180 Life Sciences (ATNF) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements 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 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 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) 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][51] - The company recorded a $1,000,000 commitment to repurchase common stock, which was reflected as treasury stock[13][98] - Stock-based compensation for the six months ended June 30, 2025, amounted to $577,584[13] Condensed Consolidated Statements of Cash Flows 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] Notes to Unaudited Condensed Consolidated Financial Statements 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][23] - 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][25] - 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][76][87] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) 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][198][243] - 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][209] 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] Quantitative and Qualitative Disclosures About Market Risk 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] Controls and Procedures 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] - 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][266] - 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] PART II - OTHER INFORMATION Legal Proceedings 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] - Details of previously disclosed litigation that has now been settled are incorporated by reference from Note 9 – Commitments and Contingencies[272] Risk Factors 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] - 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] - 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][296] - 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] Other Information 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] Exhibits 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] - 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]