Artelo Biosciences(ARTL) - 2025 Q4 - Annual Results

Financial Performance - Net loss for the year ended December 31, 2025 was $12,879,000, compared to a net loss of $9,826,000 for the year ended December 31, 2024, indicating an increase in losses of about 31%[14] - The company reported a total comprehensive loss of $12,949,000 for 2025, compared to $9,825,000 in 2024, marking an increase of approximately 31%[14] - The accumulated deficit increased from $50,136,000 in 2024 to $63,015,000 in 2025, representing a growth of about 25.7%[12] - The company has not generated any revenue since inception and anticipates continued losses as it conducts research and development activities[62] Assets and Liabilities - Total assets decreased from $4,698,000 in December 31, 2024 to $2,801,000 in December 31, 2025, representing a decline of approximately 40%[12] - Cash and cash equivalents decreased significantly from $2,338,000 in 2024 to $600,000 in 2025, a reduction of about 74%[12] - Current liabilities rose sharply from $1,772,000 in 2024 to $4,044,000 in 2025, an increase of approximately 128%[12] Operating Expenses - Total operating expenses increased to $11,404,000 in 2025 from $10,108,000 in 2024, reflecting a rise of approximately 12.8%[14] - For the year ended December 31, 2025, the Company incurred total general and administrative expenses of $5,981,000, an increase from $4,115,000 in 2024[63] - Research and development expenses totaled $5,423,000 for the year ended December 31, 2025, compared to $5,993,000 in 2024, indicating a decrease in R&D spending[64] Stock and Financing Activities - The company filed a $75,000,000 shelf registration statement on Form S-3, effective for three years, allowing for the sale of various securities[27] - On May 1, 2025, the company issued unsecured convertible notes with gross proceeds of $900,000, bearing interest at 12.0%[28] - The company raised approximately $1,425,000 in a private placement on June 24, 2025, with net proceeds of $1,079,000 after transaction costs[29] - The company completed an underwritten offering on September 4, 2025, raising gross proceeds of approximately $3,000,000, resulting in net proceeds of $2,690,000[32] - The Company issued convertible notes totaling $900,000, with a portion convertible into common stock at a conversion price of $23.22[71] - The Company recognized stock-based compensation expense of $1,142 for the year ended December 31, 2025[94] Shares and Stock Options - As of December 31, 2025, the Company had 673,008 shares of common stock issued and outstanding, up from 189,194 shares in 2024[78] - The Company granted 32,963 stock options during the year ended December 31, 2025, with a weighted average exercise price of $33.09[93] - A reverse stock split was executed on June 12, 2025, reducing the number of outstanding shares from 3,280,000 to approximately 546,667[38] Tax and Valuation - The company received R&D tax credits of $704,000 and $1,349,000 during the years ended December 31, 2025, and 2024, respectively, indicating a decrease of approximately 47.9%[42] - As of December 31, 2025, the net deferred tax asset was $0, with a valuation allowance of $7,817 against the NOL carryover[97] Lease Obligations - Operating lease cost increased to $35 million in 2025 from $32 million in 2024, representing a 9.38% increase[101] - Cash paid for operating leases rose to $35 million in 2025 compared to $30 million in 2024, marking a 16.67% increase[101] - The total future minimum lease payments under operating lease liability for 2026 are projected at $43 million[101] - The weighted-average remaining lease term for operating leases decreased to 1.58 years in 2025 from 2.58 years in 2024[101] Going Concern - The company has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern[5] - The Company has incurred an aggregate net operating loss of $37,780, with net operating loss carryforwards beginning to expire in 2034[96] Cryptocurrency Holdings - The Company purchased 1,524.69 units of Solana cryptocurrency at a cost of $250, resulting in a loss of $62 upon sale, with no digital assets held as of December 31, 2025[66] - The Company adopted ASU 2023-08, requiring cryptocurrency assets to be measured at fair value, with no prior period impact due to the first-time holding of such assets[58] Foreign Currency Risk - The Company has not utilized derivative instruments to mitigate foreign currency risk, translating monetary assets and liabilities at year-end exchange rates[49]