC, I and II, which are venture capital funds invested in life
science funds and companies. Ms Masterson is also the Lead Investor
for Portfolia Femtech Funds since 2018. She serves on several start
up boards, as Chair of Prime Genomics and as Chair of LactaLogics,
Inc, and as board member of LynxBio and Microbide LTD. Ms.
Masterson was a Venture Partner in TVM Capital, a large global
venture firm. She was a member of the board of directors of Repros
Therapeutics Inc. (sold to Allergan plc [NYSE: AGN] in January
2018) and served on the audit committee, nominating committee and
the compensation committee at that company. She is an Adjunct
Professor at the University of San Francisco. Ms. Masterson was a
biotechnology analyst on Wall Street, working with Drexel Burnham
Lambert and Merrill Lynch, and is a co-founder and was the founding
CEO of Sequenom, Inc., a genetic analysis company located in San
Diego, California and Hamburg, Germany. Ms. Masterson is the Chair
Emeritus of the California Life Science Association Institute, a
501(c)(3) organization, which promotes science education, workforce
development and best practices as well as entrepreneurs in the
bioeconomy. Ms. Masterson began her business career at Ames
Company, a division of Bayer, and spent eight years at Millipore
Corporation in sales and sales management and as Vice President of
the Biotechnology Division. She received her Master’s degree
in Biological Sciences from George Washington University, and
continued Ph.D. work at the University of Florida. Ms. Masterson
provides us with the benefit of her extensive experience as an
entrepreneur and an analyst on Wall Street, as well as her 40 years
of investment advisory expertise and experiences in the life
sciences industry.
John B. Payne
Age: 72
Director since 2013
Mr.
Payne was appointed to serve as a director of the Company in July,
2013. Mr. Payne is the President and CEO of Compassion-First Pet
Hospitals and serves as the Chairman of the Board of Directors. He
founded Compassion-First in 2014 and today, the family of
specialty, general practice and emergency veterinary hospitals
throughout the United States is dedicated to changing the
veterinary landscape and elevating patient outcomes. With 44
hospitals across 14 states, Compassion-First has more than 3,000
employees and more than 230 board-certified specialists across a
wide range of medical disciplines. Mr. Payne currently serves as
the Chairman of the Board for American Humane and serves as the
director of ZIVO. He is on the Board of Regents at Ross University
School of Medicine and at Ross University School of Veterinary
Medicine. Prior to creating Compassion-First Mr. Payne served as a
member of the Global Leadership Team for Mars Pet Care. He also
served as the President and CEO of Banfield Pet Hospitals and
served as the President and General Manager of Bayer
Healthcare’s North American Animal Health Division. Mr. Payne
provides the Board of Directors with valuable insight and
experience in the animal care and pharmaceutical
fields.
Robert O. Rondeau, Jr.
Age: 55
Director since 2016
Mr.
Rondeau is Managing Partner of RESON Development, LLC since 2018
and the chief executive officer of PRZ, LLC, a financing company
focused on used car floor plan financing, retail financing and
leasing, a position he has held since 2013. Mr. Rondeau is also the
chief executive officer of Bran Financial, a credit card processing
company, a position he has held since 2010. Prior to that, Mr.
Rondeau was an executive director of Flagstar Bank, focusing on
commercial, consumer and warehouse lending from 2004 through 2009.
Mr. Rondeau received a Bachelor of Arts degree from Northwestern
University and an Executive M.B.A. from Michigan State University.
Mr. Rondeau’s extensive business and financial experience, as
well as his background in executive management, led the Board of
Directors to nominate Mr. Rondeau for re-election.
Votes Required to Elect Directors; Board
Recommendation
Directors
are elected by a plurality of the votes of the shares entitled to
vote in the election and present, in person or by proxy, at the
Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE ELECTION OF ANDREW A. DAHL, CHRISTOPHER D. MAGGIORE,
NOLA E. MASTERSON, JOHN B. PAYNE, AND ROBERT O. RONDEAU, JR. AS
DIRECTORS OF THE
COMPANY.
INFORMATION WITH RESPECT TO THE BOARD OF DIRECTORS
The
following is a brief description of the structure and certain
functions of our Board of Directors. Each of the current directors
is serving until his or her respective successor is duly elected
and qualified, subject to earlier resignation. The Board currently
consists of five directors, one of whom is an employee director,
each of whom has been nominated for election as a director at this
Annual Meeting. The Board of Directors has determined that each
director, other than Mr. Dahl and Mr. Rice, is independent. Under
the rules of Nasdaq, a director will only qualify as an
“independent director” if, in the opinion of that
company’s board of directors, that person does not have a
relationship that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. Each
director was nominated based on his or her knowledge of the
Company, his or her skills, expertise and willingness to serve as a
director. The Board usually meets in scheduled meetings either in
person or via conference telephone call. The Board of Directors
held eight meetings during the fiscal year ended December 31, 2019.
Each of the directors attended at least 75% of the scheduled
meetings of the Board of Directors, and the Compensation Committee
if such director served on the committee, during the period.
Members of the Board of Directors are strongly encouraged to attend
the Company’s annual meeting of shareholders in person. If
attendance in person is not possible, members of the Board of
Directors are strongly encouraged to attend the Company’s
annual meeting of shareholders via telephone or similar
communication equipment. Each of the current directors attended the
annual meeting of shareholders in 2019.
Structure and Operation of the Board
Mr.
Payne acts as the Chairman of our Board of Directors and Mr. Dahl
is our Chief Executive Officer. The Board has a standing
compensation committee and a standing nominating and corporate
governance committee. We do not have a standing audit committee.
The full Board, however, performs all of the functions of a
standing audit committee. The following is a brief description of
these functions of the Board.
Compensation Committee
The
Compensation Committee, which is currently comprised of Ms.
Masterson, as Chair, and Mr. Rondeau, establishes the compensation
for our President and Chief Executive Officer, including applicable
bonus milestones and equity/option grants. The Compensation
Committee also may be involved in or may approve, depending on the
availability of the full board of directors, grants of awards to
other employees, may determine the terms and conditions provided
for in each option grant, and may, as requested by our President
and Chief Executive Officer, review and recommend to the Board of
Directors the amount of compensation to be paid to our officers.
The Compensation Committee generally convenes on an as needed
basis. The Compensation Committee met 12 times during 2019. The
Board of Directors has determined that each member of the
Compensation Committee is independent, as independence is defined
under the rules of Nasdaq. The Compensation Committee does not have
a formal charter.
Nominating and Corporate Governance Committee
The
Nominating and Corporate Governance Committee is currently
comprised of Ms. Masterson, as Chair, and Mr. Rondeau. The
Nominating and Corporate Governance Committee is responsible for,
among other things, considering potential Board members, making
recommendations to the full Board as to nominees for election to
the Board and assessing the effectiveness of the Board. The
Nominating and Corporate Governance Committee will consider
director candidates recommended by shareholders. Any such
candidates will be evaluated on the same basis as other candidates
being evaluated by the Nominating and Corporate Governance
Committee. Information with respect to such candidates should be
sent to Zivo Bioscience, Inc., 2804 Orchard Lake Road, Suite 202,
Keego Harbor, Michigan 48320, Attention: Secretary. The Nominating
and Corporate Governance Committee considers the needs for the
Board of Directors as a whole when identifying and evaluating
nominees and, among other things, considers diversity in
background, age, experience, qualifications, attributes and skills
in identifying nominees, although it does not have a formal policy
regarding the consideration of diversity. For information
concerning the procedures to be followed by security holders in
nominating candidates, please refer to the information under the
caption “Management
– Procedures for Shareholders to Nominate
Directors.” Each current director nominee was
recommended by the Nominating and Corporate Governance Committee.
The Nominating and Corporate Governance Committee was formed in
February 2020 and did not meet in 2019. The Board of Directors has
determined that each member of the Nominating and Corporate
Governance Committee is independent, as independence is defined
under the rules of Nasdaq. The Nominating and Corporate Governance
Committee does not have a formal charter.
Audit Committee Related Function
We do
not have a standing audit committee, and thus we do not have an
audit committee charter. The Board does not believe that the
Company is in a position to attract non-management directors who
could be made members of a separate audit committee. The Board of
Directors reviews with management and the Company’s
independent public accountants the Company’s financial
statements, the accounting principles applied in their preparation,
the scope of the audit, any comments made by the independent
auditors upon the financial condition of the Company and its
accounting controls and procedures and such other matters as the
Board deems appropriate. During fiscal year 2019, the Board met one
time with respect to audit committee related matters. Because the
Company’s Common Stock is traded on the Over the Counter
Bulletin Board, the Company is not subject to the listing
requirements of any securities exchange regarding audit committee
related matters.
The
Board currently consists of five Directors: Mr. Andrew A. Dahl, Mr.
Christopher D. Maggiore, Ms. Nola E. Masterson, Mr. John B. Payne
and Mr. Robert O. Rondeau, Jr. (Mr. Rice was a member of the Board
until his resignation on March 3, 2020. Mr. Dahl was appointed to
the Board on March 4, 2020.) The audit related functions of the
Board include:
●
Selecting our
independent auditors;
●
Reviewing the
results and scope of the audit and other services provided by our
independent auditors; and
●
Reviewing and
evaluating our audit and control functions.
Report of Board on Audit Related Matters
In
discharging its responsibility for oversight of the audit process,
the Board of Directors obtained from the Company’s
independent auditors, Wolinetz, Lafazan and Company, P.C., a formal
written statement describing any relationships between the auditors
and the Company that might bear on the auditors’
independence, consistent with the Independence Standards Board
Standard No. 1, “Independence Discussions with Audit
Committees.” In addition, the Board discussed with the
auditors any relationships that might impact the auditors’
objectivity and independence. The Board is satisfied as to the
auditors’ independence.
The
Board of Directors of the Company reported the
following:
1.
The Board has
reviewed and discussed the audited financial statements as of, and
for, the fiscal year ended December 31, 2019, with management and
the independent auditors. Management has the responsibility for
preparation of the Company’s financial statements and the
independent auditors have the responsibility for auditing those
statements;
2.
The Board has
discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, as amended and
as adopted by the Public Company Accounting Oversight Board (PCAOB)
in Rule 3200T and the Commission;
3.
The Board has
received the written disclosures and the letter from the
independent auditors required by applicable requirements of the
PCAOB regarding the independent auditor’s communications with
the Board and has discussed with the independent auditors the
independent auditor’s independence; and
4.
Based on the reviews and discussions
referred to in paragraphs (1)
through (3) above, the Board approved the inclusion of the
audited financial statements in the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31,
2019.
Members
of the Board:
Andrew A. Dahl
Christopher D. Maggiore
Nola E. Masterson
John B. Payne
Robert O. Rondeau. Jr.
Audit Services and Fees
Wolinetz,
Lafazan and Company, P.C., acting as our independent auditors, has
reported on our December 31, 2019 financial statements in our 2019
Annual Report, which was filed with the SEC on Form 10-K on March
26, 2020, and has served as our independent auditors for 12 years.
We have selected Wolinetz, Lafazan and Company, P.C. to serve as
our independent auditors for the current fiscal year ending
December 31, 2020. No representative of Wolinetz, Lafazan and
Company, P.C. will be present at the Annual Meeting.
It is
the Board’s policy and practice to review and approve in
advance all services, audit and non-audit, to be rendered by the
Company’s independent auditors. The Board does not delegate
this responsibility to Company management.
Fees
billed by Wolinetz, Lafazan and Company, P.C. for 2019 and 2018,
all which were approved by the Board in accordance with its
established policies and procedures, were as follows:
|
|
|
Audit
Fees
|
$87,000
|
$87,000
|
Audit-Related
Fees
|
-
|
-
|
Tax
Fees
|
-
|
-
|
All
Other Fees
|
-
|
-
|
|
$87,000
|
$87,000
|
The
Company’s independent auditors do not generally provide tax
compliance, tax advice and tax planning services to the
Company.
Risk Oversight
The
Board of Directors oversees the Company’s risk management
primarily through the following:
●
review and approval
of an annual business plan;
●
review of a summary
of risks and opportunities at meetings of the Board of
Directors;
●
review of business
developments, business plan implementation and financial
results;
●
oversight of
internal controls over financial reporting; and
●
review of employee compensation and its
relationship to our business
plans.
Communication with Shareholders
We have
established a process for shareholders to communicate with the
Board of Directors. Shareholders wishing to communicate with the
Board of Directors of ZIVO can send an email to
achunovich@zivobioscience.com or write or telephone Angela
Chunovich at the Company’s corporate offices:
Angela Chunovich
Zivo Bioscience, Inc.
2804 Orchard Lake Rd, Suite 202
Keego Harbor, MI 48320
Telephone: (248) 452-9866
All
such communication must state the type and amount of Company
securities held by the shareholder and must clearly state that the
communication is intended to be shared with the Board of Directors.
Ms. Chunovich will forward all such communications to the
members of the Board.
Code of Ethics
ZIVO
has adopted a code of ethics that applies to the Principal
Executive Officer and Principal Financial Officer, or those
performing similar functions. A copy of the code of ethics is
available on our website, www.zivo.com, under the
“Investors – Corporate
Governance” tab and will be sent to any shareholder,
without charge, upon written request sent to the Company’s
Chief Financial Officer, Philip M. Rice II, Zivo Bioscience, Inc.,
2804 Orchard Lake Rd, Suite 202, Keego Harbor, MI
48320.
MANAGEMENT
Directors and Executive Officers
The
following table sets forth the name, age and position of each of
our executive officers and directors:
Name
|
|
Age
|
|
Positions
|
|
Since
|
Andrew
A. Dahl
|
|
66
|
|
President
/ Chief Executive Officer / Director
|
|
2011/2020
|
Philip
M. Rice II
|
|
65
|
|
Chief
Financial Officer / Former Director
|
|
2011
|
Christopher
D. Maggiore
|
|
54
|
|
Director
|
|
2013
|
Nola E.
Masterson
|
|
73
|
|
Director
|
|
2014
|
John B.
Payne
|
|
72
|
|
Director
|
|
2013
|
Robert
O. Rondeau, Jr.
|
|
55
|
|
Director
|
|
2016
|
Philip M. Rice II
Mr.
Rice was appointed Chief Financial Officer in November 2011. In
January 2012, Mr. Rice was appointed to the Board of Directors and
served until March 2020. Mr. Rice is a member of the Board of
Directors of Coherix, Inc. In 2001, Mr. Rice founded Legacy
Results, LLC (now Legacy Results Inc.), a management consulting
firm providing a wide range of consulting services, including
strategic planning, business plan development, turnaround
management, financial management, and mergers and acquisitions, and
has served as its Managing Partner since that date. From December,
2007 through March, 2008, Mr. Rice served as chairman of the board
of IMX Solutions, Inc., a technology company providing secure
internet transactions, including private data transactions. Mr.
Rice practiced as a CPA and worked for Deloitte & Touche LLP
for 13 years before founding Legacy Results.
Information
with respect to Mr. Dahl, Mr. Maggiore, Ms. Masterson, Mr. Payne
and Mr. Rondeau is contained herein under the caption
“Proposal No. 1
– Election of Directors
– Nominees.”
Each of
the officers will serve as such until his respective successor is
appointed and qualified, or until his earlier resignation or
removal. All directors hold their positions for one year or until
their successors are elected and qualified, subject to their
earlier resignation or removal.
Family Relationships
There
are no familial relationships between any of our officers and
directors.
Audit Committee Financial Expert
We do
not have an audit committee financial expert (as that term is
defined in rules promulgated by the SEC), because we do not have an
audit committee.
Procedures for Shareholders to Nominate Directors
Our
bylaws provide a procedure for shareholders to nominate directors.
Nominations for the election of directors may be made by the board
of directors or by any shareholder entitled to vote for the
election of directors. Subject to compliance with applicable United
States securities laws and the rules and regulations of the SEC,
nominations by shareholders may be made by notice in writing to the
secretary of the corporation not less than 14 days nor more than 60
days prior to any meeting of the shareholders called for the
election of directors; provided, however, that if less than 21
written days’ notice of the meeting is given to shareholders,
such notice of nomination by a shareholder shall be given to the
secretary of the corporation not later than the close of the fifth
day following the day on which notice of the meeting was mailed to
shareholders.
Delinquent Section 16(a) Reports
Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires the
Company’s directors and officers, as well as persons
beneficially owning more than 10% of the Company’s
outstanding Common Stock, to file reports of ownership and changes
in ownership with the SEC within specified time
periods.
Based
upon a review of Forms 3, 4 and 5 filed with the SEC with respect
to the year ended December 31, 2019, we believe that none of our
reporting persons have failed to file required reports and/or made
late filings during the most recent year, except for the following:
(1) Mr. Dahl filed a late Form 4 on April 8, 2020 to report the
grant of common stock options on November 15, 2019 and December 6,
2019; (2) Mr. Rice filed a late Form 4 on April 8, 2020 to report
11 transactions representing the grants of common stock warrants
and options from February 21, 2018 to March 4, 2020; (3) Mr.
Maggiore filed late Form 4’s on January 3, 2019 to report 13
purchases from December 11, 2018 through December 31, 2018, on May
9, 2019 to report five purchases of common stock on April 26, 2019
through May 3, 2019, on July 26, 2019 to report four purchases of
common stock from July 15, 2019 through July 19, 2019, on November
21, 2019 to report the purchases of common stock on November 15,
2019 and November 18, 2019, on December 9, 2019 to report 10
purchases of common stock from June 17, 2019 through December 5,
2019, on December 20, 2019 to report five purchases of common stock
on December 6, 2019 through December 16, 2019, on January 7, 2020
to report five purchases of common stock on December 19, 2019
through December 30, 2020, and on April 8, 2020 to report the
grants of common stock warrants on September 25, 2019 and September
26, 2019; (4) Ms. Masterson filed a late Form 4 on April 24, 2020
to report five transactions representing the grants of common stock
warrants on September 10, 2015 through September 26, 2019, and two
transactions representing the exercise of common stock warrants and
acquisition of common stock on April 15, 2020; (5) Mr. Payne filed
a late Form 4 on April 8, 2020 to report five transactions
representing the grants of common stock warrants on September 10,
2015 through September 26, 2019; and (6) Mr. Rondeau filed a late
Form 4 on April 8, 2020 to report four transactions representing
grants of common stock warrants on September 10, 2016 through
September 26, 2019.
EXECUTIVE COMPENSATION
Summary Compensation
Table
The
following table summarizes the compensation paid to our Chief
Executive Officer and Chief Financial Officer (referred to herein
as our “named executive officers”) during or with
respect to fiscal 2019 and 2018 for services rendered to us in all
capacities.
Name and Principal
Position
|
|
|
|
All Other
Compensation
($)
|
|
Andrew
A. Dahl
|
2019
|
324,167
|
2,635,967(2)
|
-
|
2,960,134
|
Chief
Executive Officer and Director
|
2018
|
240,000
|
-
|
-
|
240,000
|
|
|
|
|
|
Philip
M. Rice II
|
2019
|
238,000
|
55,798(3)
|
10,0000(4)
|
303,798
|
Chief
Financial Officer
|
2018
|
204,000
|
100,263(5)
|
10,0000(4)
|
314,263
|
(1)
The
amounts reported reflect the grant date fair value (excluding the
effect of estimated forfeitures). The grant date fair value of each
warrant is calculated using the Black Scholes option-pricing model
computed in accordance with FASB ASC Topic 718 and does not
correspond to the actual amount that will be realized upon exercise
by the named executive officers. Valuation assumptions used in
determining the grant date fair value of 2019 awards are included
in Note 3 of the Company’s Financial Statements included with
its Annual Report on Form 10-K filed with the SEC on March 26,
2020.
(2)
Represents the fair
value of an award of compensatory options, pursuant to which Mr.
Dahl received the right to purchase 29,000,000 shares of common
stock at an exercise price between $.10 and $.14 with a term of ten
years for his role as CEO.
(3)
(a)
$38,523 represents the fair value of an award of compensatory
warrants, pursuant to which Mr. Rice received the right to purchase
500,000 shares of common stock at an exercise price of $.08 with a
term of five years for his role as Director; (b) $17,275 represents
the fair value of an award of compensatory warrants, pursuant to
which Mr. Rice received the right to purchase 200,000 shares of
common stock at an average exercise price of $.10 with a term of
five years, in his position as Chief Financial
Officer.
(4)
Represents fees
paid to Mr. Rice for his role as a Director of the
Company.
(5)
(a) $76,814 represents the fair value of an
award of compensatory warrants,
pursuant to which Mr. Rice received the right to purchase 500,000
shares of common stock at an exercise price of $.14 with a term of
five years for his role as Director; (b) $23,449 represents the
fair value of an award of compensatory warrants, pursuant to which
Mr. Rice received the right to purchase 200,000 shares of common
stock at an average exercise price of $.12 with a term of five
years, in his position as Chief Financial
Officer.
Executive Compensation Programs
In
2019, the Compensation Committee reviewed financial information and
other performance metrics relative to the historical compensation
of executive management and comparative information prepared
internally. The Compensation Committee also reviewed
management’s recommendations for compensation levels of all
of the Company’s senior executive officers and considered
these recommendations with reference to relative compensation
levels of like-size institutions. The totality of the information
reviewed by the Compensation Committee was considered when
establishing current executive salary levels, and similar analysis
is expected to be considered when reviewing and establishing future
salaries and long term incentives. The Company’s compensation
policies and practices are designed to ensure that they do not
foster risk taking above the level of risk associated with the
Company’s business model. For this purpose, the Compensation
Committee generally considers the Company’s financial
performance, comparing that performance to the performance metrics
included in the Company’s strategic plan. The Compensation
Committee also generally evaluates management’s compensation
in light of other specific risk parameters. Based on this
assessment, the Compensation Committee believes that the Company
has a balanced pay and performance program that does not promote
excessive risk taking.
The
Company’s compensation programs are aimed at enabling it to
attract and retain the best possible executive talent and rewarding
those executives commensurate with their ability and performance.
The Company’s compensation programs consist primarily of base
salary and bonus.
Base Salary. Base salaries for executive officers are
determined in the same manner as those other salaried employees.
Salary guidelines are established by comparing the responsibilities
of the individual’s position in relation to similar positions
in other nutraceutical companies of similar size. Individual
salaries were determined this year by considering respective levels
of responsibility, position and industry information.
Bonuses. Mr. Dahl is entitled to a Revenue Bonus (as defined
in the Dahl Agreement, as defined below) equal to 2% of the
Company’s revenue contribution in accordance with a formula
as detailed in the Dahl Agreement. No Revenue Bonus is payable in
any year where there is an Operating Net Loss (as defined in the
Agreement). For the 2020 fiscal year (January 1, 2020 to December
31, 2020) (“Dahl Year One”), the Company shall pay Mr.
Dahl a bonus equal to 50% of the Dahl Base Salary (as defined
below) if the Company achieves revenues for Dahl Year One which are
(w) at least $500,000; and (x) greater than that for the 12-month
period immediately preceding Dahl Year One. In addition, for 2021
fiscal year (January 1, 2021 through December 31, 2021)
(“Dahl Year Two”), the Company shall pay Mr. Dahl a
bonus equal to 50% of the Dahl Base Salary if the Company achieves
revenues for Dahl Year Two which are (y) at least $500,000; and (z)
greater than that for Dahl Year One.
Mr.
Rice has no bonus plan; any bonuses awarded are at the discretion
of the Board of Directors. The Chief Financial Officer may receive
equity-based compensation which compensates him in the form of an
equity bonus.
No
bonuses were paid in fiscal 2019 or 2018.
Incentive Compensation Plan. In November 2019, the Company
adopted the 2019 Omnibus Long-Term Incentive Plan (the “2019
Incentive Plan”) for the purpose of enhancing the
Company’s ability to attract and retain highly qualified
directors, officers, key employees and other persons and to
motivate such persons to improve the business results and earnings
of the Company by providing an opportunity to acquire or increase a
direct proprietary interest in the operations and future success of
the Company. The 2019 Incentive Plan will be administered by the
compensation committee of the Board who will, amongst other duties,
have full power and authority to take all actions and to make all
determinations required or provided for under the 2019 Incentive
Plan. Pursuant to the 2019 Incentive Plan, the Company may grant
options, share appreciation rights, restricted shares, restricted
share units, unrestricted shares and dividend equivalent rights.
The 2019 Incentive Plan has a duration of ten years. Subject to
adjustment as described in the 2019 Incentive Plan, the aggregate
number of common shares available for issuance under the 2019
Incentive Plan is 102,000,000 shares. The exercise price of each
share subject to an Option (as defined in the 2019 Incentive Plan)
shall be at least the Fair Market Value (as defined in the 2019
Incentive Plan) (except in the case of a more than 10% shareholder
of the Company, in which case the price should not be less than
110% of the Fair Market Value) on the date of the grant of a Share
and shall have a term of no more than ten years.
Say-On-Pay. We last conducted a say-on-pay vote at the 2017
Annual Meeting of Shareholders. The next say-on-pay vote is taking
place at this 2020 Annual Meeting of Shareholders.
Employment Agreements
We
currently have compensation agreements with our President / Chief
Executive Officer and with our Chief Financial
Officer.
Mr. Dahl’s Employment Agreement:
The
Company’s Chief Executive Officer, Andrew Dahl, is serving
under the terms of an employment agreement dated November 29, 2019
(“Dahl Agreement”) that superseded and replaced all
prior employment arrangements. Under the terms of the Dahl
Agreement, Mr. Dahl will serve as chief executive officer of the
Company for three years, with successive automatic renewals for one
year terms, unless either party terminates the Dahl Agreement on at
least 60 days’ notice prior to the expiration of the then
current term of Mr. Dahl’s employment. Mr. Dahl will receive
an annual base salary, commencing on June 1, 2019, of $440,000
(“Base Salary”), of which $7,500 per month will be
deferred until either of the following events occur: (i) within
five (5) years after the effective date, the Company enters into a
term sheet to receive at least $25,000,000 in equity or other form
of investment or debt on terms satisfactory to the board of
directors of the Company including funding at closing on such terms
of at least $10 million; or (ii) within 12 months after the
effective date that the Company receives revenue of at least $10
million. The Dahl Base Salary shall be subject to annual review and
increase (but not decrease) by the Board during the employment term
with minimum annual increases of 4% over the previous year’s
Dahl Base Salary.
Mr.
Dahl is entitled to a Revenue Bonus under the Dahl Agreement (see
“—Bonuses” above).
Mr.
Dahl was awarded a non-qualified option to purchase 28 million
shares of the Company’s common stock at a price of $0.10 per
share upon signing the Dahl Agreement. Mr. Dahl will be entitled to
non-qualified performance-based options having an exercise price
equal to the greater of $.10 per share and the Fair Market Value
(as defined in the 2019 Incentive Plan), upon the attainment of
specified milestones as follows: (i) non-qualified option to
purchase 1,000,000 common shares upon identification of bioactive
agents in the Company product and filing of a patent with respect
thereto; (ii) non-qualified option to purchase 1,500,000 common
shares upon entering into a contract under which the Company
receives at least $500,000 in cash payments; (iii) non-qualified
option to purchase 1,500,000 common shares upon the Company
entering into a co-development agreement with a research company to
develop medicinal or pharmaceutical applications (where the partner
provides at least $2,000,000 in cash or in-kind outlays); (iv)
non-qualified option to purchase 1,500,000 common shares upon the
Company entering into a co-development agreement for nutraceutical
or dietary supplement applications (where the partner provides at
least $2,000,000 in cash or in-kind outlays); and (v) non-qualified
option to purchase 1,500,000 common shares upon the Company
entering into a pharmaceutical development agreement. Note that
item (i) was achieved in 2019 and the Company awarded a
non-qualified option to purchase 1,000,000 common shares of the
Company’s common stock at a price of $0.14 per
share.
As it
relates to the Company’s wholly-owned subsidiary, Wellmetrix,
LLC (“Wellmetrix”), if and when at least $2 million in
equity capital is raised from a third party and invested in
Wellmetrix in an arms-length transaction, Mr. Dahl shall be granted
a warrant to purchase an equity interest in Wellmetrix that is
equal to the equity interest in Wellmetrix owned by the Company at
the time of the first tranche of any such capital raise (the
“Wellmetrix Warrant”). The Wellmetrix Warrant shall be
fully vested as of the date it is granted and shall expire on the
10th anniversary of the grant date. Once granted, the Wellmetrix
Warrant may be exercised from time to time in whole or in part,
with Mr. Dahl retaining any unexercised portion. The exercise price
for the Wellmetrix Warrant shall be equal to the fair market value
of the interest in Wellmetrix implied by the pricing of the first
tranche of any such capital raise.
The
Dahl Agreement provides that if a Change of Control (as defined in
the Dahl Agreement) occurs and Mr. Dahl is not offered
substantially equivalent employment with the successor corporation
or Mr. Dahl’s employment is terminated without Cause (as
defined in the Dahl Agreement) during the three month period prior
to the Change of Control or the 24-month period following the
Change of Control, 100% of Mr. Dahl’s unvested options will
be fully vested. The Dahl Agreement also provides for severance
payments of, amongst other things, 300% of the Dahl Base Salary and
2x the amount of the Revenue Bonus in such event.
Mr. Rice’s Employment Arrangement:
On
March 4, 2020, the Company entered into an employment letter with
Philip Rice, Chief Financial Officer of the Company (“Rice
Agreement”) that replaced and superseded all prior employment
arrangements. Under the terms of the Rice Agreement, Mr. Rice will
serve as Chief Financial Officer of the Company for one year, with
successive automatic renewals for one year terms, unless either
party terminates the Rice Agreement on at least sixty days’
notice prior to the expiration of the then current term of the Rice
Agreement. Mr. Rice will receive an annual base salary, commencing
on January 1, 2020, of $280,000 (“Rice Base Salary”).
The Rice Base Salary shall increase to $300,000, when the following
event occurs: within one (1) year after the effective date, the
Company enters into a term sheet and receives the related financing
to receive at least $15,000,000 in equity or other form of
investment or debt (“Third Party Financing”) on terms
satisfactory to the board of directors of the Company. On the date
the Rice Agreement was executed, Mr. Rice received a fully-vested
nonqualified stock option to purchase 2,000,000 shares of the
Company’s common stock at a price of $0.15 per and a $25,000
retention bonus.
Mr.
Rice shall also receive $50,000 and a fully-vested nonqualified
stock option to purchase 2,000,000 shares of the Company’s
common stock at a price equal to the greater of $0.10 per share and
the Fair Market Value (as defined in the 2019 Incentive Plan),10
year term, upon the closing, prior to December 31, 2020, of Third
Party Financing which raises at least $15,000,000, as long as Mr.
Rice was employed at the time of closing or was employed within one
year prior to the closing. If, upon the closing prior to December
31, 2021 of Third Party Financing which raises at least $10,000,000
for the Company, Mr. Rice shall receive an additional bonus of
$50,000, as long as Mr. Rice was employed at the time of closing or
if employed within one year prior to the closing.
The
Rice Agreement provides that if a Change of Control (as defined in
the Rice Agreement) occurs and Mr. Rice is not offered
substantially equivalent employment with the successor corporation
or Mr. Rice’s employment is terminated without Cause (as
defined in the Rice Agreement) during the three month period prior
to the Change of Control or the 24-month period following the
Change of Control, 100% of Mr. Rice’s unvested options will
be fully vested and the restrictions on his restricted shares will
lapse. The Rice Agreement also provides for severance payments of,
amongst other things, a lump sum payment of 300% of the Rice Base
Salary and payment of 24 months of the Rice Base Salary in such
event.
Mr.
Rice will receive the following severance benefits following a
termination of employment: a continuation of the Rice Base Salary
for one year and a fully-vested, nonqualified stock option to
purchase 1,000,000 shares of the Company’s common stock at a
price equal to the greater of $0.10 per share and the Fair Market
Value (as defined in the 2019 Incentive Plan), 10 year
term.
Outstanding Equity Awards at Fiscal Year-End 2019
The
following table provides information on the outstanding equity
awards held by our named executive officers as of December 31,
2019.
Option Awards
|
Name
|
Grant Date
|
Number of
securities
underlying
unexercised options
exercisable (1)
|
|
Equity incentive
plan awards:
Number of
securities
underlying
unexercised
unearned options (2)
|
Option
Exercise Price
($)
|
Option
Expiration
Date
|
Andrew A. Dahl
|
11/15/2019
|
28,000,000
|
|
|
0.10
|
11/15/2029
|
|
12/6/2019
|
1,000,000
|
|
|
0.14
|
12/6/2029
|
|
11/8/2017
|
10,000,000
|
|
|
0.08
|
11/8/2022
|
|
8/14/2012
|
|
|
6,000,000(2)
|
0.25
|
8/14/2022
|
Philip M. Rice II
|
10/28/2019
|
50,000
|
|
|
0.08
|
10/28/2024
|
|
9/26/2019
|
500,000
|
|
|
0.08
|
9/26/2024
|
|
8/7/2019
|
50,000
|
|
|
0.10
|
8/7/2024
|
|
5/13/2019
|
50,000
|
|
|
0.10
|
5/13/2024
|
|
2/13/2019
|
50,000
|
|
|
0.10
|
2/13/2024
|
|
11/14/2018
|
50,000
|
|
|
0.14
|
11/14/2023
|
|
9/28/2018
|
500,000
|
|
|
0.14
|
9/28/2023
|
|
8/14/2018
|
50,000
|
|
|
0.12
|
8/14/2023
|
|
4/23/2018
|
50,000
|
|
|
0.10
|
4/23/2023
|
|
2/21/2018
|
50,000
|
|
|
0.10
|
2/21/2023
|
|
11/8/2017
|
6,000,000
|
|
|
0.08
|
11/8/2022
|
|
10/19/2017
|
50,000
|
|
|
0.09
|
10/19/2022
|
|
9/11/2017
|
500,000
|
|
|
0.07
|
9/11/2022
|
|
8/11/2017
|
50,000
|
|
|
0.06
|
8/11/2022
|
|
5/12/2017
|
50,000
|
|
|
0.09
|
5/12/2022
|
|
3/31/2017
|
50,000
|
|
|
0.08
|
3/21/2022
|
|
11/14/2016
|
50,000
|
|
|
0.05
|
11/14/2021
|
|
9/10/2016
|
250,000
|
|
|
0.07
|
9/10/2021
|
|
8/12/2016
|
50,000
|
|
|
0.08
|
8/12/2021
|
|
5/13/2016
|
50,000
|
|
|
0.08
|
5/13/2021
|
|
3/29/2016
|
50,000
|
|
|
0.08
|
3/29/2021
|
|
11/13/2015
|
50,000
|
|
|
0.08
|
11/13/2020
|
|
9/10/2015
|
250,000
|
|
|
0.10
|
9/10/2020
|
|
8/13/2015
|
50,000
|
|
|
0.11
|
8/13/2020
|
|
5/13/2015
|
50,000
|
|
|
0.08
|
5/13/2020
|
|
4/6/2015
|
50,000
|
|
|
0.09
|
4/6/2020
|
(1)
All options granted
are immediately vested.
(2)
Represents
compensatory warrants granted pursuant to the terms of the Dahl
Agreement, which shall become exercisable upon the occurrence of a
specific event. See ”—Mr. Dahl’s Employment
Agreement” for a description of these
warrants.
2019 Compensation of Directors
Our
directors received warrants to purchase our common stock and cash
in exchange for board service during 2019 and 2018. Information
relating to the specific fees that Mr. Rice received in connection
with his role as Director in 2019 is included in our Summary
Compensation Table. Otherwise, our directors do not receive any
additional compensation for serving on our board, and members of
the compensation committee do not receive a separate fee for
serving on the committee. Mr. Maggiore, at his request, receives no
cash compensation for serving as a member of the Board of
Directors.
The
following table summarizes the compensation paid to our other
Directors in 2019:
Name
|
Fees
Earned
or Paid in
Cash
|
Option
Awards
($) (1) (2)
|
|
Nola E.
Masterson
|
$10,000
|
$58,154
|
$68,154
|
Christopher D.
Maggiore
|
-0-
|
58,154
|
58,154
|
John B.
Payne
|
10,000
|
58,154
|
68,154
|
Robert O. Rondeau,
Jr.
|
10,000
|
58,154
|
68,154
|
(1)
The
amounts reported reflect the grant date fair value (excluding the
effect of estimated forfeitures). The grant date fair value of each
warrant is calculated using the Black Scholes option-pricing model
computed in accordance with FASB ASC Topic 718 and do not
correspond to the actual amount that will be realized upon exercise
by the named Directors. Valuation assumptions used in determining
the grant date fair value of 2019 awards are included in Note 3 of
the Company’s Financial Statements included with its Form
10-K filed with the SEC on March 26, 2020.
(2)
Represents
a warrant to purchase 500,000 shares of common stock at an exercise
price of $.08 with a term of five years. As of December 31,
2019, each of the following non-employee directors had shares
underlying outstanding warrants as follows: Ms. Masterson,
2,000,000; Mr. Maggiore, 2,000,000; Mr. Payne, 2,000,000; and Mr.
Rondeau, 1,875,000.
On
March 3, 2020, Mr. Rice resigned from the Board of Directors. On
March 4, 2020, the Board of Directors appointed Mr. Dahl to the
Board of Directors. In 2020, Messrs. Payne, Rondeau and Ms.
Masterson will receive $10,000 for each annual term served, paid in
quarterly installments, and each outside director (including Mr.
Maggiore) will receive a warrant to purchase 500,000 shares of
common stock at an exercise price at current market with a term of
five years.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED SHAREHOLDER
MATTERS
The following table sets forth certain information regarding
each person who is known to us
to beneficially own more than 5% of our issued and outstanding
shares of Common Stock, and the number of shares of our Common
Stock beneficially owned by each of our directors and named
executive officers, and all officers and directors as a group. All
percentages are based on 406,914,909 shares of Common Stock issued and
outstanding as of September 18, 2020, and where applicable,
beneficial ownership includes shares which the beneficial owner has
the right to acquire within 60 days.
Security Ownership of Certain
Beneficial Owners:
Name and
Address
|
Number of
Shares
Beneficially
Owned (1)
|
|
HEP
Investments
2804 Orchard Lake
Rd.
Suite
205
Keego Harbor, MI
48302
|
223,247,458(2)
|
42.4%
|
|
|
|
Strome et.
al.
1688 Meridian Ave,
Suite 727
Miami Beach, FL
33139
|
93,422,753(3)
|
19.2%
|
|
|
|
Christopher D.
Maggiore
4788 Nobles Pond
Dr. NW
Canton, OH
44718
|
57,160,989(4)
(5) (6)
|
13.8%
|
Security Ownership of Management:
Name and
Address
|
Number of
Shares
Beneficially Owned
(1)
|
|
Mr. Christopher D.
Maggiore
|
57,160,989(4)
(5) (6)
|
13.8%
|
Mr. Andrew A.
Dahl
|
35,685,925(7)
|
8.0%
|
Mr. Philip M. Rice
II
|
10,572,455(8)
|
2.5%
|
Mr. Robert O.
Rondeau, Jr.
|
1,875,000(9)
|
*
|
Mr. John B.
Payne
|
1,772,455(10)
|
*
|
Nola E.
Masterson
|
1,609,849(11)
|
*
|
All Directors and
Officers as a Group (6 persons)
|
108,926,673(12)
|
23.3%
|
* Less than 1%
(1)
“Beneficially”
owned shares, as defined by the SEC, are those shares as to which a
person has voting or investment power, or both, and which the
beneficial owner has the right to acquire within 60 days. Unless
otherwise indicated, the persons or entities identified in this
table have sole voting and investment power with respect to all
shares shown as beneficially owned by them.
“Beneficial” ownership does not necessarily mean that
the named person is entitled to receive the dividends on, or the
proceeds from the sale of, the shares.
(2)
Pursuant to a
Schedule 13D filed with the SEC on March 5, 2020 by HEP Investments
LLC and Laith Yaldoo, the manager and controlling member of HEP
Investments LLC (“HEP et. al.”), HEP et. al. has sole
power to vote 104,147,636 shares, sole power to dispose 104,147,636
shares, shared power to vote 119,099,822 shares and shared power to
dispose 119,099,822 shares. Amount includes 59,353,821 shares of
Common Stock issuable upon
conversion of certain promissory notes, including accrued interest
as of September 18, 2020 and 59,746,001 shares of Common Stock issuable upon the exercise of
certain warrants.
(3)
Pursuant to a
Schedule 13D/A filed by Strome Mezzanine Fund, L.P., Strome Alpha
Fund, L.P., Strome Investment Management, L.P., Strome Group, Inc.
and Mark E. Strome (“Strome et. al.”) with the SEC on
February 25, 2020, Strome et. al. has sole power to vote 13,088,129
shares, sole power to dispose 13,088,129 shares, shared power to
vote 80,334,624 shares and shared power to dispose 80,334,624
shares. Amount includes 28,584,624 shares of Common Stock issuable upon conversion of
certain promissory notes, including accrued interest as of
September 18, 2020 and 51,750,000 shares of Common Stock issuable upon the exercise of
certain warrants.
(4)
Pursuant to a
Schedule 13G/A filed with the SEC on February 19, 2020, Christopher
D. Maggiore has sole power to vote 40,904,577 shares, sole power to
dispose 40,904,577 shares, shared power to vote 7,882,740 shares
and shared power to dispose 7,882,740 shares.
(5)
Includes warrants
to purchase 8,373,672 shares of Common
Stock.
(6)
Includes 7,882,740
beneficial shares held in the estate of the Robert S. McLain Estate
of which Mr. Maggiore is the controlling trustee.
(7)
Includes options
and warrants to purchase 35,000,000 shares of Common Stock.
(8)
Includes warrants
to purchase 10,550,000 shares of Common Stock.
(9)
Includes warrants
to purchase 1,750,000 shares of Common
Stock.
(10)
Includes warrants
to purchase 1,750,000 shares of Common
Stock.
(11)
Includes warrants
to purchase 1,250,000 shares of Common
Stock.
(12)
Includes
options and warrants to purchase a total of 58,923,672 shares of
Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In
general, it is our unwritten policy to submit all proposed related
party transactions (those that may require disclosure under
Regulation S-K, Item 404) to the Board of Directors for approval.
The Board of Directors only approves those transactions that are on
terms comparable to, or more beneficial to us than, those that
could be obtained in arm’s length dealings with an unrelated
third party. If a director has any interest in a related party
transaction presented to the Board of Directors for approval, such
director will abstain from the vote to approve or not approve the
transaction. Examples of related party transactions covered by our
policy are transactions in which any of the following individuals
has or will have a direct or indirect material interest: any of our
directors or executive officers, any person who is known to us to
be the beneficial owner of more than five percent of our common
stock, and any immediate family member of one of our directors or
executive officers or person known to us to be the beneficial owner
of more than five percent of our common stock. Transactions that
involve any salaried employees generally are not covered by our
approval policy. Our policy also requires that all related party
transactions be disclosed in our filings with the SEC to the extent
required by the SEC’s rules.
Our
former Executive Director of Asia Operations, Wendy Chiao, is the
spouse of our Chief Financial Officer. Ms. Chiao was contracted on
a month to month basis and was paid $99,000 in 2019 and paid
$99,000 in 2018. In 2018, Ms. Chiao was issued warrants to purchase
1,000,000 shares of common stock at an exercise price of $.11 with
a term of five years. Her contract was terminated in November
2019.
PROPOSAL NO. 2 — ADVISORY VOTE ON NAMED EXECUTIVE
OFFICER COMPENSATION
Our
Board of Directors proposes that shareholders provide advisory
(non-binding) approval of the compensation of our named executive
officers, as disclosed in this proxy statement in accordance with
the SEC’s rules (commonly known as a “say-on-pay”
proposal). We recognize the interest our shareholders have in the
compensation of our executives and we are providing this advisory
proposal in recognition of that interest and as required by the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,
or the Dodd-Frank Act.
Our
named executive officer compensation program is designed to
attract, motivate, and retain our named executive officers, who are
critical to our success, and ensure alignment of such persons with
shareholders. Under this program, our named executive officers are
rewarded for their service to the Company and the realization of
increased shareholder value. We believe our executive officer
compensation programs also are structured appropriately to support
our Company and business objectives and to conserve our scarce cash
resources.
Please
read the “Executive
Compensation - Summary Compensation Table”, beginning
on page 11, for additional details about our named executive
officer compensation program.
We are
asking our shareholders to indicate their support for our named
executive officer compensation as described in this proxy
statement. This vote is not intended to address any specific item
of compensation, but rather the overall compensation of our named
executive officers and the philosophy, policies and practices
described in this proxy statement. Accordingly, we will ask our
shareholders to vote “FOR” the following resolution at
the Annual Meeting:
“RESOLVED, that the Company’s shareholders approve, on
an advisory basis, the compensation of the named executive
officers, as disclosed in the Company’s Proxy Statement for
the 2020 Annual Meeting of Shareholders pursuant to the
compensation disclosure rules of the Securities and Exchange
Commission, including the Summary Compensation Table and the other
related tables and disclosure.”
The
say-on-pay vote is advisory, and therefore not binding on the
Company or our Board. We value the opinions of our shareholders and
to the extent there is any significant vote against the named
executive officer compensation as disclosed in this proxy
statement, we will consider our shareholders’ concerns and
the Board will evaluate whether any actions are necessary to
address those concerns.
The Board of Directors recommends a vote FOR the approval of the
compensation of our named executive officers, as disclosed in this
proxy statement pursuant to the compensation disclosure rules of
the Securities and Exchange Commission.
Vote Required
The affirmative vote of a majority of the votes cast at the annual
meeting will be necessary to approve the compensation of our named
executive officers. Abstentions and broker non-votes will have no
effect on the outcome of the vote.
PROPOSAL NO. 3 — ADVISORY VOTE ON THE FREQUENCY OF AN
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
The
Dodd-Frank Act also enables our shareholders to indicate how
frequently we should seek an advisory vote on the compensation of
our named executive officers, as disclosed pursuant to the
SEC’s compensation disclosure rules, such as Proposal 2
included in this proxy statement. By voting on this Proposal 3,
shareholders may indicate whether they would prefer an advisory
vote be held on named executive officer compensation once every
one, two, or three years.
After
careful consideration of this Proposal, our Board has determined
that an advisory vote on named executive officer compensation that
occurs every three years is the most appropriate alternative for
the Company, and therefore our Board recommends that you vote for a
three-year interval for the advisory vote on named executive
officer compensation. Our Board believes that compensation is best
analyzed in a longer term context.
You may
cast your vote on your preferred voting frequency by choosing the
option of one year, two years, three years or abstain from
voting.
This
vote is advisory and not binding on the Board or the Company in any
way, and therefore the Board may decide that it is in the best
interests of our shareholders and the Company to hold an advisory
vote on named executive officer compensation more or less
frequently than the option approved by our
shareholders.
The Board of Directors recommends a vote for the option of EVERY
THREE YEARS as the frequency with which shareholders are provided
an advisory vote on the compensation of named executive officers,
as disclosed pursuant to the compensation disclosure rules of the
Securities and Exchange Commission.
Vote Required
The option of one year, two years or three years that receives the
highest number of votes cast by shareholders will be the frequency
for the advisory vote on named executive officer compensation that
has been selected by shareholders. Abstentions and broker non-votes
will have no effect on the outcome of the vote.
PROPOSAL NO. 4 — REVERSE STOCK SPLIT
We are seeking shareholder approval for a proposal to adopt an
amendment to our Articles of Incorporation to permit us to effect a
reverse stock split of our issued and outstanding common stock by a
ratio that will be determined by the Board and that will be within
a range of 1-for-25 and 1-for-120, if the Board determines, in its
sole discretion, at any time prior to the first anniversary of the
Annual Meeting, that the reverse stock split is in the best
interests of the Company and its shareholders.
The form of the amendment to our Articles of Incorporation to
effect the reverse stock split is set forth on Appendix A (the “Certificate of Amendment”).
Approval of the proposal would permit (but not require) the Board
to effect the reverse stock split by a ratio of not less than
1-for-25 and not more than 1-for-120, with the exact ratio to be
determined by the Board in its sole discretion, no later than the
first anniversary of the Annual Meeting. The Board believes that
shareholder approval of the range of reverse stock split ratios (as
opposed to approval of a single reverse stock split ratio) provides
the Board with maximum flexibility to achieve the purpose of a
reverse stock split, as discussed below, and therefore is in the
best interests of the Company and its
shareholders.
The Board may, in its discretion, determine not to effect the
reverse stock split if it determines, subsequent to obtaining
shareholder approval, that such action is not in the best interests
of the Company. By voting in favor of the reverse stock split, you
are expressly authorizing the Board to determine not to proceed
with, and abandon, the reverse stock split if it should so decide.
The Board has recommended that the proposed Certificate of
Amendment to effect the reverse stock split be presented to the
Company’s shareholders for approval.
Reasons for the Reverse Stock Split
We are submitting this proposal to our shareholders to help attract
institutional investors with minimum trading price requirements. We
believe increasing the trading price of our Common Stock will also
assist in our capital-raising efforts by making our Common Stock
more attractive to a broader range of investors. Accordingly, we
believe that the reverse stock split is in our shareholders’
best interests.
Determination of the Reverse Stock Split Ratio
In determining the ratio to be used, the Board will consider
various factors, including but not limited to, (i) the potential
impact and anticipated benefits to the Company and its
shareholders, (ii) market conditions and the existing and expected
market price of the Company’s Common Stock at such time,
(iii) the number of shares that will be outstanding after the
reverse stock split, (iv) the shareholders’ equity at such
time and (v) the trading volume of the Company’s Common Stock
at such time.
Impact of the Reverse Stock Split, if Implemented
The Company’s Articles of Incorporation currently authorizes
the issuance of 1,200,000,000 shares of Common Stock, par value
$0.001 per share. On September 18, 2020, the Company had
406,914,909 shares of Common Stock
issued and outstanding and 184,697,006 shares of Common Stock
reserved pursuant to outstanding warrants,37,500,000 shares of
Common Stock issuable upon exercise of outstanding options, and
64,500,000 shares reserved for future issuance under the
Company’s equity incentive plans.
If approved and effected, the reverse stock split will
automatically apply to all shares of the Company’s Common
Stock, and each shareholder will own a reduced number of shares of
the Company’s Common Stock. However, except for adjustments
that may result from the treatment of fractional shares as
described below or as a result of adjustments to the conversion
prices of certain convertible securities, as described below, the
reverse stock split will not affect any shareholder’s
percentage ownership or proportionate voting power.
The following table contains approximate information relating to
our Common Stock immediately following the reverse stock split
under certain possible ratios, based on share information as of
September 18, 2020:
|
|
|
|
|
|
|
Number
of outstanding shares of Common Stock
|
406,914,909
|
16,276,596
|
8,138,298
|
5,425,532
|
4,069,149
|
3,390,957
|
|
|
|
|
|
|
|
Number
of shares of Common Stock issuable upon exercise of outstanding
stock options and warrants
|
222,197,006
|
8,887,880
|
4,443,940
|
2,962,627
|
2,221,970
|
1,851,642
|
|
|
|
|
|
|
|
Number
of shares of Common Stock reserved for issuance in connection with
future awards under the Company’s equity incentive
plans
|
37,500,000
|
1,500,000
|
750,000
|
500,000
|
375,000
|
312,500
|
Certain Risk Factors Associated with the Reverse Stock
Split
A reverse stock split may negatively impact the market for our
Common Stock.
Factors such as our financial results, market conditions and the
market perception of our business may adversely affect the market
price of our Common Stock. As a result, there can be no assurance
that the total market capitalization of our Common Stock after the
proposed reverse stock split will be equal to or greater than the
total market capitalization before the proposed reverse stock split
or that the per share market price of our Common Stock following
the reverse stock split will increase in proportion to the
reduction in the number of shares of Common Stock outstanding
before the reverse stock split. A decline in the market price of
our Common Stock after the reverse stock split may result in a
greater percentage decline than would occur in the absence of a
reverse stock split, and the liquidity of our Common Stock could be
adversely affected following such a reverse stock
split.
In addition, the reverse stock split may increase the number of
shareholders who own odd lots (less than 100 shares). Any
shareholder who owns fewer than 5,000 to 12,000 shares of Common
Stock, depending on the final ratio, prior to the reverse stock
split will own fewer than 100 shares of Common Stock following the
reverse stock split. Shareholders who hold odd lots typically
experience an increase in the cost of selling their shares and may
have greater difficulty in effecting sales. Furthermore, some
shareholders may cease being shareholders of the Company following
the reverse stock split. Any shareholder who owns fewer than 50 to
120 shares of Common Stock, depending on the final ratio, prior to
the reverse stock split will own less than one share of Common
Stock following the reverse stock split and therefore such
shareholder will receive cash equal to the market value of such
fractional share and cease being a shareholder of the Company, as
further described below under “–Procedure for
Effecting the Reverse Stock Split–Treatment of Fractional
Shares”.
A reverse stock split would increase our number of authorized but
unissued shares of stock, which could negatively impact a potential
investor if they purchased our Common Stock.
Because the number of authorized shares of the Company’s
Common Stock will not be reduced proportionately, the reverse stock
split, will increase the Board’s ability to issue authorized
and unissued shares without further shareholder action. Without
taking into account the impact of the proposed reverse stock split,
the Company already has a substantial number of authorized but
unissued shares of stock, the issuance of which would be dilutive
to our existing shareholders and may cause a decline in the trading
price of our Common Stock. With respect to authorized but unissued
and unreserved shares, we could use such shares to oppose a hostile
takeover attempt or delay or prevent changes in control or changes
in or removal of management, including transactions that are
favored by a majority of the shareholders or in which the
shareholders might otherwise receive a premium for their shares
over then-current market prices or benefit in some other manner. We
could also use the shares that are available for future issuance in
dilutive equity financing transactions. We plan to seek additional
financing throughout fiscal 2021. Other than the foregoing, we have
no existing plans to issue any of the authorized, but unissued and
unreserved shares, whether available as a result of the proposed
reverse stock split or otherwise.
Vote Required
The affirmative vote of holders of a majority of shares entitled to
vote at the Annual Meeting is required for the approval of the
Certificate of Amendment to effect a reverse stock split.
Abstentions and broker non-votes, if any, will have the same effect
as votes against the matter.
Treatment of Fractional Shares
No fractional shares of common stock will be issued as a result of
any Reverse Stock Split. Instead, in lieu of any fractional shares
to which a shareholder of record would otherwise be entitled as a
result of the Reverse Stock Split, ZIVO will pay cash (without interest) equal to such
fraction multiplied by the average of the closing sales prices of
the common stock during regular trading hours for the five
consecutive trading days immediately preceding the Effective Date
(with such average closing sales prices being adjusted to give
effect to the Reverse Stock Split). After the Reverse Stock Split,
a shareholder otherwise entitled to a fractional interest will not
have any voting, dividend or other rights with respect to such
fractional interest, except to receive payment as described
above.
Material Federal Income Tax Consequences
The following discussion of certain U.S. federal income tax
consequences to the Company’s shareholders of the reverse
stock split, if effected, does not purport to be a complete
discussion of all of the possible U.S. federal income tax
consequences and is included for general information only. It is
not intended as tax advice to any person and is not a comprehensive
description of the tax consequences that may be relevant to each
shareholder’s own particular circumstances. The discussion is
based on the Internal Revenue Code of 1986, as amended (the
“Code”), applicable Treasury Regulations promulgated
thereunder, judicial authority and current administrative rulings
and practices as in effect on the date of this proxy statement.
Changes to the laws could alter the tax consequences described
below, possibly with retroactive effect. The Company has not sought
and will not seek an opinion of counsel or a ruling from the
Internal Revenue Service regarding the U.S. federal income tax
consequences of the reverse stock split.
This discussion addresses the U.S. federal income tax consequences
only to a shareholder that is (i) a citizen or individual resident
of the United States, (ii) a corporation organized in or under the
laws of the United States or any state thereof or the District of
Columbia or otherwise subject to U.S. federal income taxation on a
net income basis in respect of our Common Stock, (iii) a trust if
(1) a U.S. court is able to exercise primary supervision over
administration of such trust and one or more U.S. persons have the
authority to control all substantial decisions of the trust or (2)
it has a valid election in place to be treated as a U.S. person, or
(iv) an estate whose income is subject to U.S. federal income
taxation regardless of its source. This discussion addresses only
those shareholders who hold their pre-reverse stock split shares as
“capital assets” as defined in the Code (generally,
property held for investment), and will hold the shares received in
the reverse stock split as capital assets. Further, it does not
address any state, local, foreign or other income tax consequences,
nor does it address the tax consequences to shareholders that are
subject to special tax rules, such as, without limitation,
shareholders who are subject to the alternative minimum tax, banks,
insurance companies, regulated investment companies, personal
holding companies, shareholders who are not “United States
persons” as defined in Section 7701(a)(30) of the Code, U.S.
persons whose functional currency is not the U.S. dollar,
broker-dealers, tax-exempt entities, or S corporations,
partnerships or other entities or arrangements treated as
partnerships for U.S. federal income tax purposes (or investors
therein). If an entity or arrangement treated as a partnership for
U.S. federal income tax purposes holds pre-reverse stock split
shares of our stock, the U.S. federal income tax treatment of a
partner of the partnership will depend on the status of the partner
and the activities of the partnership and upon certain
determinations made at the partnership level. Partners in
partnerships holding our Common Stock are urged to consult their
own tax advisors about the U.S. federal income tax consequences of
the reverse stock split.
Shareholders are advised to consult their own tax advisers
regarding the U.S. federal income tax consequences of the reverse
stock split in light of their personal circumstances and the
consequences under state, local and foreign tax laws, and also as
to any estate or gift tax considerations.
Exchange Pursuant to Reverse Stock Split
No gain or loss will be recognized by a shareholder upon such
shareholder’s exchange of pre-reverse stock split shares for
post-reverse stock split shares pursuant to the reverse stock
split, except to the extent of cash, if any, received in lieu of
fractional shares, further described in
“—Cash in Lieu of Fractional
Shares” below. The
aggregate tax basis of the post-reverse stock split shares received
in the reverse stock split, including any fractional share deemed
to have been received, will be equal to the aggregate tax basis of
the pre-reverse stock split shares exchanged therefor, and the
holding period of the post-reverse stock split shares will include
the holding period of the pre-reverse stock split
shares.
Cash in Lieu of Fractional Shares
A shareholder who receives cash in lieu of a fractional share of
post-reverse stock split shares should generally be treated as
having received such fractional share pursuant to the reverse stock
split and then as having exchanged such fractional share for cash
in a redemption of such fractional share. The amount of any gain or
loss should be equal to the difference between the ratable portion
of the tax basis of the pre-reverse stock split shares exchanged in
the reverse stock split that is allocated to such fractional share
and the cash received in lieu thereof. In general, any such gain or
loss will constitute a long-term capital gain or loss if the
shareholder’s holding period for such pre-reverse stock split
shares exceeds one year at the time of the reverse stock split.
Deductibility of capital losses by holders is subject to
limitations. Depending on a shareholder’s individual facts
and circumstances, it is possible that cash received in lieu of a
fractional share could be treated as a distribution under Section
301 of the Code, so shareholders should consult their own tax
advisors as to that possibility and the resulting tax consequences
to them in that event.
The Company will not recognize any gain or loss as a result of the
reverse stock split.
OUR BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR APPROVAL OF PROPOSAL NO. 4.
PROPOSAL NO. 5 — AUTHORIZED SHARE REDUCTION
Our Board of Directors has adopted and is recommending that our
shareholders approve an amendment to our Articles of Incorporation
to effect an Authorized Shares Reduction, with the specific number
of authorized shares determined by a formula that is based on the
ratio utilized for a Reverse Stock Split. The text of the proposed
Certificate of Amendment to our Articles of Incorporation, which we
refer to as the Certificate of Amendment, is attached as
Appendix A.
The implementation of the Authorized Shares Reduction is expressly
conditioned upon the approval by the shareholders and
implementation of the Reverse Stock Split. Accordingly, if we do
not receive the required shareholder approval for the Reverse Stock
Split, or it is not otherwise implemented on or prior to November
11, 2021, we will not implement the Authorized Shares Reduction.
The Reverse Stock Split is not conditioned in any way upon the
approval by the shareholders of the Authorized Shares Reduction. If
we receive the required shareholder approval for the Reverse Stock
Split but do not receive the required shareholder approval for the
Authorized Shares Reduction, our Board of Directors will
nonetheless retain the ability to implement a Reverse Stock Split
and, if so effected, the total number of authorized shares of our
common stock would remain unchanged.
Reasons for the Authorized Shares Reduction; Certain
Risks
If Proposals 4 and 5 are approved by our shareholders and a Reverse
Stock Split is implemented, the authorized number of shares of our
common stock also would be reduced according to the schedule set
forth below under “—Relationship Between Reverse
Stock Split Ratio and the Authorized Shares
Reduction.” The reduction
in the authorized number of shares of common stock will not be
directly proportionate to the Reverse Stock Split ratio, so the
practical effect of any Reverse Stock Split and the corresponding
Authorized Shares Reduction would be to
proportionately increase the number of authorized shares of our
common stock available for issuance.
Our Board of Directors desires to have a sufficient number of
unissued and unreserved authorized shares of common stock following
the implementation of a Reverse Stock Split to provide us with
flexibility with respect to our authorized capital sufficient to
execute our business strategy, including to have sufficient
authorized capital available to accommodate any share reserves
under our long-term incentive plans. At the same time, the
corresponding Authorized Shares Reduction was designed so that we
do not have what some shareholders might view as an unreasonably
high number of authorized shares of common stock that are unissued
or reserved for issuance following the Reverse Stock Split. In this
regard, if the Reverse Stock Split is approved but the Authorized
Shares Reduction is not approved, the authorized number of shares
of our common stock would not be reduced at all even if a Reverse Stock Split is
implemented; accordingly, our Board of Directors believes that the
Authorized Shares Reduction is in the best interests of ZIVO and
our shareholders and strikes the appropriate balance in the event a
Reverse Stock Split is implemented. However, the implementation of
a Reverse Stock Split and the resulting effective proportional
increase in the number of authorized shares of our common stock
available for issuance, could, under certain circumstances, have
anti-takeover implications. Although we are not proposing a Reverse
Stock Split as a result of any threat of a hostile takeover attempt
(nor is the Board currently aware of any such attempts directed at
us), shareholders should be aware that if the Reverse Stock Split
is approved but the Authorized Shares Reduction is not approved,
the anti-takeover implications associated with any Reverse Stock
Split may be enhanced due to the additional number of shares of
common stock that could be used by us to deter or prevent changes
in control.
Effects of Authorized Shares Reduction
The principal effect of the Authorized Shares Reduction will be
that the number of authorized shares of our common stock will be
reduced from 1,200,000,000 to a range from 120,000,000 to
240,000,000, depending on the exact Reverse Stock Split ratio
selected by the Board, if and when a Reverse Stock Split is
implemented. The Authorized Shares Reduction would not have any
effect on the rights of existing shareholders, and the par value of
the common stock would remain unchanged at $0.001 per share. The
table below shows how the Reverse Stock Split ratio selected by the
Board will determine the corresponding Authorized Shares Reduction
if it is approved and a Reverse Stock Split is
implemented:
Relationship Between Reverse Stock Split Ratio and the Authorized
Shares Reduction
Reverse Stock Split Ratio
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Number of Shares of Common Stock Available for
Issuance
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None
(current)
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1,200,000,000
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533,388,085
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1:25
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480,000,000
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453,335,523
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1:50
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240,000,000
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226,667,762
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1:75
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160,000,000
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151,111,841
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1:100
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120,000,000
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113,333,881
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1:120
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100,000,000
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94,444,901
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(a)
The total authorized common stock
would be correspondingly decreased at a rate equal to 1/10th of the
reverse stock split ratio determined by the Board of
Directors. For example, if the Board of Directors implements a
1-for-100 reverse stock split, the total authorized common
stock would be reduced at a ratio of 1-for-10
(1/10th
of the reverse
stock split ratio).
If the Authorized Shares Reduction is not approved, but the Reverse
Stock Split is approved and implemented, the authorized number of
shares of our common stock would remain unchanged at 1,200,000,000
following the Reverse Stock Split. For additional information
regarding the effects of a Reverse Stock Split, see
“—Effects of
Reverse Stock Split” in
Proposal 4.
Other Matters Regarding the Proposals
Effective Date of the Proposals; Conditionality
The proposed Reverse Stock Split and Authorized Shares Reduction,
if approved and implemented, would become effective at
5:00 p.m., Eastern Time, on the date of filing of a
Certificate of Amendment with the office of the Secretary of State
of the State of Nevada, or such later date as is chosen by the
Board and set forth in the Certificate of Amendment, which date we
refer to as the Effective Date. Except as to fractional shares,
effective as of 5:00 p.m., Eastern Time, on the Effective
Date, the Reverse Stock Split will combine, automatically and
without any action on the part of us or our shareholders, the
shares of common stock issued and outstanding immediately prior
thereto into a lesser number of new shares of our common stock in
accordance with the Reverse Stock Split ratio determined by our
Board of Directors within the limits set forth in the
Proposal 4. If the Authorized Shares Reduction is approved,
effective as of 5:00 p.m., Eastern Time, on the Effective
Date, the number of authorized shares of our common stock will be
automatically reduced by the formula reflected in the Certificate
of Amendment as set forth in Proposal 5.
Our Board of Directors will proceed with the Authorized Shares
Reduction only if and when a Reverse Stock Split is implemented.
Accordingly, should we not receive the required shareholder
approval for the Reverse Stock Split or it is not otherwise
implemented on or prior to November 11, 2021, we will not implement
the Authorized Shares Reduction even if it is approved. In this
regard, the implementation of the Authorized Shares Reduction is
expressly conditioned upon the approval by the shareholders and
implementation of the Reverse Stock Split. The Reverse Stock Split
is not conditioned in any way upon the approval by the shareholders
of the Authorized Shares Reduction. If we receive the required
shareholder approval for the Reverse Stock Split but do not receive
the required shareholder approval for the Authorized Shares
Reduction, our Board of Directors will retain the option to
implement a Reverse Stock Split and if so effected, the total
number of authorized shares of our common stock would remain
unchanged.
Accounting Consequences
The par value per share of our common stock would remain unchanged
at $0.001 per share after any Reverse Stock Split. As a result, on
the Effective Date, the stated capital on our balance sheet
attributable to the common stock would be reduced proportionally
from its present amount, based on the actual Reverse Stock Split
ratio, and the additional paid-in capital account would be credited
with the amount by which the stated capital would be reduced. The
net income or loss per share of common stock would be increased
because there would be fewer shares of common stock outstanding.
The Reverse Stock Split would be reflected retroactively in our
consolidated financial statements. We do not anticipate that any
other accounting consequences would arise as a result of any
Reverse Stock Split.
No Appraisal Rights
Our shareholders are not entitled to dissenters’ or appraisal
rights under the Nevada Business Corporation Act with respect to
the proposed amendments to our Articles of Incorporation to allow
for a Reverse Stock Split and, if the Authorized Shares Reduction
is approved, to effect the corresponding Authorized Shares
Reduction. We will not independently provide the shareholders with
any such right if any Reverse Stock Split and the corresponding
Authorized Shares Reduction are implemented.
Interest of Certain Persons in Matter to be Acted Upon
No officer or director has any substantial interest, direct or
indirect, by security holdings or otherwise, in the Reverse Stock
Split or the Authorized Shares Reduction that is not shared by all
other shareholders.
OTHER MATTERS
Householding
The
SEC’s rules permit us to deliver a single Annual Report on
Form 10-K and proxy materials to one address shared by two or more
of our shareholders. This delivery method is referred to as
“householding” and can result in significant cost
savings to us. To take advantage of this opportunity, we have
delivered only one Annual Report on Form 10-K and proxy materials
to multiple shareholders who share an address, unless we received
contrary instructions from the impacted shareholders prior to the
mailing date. We agree to deliver promptly, upon written or oral
request, a separate copy of the Annual Report on Form 10-K and
proxy materials, if applicable, to any shareholder at the shared
address to which a single copy of these documents was delivered. If
you prefer to receive separate copies of the Annual Report on Form
10-K and proxy materials, contact in writing: ISSUER DIRECT
CORPORATION, 1981 Murray Holladay Road, Suite 100, SLC UT, 84117
(www.issuerdirect.com) or email Julie.Felix@issuerdirect.com. Any
shareholders who share the same address and currently receive
multiple copies of our Annual Report on Form 10-K and other proxy
materials who wish to receive only one copy in the future can
contact their bank, broker, or other holder of record to request
information about “householding” or ISSUER DIRECT
CORPORATION at the address or telephone number listed
above.
Shareholder Proposals
Deadline for Submission of Shareholder Proposals and
Recommendations for Director
Shareholder
proposals for inclusion in our proxy materials for the 2021 annual
meeting of shareholders must be received by us no later than May
31, 2021. These proposals must also meet the other requirements of
the rules of the SEC.
Regarding
proposals that shareholders otherwise desire to introduce at our
annual meeting in 2020, without inclusion in our proxy statement
for that meeting, written notice of such shareholder proposals for
such annual meeting must be received by our Secretary and, with
respect to proposals for the nomination of directors, should be
received by our Board of Directors at 2804 Orchard Lake Rd, Suite
202, Keego Harbor, MI 48320, not later than October 21, 2020 and
must not have been received earlier than September 5, 2020 in order
to be considered timely and must contain specified information
concerning the matters proposed to be brought before such meeting
and concerning the shareholder proposing such matters. The matters
proposed to be brought before the meeting also must be proper
matters for shareholder action. If a shareholder who wishes to
present such a proposal fails to notify us within the specified
time frame, the proxies that management solicits for the meeting
will have discretionary authority to vote on the
shareholder’s proposal if it is properly brought before the
meeting. If a shareholder makes a timely notification, the proxies
may still exercise discretionary voting authority under
circumstances consistent with the proxy rules of the
SEC.
The
notice should set forth: (a) for each nominee
(i) information as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the SEC, and
(ii) written consent of the nominee to be named in the proxy
statement and to serve as director if so elected; (b) a brief
description of any proposed business including (i) the text of
such proposal and any accompanying resolutions, (ii) the
reasons for conducting such business at the meeting, (iii) any
material interest held by the proposing shareholder or any
beneficial owner on whose behalf the proposal is made; and
(c) proposing shareholder and/or beneficial owner information
including, (i) name and address, (ii) the class and
number of shares of capital stock held, (iii) a representation
that they are the holder of record, are entitled to vote, and
intend to appear in person or by proxy and propose such business or
nomination, and (iv) a representation of intention to either
deliver proxy statements to holders of the necessary percentage of
shares or to solicit proxies in support of the proposal. The
shareholder can alternatively satisfy the notice requirement by
submitting proposals in compliance with SEC requirements and
inclusion of such proposal within a proxy statement prepared by
us.
Expenses of Solicitation
All
costs of solicitation of proxies will be borne by us. In addition
to solicitations by mail, certain of our Directors, officers and
regular employees, without additional remuneration, may solicit
proxies in person or by telephone or electronic mail. Brokers,
custodians and fiduciaries will be requested to forward proxy
soliciting material to the owners of stock held in their names, and
we will reimburse them for their reasonable out-of-pocket costs.
Solicitation by our officers and employees may also be made of some
shareholders in person or by mail, telephone or telegraph following
the original solicitation.
FINANCIAL MATTERS AND FORM 10-K REPORT
As noted above under “Questions and Answers
– How can I access the Company’s proxy materials
and annual report on Form 10-K?” we will provide each beneficial owner of
our securities with a copy of our Annual Report on Form 10-K
including the financial statements and schedules thereto filed with
the Securities and Exchange Commission for our most recent fiscal
year, without charge upon receipt of a written request from such
person. Such request should be sent to: Philip M. Rice II, Chief
Financial Officer, Zivo Bioscience, Inc., 2804 Orchard Lake Rd,
Suite 202, Keego Harbor, MI 48320. Alternatively, the
Company’s Annual Report on Form 10-K may be accessed on the
Company’s internet website at:
https://www.iproxydirect.com/index.php/ZIVO.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON NOVEMBER 11, 2020
The Proxy Statement and the ZIVO Annual Report for the fiscal year
ended December 31, 2019 are available at:
https://www.iproxydirect.com/index.php/ZIVO.
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD IN THE
ENVELOPE PROVIDED AS SOON AS POSSIBLE
ZIVO BIOSCIENCE, INC.
Appendix A
Certificate of Amendment
to the
Articles of Incorporation of
Zivo Bioscience, Inc.
1. Name of Corporation: Zivo
Bioscience, Inc. (the “Corporation”),
Entity Number C1851-1983
2. The
Articles of Incorporation have been amended as
follows:
ARTICLE
4 of the Corporation’s Articles of Incorporation is hereby amended and restated as
follows:
ARTICLE
4. The total authorized capital stock of the corporation is [ ]1
shares of Common Stock, with a par value of $0.001. All stock when
issued shall be deemed fully paid and nonassessable. No cumulative
voting, on any matter to which Stockholders shall be entitled to
vote, shall be allowed for any purpose.
The
authorized stock of this corporation may be issued at such time,
upon such terms and conditions and for such consideration as the
Board of Directors shall, from time to time, determine.
Shareholders shall not have preemptive rights to acquire unissued
shares of stock of the Corporation.
Upon
the filing and effectiveness (the "Effective
Time") of this Certificate of Amendment pursuant to
Sections 78.385 and 78.390 of the Nevada Revised Statutes, each
[__]2 shares of the Corporation’s Common Stock, issued and
outstanding immediately prior to the Effective Time shall
automatically and without any action on the part of the Corporation
or respective holders thereof be combined and converted into one
(1) validly issued, fully paid and non-assessable share of Common
Stock, par value of $0.001 per share (“Common Stock”)
of the Corporation (the “Reverse
Split”). No fractional shares of Common Stock shall be
issued in connection with the Reverse Split. In lieu thereof, any
person who would otherwise be entitled to a fractional share of
Common Stock as a result of the Reverse Split shall be entitled to
receive a cash payment equal to the fraction of a share of Common
Stock to which such holder would otherwise be entitled multiplied
by the closing price per share of the Common Stock on the OTCQB
Market at the close of business on the date of the Effective Time,
excluding fractional shares resulting in a cash payment of less
than $1.00, which will be forfeited.
3. The vote by which
the stockholders holding shares in the corporation entitling them
to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the
case of a vote by classes or series, or as may be required by the
provisions of the Articles of Incorporation have voted in favor of
the amendment is: [___]%.
4. Effective date of
filing:
[ ]
5. Signature:
_________________________________
Philip
M. Rice, II, Chief Financial Officer
1. Assuming the reverse stock split proposal and the authorized
shares reduction proposal are approved by the required shareholder
vote and ZIVO’s Board of Directors elects to effect a reverse
stock split, the number of shares of ZIVO’s total authorized
common stock would be reduced correspondingly, at a rate equal to
one-tenth of the reverse stock split ratio determined ZIVO’s
Board of Directors (thereby effecting a reduction in ZIVO’s
total authorized capital stock). For example, if the Board of
Directors implements a 1-for-100 reverse stock split, the total
authorized common stock would be reduced at a ratio of 1-for-10
(1/10th of the reverse stock split ratio).
2. This amendment approves the combination of any whole number of
shares of ZIVO’s common stock between and including twenty
five (25) and one-hundred twenty (120) into one (1) share of
ZIVO’s common stock. If the reverse stock split proposal is
approved by shareholders, the Certificate of Amendment filed with
the Secretary of State of the State of Nevada will include only
that reverse stock split ratio determined by ZIVO’s Board of
Directors.
PROXY CARD
ZIVO BIOSCIENCES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS – NOVEMBER 11, 2020 AT 10:00AM
LOCAL TIME
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CONTROL
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REQUEST
ID:
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The
undersigned shareholder of Zivo Bioscience, Inc., a Nevada
corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement dated October 19, 2020.
The undersigned hereby appoints Phillip M. Rice II, Chief Financial
Officer, and Andrew A. Dahl, Chief Executive Officer, and each of
them, as attorneys and proxies with full power of substitution to
represent the undersigned at the Annual Meeting of shareholders of
the Company to be held in a virtual-only format at the annual
meeting will be held in a virtual format only, at
https://www.issuerdirect.com/virtual-event/zivo, on November 11,
2020 at 10:00 a.m., EST, and at any adjournment or postponement
thereof, with all power which the undersigned would possess if
personally present, and to vote all shares of stock which the
undersigned may be entitled to vote at said meeting upon the
matters set forth in the Notice of Meeting in accordance with the
following instructions and with discretionary authority upon such
other matters as may come before the meeting. All previous proxies
are hereby revoked
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(CONTINUED
AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING
INSTRUCTIONS
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If
you vote by phone, fax or internet, please DO NOT mail your proxy
card.
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MAIL:
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Please mark, sign,
date, and return this Proxy Card promptly using the enclosed
envelope.
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FAX:
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Complete the
reverse portion of this Proxy Card and Fax to 202-521-3464.
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INTERNET:
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https://www.iproxydirect.com/ZIVO
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PHONE:
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1-866-752-VOTE(8683)
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ANNUAL MEETING OF THE STOCKHOLDERS OF
ZIVO BIOSCIENCES, INC.
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PLEASE
COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE:
☒
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PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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Proposal
1
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FOR
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WITHHOLD
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To
elect the following person to the Board of Directors to serve until
the next annual meeting of shareholders in 2021 and until his/her
successor is elected and qualified:
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☐
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☐
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Andrew
A. Dahl
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☐
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☐
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CONTROL
ID:
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Nola
E. Masterson
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☐
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☐
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REQUEST
ID:
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Robert
O. Rondeau, Jr.
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☐
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☐
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Christopher
D. Maggiore
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☐
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☐
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John
B. Payne
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☐
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☐
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Proposal
2
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FOR
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AGAINST
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ABSTAIN
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To
approve (on an advisory basis) the compensation of the
Company’s named executive officers for the fiscal year ended
December 31, 2019.
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☐
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☐
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☐
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Proposal
3
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EVERY
YEAR
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EVERY TWO YEARs
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EVERY THREE YEARS
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ABSTAIN
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To
recommend (on an advisory basis) the frequency with which the
Company holds a vote regarding the compensation of the
Company’s named executive officers:
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☐
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☐
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☐
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☐
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Proposal
4
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FOR
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AGAINST
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ABSTAIN
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To approve an amendment to our Articles of Incorporation, as
amended, to effect, at the option of the Board of Directors, a
reverse stock split of our commonstock at a reverse stock split
ratio ranging from one-for-twenty five (1:25) to
one-for-one-hundred twenty (1:120), with the effectiveness of such
amendment to be determined by the Board of Directors prior to
November 11, 2021.
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☐
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☐
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☐
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Proposal 5
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FOR
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AGAINST
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ABSTAIN
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To
approve an amendment to our Articles of Incorporation, as amended,
authorizing a reduction in the total number of authorized shares of
our Common Stock, with the specific number of authorized shares
determined by a formula that is based on 1/10th if the ratio
utilized for the Reserve Stock Split.
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☐
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☐
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☐
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MARK
“X” HERE IF YOU PLAN TO ATTEND THE MEETING:
◻
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THIS PROXY IS REVOCABLE. WHEN PROPERLY EXECUTED AND RETURNED, THIS
PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER, UNLESS REVOKED IN COMPLIANCE WITH THE
PROCEDURE DESCRIBED IN THE PROXY STATEMENT RELATING TO THE ANNUAL
MEETING. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
“FOR” THE NOMINEES IN PROPOSAL 1, “FOR” THE
APPROVAL OF THE NAMED EXECUTIVE OFFICER COMPENSATION IN PROPOSAL 2,
“EVERY THREE YEARS” FOR THE FREQUENCY OF FUTURE
SAY-ON-PAY VOTES IN PROPOSAL 3, “FOR” THE REVERSE STOCK
SPLIT IN PROPOSAL 4, AND “FOR THE AUTHORIZED SHARE REDUCTION
IN PROPOSAL 5.
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MARK HERE FOR
ADDRESS CHANGE ◻ New Address (if
applicable):
____________________________
____________________________
____________________________
IMPORTANT: Please sign exactly as your
name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized
person.
Dated:
________________________, 2020
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(Print Name of
Stockholder and/or Joint Tenant)
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(Signature of
Stockholder)
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(Second Signature
if held jointly)
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