Treasury Management and ETH Strategy - The company adopted an Ethereum-focused treasury management strategy in August 2025, aiming to acquire and grow its ETH position [279]. - The company aims to maximize ETH accumulation and value accretion while maintaining robust controls over its digital assets [280]. - The company's treasury strategy is designed to bring value to shareholders by deploying ETH across various DeFi activities [282]. - The company has not reduced its treasury or sold any of its ETH staking rewards to date [283]. - The company actively deploys ETH in the treasury across staking, lending, and advanced DeFi protocols to generate yields [284]. - The transition of Ethereum to a Proof-of-Stake consensus mechanism is expected to enhance ETH's value as a yield-bearing digital asset [281]. - The issuance rate of new ETH has dropped significantly since Ethereum switched from Proof-of-Work to Proof-of-Stake in September 2022 [295]. - The Ethereum network's transition to Proof-of-Stake is designed to dramatically reduce energy use while maintaining security and decentralization [299]. - The company implemented an Ethereum-focused treasury strategy in August 2025, aiming to acquire and grow its ETH position without a specific target for maximum holdings [430]. Financial Performance - Total revenue for the three months ended September 30, 2025, was $4,110,169, compared to $0 for the same period in 2024 [407]. - General and administrative expenses increased to $224,604,532 for the three months ended September 30, 2025, from $596,172 in 2024, representing an increase of $224,008,360 [409]. - The net loss from continuing operations for the three months ended September 30, 2025, was $208,670,965, compared to a net loss of $532,389 for the same period in 2024, an increase of $208,138,576 [411]. - Other income, net for the three months ended September 30, 2025, was $11,823,398, compared to $63,783 for the same period in 2024, an increase of $11,759,615 [410]. - For the nine months ended September 30, 2025, total revenue was $4,110,169, with general and administrative expenses rising to $227,954,479 from $3,471,965 in 2024 [413][414]. - The net loss for the nine months ended September 30, 2025, was $220,837,892, compared to a net loss of $1,894,683 for the same period in 2024, representing an increase of $218,943,209 [416]. - The net loss from continuing operations for the nine months ended September 30, 2025, was $212,008,038, significantly higher than the net loss of $1,658,746 for the same period in 2024 [421]. - Cash used in operating activities from continuing operations totaled $18,286,323 for the nine months ended September 30, 2025, compared to $531,565 for the same period in 2024 [425]. - Cash used in investing activities from continuing operations was $252,370,414 for the nine months ended September 30, 2025, compared to $0 for the same period in 2024 [426]. - Cash provided by financing activities from continuing operations totaled $825,274,591 for the nine months ended September 30, 2025, compared to cash used of $996,005 for the same period in 2024 [427]. Capital Raising and Stock Transactions - The company plans to raise capital through equity or equity-linked debt to increase its ETH holdings, benefiting shareholders [282]. - The company increased its authorized number of shares of common stock from 100 million to 1 billion on July 24, 2025 [324]. - Following a special meeting on October 7, 2025, the company further increased its authorized shares from 1 billion to 5 billion [327]. - On July 29, 2025, the company entered into a securities purchase agreement to sell 14,393,417 shares at an offering price of $26.50 per share [329]. - The company issued senior secured convertible notes totaling $156.25 million on August 8, 2025, at a cash exchange of 96% of the principal amount [335]. - The September 2025 Convertible Notes were sold for an aggregate principal amount of $360 million, with cash received equal to 97.25% of this amount [343]. - The company authorized a stock repurchase program for up to $250 million of its common stock, set to expire by June 30, 2026, or upon repurchase of the maximum amount [363]. - The company sold 739,050 shares under the Sales Agreement for gross proceeds of approximately $40,990,338 during the three months ended September 30, 2025 [373]. - Since September 30, 2025, the company sold 410,403 shares for net proceeds of approximately $6,861,299 after deducting commissions [374]. - The company entered into a Transaction Agreement to obtain up to $50.0 million with a forward rate of 9.90% per annum, collateralized by approximately $80.8 million of ETH [379]. Operational Changes and Strategic Initiatives - The company has alleviated substantial doubt about its ability to continue as a going concern due to significant fundraising events in the third quarter of 2025 [275]. - The company focuses on generating recurring revenues through various DeFi protocols that improve Ethereum network integrity and security [276]. - The company has two legacy biotechnology programs classified as discontinued operations, focusing on different diseases [278]. - The company made a strategic shift to discontinue its pharmaceutical research operations and Gaming Technology Platform, impacting financial reporting for the period [408]. - The company invested $15 million to acquire a 15% interest in Satschel, securing exclusive rights to list Ethereum L2 tokens on the platform [401]. - The company commenced native staking in August 2025 and liquid staking in September 2025, intending for staking to become a primary yield generation strategy within the current fiscal year [457]. Regulatory and Compliance Considerations - The regulatory landscape for digital assets is rapidly evolving, potentially impacting the company's operations and compliance obligations [323]. - The company utilizes third-party qualified custodians to hold its Ethereum, ensuring risk management and operational best practices [308]. - The company is in the process of onboarding a third qualified custodian as part of its risk management process [314].

Financial Performance - ETHZilla generated $4.1 million in revenue during the first six weeks of operation as ETHZilla, with a gross profit of $4.1 million[1][5] - The company reported a net loss from continuing operations of $208.7 million, primarily due to one-time non-cash items[7] - Adjusted EBITDA for the quarter was $8.5 million, indicating positive operational performance despite the net loss[7] - For the nine months ended September 30, 2025, the net loss from continuing operations was $212,008 thousand, compared to a net loss of $1,659 thousand for the same period in 2024[16] - The company reported an EBITDA of $(211,688) thousand for the nine months ended September 30, 2025, compared to $(1,630) thousand for the same period in 2024[17] - Adjusted EBITDA for the nine months ended September 30, 2025, was $5,810 thousand, compared to $(1,355) thousand for the same period in 2024[17] - Net cash used in operating activities was $(18,419) thousand for the nine months ended September 30, 2025, compared to $(546) thousand for the same period in 2024[16] - The company used $(252,370) thousand in investing activities for the nine months ended September 30, 2025, with significant purchases of digital assets totaling $(243,480) thousand[16] - Net cash provided by financing activities was $825,123 thousand for the nine months ended September 30, 2025, compared to $(1,010) thousand for the same period in 2024[16] - The cash, cash equivalents, and restricted cash at the end of the period was $558,901 thousand, up from $150 thousand at the end of the same period in 2024[16] Capital and Investments - The company secured approximately $931 million in institutional capital through various financings, including a $425 million PIPE and a $360 million convertible note[3] - A strategic partnership with Liquidity.io was established, including a $15 million investment and a 15% equity stake in Satschel, Inc., aimed at tokenizing high-value real-world assets[3] - A share repurchase program was initiated, with 2,099,472 shares repurchased for $46.3 million under a $250 million authorization[6] - The company plans to continue opportunistic share repurchases and expects revenue-generating real-world assets on-chain in the coming weeks[6] - The company plans to continue purchasing ETH over time as part of its digital asset treasury strategy[25] Asset Management - ETHZilla's ETH holdings amounted to 102,273 ETH, valued at $424 per ETH, with 70% of ETH deployed in staking protocols[8] - ETHZilla's total assets as of September 30, 2025, were $1.009 billion, with total liabilities of $564.2 million[14] Future Outlook - The company anticipates positive adjusted EBITDA in the fourth quarter and expects L2 protocol yield to range between 3.5% and 4.5%[6] - The financial projections are based on numerous assumptions and are subject to significant uncertainties, which may materially impact actual results[23] - The company emphasizes that forward-looking statements are subject to risks and uncertainties, including fluctuations in the market price of ETH and regulatory changes[25]

Core Viewpoint - 180 Life Sciences Corp., operating as ETHZilla, has initiated a strategy for institutional accumulation of Ether (ETH), holding a total of 82,186 ETH valued at approximately $349 million, alongside $238 million in USD cash equivalents [1][8]. Group 1: Company Strategy and Financial Position - The company has invested over $350 million in capital since a recent PIPE transaction, focusing on building a differentiated Ethereum treasury vehicle [2]. - The ETH holdings are intended for long-term retention and staking to generate yield through Electric Capital's proprietary Ethereum network strategies [2]. - The company plans to provide ongoing updates regarding its treasury and yield generation strategies through public releases and regulatory filings [3]. Group 2: Rebranding and Institutional Focus - 180 Life Sciences plans to rebrand as ETHZilla Corporation, aiming to establish itself as a benchmark for on-chain treasury management among public companies [4]. - The treasury strategy, in partnership with Electric Capital, is designed to pursue a yield generation program that aims to outperform traditional ETH staking [5]. Group 3: Business Evolution - Originally established as a biotechnology company, 180 Life Sciences is evolving towards software-enabled gaming and entertainment while continuing to develop its gaming initiatives [6].

Core Viewpoint - 180 Life Sciences Corp. (d/b/a ETHZilla) is focusing on increasing its Ethereum (ETH) holdings through a recent $156 million convertible notes offering, which is part of its broader ETH treasury strategy [1][2][6] Group 1: Financing and Strategy - The company has closed a $425 million private placement and subsequently sold approximately $156 million in senior secured convertible notes due 2028 [1][2] - Proceeds from the convertible notes will primarily be used to purchase more ETH and support the company's ETH treasury strategy [2][3] - The convertible notes will not accrue interest for the first six months and will have a 4% annual interest rate thereafter, maturing three years from the issuance date [2] Group 2: Company Operations and Future Plans - The company aims to rebrand as ETHZilla Corporation and establish itself as a leader in on-chain treasury management among public companies [6] - A significant portion of the company's operations will focus on becoming an ETH accumulation vehicle, designed to provide community access to the Ethereum network [7] - The company plans to implement a differentiated yield generation program in partnership with Electric Capital, aiming to outperform traditional ETH staking [7] Group 3: Legal and Advisory Support - Clear Street LLC acted as the financial advisor and exclusive placement agent for the convertible notes offering, while The Loev Law Firm, PC and Reed Smith LLP provided legal advice to the company [4]

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]

Core Viewpoint - 180 Life Sciences Corp. plans to raise $425 million through a PIPE funding to adopt a treasury policy focused on Ether (ETH) and will rebrand as ETHZilla Corporation [1][16]. Transaction Overview - The PIPE transaction involves approximately $425 million for the purchase and sale of common stock, expected to close around August 1, 2025, subject to customary conditions [2]. - The company has approval to sell up to $150 million in debt securities following the PIPE closing [2]. Use of Proceeds - Net proceeds from the offering will primarily be used for purchasing ETH, general corporate purposes, and transaction expenses [3]. Investor Participation - Over 60 institutional and crypto-native investors are participating in the PIPE transaction, including notable figures from the Ethereum ecosystem [4]. Market Context - The Ethereum network has a market cap exceeding $450 billion, positioning it among the most valuable companies globally [5]. Strategic Goals - The company aims to provide investors with exposure to a high-yield potential ecosystem central to stablecoin and tokenized asset markets [5]. - Electric Capital will act as the external asset manager, implementing a differentiated yield generation program designed to outperform traditional ETH staking [5][17]. Long-term Vision - The company intends to execute a long-term investment strategy focused on acquiring ETH and generating yield from its ETH treasury [7]. - ETHZilla aims to be a community-driven ETH accumulation vehicle, facilitating investor access to the Ethereum network [17]. Partnerships and Advisory - The company plans to collaborate with Etherealize and a DeFi Council composed of leading DeFi builders to optimize treasury yield generation [8][9].

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)