aibioArtelo Biosciences' updated 2024 statements carry auditor going-concern doubt
Tickers ARTL
MaloneBailey said recurring losses and a net capital deficiency raise substantial doubt. Stockholders' equity fell to $2,857 thousand from $11,752 thousand.
Key facts
- Company
- Artelo Biosciences, Inc. (NASDAQ: ARTL)
- News type
- Distress
- Primary source
- Artelo Biosciences, Inc. 8-K (2025-07-11)
The auditor's going concern paragraph
Artelo Biosciences, Inc. (Nasdaq: ARTL) filed updated audited financial statements for 2024 on July 11, 2025, as an exhibit to a current report of the same date. The auditor, MaloneBailey, LLP of Houston, Texas, says the company "has suffered recurring losses from operations and has a net capital deficiency" that raises substantial doubt about its ability to continue as a going concern. The statements do not include any adjustments that might result from that uncertainty.
The original audit report is dated March 3, 2025, and Notes 1, 2, 5 and 10 are dated July 11, 2025.
The 2024 numbers
The figures are in thousands of dollars. Cash and cash equivalents were $2,338 thousand at December 31, 2024, down from $2,815 thousand a year earlier. The company held no trading marketable securities at year end, after $7,611 thousand at the end of 2023. Total assets fell to $4,698 thousand from $13,043 thousand, and total liabilities rose to $1,841 thousand from $1,291 thousand.
Stockholders' equity fell to $2,857 thousand from $11,752 thousand. The accumulated deficit reached $50,136 thousand, up from $40,310 thousand.
The net loss for 2024 was $9,826 thousand, compared with $9,289 thousand for 2023. Research and development expense was $5,993 thousand and general and administrative expense was $4,115 thousand. Net cash used in operating activities was $8,350 thousand, against $8,207 thousand in 2023. Financing brought in $112 thousand from the sale of common shares.
How the company has been raising money
In May 2022 it signed an equity line with an institutional investor for up to $20,000 thousand of common stock over 36 months. By December 31, 2024, the company had issued 70,897 shares under that line for $679 thousand, and 15,348 of those shares, for $112 thousand, were issued during 2024.
In July 2023 the company filed a $75,000 thousand shelf registration, which became effective on July 14, 2023 and lasts three years. The note says that if the public float falls below $75,000 thousand, sales are limited to one-third of the public float in any 12-month period. The note says there is no assurance any such funding will be enough.
Financing after year end
On May 1, 2025, the company issued at-market, unsecured convertible notes with gross proceeds of $900 thousand. The notes bear interest at 12.0% and mature in 180 days. They can convert into common stock, and into warrants for five years at a stated price. Board members, an officer and consultants bought $350 thousand of the notes.
On June 13, 2025 the company carried out a 6-for-1 reverse stock split. On June 24, 2025 it signed a private placement with accredited investors for 136,843 common shares, up to 93,180 shares through pre-funded warrants, and warrants for up to 460,046 shares at $5.82 and up to 230,023 shares at $10.00. The filing says the placement was priced at the market and closed on June 26, 2025. Each share sold came with two $5.82 warrants and one $10.00 warrant, at a combined price of $6.195 per share.
The warrants in the placement outnumber the common shares sold in it.
The programs behind the spending
Its lead program, ART27.13, is a dual cannabinoid receptor agonist being tested in a Phase 1b/2a study, the Cancer Appetite Recovery Study, for cancer-related anorexia. The annual report, filed March 3, 2025, says the Phase 2a portion is planned for 40 evaluable patients, randomized 3 to 1 against placebo, and that 18 clinical sites were open as of February 2025, with full enrollment projected for the first half of 2025.
The second program, ART26.12, is a lead inhibitor of fatty acid binding protein 5. The company says the FDA cleared its IND in July 2024 and that a Phase 1 trial for chemotherapy-induced peripheral neuropathy has begun. The annual report says no treatment for that condition is approved in the United States, the United Kingdom or the European Union.
The going concern note lists licensing as one of the ways to raise money, alongside equity and debt offerings.