Artelo Biosciences, Inc 10-Q for FY2023 Q2

Artelo Biosciences, Inc. (ARTL)

10-Q 2023-08-10 For: 2023-06-30

Added on April 10, 2026

About this 10-Q

Artelo Biosciences, Inc filed this 10-Q on August 10, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $1.6M; compared with a net loss of $2.45M a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

Nevada		33-1220924
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

505 Lomas Santa Fe, Suite 160, Solana Beach, CA USA		92075
(Address of principal executive offices)		(Zip Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	ARTL	The Nasdaq Stock Market, LLC
Warrants	ARTLW	The Nasdaq Stock Market, LLC

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	49

SIGNATURES		50

	June 30,			December 31,
	2023			2022

ASSETS
Current Assets
Cash and cash equivalents	$	5,719		$	6,888
Trading marketable securities		8,272			9,150
Available-for-sale securities (amortized cost of $0 and $1,502, respectively)		-			1,495
Prepaid expenses and other current assets		611			789
Total Current Assets		14,602			18,322
Operating lease right-of-use assets		39			60
Intangible asset		2,039			2,039
Other assets		197			3
TOTAL ASSETS	$	16,877		$	20,424

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	523		$	905
Due to related parties		46			53
Operating lease liabilities - current portion		34			40
Total Current Liabilities		603			998

Operating lease liabilities		6			23
TOTAL LIABILITIES		609			1,021

STOCKHOLDERS’ EQUITY
Preferred Stock, par value $0.001, 416,667 shares authorized,
0 shares issued and outstanding as of June 30, 2023 and December 31, 2022		-			-
Common Stock, par value $0.001, 50,000,000 shares authorized, as of June 30, 2023 and December 31, 2022
2,855,688 and 2,855,688 shares issued and outstanding as of June 30, 2023 and December 31, 2022		3			3
Additional paid-in capital		51,254			50,675
Accumulated deficit		(34,788	)		(31,021	)
Accumulated other comprehensive loss		(201	)		(254	)
TOTAL STOCKHOLDERS’ EQUITY		16,268			19,403

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	16,877		$	20,424

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended: June 30, 2023

☐	TRANSITION REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ___________ to ___________

	Three months ended						Six months ended
	June 30,						June 30,
	2023			2022			2023			2022

OPERATING EXPENSES
General and administrative	$	1,032		$	1,415		$	2,089		$	2,897
Research and development		752			1,056			1,987			1,520
Total Operating Expenses		1,784			2,471			4,076			4,417

Loss from Operations		(1,784	)		(2,471	)		(4,076	)		(4,417	)

OTHER INCOME (EXPENSE)
Interest income		-			1			-			2
Net change in fair value of trading marketable securities		185			21			309			1
Total other income		185			22			309			3

Provision for income taxes		-			-			-			-

NET LOSS	$	(1,599	)	$	(2,449	)	$	(3,767	)	$	(4,414	)

OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized loss on available-for-sale securities		(29	)		(7	)		-			(29	)
Foreign currency translation adjustments		33			(105	)		53			(129	)
Total Other Comprehensive Income (Loss)		4			(112	)		53			(158	)

TOTAL COMPREHENSIVE LOSS	$	(1,595	)	$	(2,561	)	$	(3,714	)	$	(4,572	)

Basic and Diluted Loss per Common Share	$	(0.56	)	$	(0.87	)	$	(1.32	)	$	(1.56	)

Basic and Diluted Weighted Average Common Shares Outstanding		2,856			2,830			2,856			2,825

										Accumulated
					Additional					Other
	Common stock				Paid-in		Accumulated			Comprehensive
	Shares		Amount		Capital		Deficit			Income (loss)			Total

Balance, December 31, 2022		2,856	$	3	$	50,675	$	(31,021	)	$	(254	)	$	19,403

Stock based compensation		-		-		354		-			-			354
Net loss for the period		-		-		-		(2,168	)		-			(2,168	)
Other comprehensive income		-		-		-		-			49			49
Balance, March 31, 2023		2,856	$	3	$	51,029	$	(33,189	)	$	(205	)	$	17,638

Stock based compensation		-		-		225		-			-			225
Net loss for the period		-		-		-		(1,599	)		-			(1,599	)
Other comprehensive income		-		-		-		-			4			4
Balance, June 30, 2023		2,856	$	3	$	51,254	$	(34,788	)	$	(201	)	$	16,268

	June 30, 2023
	Level 1		Level 2		Level 3		Total
Marketable securities – trading securities
Commercial paper	$	-	$	7,351	$	-	$	7,351
Asset-backed securities		-		244		-		244
US Government		-		677		-		677
		-		8,272		-		8,272

Available-for-sale securities		-		-		-		-

	$	-	$	8,272	$	-	$	8,272

	December 31, 2022
	Level 1		Level 2		Level 3		Total
Marketable securities – trading securities
Commercial paper	$	-	$	9,150	$	-	$	9,150
		-		9,150		-		9,150

Available-for sale securities
US Treasury		-		1,495		-		1,495
		-		1,495		-		1,495

	$	-	$	10,645	$	-	$	10,645

						Weighted
	Number of			Weighted Average		Average
	shares			Exercise Price		Life (years)
Outstanding, December 31, 2022		270,053		$	64.16		2.05
Granted		-			-		-
Expired		(11,232	)		180.89		-
Exercised		-			-		-
Outstanding, June 30, 2023		258,821		$	64.16		1.56

	Options Outstanding				Weighted Average
	Number of		Weighted Average		Remaining life
	Options		Exercise Price		(years)
Outstanding, December 31, 2022		313,109	$	24.15		8.41
Granted		199,498		3.13		10.00
Exercised		-		-		-
Forfeited/canceled		-		-		-
Outstanding, June 30, 2023		512,607	$	15.97		8.57

Exercisable options, June 30, 2023		207,824	$	29.55		7.75

	Six Months Ended
	June 30,
	2023
Expected term	5.50 - 6.25 years
Expected average volatility	114 - 150		%
Expected dividend yield		-
Risk-free interest rate	3.43 - 4.13		%

	Total
Year Ended December 31,
2023 - Remaining 6 months	$	17
2024		24
Thereafter		-
		41
Less: Imputed interest		(1	)
Operating lease liabilities		40

Operating lease liability - current		34
Operating lease liability - non-current	$	6

	Six months ended
	June 30,
	2023			2022

Lease cost
Operating lease cost	$	21		$	19

Other information
Cash paid for operating cash flows from operating leases	$	23		$	22
Right-of-use assets obtained in exchange for new operating lease liability	$	-		$	20

Weighted-average remaining lease term — operating leases (year)		1.17			2.03
Weighted-average discount rate — operating leases		3.00	%		2.98	%

	·	The Company is invoiced monthly and quarterly in connection with several research and development contracts.
	·	The Company may be obligated to make additional payments related to research and development contracts entered into, dependent on the progress and milestones achieved through the programs.
	·	The Company’s principal executive office is currently located at 505 Lomas Santa Fe Drive, Suite 160, Solana Beach, CA, US. Additionally, we have an office outside Manchester, UK, which serve as administrative spaces for managing our subsidiaries, Trinity Reliant Ventures, Ltd (Ireland) and Artelo Biosciences Limited (UK). We do not currently own any properties, laboratories, or manufacturing facilities. All leases for our office space, other than for the principal executive office, are month-to-month.

	·	our plans to obtain funding for our operations, including funding necessary to develop, manufacture and commercialize our product candidates;
	·	our ability to raise any current or future funding to meet our capital requirements;
	·	the expected timing of the initiation and completion of our clinical studies for our product candidates;
	·	the size and growth of the markets for our product candidates;
	·	our commercialization, marketing, and manufacturing capabilities and strategies;
	·	any impact of the global COVID‑19 pandemic, or responses to the pandemic, on our business, clinical trials or personnel;
	·	geopolitical tensions, including the war in Ukraine, that can disrupt investment, supply chains and the economy generally;
	·	our ability to compete with companies currently producing alternative treatment methods;
	·	the cost, timing and outcomes of any potential litigation involving our product candidates;
	·	regulatory developments in the US and internationally;
	·	the development, regulatory approval, efficacy and commercialization of competing product candidates;
	·	our ability to attract and retain key scientific or management personnel;
	·	the scope of protection we are able to establish and maintain for intellectual property rights covering our products and technology;
	·	the terms and conditions of licenses granted to us and our ability to license additional intellectual property related to our product candidates, as appropriate;
	·	our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates;
	·	potential claims related to our intellectual property;
	·	the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
	·	our ability to maintain compliance with Nasdaq listing requirements;
	·	our ability to develop and maintain our corporate infrastructure, including our internal controls;
	·	our ability to develop innovative new product candidates; and
	·	our financial performance.

Product Candidate	Target Indications	Development Phase	Estimated Market Size
ART27.13 – Synthetic Dual Cannabinoid GPCR Agonist	Anorexia associated with cancer	Clinical	Cancer anorexia cachexia syndrome: >$2 billion
ART26.12 – FABP5 inhibitor	Chemotherapy Induced Peripheral Neuropathy, Prostate cancer and Breast cancer, pain, and anxiety disorders	Pre-clinical	CIPN: >$1 billion Prostate cancer: approximately $9 billion Breast cancer: approximately $18 billion PTSD: approximately $7 billion
ART12.11 – Synthetic CBD Cocrystal	Inflammatory Bowel Disease (IBD), Post-Traumatic Stress Disorder (PTSD), and other potential indications	Pre-clinical	IBD: approximately $7 billion PTSD: approximately $7 billion

	Three months ended
	June 30,
(In thousands)	2023			2022			Change
Operating Expenses
General and administrative	$	1,032		$	1,415		$	(383	)
Research and development		752			1,056			(304	)
Total Operating Expenses		1,784			2,471			(687	)
Loss from Operations		(1,784	)		(2,471	)		687
Other income		185			22			163
Net Loss	$	(1,599	)	$	(2,449	)	$	850

	·	The Company will need to raise additional financing to support our business objectives. The Company cannot be sure the Company will be able to obtain additional financing on terms favorable to us when needed, or at all. If the Company is unable to obtain additional financing to meet our needs, our operations may be adversely affected or terminated.
	·	The Company is currently receiving Research and Development, or R&D, tax credits from the United Kingdom (“UK”) in connection with our clinical trials being conducted in the UK. With effect from April 2024 if expenditure is incurred in connection with activities which take place outside the UK as part of our clinical trials, such credits are not expected to be available.
	·	If the Company fails to comply with our obligations under our patent licenses with third parties, the Company could lose license rights that are vital to our business.
	·	Changes in regulatory requirements or other unforeseen circumstances may impact the timing of the initiation or completion of our clinical trials.
	·	The Company faces many of the risks and difficulties frequently encountered by relatively new companies with respect to our operations.
	·	The Company has no mature product candidates and may not be successful in licensing any.
	·	Even if the Company is successful in licensing lead product candidates, resource limitations may limit our ability to successfully develop them.

	·	If the Company is unable to obtain and maintain patent protection for our products, our competitors could develop and commercialize products and technology similar or identical to our product candidates, and our ability to successfully commercialize any product candidates the Company may develop, and our science may be adversely affected.
	·	Obtaining and maintaining our patent protection depends on compliance with various procedural measures, document submissions, fee payments and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
	·	The Company may be subject to claims challenging the inventorship of our patents and other intellectual property.
	·	Intellectual property rights do not necessarily address all potential threats.
	·	Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.

	·	Our Common Stock may be delisted from The Nasdaq Capital Market if the Company cannot maintain compliance with Nasdaq’s continued listing requirements.
	·	If the Company sells securities in future financings stockholders may experience immediate dilution and, as a result, our stock price may decline.
	·	The price of our securities may be volatile, and you could lose all or part of your investment. Further, the Company does not know whether an active, liquid and orderly trading market will continue for our securities or what the market price of our securities will be and as a result it may be difficult for you to sell your shares of our securities.
	·	Shares of our Common Stock that have not been registered under federal securities laws are subject to resale restrictions imposed by Rule 144, including those set forth in Rule 144(I) which apply to a former “shell company.”
	·	Sales of our currently issued and outstanding stock may become freely tradable pursuant to Rule 144 and sales of such shares may have a depressive effect on the share price of our Common Stock.

	·	the costs related to initiation, progress, timing, costs and results of preclinical studies and clinical trials for our product candidates;

	·	any change in the clinical development plans for these product candidates;

	·	the number and characteristics of product candidates that the Company develops or acquires;

	·	our ability to establish and maintain strategic collaborations, licensing or other commercialization arrangements and the terms and timing of such arrangements;

	·	the emergence, approval, availability, perceived advantages, relative cost, relative safety and relative efficacy of other products or treatments;

	·	the events related to the outcome, timing and cost of meeting regulatory requirements established by the US Drug Enforcement Agency (the “DEA”), the FDA or other comparable foreign regulatory authorities;

	·	the potential costs of filing, prosecuting, defending and enforcing our patent claims and other intellectual property;

	·	changes in economic conditions, including recessionary effects and inflationary pressures;

	·	the costs associated with attracting and retaining skilled personnel;

	·	the costs associated with being a public company;

	·	the cost of defending intellectual property disputes; and

	·	the cost of marketing and generating revenues for any of our product candidates.

	·	our research and development efforts, including preclinical studies and clinical trials of our product candidates;

	·	developing sustainable, scalable, reliable and cost-effective manufacturing and distribution processes for our product candidates, including establishing and maintaining commercially viable supply relationships with third parties and establishing our own cGMPs, manufacturing facilities and processes;

	·	addressing any competing technological and industry developments;

	·	identifying, assessing, acquiring and/or developing new technology platforms and product candidates across numerous therapeutic areas;

	·	obtaining regulatory approvals and marketing authorizations for product candidates;

	·	launching and commercializing any approved products, either directly or with a collaborator or distributor;

	·	obtaining market acceptance of and acceptable reimbursement for any approved products;

	·	completing collaborations, licenses and other strategic transactions on favorable terms, if at all;

	·	maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and

	·	attracting, hiring and retaining qualified personnel.

	·	identifying, licensing and obtaining development programs and lead candidates;

	·	conducting initial research required to identify a lead candidate as the result of intellectual property the Company has licensed;

	·	initiating preclinical, clinical or other required studies for future product candidates;

	·	adding manufacturers and suppliers required to advance our programs;

	·	obtaining regulatory and marketing approvals for our product candidates that successfully complete clinical studies;

	·	making milestone or other payments under any license agreements;

	·	expanding, maintaining and protecting our intellectual property portfolio;

	·	attracting and retaining skilled personnel; and

	·	creating and maintaining an infrastructure required to support our operations as a public company.

	·	generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation or continuation of clinical trials;

	·	obtain regulatory approval, or feedback on clinical trial design, to commence a clinical trial;

	·	identify, recruit and train suitable clinical investigators;

	·	reach agreement on acceptable terms with prospective CROs and clinical trial sites;

	·	obtain and maintain IRB, approval at each clinical trial site;

	·	identify, recruit, and enroll suitable patients to participate in a clinical trial;

	·	have a sufficient number of patients complete a clinical trial or return for post-treatment follow-up;

	·	ensure clinical investigators observe clinical trial protocol or continue to participate in a clinical trial;

	·	address any patient safety concerns that arise during the course of a clinical trial;

	·	address any conflicts with new or existing laws or regulations;

	·	add a sufficient number of clinical trial sites;

	·	timely manufacture sufficient quantities of a product candidate for use in clinical trials; or

	·	raise sufficient capital to fund a clinical trial.

	·	lack of effectiveness of any formulation or delivery system during clinical trials;

	·	discovery of serious or unexpected toxicities or side effects experienced by trial participants or other safety issues;

	·	slower than expected rates of subject recruitment and enrollment rates in clinical trials;

	·	delays or inability in manufacturing or obtaining sufficient quantities of materials for use in clinical trials due to regulatory and manufacturing constraints;

	·	delays in obtaining regulatory authorization to commence a trial, including IRB approvals, licenses required for obtaining and using cannabinoids for research, either before or after a trial is commenced;

	·	unfavorable results from ongoing non-clinical studies and clinical trials;

	·	patients or investigators failing to comply with study protocols;

	·	patients failing to return for post-treatment follow-up at the expected rate;

	·	sites participating in an ongoing clinical study withdraw, requiring us to engage new sites;

	·	third-party clinical investigators decline to participate in our clinical studies, do not perform the clinical studies on the anticipated schedule, or act in ways inconsistent with the established investigator agreement, clinical study protocol, good clinical practices, and other IRB requirements;

	·	third-party entities do not perform data collection and analysis in a timely or accurate manner or at all; or

	·	regulatory inspections of our clinical studies require us to undertake corrective action or suspend or terminate our clinical studies.

	·	others may be able to make products that are similar to our product candidates or utilize similar science or technology but that are not covered by the claims of the patents that the Company may own or license from our licensors or that incorporate certain research in our product candidates that is in the public domain;

	·	the Company, or our licensors or collaborators, might not have been the first to make the inventions covered by the issued patent or pending patent application that the Company or our licensors own now or in the future;

	·	the Company, or our licensors or collaborators, might not have been the first to file patent applications covering certain of our or their inventions;

	·	others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

	·	it is possible that our or our licensors’ current or future pending patent applications will not lead to issued patents;

	·	issued patents that the Company or our licensors hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties;

	·	our competitors or other third parties might conduct research and development activities in countries where the Company or our licensors do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

	·	the Company may not develop additional proprietary product candidates that are patentable;

	·	the patents of others may harm our business if, for example, the Company or our licensors are found to have infringed those patents or if those patents serve as prior art to our or our licensors’ patents which could potentially invalidate our or our licensors’ patents; and

	·	the Company may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property, which could ultimately result in public disclosure of the intellectual property if the third party’s patent application is published or issues to a patent.

	·	authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our Common Stock;

	·	limiting the liability of, and providing indemnification to, our directors, including provisions that require the company to advance payment for defending pending or threatened claims;

	·	limiting the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting;

	·	requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our Board;

	·	controlling the procedures for the conduct and scheduling of board and stockholder meetings;

	·	limiting the determination of the number of directors on our board and the filling of vacancies or newly created seats on the board to our Board then in office; and

	·	providing that directors may be removed by stockholders at any time.

Exhibit Number	Description	Form	File No.	Filing Date	Filed Herewith
3.1	Articles of Incorporation, as amended	10-Q	001-38951	05/11/2023
3.2	Amended and Restated Bylaws	8-K	001-38951	04/21/2023
31.1	Section 302 Certification				*
32.1 **	Section 906 Certification				*
101. INS	Inline XBRL Instance Document
101. SCH	Inline XBRL Taxonomy Extension Schema Document
101. CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101. DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101. LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101. PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover page Interactive Data File (embedded with the Inline XBRL document)

		Artelo Biosciences, Inc.
		(Registrant)

Dated: August 10, 2023		/s/ Gregory D. Gorgas
		Gregory D. Gorgas
		President, Chief Executive Officer, Chief Financial Officer, Treasurer and Director
		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

1.	I have reviewed this Quarterly Report on Form 10-Q of Artelo Biosciences, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.