180 Life Sciences (ATNF) - 2023 Q1 - Quarterly Report

Financial Performance - As of March 31, 2023, the company reported an accumulated deficit of $112,170,623 and a working capital deficit of $925,565[126]. - For the quarter ended March 31, 2023, the company experienced a net loss of $4,762,078 and cash used in operating activities amounted to $3,869,891[126]. - The company is currently not generating revenues and relies on equity and debt financings to fund operations[129]. - The company expects to continue incurring losses and will need to raise additional capital to fund operations[164]. - There is substantial doubt about the company's ability to continue as a going concern within one year after the financial statement issuance date[164]. - Cash used in operating activities was $3,869,891 for Q1 2023, compared to $2,072,931 for Q1 2022[159]. - As of March 31, 2023, cash balances were $2,646,184, down from $6,970,110 at the end of 2022[159]. - The company anticipates cash requirements of approximately $7,500,000 for the remainder of 2023 and $27,000,000 for 2024 through 2027[162]. Capital and Funding - The company has raised capital in August 2021, July 2022, December 2022, and April 2023, but anticipates needing additional funding in the future[126]. - The company may need to issue equity to fund operations and repay outstanding debt, which could lead to dilution of existing shareholders' interests[132]. - The company raised approximately $3,000,000 in an offering that closed on April 10, 2023[167]. Research and Development - The company is focused on developing therapeutics for chronic pain, inflammation, fibrosis, and other inflammatory diseases, utilizing three product development platforms[135]. - One product candidate has completed a successful Phase 2b clinical trial in the UK for Dupuytren's Contracture[137]. - The company intends to invest resources to complete ongoing clinical programs and discover new drug candidates to address unmet clinical needs[137]. - Research and development expenses for Q1 2023 were $578,309, a decrease of 12% from $658,939 in Q1 2022[154]. - Research and development expenses related to parties increased by 354% to $216,684 in Q1 2023 from $47,718 in Q1 2022[155]. Expenses and Income - General and administrative expenses rose by 35% to $4,008,852 in Q1 2023, up from $2,969,151 in Q1 2022[157]. - Other income decreased by 99% to $41,767 in Q1 2023 compared to $5,244,782 in Q1 2022, primarily due to changes in fair value of derivative liabilities[158]. Internal Controls and Accounting - The Company has identified critical accounting policies and estimates that significantly impact its financial statements, particularly related to intangible assets and in-process research and development[171]. - Management plans to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting during the second half of 2023[183]. - The Company has acknowledged material weaknesses in its internal control over financial reporting, particularly regarding the fair value of warrants and IP R&D assets[180][181]. - Management is committed to enhancing internal controls, including implementing quarterly analyses of fluctuations and variances in the Income Statement[184]. Intellectual Property and Impairment - As of March 31, 2023, the carrying amount of the IP R&D assets on the balance sheet was $9,063,000, which consists solely of the balance related to the Company's 180 LP subsidiary[174]. - The Company recorded a loss for impairment of IP R&D assets amounting to $3,342,084 during the fourth quarter of 2022, reducing the total consolidated IP R&D asset balance to $9,063,000 after impairment[172][173]. - The fair market value of the Company's IP R&D assets was determined to be $9,063,000 as of December 31, 2022, indicating a significant impairment compared to the carrying amount[172]. Legal Matters - The Company believes that the resolution of currently pending legal matters will not have a material adverse effect on its financial condition or results of operations[188]. Warrants - All of the 1,170,860 April 2023 Pre-Funded Warrants have been exercised, while none of the 1,570,680 April 2023 Common Warrants have been exercised[170]. - The exercise price of the April 2023 Common Warrants is set at $1.78 per share and they are exercisable for 5 years following the Initial Exercise Date[169]. Risks - The company faces significant risks associated with the development of new business enterprises in a competitive industry[127].