UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2023

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

For the transition period from ___________ to ___________

Commission File No. 001-40388

ANEBULO PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware

85-1170950

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1017 Ranch Road 620 South, Suite 107

Lakeway, Texas

78734

(Address of principal executive offices)

(Zip Code)

(512) 598-0931

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		ANEB		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of February 6, 2024, the registrant had 25,933,217 shares of common stock, par value $0.001 per share, outstanding.

Anebulo Pharmaceuticals, Inc.

Table of Contents

		Page Number

Special Note Regarding Forward-Looking Statements
Risk Factors Summary
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)		1
Condensed Balance Sheets		1
Condensed Statements of Operations		2
Condensed Statements of Stockholders’ Equity		3
Condensed Statements of Cash Flows		4
Notes to Unaudited Condensed Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
Item 3. Quantitative and Qualitative Disclosures About Market Risk		17
Item 4. Controls and Procedures		17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		18
Item 1A. Risk Factors		18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		51
Item 3. Defaults Upon Senior Securities		51
Item 4. Mine Safety Disclosures		51
Item 5. Other Information		51
Item 6. Exhibits		51
Signatures		52

In this report, unless otherwise stated or as the context otherwise requires, references to “Anebulo Pharmaceuticals,” “Anebulo,” “Company,” “we,” “us,” “our” and similar references refer to Anebulo Pharmaceuticals, Inc. The Anebulo logo, and other trademarks or service marks of Anebulo Pharmaceuticals, Inc. appearing in this report are the property of Anebulo Pharmaceuticals, Inc. This report also contains registered marks, trademarks and trade names of other companies. All other trademarks, registered marks and trade names appearing in this report are the property of their respective holders. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject the “safe harbor” created by those sections. These forward-looking statements about us and our industry involve substantial risks and uncertainties and our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth below under Part II, Item 1A, “Risk Factors” in this Quarterly Report. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “seek,” “plan,” “expect,” “should,” “would,” “potentially” or the negative of these terms or similar expressions in this Quarterly Report.

We have based these forward-looking statements largely on our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These forward-looking statements include, but are not limited to, statements about:

●	our expectations regarding our capital requirements, revenue, expenses and other operating results, and needs for additional financing;
●	the timing or outcome of any of our regulatory submissions;
●	the timing and conduct of our clinical trials, including statements regarding the timing, progress and results of current and future nonclinical studies and clinical trials, and our research and development programs;
●	the clinical utility of, potential advantages of and timing or likelihood of regulatory filings and approvals for selonabant (formerly ANEB-001);
●	the market opportunity for selonabant, if approved;
●	our expectations regarding future growth;
●	our ability to obtain and maintain adequate intellectual property rights and adequately protect and enforce such rights;
●	our ability to maintain our existing licensing arrangements and enter into and maintain other collaborations or licensing arrangements;
●	our estimates regarding the commercial potential and market opportunity for our product candidates;
●	the performance of our third-party suppliers and manufacturers;
●	our ability to compete effectively with existing competitors and new market entrants;
●	the impact on our business of economic or political events or trends; and
●	the impact of governmental laws and regulations.

You should not place undue reliance on these forward-looking statements. Unless required by law, we undertake no obligation to update or revise any forward-looking statements to reflect new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully read this Quarterly Report, including the section titled “Risk Factors” and the documents that we reference in this Quarterly Report and have filed as exhibits to this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this report by these cautionary statements.

RISK FACTORS SUMMARY

Below is a summary of material factors that make an investment in our common stock speculative or risky. Importantly, this summary does not address all of the risks and uncertainties that we face. Additional discussion of the risks and uncertainties summarized in this risk factor summary, as well as other risks and uncertainties that we face, can be found under “Risk Factors” in Part II, Item 1A of this Quarterly Report. The below summary is qualified in its entirety by that more complete discussion of such risks and uncertainties. You should carefully consider the risks and uncertainties described under “Risk Factors” in Part II, Item 1A of this Quarterly Report as part of your evaluation of an investment in our common stock.

	●	We have not generated any revenue since our inception and expect to incur future losses and may never become profitable.

	●	Our business is highly dependent on our lead product candidate, selonabant (formerly ANEB-001), and we must complete clinical testing before we can seek regulatory approval and begin commercialization of any of our product candidates.

	●	We depend substantially on intellectual property licensed from third parties, including Vernalis Development Limited, and termination of any of these licenses could result in the loss of significant rights, which would harm our business.

	●	We will need substantial additional funding, and if we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product discovery and development programs or commercialization efforts.

	●	We have entered into the LSA with 22NW and JFL for a debt facility. The debt facility may be secured by substantially all of the Company’s assets. Additionally, a default thereunder would have material adverse consequences on our financial condition, operating results, and business.

	●	We are highly dependent on our key personnel and anticipate hiring new key personnel. If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.

	●	If we are unable to obtain and maintain sufficient intellectual property protection for our product candidates or if the scope of the intellectual property protection is not sufficiently broad, our ability to commercialize our product candidates successfully and to compete effectively may be adversely affected.

	●	We have a limited operating history, which may make it difficult to evaluate the success of our business to date and to assess our future viability.

	●	We are early in our development efforts and have only one product candidate in clinical development. If we are unable to successfully develop and commercialize our product candidate or experience significant delays in doing so, our business may be materially harmed.

	●	Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and the inability to successfully and timely conduct clinical trials and obtain regulatory approval for our product candidates would substantially harm our business.

	●	The results of clinical trials are not necessarily predictive of future results. Our existing product candidate in clinical trials, and any other product candidate we advance into clinical trials, may not have favorable results in later clinical trials or receive regulatory approval.

	●	Any products we develop may become subject to unfavorable pricing regulations, third-party coverage and reimbursement practices or healthcare reform initiatives, thereby harming our business.

	●	We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

	●	Our product candidates, the methods used to deliver them or their dosage levels may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following any regulatory approval.

	●	We currently have no marketing and sales organization and we have no direct experience marketing pharmaceutical products. If we are unable to establish our own marketing and sales capabilities, or enter into agreements with third parties to market and sell our products after approval, we may not be able to generate product revenues.

	●	New drugs, which may be developed by others, could impair our ability to maintain and grow our business and remain competitive.

	●	We depend on third parties in connection with our preclinical testing and clinical trials, which may result in costs and delays that prevent us from obtaining regulatory approval or successfully commercializing selonabant or future product candidates.

	●	We will be completely dependent on third parties to manufacture selonabant, and our commercialization of selonabant could be halted, delayed or made less profitable if those third parties fail to obtain manufacturing approval from the FDA or comparable foreign regulatory authorities, fail to provide us with sufficient quantities of selonabant or fail to do so at acceptable quality levels or prices.

	●	The trading price and volume of our common stock in the public markets has experienced, and may in the future experience, volatility due to a variety of factors, many of which are beyond our control.

PART I. FINANCIAL INFORMATION

Anebulo Pharmaceuticals, Inc.

Condensed Balance Sheets

(unaudited)

	December 31, 2023			June 30, 2023
Assets
Current assets:
Cash and cash equivalents	$	6,644,517		$	11,247,403
Prepaid expenses		171,740			422,748
Total current assets	$	6,816,257		$	11,670,151
Other assets:
Loan commitment fees		684,516			-
Total assets		7,500,773			11,670,151

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	318,679		$	534,545
Accrued expenses		694,877			534,256
Total liabilities		1,013,556			1,068,801

Commitments and contingencies		-			-
Stockholders’ equity:
Preferred stock, $0.001 par value; 2,000,000 shares authorized, no shares issued or outstanding at December 31, 2023 and June 30, 2023		-			-
Common stock, $0.001 par value; 50,000,000 and 40,000,000 shares authorized at December 31, 2023 and June 30, 2023, respectively; 25,933,217 and 25,633,217 shares issued and outstanding at December 31, 2023 and June 30, 2023, respectively		25,934			25,634
Additional paid-in capital		68,861,516			67,777,757
Accumulated deficit		(62,400,233	)		(57,202,041	)
Total stockholders’ equity		6,487,217			10,601,350
Total liabilities and stockholders’ equity	$	7,500,773		$	11,670,151

The accompanying notes are an integral part of these condensed financial statements.

Anebulo Pharmaceuticals, Inc.

Condensed Statements of Operations

(unaudited)

	2023			2022			2023			2022
	Three Months Ended December 31,						Six Months Ended December 31,
	2023			2022			2023			2022
Research and development	$	1,062,672		$	1,869,920		$	2,332,892		$	3,093,696
General and administrative		1,697,787			1,943,202			2,971,245			3,331,473
Total operating expenses		2,760,459			3,813,122			5,304,137			6,425,169
Loss from operations		(2,760,459	)		(3,813,122	)		(5,304,137	)		(6,425,169	)

Other (income) expenses:
Interest expense		31,838			-			31,838			-
Interest income		(75,522	)		(8,816	)		(130,720	)		(13,249	)
Other		594			22,646			(7,063	)		26,867
Other (income) expenses, net		(43,090	)		13,830			(105,945	)		13,618
Net loss	$	(2,717,369	)	$	(3,826,952	)	$	(5,198,192	)	$	(6,438,787	)
Weighted average common shares outstanding, basic and diluted		25,789,739			25,633,217			25,711,478			24,524,856
Net loss per share, basic and diluted	$	(0.11	)	$	(0.15	)	$	(0.20	)	$	(0.26	)

The accompanying notes are an integral part of these condensed financial statements.

Anebulo Pharmaceuticals, Inc.

Condensed Statements of Stockholders’ Equity

(unaudited)


					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			Equity
Balance at June 30, 2022		23,344,567	$	23,345	$	60,513,258	$	(45,469,703	)	$	15,066,900
Issuance of common stock, net of offering costs		2,264,650		2,265		6,395,556		-			6,397,821
Common stock issued upon exercise of options		24,000		24		52,376		-			52,400
Stock-based compensation expense		-		-		211,900		-			211,900
Net loss		-		-		-		(2,611,835	)		(2,611,835	)
Balance at September 30, 2022		25,633,217	$	25,634	$	67,173,090	$	(48,081,538	)	$	19,117,186
Stock-based compensation expense		-		-		225,621		-			225,621
Net loss		-		-		-		(3,826,952	)		(3,826,952	)
Balance at December 31, 2022		25,633,217	$	25,634	$	67,398,711	$	(51,908,490	)	$	15,515,855

Balance at June 30, 2023		25,633,217		25,634		67,777,757		(57,202,041	)		10,601,350
Stock-based compensation expense		-		-		210,797		-			210,797
Net loss		-		-		-		(2,480,823	)	$	(2,480,823	)
Balance at September 30, 2023		25,633,217	$	25,634	$	67,988,554	$	(59,682,864	)	$	8,331,324
Balance		25,633,217	$	25,634	$	67,988,554	$	(59,682,864	)	$	8,331,324
Issuance of common stock		300,000		300		653,700		-			654,000
Stock-based compensation expense		-		-		219,262		-			219,262
Net loss		-		-		-		(2,717,369	)		(2,717,369	)
Balance at December 31, 2023		25,933,217	$	25,934	$	68,861,516	$	(62,400,233	)	$	6,487,217
Balance		25,933,217	$	25,934	$	68,861,516	$	(62,400,233	)	$	6,487,217

The accompanying notes are an integral part of these condensed financial statements.

Anebulo Pharmaceuticals, Inc.

Condensed Statements of Cash Flows

(unaudited)

	2023			2022
	Six Months Ended December 31,
	2023			2022
Cash flows from operating activities:
Net loss	$	(5,198,192	)		(6,438,787	)
Adjustments to reconcile net loss to net cash used in operating activities

Stock-based compensation		430,059			437,521
Amortization of loan commitment fee		31,838			-
Changes in operating assets and liabilities:
Prepaid expenses		251,008			498,054
Accounts payable		(215,866	)		(34,274	)
Accrued expenses		160,621			894,144
Net cash used in operating activities		(4,540,532	)		(4,643,342	)
Cash flows from financing activities:
Proceeds from issuance of common stock		-			6,646,748
Payment of financing/offering costs		(62,354	)		(248,927	)
Proceeds from issuance of common stock upon exercise of options		-			52,400
Net cash (used in) provided by financing activities		(62,354	)		6,450,221
Net (decrease) increase in cash		(4,602,886	)		1,806,879
Cash, beginning of period		11,247,403			14,548,471
Cash, end of the period	$	6,644,517			16,355,350

Noncash investing and financing activities:

Financing commitment fee funded through issuance of common stock		654,000			-

The accompanying notes are an integral part of these condensed financial statements.

Anebulo Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

Note 1. Nature of business and basis of presentation

Organization

Anebulo Pharmaceuticals, Inc. (the “Company”) was founded on April 23, 2020, as a Delaware corporation. The Company is a clinical stage biotechnology company focused on developing and commercializing new treatments for patients suffering from Acute Cannabis Intoxication (“ACI”) and addiction. The Company’s principal operations are located in Lakeway, Texas.

Liquidity and capital resources

Since inception, the Company’s activities have consisted primarily of performing research and development to advance its product candidates. The Company is still in the development phase and has not been marketing any developed products to date. Since inception, the Company has incurred losses, including a net loss of approximately $5.2 million for the six-month period ended December 31, 2023. As of December 31, 2023, the Company had an accumulated deficit of $62.4 million. The Company expects to continue to generate operating losses. The Company expects that its cash, along with access to the Facility Amount under the LSA (as defined below in Note 10), will be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the issuance date of the financial statements. Until such time, if ever, as the Company can generate substantial product revenue from sales of any current or future product candidates, the Company expects to seek additional funding in order to reach its development and commercialization objectives through various potential sources, such as equity and debt financings or through collaboration, license and development agreements. The Company may not be able to obtain funding or enter into collaboration, license or development agreements on acceptable terms, or at all. The terms of any funding may be dilutive to or adversely affect the rights of the Company’s stockholders. If the Company is unable to obtain funding on satisfactory terms, or at all, the Company could be forced to delay, scale back or eliminate the development of its current or future product candidates or other business.

Risks and uncertainties

The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include uncertainty regarding results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s current or future product candidates, uncertainty of market acceptance of the Company’s product candidates, if approved, competition from substitute products and larger companies, securing and protecting proprietary technology, ability to establish strategic relationships and dependence on key individuals and sole source suppliers. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities and may not ultimately lead to a marketing approval and commercialization of a product.

The Company’s product candidates require approvals from the U.S. Food and Drug Administration (“FDA”) and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any product candidates will receive the necessary approvals. If the Company was denied approval, approval was delayed or the Company was unable to maintain approval for any product candidate, it could have a materially adverse impact on the Company. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. The Company will need to generate significant revenue to achieve profitability, and it may never do so.

Basis of presentation

The accompanying condensed financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

The unaudited interim condensed financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed financial statements should be read in conjunction with the financial statements as of and for the year ended June 30, 2023 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K (File No. 001-40388).

In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the results for the reported interim periods. The Company considers events or transactions that occur after the balance sheet date but before the condensed financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.

Reclassifications

Certain reclassifications have been made to the fiscal year 2023 amounts to conform with the fiscal year 2024 financial statement presentation.

Note 2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited financial statements as of and for the year ended June 30, 2023, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC on September 22, 2023. Since the date of those financial statements, there have been no material changes to significant accounting policies.

Note 3. Prepaid Expenses

Prepaid expenses consisted of the following :

Schedule of Prepaid Expenses

	December 31, 2023		June 30, 2023
Prepaid insurance	$	156,700	$	391,750
Prepaid other		15,040		30,998
Total prepaid expenses	$	171,740	$

SEC Form 10-Q filed by Anebulo Pharmaceuticals Inc.