ARTELO BIOSCIENCES, INC.

Previous wording

Presently, we have two U.S. patents, one pending U.S. patent application, seven foreign patents (Australia, Brazil, China, Mexico, Japan, Taiwan, and Europe, including validation in 15 countries) and two pending foreign patent applications (Canada and South Korea) directed to our cocrystal composition of CBD. Composition claims are generally known in the pharmaceutical industry as the most desired type of intellectual property and should provide for long lasting market exclusivity for our synthetic CBD cocrystal drug product candidate. In addition, due to the reasons outlined above, we believe that our synthetic CBD cocrystal will continue to demonstrate a superior set of pharmaceutical properties compared to non-cocrystal CBD compositions. We plan to develop ART12.11 for multiple potential indications where CBD has shown activity of such anxiety disorders, including PTSD, depression, and other possible uses such as epilepsy and insomnia.

Current wording

Presently, we have three U.S. patents, one pending U.S. patent application, six issued foreign patents (Australia, China, Mexico, Japan, Taiwan, and Europe, including validation in 15 countries) and three pending foreign patent applications (Brazil, Canada and South Korea) directed to our cocrystal composition of CBD. Composition claims are generally known in the pharmaceutical industry as the most desired type of intellectual property and should provide for long lasting market exclusivity for our synthetic CBD cocrystal drug product candidate. In addition, due to the reasons outlined above, we believe that our synthetic CBD cocrystal will continue to demonstrate a superior set of pharmaceutical properties compared to non-cocrystal CBD compositions. We plan to develop ART12.11 for multiple potential indications where CBD has shown activity of such anxiety disorders, including PTSD, depression, and other possible uses such as epilepsy and insomnia.

Previous wording

Our other income (expense) consists of interest income, interest expense, and changes in fair value of our derivative liabilities.

Current wording

Our other income (expense) consists of interest income, interest expense, gain on the extinguishment of debt, and changes in fair value of our derivative liabilities.

Previous wording

Our operating expenses for the three months ended March 31, 2026, were $2.7 million compared to $2.4 million for the same period in 2025. The increase in operating expenses for the three months ended March 31, 2026, was primarily the result of increased professional fees during the year related to our financing activities and increases in the service cost of stock-based compensation offset by a decrease in research and development activities compared to the prior year, due to the timing and level of the research being conducted.

Current wording

Our operating expenses for the six months ended June 30, 2026, were $5.2 million compared to $5.5 million for the same period in 2025. The decrease in operating expenses for the six months ended June 30, 2026, was primarily the result of increased professional fees during the year related to our financing activities and increases in the service cost of stock-based compensation offset by a decrease in research and development activities compared to the prior year, due to the timing and level of the research being conducted, partially offset by $0.7 million in research and development tax credits received from the U.K. government in the prior year in which there was no comparable amount received during the current year.

Previous wording

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. Our net loss was $3.0 million for the three months ended March 31, 2026. As of March 31, 2026, we had cash, cash equivalents and investments of $10.3 million.

Current wording

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. Our net loss was $5.4 million for the six months ended June 30, 2026. As of June 30, 2026, we had cash, cash equivalents and investments of $4.2 million.

Previous wording

On January 30, 2026, we entered into an equity purchase agreement with Square Gate Capital Master Fund, LLC – Series 5 (“Square Gate”), pursuant to which we have the right, but not the obligation, to direct Square Gate to purchase up to $25.0 million in shares of common stock (the “Initial Commitment Amount”), which at our sole discretion can be increased by an additional $25.0 million once the Initial Commitment Amount has been exhausted, subject to the terms and conditions contained in the equity purchase agreement (the “Equity Line”). As consideration, we issued 35,342 shares of common stock to Square Gate and pre-funded warrants to purchase up to 62,124 shares of Common Stock at an exercise price of $0.001 per share. We filed a registration statement with the SEC on March 24, 2026, to register under the Securities Act of 1933, as amended (the “Securities Act”), the offer and resale by Square Gate of up to 4,273,519 shares of common stock, which was declared effective by the SEC on March 30, 2026. As of March 31, 2026, we have not issued any shares of common stock in accordance with the Equity Line, except for the shares or pre-funded warrants we issued to Square Gate as consideration.

Current wording

On January 30, 2026, we entered into an equity purchase agreement with an investment fund (“Fund”), pursuant to which we have the right, but not the obligation, to direct the Fund to purchase up to $25.0 million in shares of common stock (the “Initial Commitment Amount”), which at our sole discretion can be increased by an additional $25.0 million once the Initial Commitment Amount has been exhausted, subject to the terms and conditions contained in the equity purchase agreement (the “Equity Line”). As consideration, we issued 35,342 shares of common stock to the Fund and pre-funded warrants to purchase up to 62,124 shares of Common Stock at an exercise price of $0.001 per share. We filed a registration statement with the SEC on March 24, 2026, to register under the Securities Act of 1933, as amended (the “Securities Act”), the offer and resale by the Fund of up to 4,273,519 shares of common stock, which was declared effective by the SEC on March 30, 2026. As of August 11, 2026, we have issued 20,000 shares of common stock in accordance with the Equity Line, in addition to the shares or pre-funded warrants we issued to the Fund as consideration.

Previous wording

On March 27, 2026, we entered into a securities purchase agreement with Intracoastal Capital LLC (“Intracoastal”) and Armistice Capital Master Fund Ltd. (“Master Fund”), pursuant to which we agreed to issue and sell, in a private placement offering: (i) 81,000 shares of common stock, (ii) pre-funded warrants to purchase 3,107,407 shares of common stock at an exercise price of $0.001 per share, and (iii) common warrants to purchase 6,376,814 shares of common stock at an exercise price of $3.20 per share. Each share of common Stock or pre-funded warrant was issued and sold along with two common warrants. The combined purchase price for the securities was (i) $3.45 per share of common stock and two common warrants, and (ii) $3.449 per pre-funded warrant and two common warrants. H.C. Wainwright & Co., LLC (“HCW”) acted as exclusive placement agent in connection with the offering and received a cash fee equal to 8.0% of the aggregate gross proceeds and reimbursement of certain expenses. Upon the exercise for cash of the warrants, we will pay HCW a cash fee of 8.0% of the aggregate gross exercise price paid in cash with respect thereto. In addition, we issued to HCW’s designees placement agent warrants to purchase up to 255,073 shares of common stock at an exercise price of $4.3125 per share, which have substantially the same terms as the common warrants, other than the exercise price. The gross proceeds from the offering, before deducting HCW fees and other offering expenses payable by the Company, were $10,996,902.70 (or up to approximately $31.4 million in gross proceeds if the warrants are fully exercised for cash). We filed a registration statement with the SEC on April 7, 2026, to register under the Securities Act the offer and resale by Intracoastal, Master Fund, and HCW’s designees of up to 9,820,294 shares of common stock, which was declared effective by the SEC on April 15, 2026.

Current wording

On March 27, 2026, we entered into a securities purchase agreement with Intracoastal Capital LLC (“Intracoastal”) and Armistice Capital Master Fund Ltd. (“Master Fund”), pursuant to which we agreed to issue and sell, in a private placement offering: (i) 81,000 shares of common stock, (ii) pre-funded warrants to purchase 3,107,407 shares of common stock at an exercise price of $0.001 per share, and (iii) common warrants to purchase 6,376,814 shares of common stock at an exercise price of $3.20 per share. Each share of common stock or pre-funded warrant was issued and sold along with two common warrants. The combined purchase price for the securities was (i) $3.45 per share of common stock and two common warrants, and (ii) $3.449 per pre-funded warrant and two common warrants. The investment bank that acted as exclusive placement agent in connection with the offering and received a cash fee equal to 8.0% of the aggregate gross proceeds and reimbursement of certain expenses. Upon the exercise for cash of the warrants, we will pay the investment bank a cash fee of 8.0% of the aggregate gross exercise price paid in cash with respect thereto. In addition, we issued to the investment bank’s designees placement agent warrants to purchase up to 255,073 shares of common stock at an exercise price of $4.3125 per share, which have substantially the same terms as the common warrants, other than the exercise price. The gross proceeds from the offering, before deducting the investment bank’s fees and other offering expenses payable by us, were $10,996,902.70 (or up to approximately $31.4 million in gross proceeds if the warrants are fully exercised for cash). We filed a registration statement with the SEC on April 7, 2026, to register under the Securities Act the offer and resale by Intracoastal, Master Fund, and investment bank’s designees of up to 9,820,294 shares of common stock, which was declared effective by the SEC on April 15, 2026.

Previous wording

In July 2023, we filed a $75.0 million shelf registration statement on Form S-3 which became effective on July 14, 2023. The shelf registration statement is effective for three years and permits us to sell, from time to time, up to $75.0 million of our common stock, preferred stock, debt securities, warrants, and/or units subject to a limit of one-third (1/3) of our public float within a twelve (12) month period if our public float is less than $75.0 million as of relevant measurement dates under applicable securities laws. On May 4, 2026, we filed a $75.0 million in aggregate value shelf registration statement on Form S-3 which is subject to review by the SEC prior to becoming effective. The shelf registration statement, upon clearance of the SEC review process, will be effective for three years and permit us to sell, from time to time, up to $75.0 million of the Company’s common stock, preferred stock, debt securities, warrants, and/or units subject to a limit of one-third (1/3) of the Company’s public float within a twelve (12) month period if our public float is less than $75.0 million as of relevant measurement dates under applicable securities laws. We may continue to sell under the July 2023 Form S-3 until the earlier of (i) the date on which the new shelf registration statement is declared effective by the SEC, or (ii) January 10, 2027, which is 180 days after the third-year anniversary of the effective date of the July 2023 Form S-3.

Current wording

In May 2026, we filed a $75.0 million in aggregate value shelf registration statement on Form S-3 which became effective on May 19, 2026. The shelf registration statement is effective for three years and permits us to sell, from time to time, up to $75.0 million of our common stock, preferred stock, debt securities, warrants, and/or units subject to a limit of one-third (1/3) of our public float within a twelve (12) month period if our public float is less than $75.0 million as of relevant measurement dates under applicable securities laws. The shelf registration statement was intended to provide us with flexibility to access additional capital when market conditions are appropriate.

Previous wording

Our total current assets as of March 31, 2026, were $10.4 million as compared to total current assets of $0.7 million as of December 31, 2025. The increase in current assets was primarily due to the financing completed during the current quarter.

Current wording

Our total current assets as of June 30, 2026, were $4.4 million as compared to total current assets of $0.7 million as of December 31, 2025. The increase in current assets was primarily due to the financing completed during the six-month period.

Previous wording

During the three months ended March 31, 2026, cash used in operating activities was $1.2 million compared to $1.6 million during the three months ended March 31, 2025. Cash used in operating activities during the three months ended March 31, 2026, was attributed to a net loss of $3.0 million, offset by non-cash losses of $0.6 million associated with stock-based compensation, net change in fair value of derivative liability, non-cash lease expenses, and amortization of debt discounts as well as working capital adjustments for accounts payable and accrued liabilities (including related parties) of $1.2 million. Cash used in operating activities during the three months ended March 31, 2025, was attributed to a net loss of $2.4 million offset by decreases in operating assets and liabilities of $0.6 million and non-cash stock-based compensation of $0.2 million.

Current wording

During the six months ended June 30, 2026, cash used in operating activities was $6.2 million compared to $2.1 million during the six months ended June 30, 2025. Cash used in operating activities during the six months ended June 30, 2026, was attributed to a net loss of $5.4 million, offset by non-cash losses of $1.0 million associated with stock-based compensation, net change in fair value of derivative liability, non-cash lease expenses, and amortization of debt discounts as well as working capital adjustments for accounts payable and accrued liabilities (including related parties) of $2.0 million. Cash used in operating activities of $2.1 million during the six months ended June 30, 2025, was attributed primarily to a net loss of $5.6 million offset by increases in accounts payable and accrued expenses of liabilities of $3.0 million and non-cash stock-based compensation of $0.3 million.

Previous wording

We did not have cash flows from investing activities during the three months ended March 31, 2026, and 2025.

Current wording

We did not have cash flows from investing activities during the six months ended June 30, 2026 and 2025.

Previous wording

During the three months ended March 31, 2026, cash flows provided by financing activities was $10.9 million compared to $0.0 million during the three months ended March 31, 2025. During the three months ended March 31, 2026, cash flows provided by financing activities were the result of the net proceeds from the issuance of common shares of $10.0 million, net proceeds from the issuance of convertible notes of $0.6 million and proceeds from the exercise of warrants of $0.2 million.

Current wording

During the six months ended June 30, 2026, cash flows provided by financing activities was $9.8 million compared to $1.8 million during the six months ended June 30, 2025. During the six months ended June 30, 2026, cash flows provided by financing activities were the result of the net proceeds from the issuance of common shares of $10.2 million, net proceeds from the issuance of convertible notes of $0.6 million and proceeds from the exercise of warrants of $0.2 million, offset by $1.2 million in repayments to holders of convertible notes. During the six months ended June 30, 2025, cash flows provided by financing activities were the result of the net proceeds from the issuance of common shares of $1.1 million and net proceeds from the issuance of convertible notes of $0.7 million.

Previous wording

Stock-based compensation expense represents the cost of the grant date fair value of equity awards recognized over the requisite service period of the awards (usually the vesting period) on a straight-line basis. We estimate the fair value of equity awards using the Black-Scholes option pricing model and recognize forfeitures as they occur. Estimating the fair value of equity awards as of the grant date using valuation models, such as the Black-Scholes option pricing model, is affected by assumptions regarding a number of variables, including the risk-free interest rate, the expected stock price volatility, the expected term of stock options, the expected dividend yield and the fair value of the underlying common stock on the date of grant. Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized. These inputs are subjective and generally require significant analysis and judgment to develop. See Note 7 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted, if any, during the three months ended March 31, 2026, and 2025.

Current wording

Stock-based compensation expense represents the cost of the grant date fair value of equity awards recognized over the requisite service period of the awards (usually the vesting period) on a straight-line basis. We estimate the fair value of equity awards using the Black-Scholes option pricing model and recognize forfeitures as they occur. Estimating the fair value of equity awards as of the grant date using valuation models, such as the Black-Scholes option pricing model, is affected by assumptions regarding a number of variables, including the risk-free interest rate, the expected stock price volatility, the expected term of stock options, the expected dividend yield and the fair value of the underlying common stock on the date of grant. Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized. These inputs are subjective and generally require significant analysis and judgment to develop. See Note 7 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted, if any, during the six months ended June 30, 2026, and 2025.

Previous wording

Determining the fair value of the embedded conversion feature requires the use of a Black-Scholes model and is classified within Level 3 of the fair value hierarchy under ASC 820,Fair Value Measurement, because it relies on significant unobservable inputs. Key inputs and assumptions used in the valuation include our stock price, expected stock price volatility (estimated by reference to the historical volatility of the Company’s common shares and/or a peer group), the risk-free interest rate derived from the U.S. Treasury yield curve over a term commensurate with the remaining life of the instrument, the expected term to maturity, the probability and timing of conversion, and a credit-adjusted discount rate reflective of our non-performance risk. The estimated fair value of the derivative liability is most sensitive to changes in our stock price and expected volatility; a significant increase (decrease) in either input, in isolation, would generally result in a significantly higher (lower) fair value measurement and a corresponding non-cash loss (gain) in the period of change. We reassess the inputs and the appropriateness of the valuation methodology each reporting period.

Current wording

Determining the fair value of the embedded conversion feature requires the use of a Black-Scholes model and is classified within Level 3 of the fair value hierarchy under ASC 820,Fair Value Measurement, because it relies on significant unobservable inputs. Key inputs and assumptions used in the valuation include our stock price, expected stock price volatility (estimated by reference to the historical volatility of our common shares and/or a peer group), the risk-free interest rate derived from the U.S. Treasury yield curve over a term commensurate with the remaining life of the instrument, the expected term to maturity, the probability and timing of conversion, and a credit-adjusted discount rate reflective of our non-performance risk. The estimated fair value of the derivative liability is most sensitive to changes in our stock price and expected volatility; a significant increase (decrease) in either input, in isolation, would generally result in a significantly higher (lower) fair value measurement and a corresponding non-cash loss (gain) in the period of change. We reassess the inputs and the appropriateness of the valuation methodology each reporting period.

Previous wording

There were no new accounting standards adopted during the three months ended March 31, 2026.

Current wording

There were no new accounting standards adopted during the six months ended June 30, 2026.

Previous wording

In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires public business entities to disclose, in the notes to the financial statements, disaggregated information about specified categories of expenses—including (i) purchases of inventory, (ii) employee compensation, (iii) depreciation, (iv) intangible asset amortization, and (v) depletion—that are included within each relevant expense caption presented on the face of the income statement. The amendments also require disclosure of the total amount of selling expenses and, in annual reporting periods, the Company’s definition of selling expenses. In January 2025, the FASB issued ASU No. 2025-01,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified that ASU 2024-03 is effective for the Company for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied prospectively to financial statements issued for reporting periods after the effective date or retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on the disclosures within its condensed consolidated financial statements.

Current wording

In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires public business entities to disclose, in the notes to the financial statements, disaggregated information about specified categories of expenses—including (i) purchases of inventory, (ii) employee compensation, (iii) depreciation, (iv) intangible asset amortization, and (v) depletion—that are included within each relevant expense caption presented on the face of the income statement. The amendments also require disclosure of the total amount of selling expenses and, in annual reporting periods, the Company’s definition of selling expenses. In January 2025, the FASB issued ASU No. 2025-01,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified that ASU 2024-03 is effective for the Company for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied prospectively to financial statements issued for reporting periods after the effective date or retrospectively to all prior periods presented in the financial statements. We are currently evaluating the impact that the adoption of ASU 2024-03 will have on the disclosures within our condensed consolidated financial statements.