180 Life Sciences (ATNF) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements 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 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 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) 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][47] - The company issued 243,166 shares for settlement of liabilities valued at $310,000 and recorded stock-based compensation of $577,584[12] Condensed Consolidated Statements of Cash Flows 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 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][20][179] - 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][23] - Intangible assets include $7.6 million for the Gaming Technology Platform acquired from Elray, which is not yet in service[31][41][43] - In February 2025, the company settled litigation with former CEO Dr. Marlene Krauss for $50,000 cash and 200,000 restricted shares[62][111] - 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][152] - In April 2025, the company settled with AmTrust, agreeing to pay $250,000 cash and issue 509,707 shares to resolve disputes[143][144] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the iGaming pivot, liquidity challenges, and Q1 2025 results, noting cash is sufficient only through December 2025 Business Overview 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][181] - Management estimates the initial cost to fully commercialize the Gaming Technology Platform will range from $3 million to over $5 million[186] - Legacy biotechnology programs are being wound down, and the company is evaluating options to monetize its remaining TNF and SCA (CBD) assets[187][188] Consolidated Results of Operations 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 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][247] - 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][175][216] - 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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] - A material weakness was identified, resulting from limited accounting resources[235] - A remediation plan is being implemented, which includes adding a layer of internal technical review for significant accounting entries[237] PART II - OTHER INFORMATION Item 1. Legal Proceedings 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] - The company has recently settled several significant legal actions, including those with Dr. Marlene Krauss, Tyche Capital LLC, and AmTrust International[62][71][81] Item 1A. Risk Factors 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] - The company's common stock is illiquid and has experienced extreme price volatility, which may not be related to operating performance[254][256] - Elray Resources beneficially owns 23.1% of common stock and holds warrants for more, giving it potential significant voting control[260][266] - 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults upon Senior Securities The company reports no defaults upon its senior securities during the period - None[276] Item 4. Mine Safety Disclosures This disclosure item is not applicable to the company's operations - Not applicable[277] Item 5. Other Information 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] Item 6. Exhibits 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][281]