Core Insights - The company has successfully closed a private placement, raising $425 million in gross proceeds to enhance its Ethereum (ETH) holdings and execute a differentiated yield generation program [1][2][4] - The company has launched an ETH treasury strategy, allocating proceeds for ETH purchases, transaction expenses, management bonuses, and supporting its legacy iGaming operations [2][8] - The company aims to become a benchmark for on-chain treasury management among public companies by integrating its ETH treasury strategy [12][13] Financing and Investment Strategy - The private placement was led by Electric Capital and Harbour Island, with participation from various institutional and crypto-native investors [3][4] - The company plans to sell up to $150 million in fixed income securities following the PIPE transaction, subject to definitive documentation [5] - Electric Capital will act as the external asset manager, implementing a yield generation program designed to outperform traditional ETH staking [6][13] Governance and Leadership - McAndrew Rudisill has been appointed as Chairman of the Board, with Crystal Heter and Andrew Suckling joining as Independent Directors [2][15] - The incoming board members bring extensive experience in crypto, decentralized finance, and capital markets, positioning the company as a leading Ethereum treasury corporation [15] Operational Focus - The company intends to maintain its legacy operations in biotech and iGaming while focusing on becoming an ETH accumulation vehicle [11][13] - A DeFi Council, consisting of leading DeFi builders, will provide input on treasury management to generate outsized yield and benefit the Ethereum ecosystem [9][13] - The company plans to provide regular updates on its Ethereum holdings to ensure transparency for investors [4]

PART I – FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company reported a **$4.1 million net loss** and **$2.2 million working capital deficit**, with cash at **$2.2 million**, raising going concern doubts amid a business pivot to online gaming [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$10.7 million** from **$12.8 million**, liabilities increased to **$5.3 million** from **$3.5 million**, and equity declined to **$5.4 million** from **$9.3 million** Condensed Consolidated Balance Sheet Highlights (unaudited) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $2,218,331 | $4,585,141 | | Total Current Assets | $3,092,120 | $5,141,371 | | Total Assets | $10,714,161 | $12,763,412 | | **Liabilities & Equity** | | | | Total Current Liabilities | $5,333,598 | $3,504,885 | | Total Liabilities | $5,333,598 | $3,511,501 | | Total Stockholders' Equity | $5,380,563 | $9,251,911 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Net loss for the six months ended June 30, 2025, increased to **$4.1 million** from **$1.1 million** in 2024, primarily due to a significant decrease in 'Other income' from one-time gains Statement of Operations Summary (unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Operating Expenses | $1,730,415 | $1,846,738 | $4,103,383 | $3,939,206 | | Loss From Operations | ($1,730,415) | ($1,846,738) | ($4,103,383) | ($3,939,206) | | Other income, net | $3,811 | $1,858,519 | $7,547 | $2,881,243 | | **Net Income (Loss)** | **($1,726,604)** | **$11,781** | **($4,095,836)** | **($1,057,963)** | | Basic and Diluted EPS | ($0.30) | $0.01 | ($0.88) | ($1.42) | [Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20%28Deficit%29) Stockholders' equity decreased from **$9.3 million** to **$5.4 million** by June 30, 2025, driven by a **$4.1 million net loss**, Series B Preferred Stock conversion, and a **$1 million** common stock repurchase commitment - All **1,000,000** shares of Series B Convertible Preferred Stock were converted into **1,318,000** shares of common stock during the first quarter of 2025[13](index=13&type=chunk)[51](index=51&type=chunk) - The company recorded a **$1,000,000** commitment to repurchase common stock, which was reflected as treasury stock[13](index=13&type=chunk)[98](index=98&type=chunk) - Stock-based compensation for the six months ended June 30, 2025, amounted to **$577,584**[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to **$2.0 million** from **$0.3 million**, leading to a **$2.4 million** decrease in cash, ending the period at **$2.2 million** Cash Flow Summary (unaudited) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($1,984,787) | ($306,247) | | Net Cash Used In Financing Activities | ($353,320) | ($529,302) | | Net Decrease In Cash | ($2,366,810) | ($829,511) | | **Cash - End of Period** | **$2,218,331** | **$1,146,288** | - Non-cash financing activities included the issuance of **$751,406** in shares for settlement of liabilities and a **$1,000,000** commitment to repurchase common stock[16](index=16&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's strategic shift to iGaming, highlight going concern uncertainty with cash expected only until December 2025, and cover significant litigation settlements - The company is shifting its business focus from biotechnology to the online gaming industry, utilizing a 'back-end technology platform' for an online blockchain casino acquired from Elray Resources, Inc. in September 2024[21](index=21&type=chunk)[23](index=23&type=chunk) - There is substantial doubt about the Company's ability to continue as a going concern due to an accumulated deficit of **$145.6 million** and a working capital deficit of **$2.2 million** as of June 30, 2025[24](index=24&type=chunk)[25](index=25&type=chunk) - The company settled several major legal actions in 2025, including those with Dr. Marlene Krauss, AmTrust, and Tyche Capital, involving cash payments and issuance of common stock[68](index=68&type=chunk)[76](index=76&type=chunk)[87](index=87&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A discusses the company's strategic pivot to iGaming, emphasizing critical financial challenges with cash reserves only until December 2025, and a **$4.1 million net loss** for the first six months of 2025, highlighting the need for significant additional capital - The company's current cash on hand is expected to fund operations only until December 2025, highlighting a critical need for additional funding[183](index=183&type=chunk)[198](index=198&type=chunk)[243](index=243&type=chunk) - The company is strategically pivoting to the online gaming industry by leveraging its acquired 'Gaming Technology Platform' for a blockchain-based casino, while evaluating options to monetize its legacy biotechnology assets[201](index=201&type=chunk)[209](index=209&type=chunk) Comparison of Results for the Six Months Ended June 30 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Research and development expense | $423,291 | $484,047 | | General and administrative | $3,404,265 | $3,150,953 | | **Net Loss** | **($4,095,836)** | **($1,057,963)** | - Management estimates the initial cost to fully commercialize the Gaming Technology Platform, including licensing, game content, and marketing, will range from **$3 million** to over **$5 million**[208](index=208&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk%2E) The company is not required to provide this information as it qualifies as a 'smaller reporting company' under SEC regulations - As a 'smaller reporting company,' the Company is exempt from providing quantitative and qualitative disclosures about market risk under Item 305(e) of Regulation S-K[259](index=259&type=chunk) [Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures%2E) Management concluded disclosure controls were ineffective as of June 30, 2025, due to a material weakness from limited accounting resources, with a remediation plan underway and no material changes to internal controls - The principal executive officer and principal financial officer concluded that as of June 30, 2025, the company's disclosure controls and procedures were not effective[263](index=263&type=chunk) - A material weakness exists due to limited accounting resources; the company plans to remediate this by implementing an added layer of internal technical review for significant entries[264](index=264&type=chunk)[266](index=266&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[268](index=268&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings%2E) The company is not currently a party to any material legal proceedings, with details of previously settled litigation referenced in Note 9 of the financial statements - The company is not currently a party to any material legal proceedings[271](index=271&type=chunk) - Details of previously disclosed litigation that has now been settled are incorporated by reference from Note 9 – Commitments and Contingencies[272](index=272&type=chunk) [Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors%2E) The company highlights critical risks including the need for additional capital to continue as a going concern with funds projected only until December 2025, potential dilution, illiquid stock, concentrated voting control, and a **$2 million** debt to the University of Oxford - The company needs additional capital, as current cash of approximately **$1.9 million** (as of July 22, 2025) is only expected to last until December 2025, raising substantial doubt about its ability to continue as a going concern[275](index=275&type=chunk) - Elray Resources, Inc. beneficially owns **21.8%** of common stock and holds warrants that could increase its ownership to **47.8%**, giving it significant influence over corporate matters[290](index=290&type=chunk) - Stockholders holding **25.8%** of outstanding voting shares have entered into Voting Agreements, agreeing to vote as recommended by the Board of Directors, concentrating voting power with the board[293](index=293&type=chunk)[296](index=296&type=chunk) - The company owes approximately **$2 million** to the University of Oxford and currently lacks the funds for payment, facing threats of legal action which could materially harm operations[298](index=298&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter ended June 30, 2025, the company had no sales of unregistered equity securities not previously disclosed on Form 8-K, nor any purchases of equity securities by the issuer or its affiliates - There were no sales of unregistered securities during the quarter ended June 30, 2025, that have not been previously reported on a Form 8-K[303](index=303&type=chunk) [Other Information](index=62&type=section&id=Item%205.%20Other%20Information%2E) During the quarter ended June 30, 2025, no directors or officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements - No directors or officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[307](index=307&type=chunk) [Exhibits](index=63&type=section&id=Item%206.%20Exhibits%2E) This section lists exhibits filed with the Form 10-Q, including settlement agreements, executive consulting agreements, incentive plans, and officer certifications, many incorporated by reference from previous Form 8-K filings - Exhibits filed include settlement agreements with AmTrust and Elray, the 2025 Option Incentive Plan, and amended executive consulting agreements for the CEO and CAO[308](index=308&type=chunk) - Certifications by the Principal Executive Officer and Principal Accounting Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are filed with the report[308](index=308&type=chunk)

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited Q1 2025 statements reflect a strategic shift, a significant net loss, and substantial doubt about its going concern status [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decline in total assets to $11.7 million and stockholders' equity to $7.7 million as of March 31, 2025 Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $3,724,527 | $4,585,141 | | Total Current Assets | $4,028,753 | $5,141,371 | | Intangible assets, net | $7,622,041 | $7,622,041 | | **Total Assets** | **$11,650,794** | **$12,763,412** | | **Liabilities & Equity** | | | | Total Current Liabilities | $3,941,797 | $3,504,885 | | Total Liabilities | $3,945,222 | $3,511,501 | | Total Stockholders' Equity | $7,705,572 | $9,251,911 | | **Total Liabilities and Stockholders' Equity** | **$11,650,794** | **$12,763,412** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported a net loss of $2.37 million for Q1 2025, a significant increase from the prior year's $1.07 million loss Statement of Operations Summary (Unaudited) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Operating Expenses | $2,372,968 | $2,092,468 | | Loss From Operations | ($2,372,968) | ($2,092,468) | | Other Income (Expense), Net | $3,736 | $1,022,724 | | **Net Loss** | **($2,369,232)** | **($1,069,744)** | | Basic and Diluted Net Loss per Share | ($0.67) | ($1.68) | | Weighted Average Shares Outstanding (Basic) | 3,539,331 | 638,339 | [Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Deficit)) Stockholders' equity decreased to $7.71 million, impacted by a net loss and the conversion of all Series B Preferred Stock - All 1,000,000 outstanding shares of **Series B Convertible Preferred Stock were converted** into 1,318,000 shares of common stock during the quarter[12](index=12&type=chunk)[47](index=47&type=chunk) - The company issued 243,166 shares for settlement of liabilities valued at $310,000 and recorded **stock-based compensation of $577,584**[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company used $0.85 million in cash from operations, reducing its cash balance to $3.72 million by the end of Q1 2025 Cash Flow Summary (Unaudited) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($853,723) | ($1,033,417) | | Net Cash Used In Financing Activities | ($3,320) | ($264,394) | | **Net Decrease In Cash** | **($860,614)** | **($1,299,822)** | | **Cash - End of Period** | **$3,724,527** | **$675,977** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the strategic pivot to iGaming, going concern risk, intangible assets, and significant legal and subsequent events - The company is **strategically pivoting to the online gaming industry** after acquiring a 'back-end technology platform' from Elray Resources, Inc[19](index=19&type=chunk)[20](index=20&type=chunk)[179](index=179&type=chunk) - The company's financial condition, with an **accumulated deficit of $143.9 million** and recurring losses, raises **substantial doubt about its ability to continue as a going concern**[22](index=22&type=chunk)[23](index=23&type=chunk) - Intangible assets include **$7.6 million for the Gaming Technology Platform** acquired from Elray, which is not yet in service[31](index=31&type=chunk)[41](index=41&type=chunk)[43](index=43&type=chunk) - In February 2025, the company **settled litigation with former CEO Dr. Marlene Krauss** for $50,000 cash and 200,000 restricted shares[62](index=62&type=chunk)[111](index=111&type=chunk) - Subsequent to the quarter end, the company entered into a settlement with Elray Resources to **reacquire 1,318,000 of its common shares** for a total payment of $1 million[151](index=151&type=chunk)[152](index=152&type=chunk) - In April 2025, the company **settled with AmTrust**, agreeing to pay $250,000 cash and issue 509,707 shares to resolve disputes[143](index=143&type=chunk)[144](index=144&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the iGaming pivot, liquidity challenges, and Q1 2025 results, noting cash is sufficient only through December 2025 [Business Overview](index=37&type=section&id=Business%20Overview) The company is entering the online gaming market with a new platform while winding down its legacy biotechnology programs - The company is **pivoting to the global iGaming market**, planning to establish a blockchain-based business for both B2C and B2B operations[179](index=179&type=chunk)[181](index=181&type=chunk) - Management estimates the initial cost to fully commercialize the Gaming Technology Platform will range from **$3 million to over $5 million**[186](index=186&type=chunk) - **Legacy biotechnology programs are being wound down**, and the company is evaluating options to monetize its remaining TNF and SCA (CBD) assets[187](index=187&type=chunk)[188](index=188&type=chunk) [Consolidated Results of Operations](index=41&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) The Q1 2025 net loss increased 121% to $2.37 million, driven by higher G&A expenses and lower other income Comparison of Operations for the Three Months Ended March 31 | Expense/Income Category | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Research and development | $240,905 | $365,186 | -34% | | General and administrative | $1,996,608 | $1,556,740 | +28% | | Other income, net | $3,736 | $1,022,724 | -100% | | **Net Loss** | **($2,369,232)** | **($1,069,744)** | **+121%** | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) With only $3.7 million in cash, the company faces significant liquidity constraints and a going concern risk - As of May 15, 2025, the company had approximately $2.6 million in cash, which is expected to fund operations **only through December 2025**[216](index=216&type=chunk)[247](index=247&type=chunk) - The company's financial state raises **substantial doubt about its ability to continue as a going concern** and it will require significant additional funding[172](index=172&type=chunk)[175](index=175&type=chunk)[216](index=216&type=chunk) - **Cash used in operating activities was $853,723** for Q1 2025, primarily attributable to the net loss of $2.37 million, adjusted for non-cash items[211](index=211&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a 'smaller reporting company,' the company is not required to provide market risk disclosures - As a **'smaller reporting company,'** the Company is exempt from the disclosure requirements of this item[230](index=230&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded disclosure controls were ineffective as of March 31, 2025, due to a material weakness in accounting resources - Management concluded that **disclosure controls and procedures were not effective** as of March 31, 2025[234](index=234&type=chunk) - A **material weakness was identified**, resulting from limited accounting resources[235](index=235&type=chunk) - A **remediation plan is being implemented**, which includes adding a layer of internal technical review for significant accounting entries[237](index=237&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings.) The company has settled several major legal matters and does not expect remaining issues to have a material adverse effect - Details on legal proceedings are incorporated by reference from **Note 9** of the financial statements[243](index=243&type=chunk) - The company has recently **settled several significant legal actions**, including those with Dr. Marlene Krauss, Tyche Capital LLC, and AmTrust International[62](index=62&type=chunk)[71](index=71&type=chunk)[81](index=81&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors.) Key risks include the critical need for capital, going concern doubt, illiquid stock, and significant outstanding debt - The company needs additional capital, as current cash is only expected to last until December 2025, raising **substantial doubt about its ability to continue as a going concern**[247](index=247&type=chunk) - The company's common stock is **illiquid and has experienced extreme price volatility**, which may not be related to operating performance[254](index=254&type=chunk)[256](index=256&type=chunk) - **Elray Resources beneficially owns 23.1%** of common stock and holds warrants for more, giving it potential significant voting control[260](index=260&type=chunk)[266](index=266&type=chunk) - The company owes approximately **$1.3 million to the University of Oxford** and faces potential legal action if a payment plan is not agreed upon[268](index=268&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during Q1 2025 that were not previously reported - No unregistered sales of equity securities occurred during the quarter ended March 31, 2025, that were not previously reported on a Form 8-K[274](index=274&type=chunk) [Item 3. Defaults upon Senior Securities](index=53&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities.) The company reports no defaults upon its senior securities during the period - None[276](index=276&type=chunk) [Item 4. Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This disclosure item is not applicable to the company's operations - Not applicable[277](index=277&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information.) No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during Q1 2025 - During Q1 2025, **no directors or officers adopted or terminated any Rule 10b5-1 trading plans**[279](index=279&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed, including settlement agreements, plan amendments, and officer certifications - The report includes numerous exhibits, such as the **settlement agreement with AmTrust**, a settlement and voting agreement with Elray Resources, and executive consulting agreements[280](index=280&type=chunk)[281](index=281&type=chunk)

PART I [Business](index=7&type=section&id=Item%201.%20Business.) 180 Life Sciences Corp. pivoted from biotechnology to focus on the iGaming industry, acquiring a blockchain casino platform in September 2024 - The company shifted its primary focus from biotechnology to an online blockchain casino after acquiring a back-end platform from Elray Resources, Inc. in September 2024[25](index=25&type=chunk)[26](index=26&type=chunk) - The go-forward strategy involves launching a B2C online casino, with potential expansion into B2B and industry consolidation[34](index=34&type=chunk)[68](index=68&type=chunk)[80](index=80&type=chunk) - The company seeks to monetize legacy biotechnology programs, including fibrosis & anti-TNF and synthetic CBD analogues (SCAs) platforms[88](index=88&type=chunk)[89](index=89&type=chunk)[94](index=94&type=chunk) - The license agreement with Stanford University for the **α7nAChR platform** was terminated in November 2024[86](index=86&type=chunk)[88](index=88&type=chunk)[109](index=109&type=chunk) Projected iGaming Commercialization Costs | Cost Category | Estimated Amount (USD) | | :--- | :--- | | Front-End Player Interface | Starts at ~$100,000 | | Game Provider Partnerships | $10,000 - $100,000+ per game | | Game Acquisition (Sufficient Portfolio) | ~$500,000 | | First-Year Marketing Budget | $1 - $2 million | | Licensing Fees | $50,000 - $200,000+ per jurisdiction | | Legal & Regulatory Consultants | $20,000 - $100,000 annually | | Senior Staff Salaries | $250,000 - $300,000 annually per executive | | **Total Initial Commercialization Cost** | **$3 million to >$5 million** | [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors.) The company faces substantial risks, including financial viability, iGaming operating history, cryptocurrency volatility, and internal control weaknesses - The company's current cash balance is only sufficient to fund operations until approximately December 2025, which raises substantial doubt about its ability to continue as a going concern[255](index=255&type=chunk)[260](index=260&type=chunk) - The company has no operating history in the highly competitive and regulated online gaming industry, presenting significant business and execution risks[279](index=279&type=chunk)[280](index=280&type=chunk) - Plans to allow players to use cryptocurrencies like Bitcoin and Ethereum expose the company to significant legal, commercial, regulatory, and technical uncertainties, including price volatility and potential security breaches[309](index=309&type=chunk)[310](index=310&type=chunk)[327](index=327&type=chunk) - Elray Resources, Inc. beneficially owns **25.4%** of the company's voting stock, with the potential to own **52.8%** upon warrant exercise, giving it significant influence over corporate matters[411](index=411&type=chunk) - The company has identified material weaknesses in its disclosure controls and internal control over financial reporting, which could result in material misstatements in financial statements[380](index=380&type=chunk)[382](index=382&type=chunk) - The company may be unable to successfully monetize its existing life science assets (SCA and ATNF platforms) following its strategic shift to iGaming[359](index=359&type=chunk) [Unresolved Staff Comments](index=98&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) The company reports no unresolved staff comments from the SEC - None[487](index=487&type=chunk) [Cybersecurity](index=98&type=section&id=Item%201C.%20Cybersecurity.) The company engages cybersecurity consultants, with CFO oversight and Board updates, reporting no material incidents as of year-end 2024 - The company has engaged specialized consultants to assess and manage cybersecurity threats, resulting in enhancements to security processes and controls[488](index=488&type=chunk)[489](index=489&type=chunk) - The CFO is responsible for overseeing cybersecurity risks, and the Board receives periodic updates on the matter[492](index=492&type=chunk) - As of December 31, 2024, there have been no cybersecurity incidents that have materially affected the company[493](index=493&type=chunk) [Properties](index=99&type=section&id=Item%202.%20Properties.) The company's headquarters are in leased office space in Palo Alto, California, deemed suitable for current business needs - The company's principal executive offices are located at 3000 El Camino Real, Bldg. 4, Suite 200, Palo Alto, CA 94306[494](index=494&type=chunk) [Legal Proceedings](index=99&type=section&id=Item%203.%20Legal%20Proceedings.) The company is involved in legal proceedings detailed in Note 10, with management not expecting a material adverse effect, despite inherent litigation uncertainty - Details of current litigation are incorporated by reference from "Note 10 – Commitments and Contingencies" in the financial statements[496](index=496&type=chunk) - Management believes the resolution of pending matters will not have a material adverse effect, but the outcome of litigation is inherently uncertain[496](index=496&type=chunk)[497](index=497&type=chunk) [Mine Safety Disclosures](index=99&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - Not applicable[498](index=498&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=100&type=section&id=Item%205.%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock and warrants trade on Nasdaq, with **3,837,780 shares outstanding** as of March 31, 2025, and no plans for future cash dividends - Common stock and warrants trade on the Nasdaq Capital Market under symbols "ATNF" and "ATNFW"[501](index=501&type=chunk) - As of March 31, 2025, there were **3,837,780 common shares outstanding**[502](index=502&type=chunk) - The company has never paid cash dividends and does not plan to in the foreseeable future[503](index=503&type=chunk) [Reserved](index=100&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=101&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) The company reported a **$6.2 million** net loss in 2024, with cash only until December 2025 raising substantial doubt about its going concern ability Consolidated Results of Operations (FY 2024 vs. FY 2023) | Metric | FY 2024 (USD) | FY 2023 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Operating Expenses** | 6,324,729 | 13,477,500 | (53.1)% | | *Research and development* | 1,969,267 | 2,784,528 | (29.3)% | | *General and administrative* | 4,355,462 | 10,692,972 | (59.3)% | | **Loss From Operations** | (6,324,729) | (13,477,500) | (53.1)% | | **Net Loss** | (6,168,177) | (19,935,112) | (69.1)% | | **Net Loss available to Common Stockholders** | (14,179,687) | (19,935,112) | (28.9)% | - The company's ability to continue as a going concern is in doubt, with cash on hand as of March 24, 2025, of approximately **$3.8 million**, expected to fund operations only until December 2025[508](index=508&type=chunk)[511](index=511&type=chunk)[546](index=546&type=chunk) - General and administrative expenses decreased by **$6.3 million (59%)** in 2024, primarily due to reduced legal fees, professional fees, salaries from lower headcount, and stock-based compensation[534](index=534&type=chunk) - Cash provided by financing activities was **$4.0 million** in 2024, mainly from warrant exercises and a stock offering, compared to **$5.9 million** in 2023[542](index=542&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=111&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, the primary market risk is interest rate sensitivity on cash and equivalents, with a 100 basis point change not expected to be material - The company is a "smaller reporting company" and is not required to provide the full information for this item[569](index=569&type=chunk) - The primary market risk is interest rate sensitivity for its **$4.6 million** in cash and cash equivalents, with an immediate **1%** change in interest rates not expected to have a material effect[570](index=570&type=chunk) [Financial Statements and Supplemental Data](index=112&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplemental%20Data.) The company's consolidated financial statements and supplemental data are included in the report starting on page F-1 - The required financial statements are included in the report, indexed on page F-1[571](index=571&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=112&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[572](index=572&type=chunk) [Controls and Procedures](index=112&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management concluded disclosure controls were ineffective as of December 31, 2024, due to a material weakness in accounting for bonus accrual reversals - Management concluded that disclosure controls and procedures were not effective as of December 31, 2024[573](index=573&type=chunk)[580](index=580&type=chunk) - A material weakness was identified related to ineffective controls over financial reporting, specifically concerning the incorrect accounting for reversals of year-end bonus accruals for a discontinued R&D project[382](index=382&type=chunk) [Other Information](index=113&type=section&id=Item%209B.%20Other%20Information.) On March 27, 2025, Elray Resources, Inc. converted **1,000,000 Series B Preferred Stock** into **1,318,000 common shares**, resulting in **5,185,780 total common shares outstanding** - On March 27, 2025, Elray Resources, Inc. converted all **1,000,000 shares** of Series B Convertible Preferred Stock into **1,318,000 shares** of common stock[583](index=583&type=chunk) - Post-conversion, the total number of common shares outstanding is **5,185,780**[584](index=584&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=113&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections.) This item is not applicable to the company - None[585](index=585&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=114&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) Information for this item is incorporated by reference from the company's 2025 definitive proxy statement - Information is incorporated by reference from the 2025 Proxy Statement[588](index=588&type=chunk) [Executive Compensation](index=114&type=section&id=Item%2011.%20Executive%20Compensation.) Information for this item is incorporated by reference from the company's 2025 definitive proxy statement - Information is incorporated by reference from the 2025 Proxy Statement[589](index=589&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=114&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) Information for this item is incorporated by reference from the company's 2025 definitive proxy statement - Information is incorporated by reference from the 2025 Proxy Statement[590](index=590&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=114&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) Information for this item is incorporated by reference from the company's 2025 definitive proxy statement - Information is incorporated by reference from the 2025 Proxy Statement[591](index=591&type=chunk) [Principal Accountant Fees and Services](index=114&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services.) M&K CPAS, PLLC is the independent auditor for FY2024, with fee information incorporated by reference from the 2025 Proxy Statement - The independent public accounting firm for FY2024 is M&K CPAS, PLLC, while the firm for FY2023 was Marcum, LLP[592](index=592&type=chunk) - Information on fees and services is incorporated by reference from the 2025 Proxy Statement[593](index=593&type=chunk) PART IV [Exhibits, Financial Statements and Schedules](index=115&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statements%20and%20Schedules) This section provides the index to consolidated financial statements starting on page F-1 and a list of all filed or incorporated exhibits - This section includes the index to the Consolidated Financial Statements and the Exhibit Index[595](index=595&type=chunk)[598](index=598&type=chunk) [Form 10–K Summary](index=122&type=section&id=Item%2016.%20Form%2010%E2%80%93K%20Summary) The company has not provided a summary for its Form 10-K - None[608](index=608&type=chunk) Consolidated Financial Statements [Financial Statements](index=128&type=section&id=Financial%20Statements) Consolidated financial statements show a **$6.2 million** net loss in 2024, **$12.8 million** total assets, and **$9.3 million** stockholders' equity as of December 31, 2024 Key Balance Sheet Data (as of Dec 31) | Metric | 2024 (USD) | 2023 (USD) | | :--- | :--- | :--- | | **Total Assets** | 12,763,412 | 5,259,476 | | *Cash* | 4,585,141 | 1,975,799 | | *Intangible assets, net* | 7,622,041 | 1,619,570 | | **Total Liabilities** | 3,511,501 | 5,387,209 | | **Total Stockholders' Equity (Deficit)** | 9,251,911 | (127,733) | Key Operations Data (for the year ended Dec 31) | Metric | 2024 (USD) | 2023 (USD) | | :--- | :--- | :--- | | **Loss From Operations** | (6,324,729) | (13,477,500) | | **Net Loss** | (6,168,177) | (19,935,112) | | **Net Loss per Share (Basic & Diluted)** | (15.49) | (52.59) | Key Cash Flow Data (for the year ended Dec 31) | Metric | 2024 (USD) | 2023 (USD) | | :--- | :--- | :--- | | **Net Cash Used In Operating Activities** | (1,480,567) | (10,922,223) | | **Net cash provided by financing activities** | 4,037,715 | 5,907,887 | | **Cash - End of Period** | 4,585,141 | 1,975,799 | [Notes to Consolidated Financial Statements](index=135&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's iGaming strategic shift, significant going concern uncertainty, impairment of legacy biotech assets, financing activities, and legal dispute settlements - **Going Concern:** The financial statements were prepared assuming the company will continue as a going concern, but management notes that significant losses and a working capital deficit raise substantial doubt about this ability, with continuation dependent on obtaining new financing[658](index=658&type=chunk)[659](index=659&type=chunk) - **Intangible Assets:** In September 2024, the company acquired source code and intellectual property for an online casino, valued at **$7.6 million**, while concurrently recognizing a **$1.5 million** impairment loss on its legacy licensed patents and technology in 2024, following a **$9.1 million** impairment of IP R&D assets in 2023[668](index=668&type=chunk)[701](index=701&type=chunk)[703](index=703&type=chunk) - **Legal Proceedings:** The company settled a major legal action with its former CEO, Dr. Marlene Krauss, in February 2025, involving a cash payment and issuance of **200,000 restricted shares**, and also settled actions with Tyche Capital and the Bauers in June 2024[731](index=731&type=chunk)[736](index=736&type=chunk)[744](index=744&type=chunk) - **Financing Activities:** The company conducted several financing activities, including a warrant inducement in October 2024 that raised **$3.3 million gross** and a registered direct offering in December 2024 that raised **$2.9 million gross**[554](index=554&type=chunk)[561](index=561&type=chunk)[819](index=819&type=chunk) - **Subsequent Events:** On March 27, 2025, all **1,000,000 shares** of Series B Preferred Stock were converted into **1,318,000 shares** of common stock[909](index=909&type=chunk)

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited financial statements as of September 30, 2024, show increased assets and reduced net loss due to an acquisition and non-recurring impairment, despite ongoing going concern doubts [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2024, total assets increased to **$10.5 million** due to intangible assets, cash decreased, liabilities rose, and stockholders' equity shifted to **$3.7 million** Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | Sep 30, 2024 | Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash | $194,920 | $1,975,799 | ($1,780,879) | | Total Current Assets | $1,225,381 | $3,639,906 | ($2,414,525) | | Intangible assets, net | $9,244,475 | $1,619,570 | $7,624,905 | | **Total Assets** | **$10,469,856** | **$5,259,476** | **$5,210,380** | | **Liabilities & Equity** | | | | | Total Current Liabilities | $6,383,830 | $5,062,616 | $1,321,214 | | Total Liabilities | $6,736,082 | $5,387,209 | $1,348,873 | | Total Stockholders' Equity (Deficit) | $3,733,774 | ($127,733) | $3,861,507 | - A new liability for Class B Convertible Preferred stock of **$2,772,695** was recorded, related to the asset acquisition[7](index=7&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) For the nine months ended September 30, 2024, net loss significantly decreased to **$1.9 million** from **$18.7 million** in 2023, primarily due to the absence of a **$9.1 million** impairment charge and **$2.9 million** in other income Statement of Operations Highlights (Unaudited) | Metric | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | Change | | :--- | :--- | :--- | :--- | | Total Operating Expenses | $4,918,299 | $12,025,012 | ($7,106,713) | | Loss From Operations | ($4,918,299) | ($12,025,012) | $7,106,713 | | Loss on IP R&D asset impairment | $0 | ($9,063,000) | $9,063,000 | | Other income, net | $3,023,616 | ($9,028,020) | $12,051,636 | | **Net Loss** | **($1,894,683)** | **($18,708,007)** | **$16,813,324** | | **Basic and Diluted Net Loss per Share** | **($2.24)** | **($62.81)** | **$60.57** | - The company recorded **$2.87 million** in Other Income for the nine months ended Sep 30, 2024, which was not present in the prior year, primarily from insurance proceeds related to litigation[8](index=8&type=chunk)[89](index=89&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' (Deficit) Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20%28Deficit%29%20Equity) Stockholders' equity improved from a **($127,733)** deficit to **$3.7 million** positive equity by September 30, 2024, primarily due to **$4.8 million** in warrants issued for an asset acquisition - Total Stockholders' Equity increased from a deficit of **($127,733)** on January 1, 2024, to a positive balance of **$3,733,774** on September 30, 2024[9](index=9&type=chunk) - The company issued warrants for an asset acquisition valued at **$4,849,346**, which was recorded as additional paid-in capital[9](index=9&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2024, net cash used in operations significantly reduced to **$529,906**, while financing activities used **$1.0 million**, leading to a cash balance of **$194,920** Cash Flow Summary (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($529,906) | ($8,762,209) | | Net cash provided by (used in) financing activities | ($1,005,367) | $4,439,526 | | **Net Decrease In Cash** | **($1,780,879)** | **($4,307,590)** | | **Cash – End of Period** | **$194,920** | **$2,662,520** | - The company engaged in significant non-cash investing and financing activities, issuing **$7.6 million** in warrants and preferred stock for an asset acquisition and **$523,251** in common stock to settle liabilities[12](index=12&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's strategic pivot to online blockchain casino, a going concern warning, the **$7.6 million** iGaming asset acquisition, ongoing litigation, a reverse stock split, and a subsequent **$3.3 million** cash raise - The company is a clinical-stage biotech that has slowed R&D and is now entering the online blockchain casino business after acquiring assets from Elray Resources, Inc. on September 29, 2024[16](index=16&type=chunk)[17](index=17&type=chunk)[19](index=19&type=chunk) - There is substantial doubt about the company's ability to continue as a going concern due to an accumulated deficit of **$129.2 million** and a working capital deficit of **$5.2 million** as of September 30, 2024[21](index=21&type=chunk)[22](index=22&type=chunk) - In Q3 2023, the company fully impaired its remaining IP R&D assets, recording a loss of **$9,063,000**, which reduced the asset's carrying value to zero[33](index=33&type=chunk) - The company acquired online casino source code and IP from Elray for **1 million** shares of Series B Convertible Preferred Stock and warrants for **3 million** shares of common stock, valued at a combined **$7.6 million**[39](index=39&type=chunk)[44](index=44&type=chunk) - Subsequent to the quarter end, on October 16-17, 2024, the company received **$3.3 million** in cash from a warrant inducement agreement, exercising **950,069** existing warrants[142](index=142&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic pivot to iGaming, reduced net loss to **$1.9 million** due to non-recurring impairment and insurance proceeds, and expects **$3.3 million** cash to fund operations through December 2025, with **$3-5 million** needed for iGaming commercialization [Business Overview and Recent Events](index=37&type=section&id=Business%20Overview%20and%20Recent%20Events) The company strategically pivoted to the online gaming industry by acquiring a blockchain casino platform, slowing biotech R&D, and plans to launch a B2C casino by Q1 2025, with an estimated **$3-5 million** commercialization cost - The company acquired a 'back-end' online blockchain casino platform from Elray Resources on September 29, 2024, signaling a strategic pivot into the iGaming industry[173](index=173&type=chunk) - The company's plan includes launching a B2C online casino, expanding into a B2B platform provider, and pursuing a consolidation strategy in the iGaming sector[189](index=189&type=chunk)[224](index=224&type=chunk)[232](index=232&type=chunk) - Management is targeting the end of **Q1 2025** to have the first online casino operational, but this is subject to funding and other dependencies[217](index=217&type=chunk) - The estimated initial cost to fully commercialize the Gaming Technology Platform is between **$3 million** and **$5 million**[223](index=223&type=chunk)[245](index=245&type=chunk) [Results of Operations](index=49&type=section&id=Results%20of%20Operations) For the nine months ended September 30, net loss decreased **90%** to **$1.9 million** from **$18.7 million**, driven by reduced G&A and R&D expenses, non-recurring impairment, and **$2.9 million** in other income Comparison of Operations for the Nine Months Ended September 30 | Metric | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Research and development expense | $1,105,086 | $2,339,863 | -53% | | General and administrative | $3,357,868 | $9,204,122 | -64% | | Loss From Operations | ($4,918,299) | ($12,025,012) | -59% | | Total other income (expense), net | $3,023,616 | ($9,028,020) | 133% | | **Net Loss** | **($1,894,683)** | **($18,708,007)** | **-90%** | - The decrease in G&A expenses was due to reduced legal fees (**~$1.1M**), professional fees (**~$2.0M**), salaries (**~$857k**), and stock-based compensation (**~$1.2M**)[261](index=261&type=chunk) - The significant swing in 'Other Income (Expense), Net' is primarily due to a **$9.1M** IP R&D asset impairment in 2023 and **$2.9M** in income from litigation proceeds and liability settlements in 2024[262](index=262&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2024, cash was **$194,920** with a **$5.2 million** working capital deficit, but a subsequent **$3.3 million** cash raise in October 2024 is expected to fund operations through December 2025, though more capital is needed - The company had only **$194,920** in cash as of September 30, 2024, with a working capital deficit of **$5.2 million**[263](index=263&type=chunk) - In October 2024, the company received approximately **$3.3 million** in cash from a warrant inducement agreement[270](index=270&type=chunk)[277](index=277&type=chunk) - With the cash raised in October, management believes it has sufficient funds to continue as a going concern through **December 2025**[270](index=270&type=chunk) - Material cash requirements for the remainder of 2024 are estimated at **$750,000** and **$2,000,000** for 2025, primarily for iGaming asset development[267](index=267&type=chunk) [Critical Accounting Estimates](index=57&type=section&id=Critical%20Accounting%20Estimates) The primary critical accounting estimate relates to intangible assets, specifically the valuation and amortization of newly acquired online casino technology and existing licensed patents, requiring significant management judgment - The primary critical accounting estimate relates to intangible assets, specifically the valuation and amortization of the newly acquired online casino technology and existing licensed patents[285](index=285&type=chunk)[286](index=286&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, the registrant is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is exempt from providing quantitative and qualitative disclosures about market risk[288](index=288&type=chunk) [Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures.) As of September 30, 2024, disclosure controls and procedures were ineffective due to a material weakness in classifying bonus accrual reversals, with a remediation plan involving additional technical review implemented - The company's disclosure controls and procedures were determined to be **ineffective** as of September 30, 2024[292](index=292&type=chunk) - A **material weakness** was identified related to ineffective controls over the classification of a liability forgiveness, which was incorrectly recorded as a reduction to R&D expense instead of Other Income[293](index=293&type=chunk) - A **remediation plan** is in place, which involves implementing an additional layer of internal technical review for significant accounting entries[296](index=296&type=chunk) [PART II - OTHER INFORMATION](index=60&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in various legal proceedings, detailed in **Note 10**, including actions against a former CEO and an insurer, with management not expecting a material adverse effect, but acknowledging litigation uncertainty - The company refers to **Note 10** of the financial statements for details on its current legal proceedings[302](index=302&type=chunk) - Management does not expect the outcome of current litigation to have a **material adverse effect**, but acknowledges that an adverse result could harm the business[301](index=301&type=chunk)[303](index=303&type=chunk) [Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors.) Key risks include substantial doubt about going concern, need for capital, lack of iGaming experience, intense competition, regulatory challenges, significant stockholder dilution from preferred stock and warrants, illiquid stock, and potential Nasdaq delisting or IP license termination [General Business and Funding Risks](index=60&type=section&id=General%20Business%20and%20Funding%20Risks) General business and funding risks include cash sufficiency only until **December 2025**, substantial doubt about going concern, significant past-due payables to Oxford potentially terminating IP licenses, lack of iGaming experience, and reliance on key personnel - The company's cash is only sufficient to fund operations until approximately **December 2025**, and it will need to raise substantial additional capital[309](index=309&type=chunk)[312](index=312&type=chunk) - The company has no experience in the gaming industry and must purchase or develop a 'front end' for its newly acquired online casino IP, which may be costly and time-consuming[325](index=325&type=chunk)[326](index=326&type=chunk)[327](index=327&type=chunk) - The company owes approximately **$1.3 million** to the University of Oxford, which has threatened legal action and may terminate key license agreements, especially given the company's entry into the gambling industry[334](index=334&type=chunk) [Risks Relating to our Planned Online Casino Operations](index=67&type=section&id=Risks%20Relating%20to%20our%20Planned%20Online%20Casino%20Operations) Risks in online casino operations include intense competition, lack of operating history, complex and evolving regulations, licensing challenges, cybersecurity threats, fraud, and reliance on third-party infrastructure, all posing significant financial and reputational harm - The online gaming industry is **highly competitive**, and the company may not be able to compete effectively against established players with greater resources[352](index=352&type=chunk)[353](index=353&type=chunk) - The business is subject to **extensive and evolving gaming regulations**, and failure to obtain or maintain licenses in any jurisdiction could prevent operations and have a **material adverse effect**[366](index=366&type=chunk)[367](index=367&type=chunk)[368](index=368&type=chunk) - The company faces **significant cybersecurity risks**, including data breaches, denial-of-service attacks, and fraud, which could damage its reputation and result in fines and lawsuits[380](index=380&type=chunk)[381](index=381&type=chunk) [Risks Relating to our Common Stock and other Securities](index=72&type=section&id=Risks%20Relating%20to%20our%20Common%20Stock%20and%20other%20Securities) Risks include highly volatile and illiquid common stock, Nasdaq delisting risk due to non-compliance with audit committee rules, significant dilution from Series B Preferred Stock with **$17.3 million** liquidation preference and warrants, and potential **40%** voting power for preferred holder - The company's stock is **illiquid** and **highly volatile**, and it may be **delisted from Nasdaq** as it is under a one-year mandatory panel monitor and is not in compliance with audit committee requirements[384](index=384&type=chunk)[407](index=407&type=chunk)[420](index=420&type=chunk) - The Series B Convertible Preferred Stock has a **$17.3 million** liquidation preference, which would be paid before any distribution to common stockholders in a liquidation event[428](index=428&type=chunk) - The Series B Convertible Preferred Stock has **anti-dilution protection** and will be convertible into **40%** of the company's common stock upon stockholder approval, causing **significant dilution** to existing shareholders[429](index=429&type=chunk)[432](index=432&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=81&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or purchases of equity securities occurred during the third quarter of 2024 that were not previously reported - No unregistered sales of equity securities occurred during the quarter ended September 30, 2024, that were not previously disclosed[443](index=443&type=chunk) [Defaults upon Senior Securities](index=81&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities.) The company reported no defaults upon senior securities - The company reported no defaults upon senior securities[443](index=443&type=chunk) [Mine Safety Disclosures](index=81&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - This item is not applicable to the company[444](index=444&type=chunk) [Other Information](index=81&type=section&id=Item%205.%20Other%20Information.) No directors or executive officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the third quarter of 2024 - No directors or officers adopted or terminated a **Rule 10b5-1 trading plan** during the third quarter of 2024[445](index=445&type=chunk) [Exhibits](index=82&type=section&id=Item%206.%20Exhibits.) This section lists exhibits filed with the Form 10-Q, including the **Asset Purchase Agreement** with Elray, **Series B Preferred Stock** designation, warrant agreements, and officer certifications - Key exhibits filed include the **Asset Purchase Agreement** with Elray, the **Series B Preferred Stock designation**, and the **warrant inducement agreement**[447](index=447&type=chunk)

Core Viewpoint - 180 Life Sciences Corp. has appointed Omar Jimenez as the new Chief Financial Officer, effective September 30, 2024, to enhance its financial strategy during a period of growth and innovation in the pharmaceutical and biotechnology sectors [1]. Group 1: Leadership Changes - Omar Jimenez, previously a director at 180 Life Sciences, will take on the role of CFO, bringing extensive financial expertise and a forward-thinking approach to the executive team [1]. - The company expresses gratitude to former CFO Ozan Pamir for his contributions and wishes him well in future endeavors [2]. Group 2: Company Overview - 180 Life Sciences Corp. is a clinical stage biotechnology company focused on developing therapeutics for unmet medical needs, particularly in chronic pain, inflammation, and fibrosis, utilizing innovative research and combination therapy where applicable [3].

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) The company reported a working capital deficit and accumulated deficit, achieving net income in Q2 2024, but faces substantial doubt about its going concern ability and is exploring strategic alternatives [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2024, total assets and liabilities decreased, while the total stockholders' deficit worsened compared to year-end 2023 Condensed Consolidated Balance Sheets (in USD) | Balance Sheet Items | June 30, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $1,146,288 | $1,975,799 | | Total Current Assets | $2,347,490 | $3,639,906 | | Total Assets | $3,911,445 | $5,259,476 | | **Liabilities & Stockholders' Deficit** | | | | Total Current Liabilities | $4,016,127 | $5,062,616 | | Total Liabilities | $4,329,432 | $5,387,209 | | Total Stockholders' Deficit | ($417,987) | ($127,733) | | Total Liabilities and Stockholders' Deficit | $3,911,445 | $5,259,476 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) For Q2 2024, the company reported net income, a significant improvement from a prior-year net loss, driven by reduced operating expenses and substantial other income Statement of Operations Highlights (Unaudited, in USD) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $488,323 | $789,441 | $853,509 | $1,367,750 | | General and administrative | $1,224,750 | $2,762,076 | $2,781,490 | $6,770,928 | | Total Operating Expenses | $1,846,738 | $3,682,980 | $3,939,206 | $8,486,825 | | Loss From Operations | ($1,846,738) | ($3,682,980) | ($3,939,206) | ($8,486,825) | | Other income, net | $1,858,519 | $2,811 | $2,881,243 | $44,578 | | **Net Income (Loss)** | **$11,781** | **($3,680,169)** | **($1,057,963)** | **($8,442,247)** | | Basic and Diluted EPS | $0.01 | ($13.37) | ($1.42) | ($42.81) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly decreased for the six months ended June 30, 2024, primarily due to lower net loss and favorable changes in working capital, while cash used in financing activities increased Cash Flow Summary (Unaudited, in USD) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($306,247) | ($6,986,733) | | Net cash provided by (used in) financing activities | ($529,302) | $1,992,463 | | Net Decrease In Cash | ($829,511) | ($4,961,504) | | **Cash – End of Period** | **$1,146,288** | **$2,008,606** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail substantial doubt about the company's going concern ability, slowed R&D, strategic alternatives exploration, legal settlements, insurance reimbursements, management changes, and ongoing Nasdaq non-compliance - The company is a clinical-stage biotech focused on inflammation and pain but has **significantly slowed R&D activities** and is now **exploring strategic alternatives**, including a potential merger, acquisition, or sale of assets[22](index=22&type=chunk)[23](index=23&type=chunk) - There is **substantial doubt about the company's ability to continue as a going concern** due to a history of significant losses, an accumulated deficit of **$128.4 million**, and a working capital deficit of **$1.7 million** as of June 30, 2024[24](index=24&type=chunk)[25](index=25&type=chunk) - In June 2024, the company settled litigation with Tyche Capital and the Bauers, resulting in the forgiveness of loans and accrued interest and the release of a bond, recognizing a gain of **$156,891**[63](index=63&type=chunk) - The company received **$1.71 million** in insurance reimbursements from AmTrust in Q2 2024 related to legal fees advanced to former officers, which was recorded as other income[70](index=70&type=chunk) - On May 7, 2024, the **CEO and CSO resigned**, a **new Interim CEO was appointed**, and several executive compensation agreements were amended to reduce or defer cash payments to conserve capital[75](index=75&type=chunk)[78](index=78&type=chunk)[83](index=83&type=chunk) - The company is **non-compliant with Nasdaq's minimum stockholders' equity rule** and has received a **delisting determination**, with Nasdaq granting an extension until September 30, 2024, to regain compliance[96](index=96&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management expresses significant doubt about the company's going concern ability, with limited cash runway, slowed R&D, and ongoing strategic alternatives exploration, while Q2 2024 saw net income due to insurance reimbursement and reduced expenses [Going Concern and Management Liquidity Plans](index=29&type=section&id=Going%20Concern%20and%20Management%20Liquidity%20Plans) Management has substantial doubt about the company's ability to continue as a going concern due to significant deficits and high monthly cash requirements, necessitating additional dilutive equity financing - The company has a minimum monthly cash requirement of approximately **$250,000** to support operations[132](index=132&type=chunk) - Management has concluded there is **substantial doubt about the company's ability to continue as a going concern**, as it needs to raise significant capital to pay debts and cover operating costs[130](index=130&type=chunk)[134](index=134&type=chunk) [Consolidated Results of Operations](index=33&type=section&id=Consolidated%20Results%20of%20Operations) Q2 2024 saw a shift to net income from a prior-year net loss, driven by significant other income and substantial reductions in both General & Administrative and R&D expenses Comparison of Operations for the Three Months Ended June 30 (in USD) | Metric | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Research and development | $488,323 | $789,441 | -38% | | General and administrative | $1,224,750 | $2,762,076 | -56% | | Other income, net | $1,858,519 | $2,811 | +66,019% | | **Net Income (Loss)** | **$11,781** | **($3,680,169)** | **+100%** | Comparison of Operations for the Six Months Ended June 30 (in USD) | Metric | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Research and development | $853,509 | $1,367,750 | -38% | | General and administrative | $2,781,490 | $6,770,928 | -59% | | Other income, net | $2,881,243 | $44,578 | +6,363% | | **Net Loss** | **($1,057,963)** | **($8,442,247)** | **-87%** | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2024, the company had limited cash and a working capital deficit, with current funds expected to last only through October 2024, necessitating urgent additional funding - As of June 30, 2024, the company had a cash balance of **$1,146,288** and a working capital deficit of **$1,668,637**[168](index=168&type=chunk) - With approximately **$0.5 million** in cash as of August 5, 2024, the company expects its funds to last only through October 2024, reinforcing the **going concern issue**[175](index=175&type=chunk) - The company anticipates material cash requirements of approximately **$1.125 million** for the remainder of 2024 and **$3.0 million** for 2025 for contractual obligations, including milestone payments and consulting fees[173](index=173&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, 180 Life Sciences Corp. is exempt from providing quantitative and qualitative disclosures about market risk - The company is a **"smaller reporting company"** and is therefore **not required** to provide the information for this item[186](index=186&type=chunk) [Controls and Procedures](index=38&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2024, due to a material weakness in internal control over financial reporting, with a remediation plan underway - The CEO and CFO concluded that as of June 30, 2024, the company's disclosure controls and procedures were **not effective**[189](index=189&type=chunk) - A **material weakness** was identified due to ineffective controls over the accounting for reversals of year-end bonus accruals, which should have been recorded as forgiveness of a liability (Other Income) instead of a reduction to R&D expense[189](index=189&type=chunk) - The **remediation plan** involves implementing an added layer of technical review by an internal financial reporting director for significant, non-recurring entries to ensure proper classification[194](index=194&type=chunk) [PART II - OTHER INFORMATION](index=40&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=40&type=section&id=ITEM%201.%20Legal%20Proceedings.) The company is involved in various legal proceedings, detailed in Note 8, which management does not currently expect to have a material adverse effect on financial condition or operations - Details of current litigation are **incorporated by reference** from Note 8 of the financial statements[196](index=196&type=chunk) [Risk Factors](index=40&type=section&id=ITEM%201A.%20Risk%20Factors.) The company faces significant risk of delisting from Nasdaq due to non-compliance with minimum stockholders' equity and audit committee requirements, which could severely harm liquidity and capital raising ability - The company is **not in compliance** with Nasdaq's minimum stockholders' equity requirement of **$2.5 million** (the "Equity Rule")[200](index=200&type=chunk) - On May 14, 2024, the company received a **delist determination letter** from Nasdaq, and after an appeal, was granted an **extension** until September 30, 2024, to regain compliance with the Equity Rule[203](index=203&type=chunk) - The company is also **non-compliant with Nasdaq's audit committee requirement** for at least three independent directors and has a cure period until its next annual meeting or May 7, 2025[205](index=205&type=chunk) - Failure to regain compliance could result in the **delisting of the company's securities**, which would likely lead to declines in share price and liquidity, and make it more difficult to raise capital[209](index=209&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) No unregistered sales of equity securities occurred during the quarter ended June 30, 2024, that were not previously reported - **No unregistered sales** of equity securities occurred during the quarter that were not previously disclosed[210](index=210&type=chunk) [Defaults Upon Senior Securities](index=42&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities.) None - **None**[210](index=210&type=chunk) [Mine Safety Disclosures](index=42&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures.) Not applicable - **Not applicable**[210](index=210&type=chunk) [Other Information](index=42&type=section&id=ITEM%205.%20Other%20Information.) No directors or executive officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2024 - **No directors or officers adopted or terminated** any Rule 10b5-1 trading plans during the second quarter of 2024[211](index=211&type=chunk) [Exhibits](index=43&type=section&id=ITEM%206.%20Exhibits.) This section lists exhibits filed with the Form 10-Q, including agreements related to management changes and officer certifications

Core Insights - 180 Life Sciences Corp. announced topline results from a clinical pharmacology study evaluating the uptake of cannabidiol (CBD) in solid formulations compared to the FDA-approved drug Epidiolex [1][2] - The study involved twelve volunteers and demonstrated that one of the solid formulations was absorbed faster and reached higher maximal levels than Epidiolex, while both formulations were well tolerated [2][3] - The development of solid formulations for CBD could enhance its clinical application for various indications, addressing the limitations of liquid formulations [4] Company Overview - 180 Life Sciences Corp. is a clinical stage biotechnology company focused on developing therapeutics for unmet medical needs in chronic pain, inflammation, and fibrosis [5] Clinical Study Details - The clinical trial was conducted in collaboration with Prof. Avi Domb and Prof. Elyad Davidson, comparing two solid formulations of CBD with Epidiolex [1][3] - The study results indicate that capsules made from one of the ProNanoLipospheres (PNL) formulations performed statistically better than Epidiolex in terms of absorption speed and maximal levels [3] - The other PNL formulation was found to be statistically equivalent to Epidiolex regarding absorption speed and maximal levels [3] Market Potential - The proprietary solid formulation for CBD delivery may provide medical professionals with expanded options for prescribing CBD in a high uptake pill format, potentially increasing market acceptance [4]

PART I - FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) The company presents unaudited Q1 2024 financials showing a $1.1 million net loss and a going concern warning Condensed Consolidated Balance Sheet Data (Unaudited) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash | $675,977 | $1,975,799 | | Total Current Assets | $1,854,948 | $3,639,906 | | Total Assets | $3,441,740 | $5,259,476 | | Total Current Liabilities | $4,080,307 | $5,062,616 | | Total Liabilities | $4,396,206 | $5,387,209 | | Total Stockholders' Deficit | ($954,466) | ($127,733) | Condensed Consolidated Statements of Operations (Unaudited) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total Operating Expenses | $2,092,468 | $4,803,845 | | Loss From Operations | ($2,092,468) | ($4,803,845) | | Other Income, Net | $1,022,724 | $41,767 | | Net Loss | ($1,069,744) | ($4,762,078) | | Basic and Diluted Net Loss per Share | ($1.68) | ($24.15) | Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($1,033,417) | ($3,869,891) | | Net Cash Used In Financing Activities | ($264,394) | ($469,810) | | Net Decrease In Cash | ($1,299,822) | ($4,323,926) | | Cash - End of Period | $675,977 | $2,646,184 | - The company is a clinical-stage biotech firm with R&D activities **significantly slowed or suspended** due to resource constraints[24](index=24&type=chunk) - The company is actively **evaluating strategic alternatives**, including potential mergers or asset sales, to maximize stockholder value[25](index=25&type=chunk)[145](index=145&type=chunk) - Significant losses and a **$128.4 million accumulated deficit** raise substantial doubt about the company's ability to continue as a going concern[26](index=26&type=chunk)[27](index=27&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a reduced net loss in Q1 2024 but highlights a critical financial state and exploration of strategic alternatives [Going Concern and Management Liquidity Plans](index=33&type=section&id=Going%20Concern%20and%20Management%20Liquidity%20Plans) The company faces a going concern issue with cash expected to last only through October 2024 despite recent funding - As of March 31, 2024, the company had an **accumulated deficit of $128.4 million** and a working capital deficit of $2.2 million[135](index=135&type=chunk) - The company has a **minimum monthly cash requirement of approximately $300,000** to support operations[137](index=137&type=chunk) - Following insurance reimbursements, the company had approximately **$1.5 million in cash as of May 13, 2024**, expected to fund operations through October 2024[170](index=170&type=chunk) [Consolidated Results of Operations](index=38&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) Net loss decreased 78% in Q1 2024, driven by lower operating expenses and a one-time income from forgiven liabilities Comparison of Operating Results (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Research & Development | $365,186 | $578,309 | -37% | | General & Administrative | $1,556,740 | $4,008,852 | -61% | | Other Income, Net | $1,022,724 | $41,767 | +2,349% | | Net Loss | ($1,069,744) | ($4,762,078) | -78% | - The decrease in G&A expenses was primarily due to **reduced legal fees (~$1.3M)**, accounting/regulatory fees (~$450k), salaries (~$300k), and stock-based compensation (~$280k)[161](index=161&type=chunk) - The significant increase in Other Income is attributable to the **forgiveness of $1,039,364 in liabilities** owed to contractors for certain R&D programs[41](index=41&type=chunk)[162](index=162&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company has severely constrained liquidity with a working capital deficit and significant future cash requirements - Cash balance **decreased from $2.0 million at year-end 2023 to $676k** at March 31, 2024, while the working capital deficit increased to $2.2 million[163](index=163&type=chunk) - Cash used in operating activities for Q1 2024 was **$1.0 million**, a significant reduction from $3.9 million in Q1 2023[164](index=164&type=chunk) - The company estimates material cash requirements of approximately **$4.1 million for 2024** and **$23.5 million for 2025 through 2028**[167](index=167&type=chunk) - In November 2023, the company amended its August 2023 offering, raising an **additional $0.8 million in net proceeds** and modifying warrant terms[176](index=176&type=chunk)[177](index=177&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the firm is exempt from providing market risk disclosures - As a "smaller reporting company," the Company is **exempt from the requirement to provide disclosures** about market risk under Item 305(e) of Regulation S-K[183](index=183&type=chunk) [Controls and Procedures](index=43&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a material weakness in financial reporting - The principal executive and financial officers concluded that **disclosure controls and procedures were not effective** as of March 31, 2024[186](index=186&type=chunk) - A **material weakness** was identified from the misclassification of a forgiven liability as a reduction to R&D expense instead of an increase in Other Income[186](index=186&type=chunk) - Management's remediation plan includes implementing an **additional layer of technical review** for significant, non-routine entries[190](index=190&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in several legal proceedings but does not expect a material adverse financial impact - The company is party to various legal proceedings, which are described in detail in **Note 8 of the financial statements**[195](index=195&type=chunk) - Management believes the ultimate resolution of current legal proceedings **will not have a material adverse effect** on the company's financial position, though the outcome is uncertain[194](index=194&type=chunk)[195](index=195&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors.) The company faces a significant risk of delisting from Nasdaq due to non-compliance with listing standards - The company is **not in compliance with Nasdaq's minimum stockholders' equity requirement** of $2.5 million[200](index=200&type=chunk) - On May 14, 2024, the company received a **delist determination letter from Nasdaq** for failing to regain compliance by the May 13, 2024 deadline[205](index=205&type=chunk) - The company **intends to request a hearing with the Nasdaq Hearings Panel** to appeal the delisting, which is expected to stay the suspension of trading[206](index=206&type=chunk) - The company is also **non-compliant with Nasdaq's audit committee requirement** of at least three independent directors[208](index=208&type=chunk)[211](index=211&type=chunk) - **Delisting from Nasdaq** could make trading the company's securities difficult and impair the ability to raise capital[212](index=212&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) No unregistered sales of equity securities or issuer repurchases occurred during the quarter - There were **no unregistered sales of equity securities** during the quarter ended March 31, 2024, that were not previously disclosed[213](index=213&type=chunk) [Other Information](index=50&type=section&id=Item%205.%20Other%20Information.) No directors or officers adopted or terminated Rule 10b5-1 trading plans during the quarter - **No directors or officers adopted or terminated a Rule 10b5-1 trading plan** or other trading arrangement during the quarter ended March 31, 2024[214](index=214&type=chunk) [Exhibits](index=51&type=section&id=Item%206.%20Exhibits.) This section lists required Sarbanes-Oxley certifications and other exhibits filed with the Form 10-Q - The report includes required certifications from the Principal Executive Officer and Principal Accounting Officer under **Sections 302 and 906 of the Sarbanes-Oxley Act**[216](index=216&type=chunk)[217](index=217&type=chunk)

PART I [Item 1. Business](index=10&type=section&id=Item%201.%20Business) 180 Life Sciences is a clinical-stage biotechnology company developing therapeutics for chronic pain, inflammation, and fibrosis, with its lead Dupuytren's Contracture candidate having completed Phase 2b trials, and is exploring strategic alternatives [Company Overview and Strategy](index=13&type=section&id=Company%20Overview%20and%20Strategy) - 180 Life Sciences is a clinical-stage biotechnology company focused on developing therapeutics for unmet needs in chronic pain, inflammation, and fibrosis[50](index=50&type=chunk) - The company operates three distinct product development platforms: Anti-TNF (fibrosis), SCAs (synthetic cannabidiol analogues), and α7nAChR (alpha 7 nicotinic acetylcholine receptor)[51](index=51&type=chunk) - The lead product candidate under the anti-TNF platform has completed Phase 2b clinical trials for early-stage Dupuytren's Contracture[51](index=51&type=chunk) - Due to resource constraints, the company has suspended research and development activities for the α7nAChR platform[53](index=53&type=chunk) - The company is actively evaluating strategic alternatives to maximize shareholder value, which may include mergers, acquisitions, sale of assets, or other business combinations[54](index=54&type=chunk) [Product Development Platforms and Pipeline](index=15&type=section&id=Product%20Development%20Platforms%20and%20Pipeline) Product Development Pipeline Status | Platform | Indication | Development Phase | | :--- | :--- | :--- | | **Anti-TNF** | Dupuytren's Contracture | Phase 2b Completed | | | Frozen Shoulder | Feasibility Trial (Recruitment Closed) | | | Post-Operative Cognitive Decline (POCD) | Planned Phase 2 | | | Liver and Lung Fibrosis | Preclinical | | **SCAs** | Arthritis, Pain, Inflammation | Preclinical | | **α7nAChR** | Inflammatory Diseases | Suspended | - The Phase 2b trial for Dupuytren's Contracture met its primary endpoint of nodule hardness and secondary endpoint of nodule size with statistical significance[61](index=61&type=chunk) - The company intends to seek Conditional Marketing Authorization (CMA) in the U.K. for its Dupuytren's therapy, which will require a limited Phase 3 outcomes trial to be initiated prior to submission[62](index=62&type=chunk)[63](index=63&type=chunk) - Recruitment for the frozen shoulder feasibility trial was closed early at nine patients due to a regulatory request in the U.K. to end slow-recruiting trials, necessitating a future trial[58](index=58&type=chunk)[65](index=65&type=chunk) - The HMGB1 program, part of the Anti-TNF platform, was terminated in September 2023 to focus resources on the primary fibrosis platform[67](index=67&type=chunk) [Material Agreements](index=24&type=section&id=Material%20Agreements) - The company has key research and licensing agreements with the Hebrew University of Jerusalem (via Yissum) for its SCAs platform, involving license fees, milestone payments, and royalties[113](index=113&type=chunk)[116](index=116&type=chunk)[118](index=118&type=chunk) - Multiple research and license agreements are in place with the University of Oxford to sponsor R&D for the anti-TNF platform (Dupuytren's, frozen shoulder, fibrosis) and the SCAs platform[125](index=125&type=chunk)[130](index=130&type=chunk)[133](index=133&type=chunk) - The exclusive license agreement with Oxford for the HMGB1 molecule program was terminated on September 22, 2023, to conserve resources[145](index=145&type=chunk) - An exclusive license agreement with Stanford University is in place for the α7nAChR platform, requiring annual maintenance fees, milestone payments, and royalties[147](index=147&type=chunk)[149](index=149&type=chunk) - Consulting agreements are in place with key scientific leaders, including Prof. Jagdeep Nanchahal, Prof. Sir Marc Feldmann, and Prof. Lawrence Steinman, outlining compensation, bonuses, and service requirements[161](index=161&type=chunk)[172](index=172&type=chunk)[179](index=179&type=chunk) [Recent and Material Events](index=36&type=section&id=Recent%20and%20Material%20Events) - In October 2023, the UK's MHRA confirmed that a single Phase 3 study could be sufficient for Marketing Authorization for the Dupuytren's treatment but would not support a Conditional Marketing Authorization (CMA) based on Phase 2b data alone[187](index=187&type=chunk)[188](index=188&type=chunk) - In December 2023, the company engaged A.G.P./Alliance Global Partners to explore strategic alternatives, including potential mergers, acquisitions, or asset sales[192](index=192&type=chunk) - The company has faced multiple Nasdaq compliance issues, including failure to meet the **$1.00 minimum bid price**, shareholder approval rules, and the **$2.5 million minimum stockholders' equity requirement**[194](index=194&type=chunk)[198](index=198&type=chunk)[212](index=212&type=chunk) - A **1-for-19 reverse stock split** was effective on February 28, 2024, and on March 13, 2024, Nasdaq confirmed the company regained compliance with the minimum bid price rule[197](index=197&type=chunk) - The company owes approximately **£929,030** to the University of Oxford and is in discussions for a payment plan; Oxford has threatened legal proceedings, which could force the company to scale back operations or seek bankruptcy protection[219](index=219&type=chunk) [Competition](index=42&type=section&id=Competition) - For early-stage Dupuytren's Contracture, the company's proposed treatment has no currently approved direct competitor; existing treatments like surgery and Xiaflex target late-stage disease[227](index=227&type=chunk) - In the SCAs (cannabidiol) space, the primary competitor is Jazz Pharmaceuticals with its approved drug Epidiolex; other competitors include Cardiol Therapeutics and Zynerba Pharmaceuticals[228](index=228&type=chunk)[230](index=230&type=chunk) - For the α7nAChR platform, competition includes orally available Jak inhibitors (e.g., Xeljanz, Rinvoq) and electroceutical companies like SetPoint Medical Corporation, which are developing vagus nerve stimulation devices[233](index=233&type=chunk)[234](index=234&type=chunk) [Government Regulation](index=44&type=section&id=Government%20Regulation) - Pharmaceutical products in the U.S. are subject to extensive regulation by the FDA under the FDC Act and PHS Act, covering research, development, testing, manufacturing, and marketing[239](index=239&type=chunk)[240](index=240&type=chunk) - The drug development process typically involves preclinical testing and a three-phase clinical trial process (Phase 1, 2, 3) before submitting a New Drug Application (NDA) or Biologics License Application (BLA) to the FDA[241](index=241&type=chunk)[247](index=247&type=chunk) - In the EU and UK, medicinal products are regulated by the EMA and MHRA, respectively; the process involves submitting a Clinical Trial Application (CTA) and, for approval, a marketing authorization application through various procedures (e.g., centralized, mutual recognition)[294](index=294&type=chunk)[296](index=296&type=chunk)[301](index=301&type=chunk) - The company's SCA product candidates may be subject to regulation as controlled substances by the DEA in the U.S. and similar bodies internationally, which imposes strict registration, security, and recordkeeping requirements[287](index=287&type=chunk)[288](index=288&type=chunk) [Corporate History](index=60&type=section&id=Corporate%20History) - The company was formed as a blank check company (SPAC), KBL Merger Corp. IV, in 2016 and completed its IPO in June 2017[333](index=333&type=chunk)[334](index=334&type=chunk) - On November 6, 2020, the company completed a business combination with 180 Life Corp., which became a wholly-owned subsidiary; the combined entity was renamed 180 Life Sciences Corp[337](index=337&type=chunk)[341](index=341&type=chunk) - The company has executed two reverse stock splits: a **1-for-20 split** effective December 19, 2022, and a **1-for-19 split** effective February 28, 2024[346](index=346&type=chunk)[348](index=348&type=chunk) [Item 1A. Risk Factors](index=65&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial financial and operational risks, including significant doubt about its going concern ability, dependence on clinical trial success, intense competition, and Nasdaq listing non-compliance - The company's current cash is only sufficient to fund operations through approximately **May 2024**, raising substantial doubt about its ability to continue as a going concern; additional capital is required but may not be available on favorable terms, if at all[360](index=360&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk) - The company is not in compliance with Nasdaq's minimum stockholders' equity requirement of **$2.5 million**, reporting a deficit as of September 30, 2023; failure to regain compliance by the May 13, 2024 deadline could result in delisting[627](index=627&type=chunk)[628](index=628&type=chunk)[633](index=633&type=chunk) - A significant financial risk arises from approximately **£929,030** owed to the University of Oxford; failure to agree on a payment plan could lead to legal action, termination of critical license agreements, and potentially force the company to seek bankruptcy protection[379](index=379&type=chunk)[380](index=380&type=chunk) - The business is highly dependent on the success of its product candidates, particularly the anti-TNF treatment for Dupuytren's Contracture; failure to successfully complete clinical development, obtain regulatory approval, or commercialize products would materially harm the business[455](index=455&type=chunk)[456](index=456&type=chunk) - The company faces intense competition from well-established companies with greater financial and technical resources, and its method-of-use patents for the anti-TNF program may not prevent competitors from using biosimilar drugs for the same indication[407](index=407&type=chunk)[408](index=408&type=chunk)[413](index=413&type=chunk) [Item 1B. Unresolved Staff Comments](index=125&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None [Item 1C. Cybersecurity](index=125&type=section&id=Item%201C.%20Cybersecurity) The company engages cybersecurity consultants, with the CFO overseeing risks and providing board updates, and reported no material incidents as of year-end 2023 - The company engages external consultants to assess and manage cybersecurity threats, including operational risks, fraud, and data privacy[677](index=677&type=chunk) - The CFO is responsible for overseeing cybersecurity risks, with the Board receiving periodic updates[680](index=680&type=chunk) - As of December 31, 2023, no cybersecurity incidents have materially affected the company's business strategy, results of operations, or financial condition[681](index=681&type=chunk) [Item 2. Properties](index=127&type=section&id=Item%202.%20Properties) The company's headquarters are located in leased office space in Palo Alto, California, which it believes is suitable for its current business needs - The company's principal executive offices are located at 3000 El Camino Real, Bldg. 4, Suite 200, Palo Alto, CA 94306[683](index=683&type=chunk) [Item 3. Legal Proceedings](index=127&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, with details incorporated from financial statement Note 9, and management does not anticipate a material adverse effect - The company is involved in litigation that arises in the ordinary course of business; specific details are incorporated by reference from Note 9 – Commitments and Contingencies in the financial statements[685](index=685&type=chunk) [Item 4. Mine Safety Disclosures](index=127&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=128&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock and warrants trade on Nasdaq, with **852,758 shares** outstanding as of March 19, 2024, and no cash dividends are anticipated in the foreseeable future - The company's common stock and warrants trade on the Nasdaq Capital Market under symbols "ATNF" and "ATNFW"[689](index=689&type=chunk) - As of March 19, 2024, there were **852,758 shares** of common stock outstanding held by **71 holders of record**[690](index=690&type=chunk) - The company has never paid cash dividends and does not plan to in the foreseeable future[691](index=691&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=130&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company reported a net loss of **$19.9 million** in 2023, a significant reduction from **$38.7 million** in 2022 due to impairment changes, but faces critical liquidity issues with a **$1.4 million** working capital deficit and substantial doubt about its going concern ability [Results of Operations](index=135&type=section&id=Results%20of%20Operations) Consolidated Results of Operations (Years Ended Dec 31) | Metric | 2023 ($) | 2022 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Research and Development | 2,303,751 | 2,191,834 | 5% | | General and Administrative | 10,646,417 | 15,459,788 | (31%) | | **Total Operating Expenses** | **13,477,500** | **17,897,965** | **(25%)** | | Loss on Goodwill Impairment | 0 | (33,547,278) | N/A | | Loss on IP R&D Assets Impairment | (9,063,000) | (3,342,084) | 171% | | Change in Fair Value of Derivative Liabilities | 75,323 | 15,144,986 | (99.5%) | | **Net Loss** | **(19,935,112)** | **(38,726,259)** | **(48.5%)** | - The decrease in General and Administrative expenses in 2023 was primarily due to reductions in legal expenses (~**$2.8 million**), insurance (~**$0.8 million**), accrued bonuses (~**$0.7 million**), and stock-based compensation (~**$0.5 million**)[729](index=729&type=chunk) - The significant decrease in net loss for 2023 compared to 2022 is largely attributable to a **$33.5 million** goodwill impairment charge in 2022 that did not recur, partially offset by a **$9.1 million** IP R&D asset impairment in 2023 and a smaller gain from the change in fair value of derivative liabilities[731](index=731&type=chunk) [Liquidity and Capital Resources](index=136&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's cash balance is only expected to be sufficient to fund planned business operations through approximately **May 2024**, raising substantial doubt about its ability to continue as a going concern[699](index=699&type=chunk)[739](index=739&type=chunk) Financial Position Summary (as of Dec 31) | Metric | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Cash | 1,975,799 | 6,970,110 | | Working Capital (Deficit) | (1,422,710) | 3,270,608 | Cash Flow Summary (Years Ended Dec 31) | Metric | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (10,922,223) | (12,127,585) | | Net Cash Provided by Financing Activities | 5,907,887 | 10,873,606 | - Cash from financing activities in 2023 was primarily from the April and August offerings, which provided combined gross proceeds of approximately **$6.0 million**, and an additional **$0.8 million** from a repricing of the August offering[735](index=735&type=chunk)[744](index=744&type=chunk)[745](index=745&type=chunk) [Critical Accounting Estimates](index=138&type=section&id=Critical%20Accounting%20Estimates) - A critical accounting estimate involves the annual impairment assessment of In-Process Research and Development (IP R&D) assets[748](index=748&type=chunk)[749](index=749&type=chunk) - In 2022, the company recorded an IP R&D impairment loss of **$3.3 million**; in 2023, due to commercialization delays and other factors, the company recorded a full impairment loss of the remaining **$9.1 million**, reducing the asset's carrying value to zero[750](index=750&type=chunk)[752](index=752&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=140&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the primary market risk is interest rate sensitivity on cash and cash equivalents, though a 100 basis point change would not materially affect their fair value - The company's primary market risk is interest rate sensitivity; as of December 31, 2023, it held **$1,975,799** in cash and cash equivalents[754](index=754&type=chunk) [Item 8. Financial Statements and Supplemental Data](index=140&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplemental%20Data) The required financial statements and supplemental data are included in the report starting on page F-1 - The company's consolidated financial statements are included in the report, indexed on page F-1[755](index=755&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=140&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None [Item 9A. Controls and Procedures](index=141&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, having remediated a material weakness related to fair value calculation review - Management concluded that disclosure controls and procedures were effective as of December 31, 2023[757](index=757&type=chunk) - A material weakness identified in 2022 related to imprecise review of fair value calculations for warrants and IP R&D assets has been remediated as of December 31, 2023[762](index=762&type=chunk)[763](index=763&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023[760](index=760&type=chunk) [Item 9B. Other Information](index=142&type=section&id=Item%209B.%20Other%20Information) During the fourth quarter of 2023, none of the company's directors or officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements - No directors or officers adopted or terminated Rule 10b5-1 trading plans during the quarter ended December 31, 2023[766](index=766&type=chunk) PART III [Items 10-14](index=143&type=section&id=Items%2010-14) Information for Items 10 through 14, covering governance, compensation, and ownership, is incorporated by reference from the forthcoming 2024 Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the forthcoming 2024 Proxy Statement[768](index=768&type=chunk) PART IV [Item 15. Exhibits, Financial Statements and Schedules](index=144&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statements%20and%20Schedules) This section provides an index of the consolidated financial statements, which begin on page F-1, and a list of all exhibits filed with or incorporated by reference into the Annual Report on Form 10-K - This item contains the index to the consolidated financial statements and the exhibit index for the report[774](index=774&type=chunk)[776](index=776&type=chunk) [Item 16. Form 10–K Summary](index=151&type=section&id=Item%2016.%20Form%2010%E2%80%93K%20Summary) The company reports that there is no Form 10-K summary - None Consolidated Financial Statements [Financial Statements Overview](index=155&type=section&id=Financial%20Statements%20Overview) For FY2023, the company reported a **$19.9 million** net loss, ending with **$2.0 million** cash and a **$1.4 million** working capital deficit, with auditors expressing substantial doubt about its going concern ability Key Financial Data (as of and for the year ended Dec 31, 2023) | Metric | Amount ($) | | :--- | :--- | | **Balance Sheet:** | | | Cash | 1,975,799 | | Total Assets | 5,259,476 | | Total Liabilities | 5,387,209 | | Total Stockholders' (Deficit) | (127,733) | | **Statement of Operations:** | | | Total Operating Expenses | 13,477,500 | | Net Loss | (19,935,112) | | **Cash Flow:** | | | Net Cash Used in Operating Activities | (10,922,223) | - The independent auditor's report contains an explanatory paragraph highlighting substantial doubt about the company's ability to continue as a going concern due to significant working capital deficiency and recurring losses[795](index=795&type=chunk) [Notes to Consolidated Financial Statements](index=161&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes to financial statements detail significant accounting policies, including going concern doubt, asset impairments, derivative liabilities, debt, equity, ongoing litigation, and subsequent events like the 2024 reverse stock split and Nasdaq compliance efforts - **Going Concern (Note 2):** The company has incurred significant losses, has a working capital deficit, and expects to require additional capital to fund operations; these conditions raise substantial doubt about its ability to continue as a going concern[831](index=831&type=chunk)[832](index=832&type=chunk) - **Impairment of Assets (Note 5):** The company recorded a goodwill impairment loss of **$33.5 million** in 2022; it also recorded IP R&D asset impairment losses of **$3.3 million** in 2022 and a further **$9.1 million** in 2023, writing the asset's value down to zero[868](index=868&type=chunk)[873](index=873&type=chunk)[875](index=875&type=chunk) - **Litigation (Note 9):** The company is involved in multiple legal actions, including a suit against its former CEO Dr. Marlene Krauss for over **$11 million**, a suit by Dr. Krauss for advancement of legal fees, and a dispute with Tyche Capital LLC over a funding guarantee[914](index=914&type=chunk)[919](index=919&type=chunk)[922](index=922&type=chunk) - **Stockholders' Equity & Nasdaq Compliance (Note 10):** The company details its non-compliance with Nasdaq's minimum bid price, shareholder approval, and minimum stockholders' equity rules; it also describes the reverse stock splits in 2022 and 2024 aimed at addressing these issues[992](index=992&type=chunk)[1049](index=1049&type=chunk)[1052](index=1052&type=chunk) - **Subsequent Events (Note 13):** Key events after year-end include amendments reducing executive salaries, a **1-for-19 reverse stock split** effective Feb. 28, 2024, regaining Nasdaq bid price compliance on March 12, 2024, and the appointment of new independent board members[1077](index=1077&type=chunk)[1086](index=1086&type=chunk)[1090](index=1090&type=chunk)