Artelo Biosciences (NASDAQ: ARTL) posts loss and warns on going concern
Artelo Biosciences, Inc. completed a one-for-three reverse stock split of its common stock effective March 10, 2026, cutting outstanding shares from 2,124,772 to approximately 708,323 and reducing authorized common shares from 500,000,000 to 166,666,667.
The company republished its audited financial statements, which show a 2025 net loss of $12,879 (thousands) versus $9,826 (thousands) in 2024 and a stockholders’ deficit of $1,272 (thousands) as of December 31, 2025. Cash and cash equivalents were $600 (thousands), while current liabilities were $4,044 (thousands), leading the auditor to cite substantial doubt about Artelo’s ability to continue as a going concern.
The notes describe repeated equity raises, convertible note financings and warrants to fund operations, plus a January 30, 2026 equity purchase agreement giving Artelo the right to direct up to $25 million in future common stock sales, with potential to increase by another $25 million.
Positive
- None.
Negative
- Going concern warning and capital deficiency: 2025 net loss was $12,879 (thousands), cash fell to $600 (thousands) with current liabilities of $4,044 (thousands), and stockholders’ equity moved to a $1,272 (thousands) deficit, leading the auditor to raise substantial doubt about the company’s ability to continue as a going concern.
Insights
Reverse split, deep losses and going concern risk dominate.
Artelo Biosciences executed a 1-for-3 reverse stock split and restated its financials accordingly. For 2025 it reported a net loss of
The auditor highlighted recurring losses and a net capital deficiency, concluding there is substantial doubt about the company’s ability to continue as a going concern. Stockholders’ equity swung from positive
To bridge the funding gap, Artelo raised capital through multiple equity offerings, convertible notes and warrants, and entered a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
Reference is made to the information contained in Item 8.01 to this Current Report on Form 8-K set forth below, which is incorporated herein by reference.
Item 8.01. Other Events.
As previously disclosed, Artelo Biosciences, Inc., a Nevada corporation (the “Company”), completed a one-for-three (1-for-3) reverse stock split (the “Reverse Split”) of the Company’s issued and outstanding common stock, par value $0.001 per share (the “Common Stock”), effective as of March 10, 2026.
As a result of the Reverse Split, each three (3) pre-split shares of Common Stock outstanding were automatically combined into one (1) new share of Common Stock, and the number of outstanding shares of Common Stock were reduced from 2,124,772 to approximately 708,323. The number of authorized shares of common stock were reduced from 500,000,000 to 166,666,667, while the number of authorized shares of preferred stock were reduced from 69,444 to 23,148. The Common Stock par value of $0.001 per share remained unchanged after the Reverse Split.
As a result of the Reverse Split, the Company is republishing certain financial information to account for the change in total par value due to the Reverse Split. The audited financial statements of the Company as of and for the fiscal years ended December 31, 2024 and 2025 are set forth in Exhibit 99.1 hereto and are incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. |
| Exhibit |
99.1 |
| Audited financial statements of Artelo Biosciences, Inc. as of and for the fiscal years ended December 31, 2024 and 2025. |
23.1 |
| Consent Of Independent Registered Public Accounting Firm |
104 |
| Cover Page Interactive Data File (embedded within the XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: March 17, 2026 | /s/ Gregory D. Gorgas |
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| Gregory D. Gorgas |
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| President & Chief Executive Officer |
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EXHIBIT 99.1
ARTELO BIOSCIENCES, INC.
INDEX TO AUDITED FINANCIAL STATEMENTS
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Report of Independent Registered Public Accounting Firm (PCAOB ID 206) |
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Consolidated Balance Sheets at December 31, 2025 and 2024 |
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Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024 |
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Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025 and 2024. |
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Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024. |
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Notes to the Consolidated Financial Statements |
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| Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Artelo Biosciences, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Artelo Biosciences, Inc. and its subsidiaries (collectively, the “Company”) as of December 31, 2025, and 2024, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ MaloneBailey, LLP
www.malonebailey.com
We have served as the Company's auditor since 2015.
Houston, Texas
February 23, 2026, except for Notes 1, 2, 6, 7, 9, and 12 which are dated March 17, 2026
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| Table of Contents |
ARTELO BIOSCIENCES, INC.
Consolidated Balance Sheets
(In thousands, except share data)
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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Prepaid expenses and other current assets |
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Total Current Assets |
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Operating lease right-of-use assets |
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Intangible asset |
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Other assets |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities |
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Accounts payable and accrued liabilities |
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Due to related parties |
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Operating lease liabilities - current portion |
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Accrued interest - convertible notes |
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Accrued interest – convertible notes – related party |
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Convertible notes |
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Convertible notes – related party |
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Total Current Liabilities |
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Operating lease liabilities |
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TOTAL LIABILITIES |
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STOCKHOLDERS' EQUITY |
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Preferred Stock, par value $ |
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Common Stock, par value $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive loss |
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TOTAL STOCKHOLDERS' (DEFICIT) EQUITY |
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TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY |
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The accompanying notes are an integral part of these audited consolidated financial statements.
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| Table of Contents |
ARTELO BIOSCIENCES, INC.
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share data)
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OPERATING EXPENSES |
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General and administrative |
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Research and development |
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Total Operating Expenses |
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Loss from Operations |
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OTHER INCOME (EXPENSE) |
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Gain on investment |
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Interest expense |
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Interest expenses - related party |
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Loss on extinguishment of debt |
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Loss on extinguishment of debt - related party |
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Net change in fair value of digital assets |
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Net change in fair value of trading marketable securities |
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Total other (expense) income |
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Provision for income taxes |
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NET LOSS |
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OTHER COMPREHENSIVE INCOME (LOSS) |
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Foreign currency translation adjustments |
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Total Other Comprehensive Income (Loss) |
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TOTAL COMPREHENSIVE LOSS |
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Basic and Diluted Loss per Common Share |
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Basic and Diluted Weighted Average Common Shares Outstanding |
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The accompanying notes are an integral part of these audited consolidated financial statements.
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| Table of Contents |
ARTELO BIOSCIENCES, INC.
Consolidated Statements of Stockholders’ Equity
(In thousands)
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Balance, December 31, 2023 |
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Common stock issued for cash, net of issuance costs |
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Stock based compensation |
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Net loss for the period |
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Other comprehensive loss |
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Balance, December 31, 2024 |
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Common stock issued for cash, net of issuance costs |
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Warrants exercised |
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Fair value of warrants issued upon extinguishment of debt |
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Stock-based compensation |
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Net loss for the period |
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Other comprehensive loss |
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Balance, December 31, 2025 |
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The accompanying notes are an integral part of these audited consolidated financial statements.
| F-5 |
| Table of Contents |
ARTELO BIOSCIENCES, INC.
Consolidated Statements of Cash Flows
(In thousands)
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Net change in fair value of trading marketable securities |
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Net change in fair value of digital assets |
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Non-cash lease expense |
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Loss on extinguishment of debt |
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Loss on extinguishment of debt - related party |
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Amortization of debt discounts and debt issuance costs |
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Amortization of debt discounts and debt issuance costs - related party |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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Accounts payable and accrued liabilities |
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Accounts payable - related parties |
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Accrued interest |
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Accrued interest – related party |
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Fixed cash payments related to operating leases |
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Net cash used in operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchase of digital assets |
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Proceeds from disposition of digital assets |
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Investment in trading marketable securities |
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Proceeds from disposition of marketable securities |
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Net cash (used in) provided by investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from issuance of common shares for cash, net |
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Proceeds from issuance of convertible notes, net |
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Proceeds from issuance of convertible notes, net – related party |
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Proceeds from exercise of warrants |
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Repayment of convertible note |
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Effect of exchange rate changes on cash |
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Net change in cash and cash equivalents |
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Cash and cash equivalents - beginning of period |
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Cash and cash equivalents - end of period |
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Supplemental Cash Flow Information |
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Cash paid for interest |
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Cash paid for income taxes |
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NON-CASH FINANCING AND INVESTING ACTIVITIES: |
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Initial recognition of the right-of-use asset and lease liability |
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The accompanying notes are an integral part of these audited consolidated financial statements.
| F-6 |
| Table of Contents |
ARTELO BIOSCIENCES, INC.
Notes to the Consolidated Financial Statements
(In thousands, except share and per share data)
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Artelo Biosciences, Inc. (“we”, “us”, “our”, the “Company”) is a Nevada corporation incorporated on May 2, 2011, and based in Solana Beach, California. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”), and the Company’s fiscal year end is December 31.
The Company registered wholly owned subsidiaries in Ireland, Trinity Reliant Ventures Limited, on November 11, 2016, in the United Kingdom (“UK”), Trinity Research & Development Limited, on June 2, 2017 and in Canada, Artelo Biosciences Corporation, on March 18, 2020. On January 8, 2020, Trinity Research and Development Limited changed its name to Artelo Biosciences Limited. Operations in the subsidiaries have been consolidated in the financial statements.
The Company is a clinical stage biopharmaceutical company focused on developing therapeutics that target lipid-signaling pathways, including treatments intended to modulate the endocannabinoid system (the “ECS”), a family of receptors and neurotransmitters that form a biochemical communication network throughout the body.
Going Concern
The Company has incurred losses since inception and incurred a net loss of $
In July 2023, the Company filed a $
On May 1, 2025, the Company issued at-market, unsecured convertible notes with gross proceeds of $
On June 24, 2025, the Company entered into a securities purchase agreement with the purchasers named therein, for the private placement of (i)
| F-7 |
| Table of Contents |
On July 18, 2025, the Company entered into an At-The-Market Offering Agreement (the “Sales Agreement”) with R.F. Lafferty & Co., Inc. (“R.F. Lafferty”) under which we may offer and sell up to $
On August 4, 2025, the Company entered into a securities purchase agreement for an at-the market PIPE (private investment in public equity) for the
On September 4, 2025, the Company entered into an underwriting agreement (the “First Underwriting Agreement”) with R.F. Lafferty & Co., Inc. (“Underwriter”), the sole book-running manager and underwriter, relating to an underwritten offering of
On September 30, 2025, the Company entered into an underwriting agreement (the “Second Underwriting Agreement”) with the Underwriter, the sole book-running manager and underwriter, relating to an underwritten offering of (i)
To continue operations, the Company will be required to raise additional funds by completing additional equity or debt offerings or licensing our product candidates. There can be no assurance that the Company will be successful in acquiring additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The accompanying consolidated financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities if the Company is unable to continue as a going concern.
| F-8 |
| Table of Contents |
Negative Global or National Events
Businesses have been and will continue to be impacted by a number of challenging global and national events and circumstances that continue to evolve, including tariffs, trade disputes, extreme weather conditions, increased economic uncertainty, inflation, interest rate fluctuation, recent and any potential future financial institution failures, and conflicts in Eastern Europe, the Middle East and in other countries. The extent of the impact of these events and circumstances on our business, operations and development timelines and plans remains uncertain, and will depend on certain developments, including the duration and scope of the events and their impact on our development activities, third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel. We have been and continue to actively monitor the potential impacts that these various events and circumstances may have on our business, and we take steps, where warranted, to minimize any potential negative impacts on our business resulting from these events and circumstances. The ultimate impact of these global and national events and circumstances, either individually or in aggregate, is highly uncertain and subject to change.
Reverse Stock Split
On June 12, 2025, the Company filed with the Secretary of State of the State of Nevada a Certificate of Change, pursuant to Nevada Revised Statutes 78.209, to effect a one-for-six
As a result of the Reverse Split, each six (6) pre-split shares of common stock outstanding were automatically combined into one (1) new share of common stock without any action on the part of the holders, and the number of outstanding shares of common stock was reduced from
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements have been prepared using the accrual basis of accounting in accordance with GAAP. All amounts in these financial statements, notes and tables have been rounded to the nearest thousand dollars, except share and per share amounts, unless otherwise indicated.
Basis of Consolidation
The financial statements have been prepared on a consolidated basis, including the Company’s wholly owned subsidiaries, Trinity Reliant Ventures Limited, Artelo Biosciences Limited and Artelo Biosciences Corporation. All intercompany transactions and balances have been eliminated.
Research and Development (“R&D”)
R&D expenses consist primarily of costs related to clinical studies and outside services, personnel expenses, and R&D consultants. Clinical studies and outside services costs relate primarily to services performed by clinical research organizations associated with clinical trials and related clinical or development manufacturing costs, materials, and supplies, filing fees, regulatory support, and other third-party fees. Personnel expenses relate primarily to salaries and benefits. R&D expenditures are charged to operations as incurred.
| F-9 |
| Table of Contents |
The Company recognizes R&D tax credits when received from the United Kingdom government for spending on R&D as an offset of R&D expenses. The Company received R&D tax credits of $
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, commercial paper, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had $
Periodically, the Company may carry cash balances at financial institutions more than the federally insured limit of $
Intangible Assets
The Company capitalizes certain costs related to the acquisition of intangible assets. If such assets are determined to have a finite useful life they are amortized on a straight-line basis over the estimated useful life.
The Company tests its intangible assets for impairment at least annually and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others and without limitation: a significant decline in the Company’s expected future cash flows; a sustained, significant decline in the Company’s stock price and market capitalization; a significant adverse change in legal factors or in the business climate of the Company’s segments; unanticipated competition; and slower growth rates. The Company determined that there was no impairment of its intangible assets at December 31, 2025, and 2024.
Digital Assets
The Company’s digital assets consisted solely of our investment in Solana’s native token, SOL, which the Company divested prior to December 31, 2025. The cost basis of the Company’s digital assets is calculated using the first-in, first-out (FIFO) method.
The Company initially records its digital assets at their cost, which includes the capitalization of any transaction costs or fees, which are subsequently, remeasured at fair value based on the SOL price quoted from its principal market at the end of each reporting period in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized on the consolidated statements of operations.
Foreign Currency Transactions
The Company has operations outside of the United States, which results in exposure to market risks from changes in foreign currency rates. The financial risk arises from the fluctuations in foreign exchange rates and the degrees of volatility in these rates. Currently the Company does not use derivative instruments to reduce its exposure to foreign currency risk. Nonmonetary assets and liabilities are translated at historical rates and monetary assets and liabilities are translated at exchange rates in effect at the end of the year. Revenues and expenses are translated at average rates for the year. Gains and losses from translation of foreign currency financial statements into U.S. dollars are included as other comprehensive income.
| F-10 |
| Table of Contents |
Financial Instruments
The Company follows ASU 2022-03, ASC Subtopic “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASC 820”), which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The carrying amounts shown of the Company’s financial instruments including cash and cash equivalents and accounts payable approximate fair value due to the short-term maturities of these instruments.
Stock-Based Compensation
The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock option awards at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our share-based compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements. The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances. The Company accounts for forfeitures of stock options as they occur.
Net Loss per Share of Common Stock
Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares include outstanding stock options and warrants.
For the years ended December 31, 2025, and 2024, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result was anti-dilutive.
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| F-11 |
| Table of Contents |
Segment Reporting
Operating segments are defined as components of an enterprise about which separate and discrete information is available for evaluation by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s CODM is its chief executive officer. The Company’s CODM evaluates the Company’s operations and manages its business as a single operating segment. All of the Company’s long-lived assets are held in the United States. Refer to Note 3 for the Company’s disclosure on its single operating segment.
New Accounting Standards Adopted
During the year ended December 31, 2025, the Company adopted ASU 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). The standard requires all entities holding cryptocurrency assets to measure these assets at fair value and disclose significant holdings. As the current reporting period was the first period in which the Company held cryptocurrency assets, there was no impact on any prior reporting periods as a result of the adoption of this standard.
NOTE 3 – SEGMENT REPORTING
Operating segments are comprised of the components of an entity in which separate information is available for evaluation by the Company’s CODM, or group of decision makers, in determining how to allocate resources in evaluating performance. The Company consists of a single reporting segment: life science. The life science segment is comprised of the Company’s development of therapeutics that target lipid-signaling modulation pathways, including the ECS, a network of receptors and neurotransmitters that form a biochemical communication system throughout the body. The Company’s CODM is its chief executive officer.
The accounting policies of the life science segment are as described in the summary of significant accounting policies. The CODM evaluates the performance of the life science segment based on the Company’s net loss as reported on the income statement as consolidated net loss. The Company’s segment assets are reported on the balance sheet as its total consolidated assets.
The Company has not generated any revenue since its inception and expects to continue to incur losses into the foreseeable future as it continues to conduct research and development related activities through all stages of product development and clinical trials and subsequently seek approval from the respective regulatory authorities. The Company’s CODM utilizes cash forecast models to determine the Company’s investment in the life sciences segment. These models are reviewed regularly to monitor the Company’s operating results and performance and compared to the Company’s cash-based forecasts.
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| F-12 |
| Table of Contents |
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(a) | Consists of investor relations, travel and other office expenses. |
(b) | Consists of supplies and other items used in research and development activities. |
NOTE 4 – DIGITAL ASSETS
During the year ended December 31, 2025, the Company purchased
NOTE 5 – RELATED PARTY TRANSACTIONS
During the years ended December 31, 2025, and 2024, a company owned by the Senior Vice President, European Operations, provided consulting services totaling $
During the years ended December 31, 2025, and 2024, a company significantly influenced by a director of a subsidiary of the Company provided professional services totaling $
During the years ended December 31, 2025, and 2024, a company controlled by a director of a subsidiary of the Company provided professional services totaling $
As of December 31, 2025, and 2024, there was $
NOTE 6 – CONVERTIBLE NOTES
Between April 27, 2025, and May 1, 2025, the Company entered into subscription agreements with various investors, pursuant to which the Company issued convertible notes (the “Notes”) to the investors in an aggregate principal amount of $
At the Maturity Date (defined below), the investor had the ability (at the investor’s sole option) to convert all of that certain unpaid portion of principal and accrued interest of the investor’s Note into shares of common stock (the “Voluntary Conversion”), specifically into that number of shares of common stock (the “Converted Shares”) equal to the unpaid principal balance and any accrued interest of each Note divided by $23.22. The amount of principal balance and any accrued interest of each Note convertible pursuant to the Voluntary Conversion was equal to the number of Converted Shares multiplied by $18.72. Should the investor not elect Voluntary Conversion, such portion of the unpaid principal balance and any accrued interest of each Note subject to Voluntary Conversion became immediately due and payable in cash.
| F-13 |
| Table of Contents |
The Notes accrued interest at a rate of 12% per annum, which would have adjusted to 20% upon an Event of Default (as defined in the Notes). All unpaid principal, together with any then unpaid and accrued interest and other amounts payable thereunder, became due and payable 180 days after the closing of the Notes Offering (the “Maturity Date”). Upon the closing of the Notes, the Company recorded deferred debt costs of $
Effective October 28, 2025, the Company entered into an agreement pursuant to which it issued and sold to certain investors, and the investors purchased (by converting all or a portion of the unconverted portion of unpaid principal balance and accrued interest due to such investors upon the maturity of the convertible promissory notes issued to the investors on May 1, 2025): (i) convertible notes in an aggregate principal amount of $
The Company utilizes the Black-Scholes model to value its warrants. During the year ended December 31, 2025, the Company utilized the following assumptions:
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As of December 31, 2025, the net carrying value of the Notes is $
NOTE 7 – EQUITY
Preferred Stock
The Company has authorized
As of December 31, 2025, and 2024, there were no shares of preferred stock issued or outstanding.
Common Stock
The Company has authorized
As of December 31, 2025, and 2024, there were
Subsequent to the year ended December 31 2025, up to the date of filing of this report, the Company issued 83 post reverse split round up shares for the fractional shares with respect to the Company’s executed 3:1 reverse stock split with the effective date of March 9, 2026. These fractional shares have been included within these financial statements as they all relate to shares issued and outstanding as of December 31, 2025. All common stock share, option, warrant and per share amounts have been retroactively adjusted in these consolidated financial statements and related disclosures.
On June 26, 2025, the Company closed a private placement of (i)
On July 18, 2025, the Company entered into a Sales Agreement with R.F. Lafferty under which we may offer and sell up to $
| F-14 |
| Table of Contents |
On September 4, 2025, the Company entered into an underwriting agreement (the “First Underwriting Agreement”) with R.F. Lafferty & Co., Inc. (“Underwriter”), the sole book-running manager and underwriter, relating to an underwritten offering of
On September 30, 2025, the Company entered into an underwriting agreement (the “Second Underwriting Agreement”) with the Underwriter, the sole book-running manager and underwriter, relating to an underwritten offering of
Warrants
A summary of activity of the warrants during the years ended December 31, 2025, and 2024 is as follows:
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The intrinsic value of the warrants as of December 31, 2025, is $
| F-15 |
| Table of Contents |
2018 Equity Incentive Plan
On February 28, 2025, the number of shares available under the Company’s 2018 Equity Incentive Plan, as amended (the “2018 Plan”), was increased by
As of December 31, 2025, the 2018 Plan permits the Company to issue up to an aggregate of
Options granted during the year ended December 31, 2025
In July 2025, the Company granted options to certain employees, officers, and consultants to purchase a total of
In July 2025, the Company granted options to certain employees, officers, and consultants to purchase a total of
Options granted during the year ended December 31, 2024
In January 2024, the Company granted options to an officer of the Company to purchase an aggregate of
On March 5, 2024, the Company granted options to certain employees, officers and consultants to purchase a total of
On December 20, 2024, the Company granted options to directors to purchase a total of
| F-16 |
| Table of Contents |
The following is a summary of stock option activity during the years ended December 31, 2025 and 2024:
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Valuation
The Company utilizes the Black-Scholes model to value its stock options. During the years ended December 31, 2025, and 2024, the Company utilized the following assumptions:
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During the year ended December 31, 2025, the Company granted
NOTE 8 – INCOME TAXES
The Company has not made provisions for income taxes for the years ended December 31, 2025, and 2024 since the Company has not generated taxable income and has the benefit of net operating losses in these periods.
Due to uncertainties surrounding the Company’s ability to generate future taxable income to realize deferred income tax assets arising as a result of net operating losses carried forward, the Company has not recorded any deferred income tax assets as of December 31, 2025. The Company has incurred an aggregate net operating loss of $
Net deferred tax assets consist of the following components as of:
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| F-17 |
| Table of Contents |
NOTE 9 – INTANGIBLE ASSET
The Company capitalized the costs associated with acquiring the exclusive worldwide license to develop and commercialize products comprising or containing the compound ART27.13 as an intangible asset at a value of $
The amount capitalized consisted of a $
NOTE 10 – LEASE
On May 12, 2021, the Company entered into a lease arrangement for office space in the U.S. with Beckman/Lomas LLC, an entity controlled by a close family member of a director. Effective June 1, 2022, the related party divested its interests in the property, and as such, the lease agreement no longer constitutes a related party transaction. On March 6, 2024, the Company entered into an amended agreement with the landlord to extend the lease commencing in September 2024, and effective until August 2027.
The following summarizes right-of use asset and lease information about the Company’s operating leases as of December 31, 2025:
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Future minimum lease payments under the operating lease liability have non-cancellable lease payments at December 31, 2025, as follows:
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| F-18 |
| Table of Contents |
NOTE 11 – COMMITMENTS AND CONTINGENCIES
The Company has certain financial commitments relating to research and development contracts as of December 31, 2025, as follows:
| · | The Company is invoiced monthly in connection with several research and development contracts. |
| · | The Company may be obligated to make additional payments related to research and development contracts entered into, dependent on the progress and milestones achieved through the programs. |
| · | The Company’s principal executive office is currently located at 505 Lomas Santa Fe Drive, Suite 160, Solana Beach, CA, USA. Additionally, we have an office outside Manchester, UK, which serves as administrative spaces for managing our subsidiaries, Trinity Reliant Ventures, Ltd (Ireland) and Artelo Biosciences Limited (UK). We do not currently own any properties, laboratories, or manufacturing facilities. The Solana Beach lease runs through August 2027, and the Manchester UK lease is month-to-month. |
NOTE 12 – SUBSEQUENT EVENTS
On January 30, 2026, the Company entered into an Equity Purchase Agreement, dated as of January 30, 2026 (the “Purchase Agreement”), with Square Gate Capital Master Fund, LLC – Series 5, (“Square Gate”), pursuant to which the Company has the right, but not the obligation, to direct Square Gate to purchase up to $25 million (the “Initial Commitment Amount”) in shares of common stock, par value $0.001 per share, of the Company, which at the Company’s sole discretion can be increased by an additional $25 million once the Initial Commitment Amount has been exhausted, subject to the terms and conditions contained in the Purchase Agreement.
In consideration for Square Gate’s execution and delivery of the Purchase Agreement, the Company issued
The Company will be prohibited from conducting any Variable Rate Transaction (as defined in the Purchase Agreement) without the prior written consent of Square Gate from any Put Date until the end of any Standstill Period (as defined in the Purchase Agreement); provided, however, that the Company may effect sales pursuant to a customary “at-the-market” facility with a FINRA-registered broker-dealer as sales agent.
On March 10, 2026, the
| F-19 |
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