UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 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 March 31, ~~2021~~2022

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

For the transition period from to

Commission file number: 001-38105

180 LIFE SCIENCES CORP

(Exact name of registrant as specified in its charter)

Delaware		~~81-3832378~~90-1890354
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3000 El Camino Real

Bldg. 4, Suite 200

Palo Alto, CA 94306

94306

(Address of principal executive offices)

(Zip Code)

(650) 507-0669

(Registrant’s telephone number, including area code)

~~830 Menlo Avenue, Suite 100~~

~~Menlo Park, CA 94025~~

~~(Former name, former address and former fiscal year, if changed since last report)~~

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, par value $0.0001 per share	ATNF	The NASDAQ Stock Market LLC ~~(The~~ (The NASDAQ Capital Market)
Warrants to purchase Common Stock	ATNFW	The NASDAQ Stock Market LLC ~~(The~~ (The NASDAQ Capital Market)

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 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 ~~July 16, 2021, 30,768,873~~May 11, 2022, 34,087,244 shares of common stock, par value $0.0001 per share, were issued and outstanding.

180 LIFE SCIENCES CORP. AND SUBSIDIARIES

~~(FORMERLY KBL MERGER CORP. IV)~~FORM 10-Q

~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~FOR THE THREE MONTHS ENDED MARCH 31, 2022

~~INDEX~~TABLE OF CONTENTS

~~Cautionary Note Regarding Forward-Looking Statements~~		iiPage

PART I

~~FINANCIAL INFORMATION~~

~~ITEM 1. Financial Statements~~

FINANCIAL INFORMATION

ITEM 1. Financial Statements		1

Condensed Consolidated Balance Sheets as of March 31, ~~2021~~2022 (unaudited) and December 31, ~~2020~~2021		1

Unaudited Condensed Consolidated Statements of Operations and Comprehensive ~~Loss~~Income (Loss) for the Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021		2

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021		3

Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021		4

Notes to Unaudited Condensed Consolidated Financial Statements		56

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1920

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk		2831

ITEM 4. Controls and Procedures		32

PART II

~~ITEM 4. Controls and Procedures~~OTHER INFORMATION		28

~~PART II~~

~~OTHER INFORMATION~~		30

ITEM 1. Legal Proceedings.		3034

ITEM 1A. Risk Factors.		3034

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.		3034

ITEM 3. Defaults Upon Senior Securities.		3135

ITEM 4. Mine Safety Disclosures.		3135

ITEM 5. Other Information.		3135

ITEM 6. Exhibits.		3236

Signatures		3437

~~CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS~~

~~This Quarterly Report on Form 10-Q (“Report”), including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,~~” contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, regarding future events and the future results of the Company that are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the management of the Company. Words such as “~~expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,~~” variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed elsewhere in this Report, including under “~~Risk Factors”, and in other reports the Company files with the Securities and Exchange Commission (“SEC”), including the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on July 9, 2021 (under the heading “Risk Factors” and in other parts of that report). The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason, except as otherwise required by law.~~

The following discussion is based upon our unaudited Consolidated Financial Statements included elsewhere in this Report, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, and in other reports we file with the SEC, and in our most recent Annual Report on Form 10-K. All references to years relate to the calendar year ended December 31 of the particular year.

~~Summary Risk Factors~~

~~We face risks and uncertainties related to our business, many of which are beyond our control. In particular, risks associated with our business include:~~

●

~~We are a clinical stage biotechnology company that has no revenue to date, and we do not anticipate generating revenue for the near future;~~

●

Our need for additional financing, both near term and long term, to support our operations, our ability to raise such financing as needed, the terms of such financing, if available, potential significant dilution associated therewith, and covenants and restrictions we may need to comply with in connection with such funding;

●

~~Restrictions on our ability to issue securities, anti-dilution and most favored nation rights provided in connection therewith;~~

●

Our dependence on the success of our future product candidates, some of which may not receive regulatory approval or be successfully commercialized; problems in our manufacturing process for our new products and/or our failure to comply with manufacturing regulations, or unexpected increases in our manufacturing costs; problems with distribution of our products; and failure to adequately market our products;

●

~~Risks associated with the growth of our business, our ability to maintain such growth, difficulties in managing our growth, and executing our growth strategy;~~

●

~~Liability for previously restated financial statements and associated with ineffective controls and procedures;~~

●

~~Our dependence on our key personnel and our ability to attract and retain employees;~~

●

~~Risks from intense competition from companies with greater resources and experience than we have;~~

●

~~Risks that our future product candidates, if approved, may be unable to achieve the expected market acceptance and, consequently, limit our ability to generate revenue from new products;~~

●

~~The fact that the majority of our license agreements provide the licensors and/or counter-parties the right to use and/or exploit such licensed intellectual property;~~

●

Preclinical studies and earlier clinical trials may not necessarily be predictive of future results and may not have favorable results; we have limited marketing experience, and our future ability to successfully commercialize any of our product candidates, even if they are approved in the future is unknown; and business interruptions could delay us in the process of developing our future product candidates and could disrupt our product sales;

●

~~Third-party payors may not provide coverage and adequate reimbursement levels for any future products;~~

●

~~Liability from lawsuits (including product liability lawsuits, stockholder lawsuits and regulatory matters), including judgments, damages, fines and penalties;~~

●

~~Security breaches, loss of data and other disruptions which could prevent us from accessing critical information or expose us to liabilities or damages;~~

●

~~Risks associated with clinical trials that are expensive, time-consuming, uncertain and susceptible to change, delay or termination and which are open to differing interpretations;~~

●

Our ability to comply with existing and future rules and regulations, including federal, state and foreign healthcare laws and regulations and implementation of, or changes to, such healthcare laws and regulations;

●

~~Delays in the trials, testing, application, or approval process for drug candidates and/or our ability to obtain approval for promising drug candidates, and the costs associated therewith;~~

●

Our ability to adequately protect our future product candidates or our proprietary technology in the marketplace, claims and liability from third parties regarding our alleged infringement of their intellectual property;

●

~~Differences in laws and regulations between countries and other jurisdictions;~~

●

~~Changes in laws or regulations, including, but not limited to tax laws and controlled substance laws, or a failure to comply with any laws and regulations;~~

●

~~Conflicts of interest between our officers, directors, consultants and scientists;~~

●

~~Penalties associated with our failure to comply with certain pre-agreed contractual obligations and restrictions;~~

●

~~Dilution caused by future fund raising, the conversion/exercise of outstanding convertible securities, and downward pressure on the value of our securities caused by such future issuances/sales;~~

●

~~Negative effects on our business from the COVID-19 pandemic and other potential future pandemics;~~

●

~~The extremely volatile nature of our securities and potential lack of liquidity therefore;~~

●

The fact that our Certificate of Incorporation provides for indemnification of officers and directors, limits the liability of officers and directors, allows for the authorization of preferred stock without stockholder approval, and includes certain anti-takeover provisions;

~~iii~~

●

~~Our ability to maintain the listing of our common stock and warrants on The NASDAQ Capital Market (“NASDAQ”) and the costs of compliance with SEC and NASDAQ rules and requirements;~~

●

~~Risks associated with our status as an emerging growth company and the provisions of the JOBS Act, which we are able to take advantage of, due to such status;~~

●

~~Risks associated with material weaknesses that we have identified in our disclosure controls and internal controls over financial reporting;~~

●

~~Failure of our information technology systems, including cybersecurity attacks or other data security incidents, that could significantly disrupt the operation of our business;~~

●

The fact that we may acquire other companies which could divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results and if we make any acquisitions, they may disrupt or have a negative impact on our business;

●

~~The fact that we may apply working capital and future funding to uses that ultimately do not improve our operating results or increase the value of our securities; and~~

●

~~Our growth depends in part on the success of our strategic relationships with third parties.~~

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

180 LIFE SCIENCES CORP. AND SUBSIDIARIES

~~(FORMERLY KBL MERGER CORP. IV)~~

CONDENSED CONSOLIDATED BALANCE SHEETS

(Expressed in US Dollars)

(unaudited)

March 31, December 31,
2021 2020
(unaudited)
Assets
Current Assets:
Cash $ 6,052,862 $ 2,108,544
Due from related parties 300,000 300,000
Prepaid expenses and other current assets 1,945,172 1,606,414
Total Current Assets 8,298,034 4,014,958
Intangible assets, net 2,041,999 2,047,818
In-process research and development 12,589,191 12,569,793
Goodwill 37,182,945 36,900,801
Total Assets $ 60,112,169 $ 55,533,370

Liabilities, Temporary Equity and Stockholders’ Equity
Current Liabilities:
Accounts payable $ 3,905,267 $ 8,529,259
Accounts payable - related parties 236,534 215,495
Accrued expenses 2,884,950 4,110,916
Accrued expenses - related parties 512,992 454,951
Loans payable - current portion 606,295 968,446
Loans payable - related parties 514,140 513,082
Convertible notes payable 316,111 1,916,195
Convertible notes payable - related parties 270,000 270,000
Derivative liabilities 24,375,911 4,442,970
Total Current Liabilities 33,622,200 21,421,314
Accrued issuable equity - 43,095
Loans payable - non current portion 107,964 113,763
Deferred tax liability 3,672,710 3,668,329
Total Liabilities 37,402,874 25,246,501

Commitments and contingencies
Series A Convertible Preferred Stock, $0.0001 par value; 1,000,000 shares designated; 0 shares issued; none available at March 31, 2021 or December 31, 2020 - -

Stockholders’ Equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; (see designations and shares authorized for Series A, Class C and Class K preferred stock)
Class C Preferred Stock; 1 share authorized, issued and outstanding at March 31, 2021 and December 31, 2020 - -
Class K Preferred Stock; 1 share authorized, issued and outstanding at March 31, 2021 and December 31, 2020 - -
Common stock, $0.0001 par value; 100,000,000 shares authorized; 30,518,330 and 26,171,225 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively 3,052 2,617
Additional paid-in capital
86,436,232

78,005,004

Accumulated other comprehensive income 826,234 636,886
Accumulated deficit
(64,556,223
)
(48,357,638
)
Total Stockholders’ Equity
22,709,295
30,286,869
Total Liabilities and Stockholders’ Equity $ 60,112,169 $ 55,533,370

	March 31,			December 31,
	2022			2021
	(unaudited)
Assets
Current Assets:
Cash	$	5,668,915		$	8,224,508
Prepaid expenses and other current assets		3,287,599			2,976,583
Total Current Assets		8,956,514			11,201,091
Intangible assets, net		1,867,162			1,948,913
In-process research and development		12,530,106			12,575,780
Goodwill		36,323,533			36,987,886
Total Assets	$	59,677,315		$	62,713,670
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	1,039,068		$	586,611
Accrued expenses		2,627,461			1,964,580
Accrued expenses - related parties		37,640			18,370
Loans payable - current portion		1,296,466			1,828,079
Loans payable - related parties		86,034			81,277
Derivative liabilities		9,990,253			15,220,367
Total Current Liabilities		15,076,922			19,699,284

Accrued issuable equity		31,080			-
Loans payable - non current portion		43,607			48,165
Deferred tax liability		3,621,194			3,643,526
Total Liabilities		18,772,803			23,390,975
Commitments and contingencies (Note 8)
Stockholders’ Equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; (see designations and shares authorized for Series A, Class C and Class K preferred stock)
Class C Preferred Stock; 1 share authorized, issued and outstanding at March 31, 2022 and December 31, 2021		-			-
Class K Preferred Stock; 1 share authorized, issued and outstanding at March 31, 2022 and December 31, 2021		-			-
Common stock, $0.0001 par value; 100,000,000 shares authorized; 34,087,244 and 34,035,925 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		3,409			3,404
Additional paid-in capital		107,930,317			107,184,137
Accumulated other comprehensive income		89,359			817,440
Accumulated deficit		(67,118,573	)		(68,682,286	)
Total Stockholders’ Equity		40,904,512			39,322,695
Total Liabilities and Stockholders’ Equity	$	59,677,315		$	62,713,670

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

180 LIFE SCIENCES CORP. AND SUBSIDIARIES

~~(FORMERLY KBL MERGER CORP. IV)~~

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE ~~LOSS~~INCOME (LOSS)

(Expressed in US Dollars)

(unaudited)

For the Three Months
Ended
March 31,
2021 2020
Operating Expenses:
Research and development $ 99,899 $ 472,862
Research and development - related parties 267,053 30,605
General and administrative 2,542,231 995,328
General and administrative - related parties 39,120 68,067
Total Operating Expenses 2,948,303 1,566,862
Loss From Operations (2,948,303 ) (1,566,862 )

Other (Expense) Income:
Gain on settlement of payables and accrued expenses 723,764 -
Other income - related parties - 240,000
Interest expense (112,933 ) (152,916 )
Interest expense - related parties (13,949 ) (19,848 )
Loss on extinguishment of convertible notes payable, net (9,737 ) (886,736 )
Change in fair value of derivative liabilities (13,229,308 ) -
Offering costs allocated to warrant liabilities (604,118 ) -
Change in fair value of accrued issuable equity (9,405 ) -
Total Other Expense, Net (13,255,686 ) (819,500 )

Loss Before Income Taxes (16,203,989 ) (2,386,362 )
Income tax benefit 5,404 5,102
Net Loss (16,198,585 ) (2,381,260 )

Other Comprehensive Income:
Foreign currency translation adjustments 189,348 (1,844,205 )
Total Comprehensive Loss $ (16,009,237 ) $ (4,225,465 )

Basic and Diluted Net Loss per Common Share $ (0.58 ) $ (0.14 )

Weighted Average Number of Common Shares Outstanding: 27,953,302 16,840,668

	For the Quarter Ended
	March 31,
	2022			2021

Operating Expenses:
Research and development	$	658,939		$	99,899
Research and development - related parties		47,718			267,053
General and administrative		2,969,151			2,542,231
General and administrative - related parties		5,261			39,120
Total Operating Expenses		3,681,069			2,948,303
Loss From Operations		(3,681,069	)		(2,948,303	)

Other Income (Expense):
Gain on settlement of liabilities		-			723,764
Interest expense		(7,414	)		(112,933	)
Interest income (expense) - related parties		4,562			(13,949	)
Loss on extinguishment of convertible notes payable, net		-			(9,737	)
Change in fair value of derivative liabilities		5,230,114			(13,229,308	)
Change in fair value of accrued issuable equity		17,520			(9,405	)
Offering costs allocated to warrant liabilities		-			(604,118	)
Total Other Income (Expense), Net		5,244,782			(13,255,686	)
Income (Loss) Before Income Taxes		1,563,713			(16,203,989	)
Income tax benefit		-			5,404
Net Income (Loss)		1,563,713			(16,198,585	)

Other Comprehensive Income (Loss):
Foreign currency translation adjustments		(728,081	)		189,348
Total Comprehensive Income (Loss)	$	835,632		$	(16,009,237	)

Basic and Diluted Net Income (Loss) per Common Share
Basic	$	0.05		$	(0.58	)
Diluted	$	0.05		$	(0.58	)

Weighted Average Number of Common Shares Outstanding:
Basic		34,059,927			27,953,302
Diluted		34,068,762			27,953,302

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

180 LIFE SCIENCES CORP. AND SUBSIDIARIES

~~(FORMERLY KBL MERGER CORP. IV)~~

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Expressed in US Dollars)

(unaudited)

For The Three Months Ended March 31, 2021
Accumulated
Additional Other Total
Common Stock Paid-in Comprehensive Accumulated Stockholders’
Shares Amount Capital Income Deficit Equity
Balance - January 1, 2021 26,171,225 $ 2,617 $ 78,005,004 $ 636,886 $ (48,357,638 ) $ 30,286,869
Shares issued upon conversion of KBL debt 467,123 47 1,941,078 - - 1,941,125
Shares issued upon conversion of 180 debt 158,383 16 432,367 - - 432,383
Shares issued in connection with the private offering, net of financing costs^(a) 2,564,000 256 10,730,814 - - 10,731,070
Offering costs allocated to
warrant liabilities^(a) - - 604,118 - - 604,118
Warrants issued in connection with the private offering, reclassified to derivative liabilities - - (7,294,836 ) - - (7,294,836 )
Shares issued upon exchange of common stock equivalents 959,809 96 (96 ) - - -
Stock based compensation:
Common stock 197,790 20 925,384 - - 925,404
Options - - 1,092,399 - - 1,092,399
Comprehensive loss:
Net loss - - - - (16,198,585 ) 16,198,585 )
Other comprehensive income - - - 189,348 - 189,348
Balance - March 31, 2021 30,518,330 $ 3,052 $ 86,436,232 $ 826,234 $ (64,556,223 ) $ 22,709,295

	For The Three Months Ended March 31, 2022
					Additional		Accumulated Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Income			Deficit			Equity
Balance - January 1, 2022		34,035,925	$	3,404	$	107,184,137	$	817,440		$	(68,682,286	)	$	39,322,695
Shares issued for directors’ and professional fees		51,319		5		149,713		-			-			149,718
Stock based compensation:
Options		-		-		596,467		-			-			596,467
Comprehensive income (loss):
Net income		-		-		-		-			1,563,713			1,563,713
Other comprehensive loss		-		-		-		(728,081	)		-			(728,081	)
Balance - March 31, 2022		34,087,244	$	3,409	$	107,930,317	$	89,359		$	(67,118,573	)	$	40,904,512

	For The Three Months Ended March 31, 2021
					Additional			Accumulated Other					Total
	Common Stock				Paid-in			Comprehensive		Accumulated			Stockholders’
	Shares		Amount		Capital			Income		Deficit			Equity
Balance - January 1, 2021		26,171,225	$	2,617	$	78,005,004		$	636,886	$	(48,357,638	)	$	30,286,869
Shares issued upon conversion of KBL debt		467,123		47		1,941,078			-		-			1,941,125
Shares issued upon conversion of 180 debt		158,383		16		432,367			-		-			432,383
Shares issued in connection with the financing, net of financing costs ^(a)		2,564,000		256		10,730,814			-		-			10,731,070
Offering costs allocated to warrant liabilities ^(a)		-		-		604,118			-		-			604,118
Warrants issued in connection with private offering, reclassified to derivative liabilities		-		-		(7,294,836	)		-		-			(7,294,836	)
Shares issued upon exchange of common stock equivalents		959,809		96		(96	)		-		-			-
Stock based compensation:
Common stock		197,790		20		925,384			-		-			925,404
Options		-		-		1,092,399			-		-			1,092,399
Comprehensive income (loss):
Net loss		-		-		-			-		(16,198,585	)		(16,198,585	)
Other comprehensive income		-		-		-			189,348		-			189,348
Balance - March 31, 2021		30,518,330	$	3,052	$	86,436,232		$	826,234	$	(64,556,223	)	$	22,709,295

~~(a)~~

^(a)

Consists of ~~$11,700,000~~$11,666,200 of gross proceeds from the February 2021 PIPE offering, net of placement agent fees and other cash offering costs of $968,930. Of the $968,930 of offering costs, $364,812 was allocated to the common stock and $604,118 was allocated to the warrant liabilities and expensed immediately due to their liability ~~classification (see Note 6 – Derivative Liabilities – Warrants Issued in Private Offering).~~

classification.

For The Three Months Ended March 31, 2020
Accumulated
Additional Other Total
Common Stock Paid-in Comprehensive Accumulated Stockholders’
Shares Amount Capital Income (Loss) Deficit Equity
Balance - January 1, 2020 13,846,925 $ 1,384 $ 75,890,295 $ 152,803 $ (37,473,580 ) $ 38,570,902
Common stock issued for cash 12,292 1 72,499 - - 72,500
Shares issued upon exchange of common stock equivalents 410,170 41 (41 ) - - -
Beneficial conversion feature on convertible debt issued 329,300 - - 329,300
Comprehensive loss:
Net loss - - - - (2,381,260 ) (2,381,260 )
Other comprehensive loss - - - (1,844,205 ) - (1,844,205 )
Balance - March 31, 2020 14,269,387 $ 1,426 $ 76,292,053 $ (1,691,402 ) $ (39,854,840 ) $ 34,747,237

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

180 LIFE SCIENCES CORP. AND SUBSIDIARIES

~~(FORMERLY KBL MERGER CORP. IV)~~

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in US Dollars)

(unaudited)

For the Three Months Ended
March 31,
2021 2020
Cash Flows From Operating Activities
Net loss $ (16,198,585 ) $ (2,381,260 )
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation
Shares issued for services 925,404 -
Amortization of stock options 1,092,399 -
Depreciation and amortization 28,668 32,293
Gain on settlement of payables and accrued expenses (723,764 ) -
Loss on extinguishment of convertible note payable 9,737 886,736
Gain on exchange rate transactions - (5,334 )
Deferred tax benefit (5,403 ) (5,102 )
Change in fair value of derivative liabilities 13,229,308 -
Offering costs allocated to warrant liabilities 604,118 -
Change in fair value of accrued issuable equity 9,405 -
Changes in operating assets and liabilities:
Prepaid expenses and other current assets (342,045 ) 267,716
Due from related parties - (240,000 )
Accounts payable (3,966,486 ) 302,380
Accrued expenses (940,301 ) 733,565
Accrued issuable equity (52,500 ) -
Total adjustments 9,868,540 1,972,254
Net Cash Used In Operating Activities (6,330,045 ) (409,006 )

Cash Flows From Financing Activities
Shares issued for cash, net of issuance costs 10,731,070 -
Repayment of loans payable (368,532 ) -
Proceeds from sale of common stock - 72,500
Proceeds from loans payable - 3,500
Proceeds from loans payable - related parties - 174,864
Proceeds from convertible notes payable - related parties - 82,500
Cash Provided By Financing Activities 10,362,538 333,364

Effect of Exchange Rate Changes on Cash (88,175 ) 89,810

Net Increase In Cash 3,944,318 14,168
Cash - Beginning of Period 2,108,544 83,397
Cash - End of Period $ 6,052,862 $ 97,565

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest $ - $ -

Non-cash investing and financing activities:
Warrants issued in connection with the private offering $ 7,294,836
$
-
Conversion of convertible debt and accrued interest into common stock $ 1,340,185 $ -
Conversion of notes payable and accrued interest into common stock $ 432,383 $ -
Exchange of common stock equivalents for common stock $ 96 $ -
Accrued interest reclassified to convertible notes principal $ - $ 99,702
Accrued interest reclassified to convertible notes, related party principal $ - $ 8,129
Recognition of beneficial conversion feature as loss on extinguishment of convertible note principal $ - $ 339,200
Redemption premium and restructuring fee recognized as an increase in convertible note principal $ - $ 557,444
Proceeds from loans payable paid directly to vendors in satisfaction of accounts payable $ - $ 7,537
Proceeds from loans payable - related parties paid directly to vendors in satisfaction of accounts payable $ - $ 9,263
Increase in loans payable in satisfaction of certain accounts payable
$
-
$
3,000
Security deposit applied to accounts payable $ 7,030 $ -

	For the Three Months Ended March 31,
	2022			2021
Cash Flows From Operating Activities
Net Income (Loss)	$	1,563,713		$	(16,198,585	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation:
Shares issued for services		149,718			925,404
Amortization of stock options		596,467			1,092,399
Depreciation and amortization		26,462			28,668
Gain on settlement of payables and accrued expenses		-			(723,764	)
Loss on extinguishment of convertible note payable		-			9,737
Deferred tax benefit		(22,332	)		(5,403	)
Offering costs allocated to warrant liabilities		-			604,118
Change in fair value of derivative liabilities		(5,230,114	)		13,229,308
Change in fair value of accrued issuable equity		(17,520	)		9,405
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(325,057	)		(342,045	)
Accounts payable		454,982			(3,966,486	)
Accrued expenses		662,880			(969,030	)
Accrued expenses – related parties		19,270			28,729
Accrued issuable equity		48,600			(52,500	)
Total adjustments		(3,636,644	)		9,868,540
Net Cash Used In Operating Activities		(2,072,931	)		(6,330,045	)

Cash Flows From Financing Activities
Shares issued for cash, net of issuance costs		-			10,731,070
Repayment of loans payable		(515,419	)		(368,532	)
Net Cash (Used in) Provided By Financing Activities		(515,419	)		10,362,538

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

180 LIFE SCIENCES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

(Expressed in US Dollars)

(unaudited)


Effect of Exchange Rate Changes on Cash		32,757			(88,175	)

Net (Decrease) Increase In Cash		(2,555,593	)		3,944,318
Cash - Beginning of Period		8,224,508			2,108,544
Cash - End of Period	$	5,668,915		$	6,052,862

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for income taxes	$	-		$	-
Cash paid during the period for interest	$	2,853		$	-

Non-cash investing and financing activities:
Warrants issued in connection with the private offering	$	-		$	7,294,836
Conversion of convertible debt and accrued interest into common stock	$	-		$	1,340,185
Conversion of notes payable and accrued interest into common stock	$	-		$	432,383
Security deposit applied to accounts payable	$	-		$	7,030
Exchange of common stock equivalents for common stock	$	-		$	96

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

180 LIFE SCIENCES CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except share amounts)

(unaudited)

NOTE 1 - BUSINESS ORGANIZATION AND NATURE OF OPERATIONS

180 Life Sciences Corp., formerly known as KBL Merger Corp. IV (“180LS”, or together with its subsidiaries, the “Company”), was a blank check company organized under the laws of the State of Delaware on September 7, 2016. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.

180 Life Corp. (“180”, f/k/a 180 Life Sciences Corp. and CannBioRx Life Sciences Corp.) is a wholly-owned subsidiary of the Company and was incorporated in the State of Delaware on January 28, 2019. The Company is located in the United States (“U.S.”) and is a medical pharmaceutical company focused upon unmet medical needs in the areas of inflammatory diseases, fibrosis, and chronic pain by employing innovative research and, where appropriate, combination therapies, through 180’s three wholly-owned subsidiaries, 180 Therapeutics L.P. (“180 LP”), CannBioRex Pharmaceuticals Corp. (“CBR Pharma”), and Katexco Pharmaceuticals Corp. (“Katexco”). 180 LP, CBR Pharma and Katexco are together, the “180 Subsidiaries.” Katexco was incorporated on March 7, 2018 under the provisions of the British Corporation Act of British Columbia. Additionally, 180’s wholly-owned subsidiaries Katexco Callco, ULC, Katexco Purchaseco, ULC, CannBioRex Callco, ULC, and CannBioRex Purchaseco, ULC were formed in the Canadian Province of British Columbia on May 31, 2019 to facilitate the acquisition of Katexco, CBR Pharma and 180 LP.

~~180 LP~~ is a clinical stage biotechnology company focused on the ~~discovery and~~ development of ~~biologic therapies~~therapeutics for ~~the treatment of fibrosis. CBR Pharma is~~unmet medical needs in chronic pain, inflammation, fibrosis and other inflammatory diseases, where anti-TNF therapy will provide a ~~pharmaceutical~~clear benefit to patients, by employing innovative research, ~~company specializing in the clinical~~and, where appropriate, combination therapy. We have three product development of synthetic pharmaceutical grade cannabinoid compounds for the treatment of rheumatoid arthritis and related arthritic diseases. Katexco is a medical pharmaceutical company researching and developing orally available therapies harnessing nicotinic receptors to treat inflammatory diseases.platforms:

●

fibrosis and anti-tumor necrosis factor (“TNF”);

●

drugs which are derivatives of cannabidiol (“CBD”); and

●

alpha 7 nicotinic acetylcholine receptor (“α7nAChR”).

NOTE 2 - GOING CONCERN AND MANAGEMENT’S PLANS

The Company has not generated any revenues and has incurred significant losses since inception. ~~During~~For the three months ended March 31, ~~2021,~~2022, the Company ~~incurred a~~had net ~~loss~~income of ~~$16,198,585~~$1,563,713 and used ~~$6,330,045 of~~ cash in ~~operations.~~operations of $2,072,931. As of March 31, ~~2021,~~2022, the Company has an accumulated deficit of ~~$64,556,223~~$67,118,573 and a working capital deficit of ~~$25,324,166.~~$6,120,408. The Company expects to invest a significant amount of capital to fund research and development. As a result, the Company expects that its operating expenses will increase significantly, and consequently will require significant revenues to become profitable. Even if the Company does become profitable, it may not be able to sustain or increase profitability on a quarterly or annual basis. The Company cannot predict when, if ever, it will be profitable. There can be no assurance that the intellectual property of the Company, or other technologies it may acquire, will meet applicable regulatory standards, obtain required regulatory approvals, be capable of being produced in commercial quantities at reasonable costs, or be successfully marketed. The Company plans to undertake additional laboratory studies with respect to the intellectual property, and there can be no assurance that the results from such studies or trials will result in a commercially viable product or will not identify unwanted side effects.

A ~~continuation or~~ worsening of the levels of market disruption and volatility seen in the recent past as the result of the COVID-19 pandemic could have an adverse effect on the Company’s ability to access capital, on the Company’s business, results of operations and financial condition. Management continues to monitor the developments and has taken active measures to protect the health of the Company’s employees, their families and the Company’s communities. The ultimate impact will depend heavily on the duration of the COVID-19 pandemic and public health responses, including seasonal outbreaks, the efficacy of vaccines, the effect of mutations of the virus on such efficacy, the availability ~~thereof,~~of vaccines and boosters, and the willingness of individuals to receive such vaccines and boosters, as well as the substance and pace of macroeconomic recovery, all of which are uncertain and difficult to predict considering the continuing evolving landscape of the COVID-19 pandemic and the public health responses to contain it.

Management has evaluated, and will continue to evaluate, the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position or results of its operations, the specific impact is not readily determinable as of the date of these unaudited condensed consolidated financial ~~statements. To date, only the~~statements (the “condensed consolidated financial statements”). The follow-up time for patient data and the statistical analysis for the Phase 2b Dupuytren’s ~~disease~~Contracture clinical trial ~~has been~~was delayed as a result of COVID-19, but such follow-up isand statistical analyses are now ~~completed.~~complete. The Company announced the top-line data results from the Phase 2b trial on December 1, 2021 and the data was published on April 29, 2022 in a peer-reviewed journal. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

These condensed consolidated financial statements have been prepared under the assumption of a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. The Company’s ability to continue its operations is dependent upon obtaining new financing for its ongoing operations. Future financing options available to the Company include equity financings and loans and if the Company is unable to obtain such additional financing timely, or on favorable terms, the Company may have to curtail its development, marketing and promotional activities, which would have a material adverse effect on its business, financial condition and results of operations, and it could ultimately be forced to discontinue its operations and liquidate. These matters raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time, which is defined as within one year after the date that the condensed consolidated financial statements are issued. Realization of the Company’s assets may be substantially different from the carrying amounts presented in these condensed consolidated financial statements and the accompanying condensed consolidated financial statements do not include any adjustments that may become necessary, should the Company be unable to continue as a going concern.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies as set forth in the Company’s audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021 under Note 3 - Summary of Significant Accounting Policies, except as disclosed in this note.

Basis of Presentation ~~and Principles of Consolidation~~

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on a going concern basis in accordance with ~~U.S. GAAP~~accounting principles generally accepted in the United States of America (GAAP) for interim financial ~~information.~~reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and ~~disclosures~~footnotes required by ~~U.S.~~ GAAP for ~~annual consolidated~~complete financial statements. In the opinion of management, ~~the accompanying condensed consolidated financial statements include~~ all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the ~~unaudited condensed consolidated~~interim financial information have been included. When preparing financial statements in conformity with GAAP, the Company must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the ~~Company as of March 31, 2021, and~~financial statements. Actual results could differ from those estimates. Additionally, operating results for the three months ended March 31, ~~2021 and 2020. The results of operations for the three months ended March 31, 2021~~2022, are not necessarily indicative of the ~~operating~~ results that may be expected for any other interim period or for the ~~full~~fiscal year ending December 31, ~~2021 or any other period.~~2021. For ~~additional~~further information, ~~these condensed consolidated~~refer to the financial statements ~~should be read in conjunction with the Company’s audited consolidated financial statements of~~ and ~~notes thereto~~footnotes included in the Company’s ~~Annual Report~~annual financial statements for the fiscal year ended December 31, 2020, which are included in the Company’s annual report on Form 10-K filed with the ~~Securities and Exchange Commission (“SEC”)~~SEC on ~~July 9, 2021.~~

March 30, 2022.

~~On November 6, 2020 (the “Closing Date”),~~Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the ~~Company consummated a business combination (the “Business Combination”) pursuant~~reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to ~~which, among other things, a subsidiary of~~ the Company merged with and into 180, with 180 continuing as the surviving entity and a wholly-owned subsidiary of the Company (the “Merger”, and the Company prior to the Merger sometimes referred to herein as “KBL”). The Business Combination was accounted for as a reverse recapitalization, and 180 is deemed to be the accounting acquirer. Consequently, the assets and liabilities and the historical operations that are reflected in these condensed consolidated financial ~~statements prior to the Business Combination are those of 180 Life Corp.~~statements. The Company’s significant estimates and ~~its subsidiaries. The preferred stock, common stock, additional paid~~assumptions used in ~~capital and earnings per share amount in~~ these consolidated financial statements for the period prior to the Business Combination have been restated to reflect the recapitalization in accordance with the shares issued to the shareholders of the former parent, 180 Life Corp. as a result of the Business Combination.

~~The condensed consolidated~~ financial statements include, but are not limited to, the ~~historical accounts~~fair value of ~~180 Life Corp. as accounting acquirer along with its wholly owned subsidiaries,~~financial instruments warrants, options and ~~effective with~~equity shares; the ~~closing~~valuation of stock-based compensation; and the estimates and assumptions related to impairment analysis of goodwill and other intangible assets.

Certain of the ~~Business Combination, 180LS as~~Company’s estimates could be affected by external conditions, including those unique to the ~~accounting acquiree. All intercompany transactions~~Company and ~~balances~~general economic conditions. It is reasonably possible that these external factors could have ~~been eliminated in consolidation.~~an effect on the Company’s estimates and may cause actual results to differ from those estimates.

Foreign Currency Translation

The Company’s reporting currency is the United States dollar. The functional currency of certain subsidiaries is the Canadian Dollar (“CAD”) ~~or British Pound (“GBP”). Assets~~(0.7613 and ~~liabilities are translated based on the exchange rates at the balance sheet date (0.7941 and 0.7056 for the~~0.7874 CAD ~~1.3766 and 1.2373 for the GBP,~~to 1 US dollar each as of March 31, 2022 and December 31, 2021, respectively) or British Pound (“GBP”) (1.3133 and ~~2020,~~1.3510 GBP to 1 US dollar, each as of March 31, 2022 and December 31, 2021, respectively), while expense accounts are translated at the weighted average exchange rate for the period ~~(0.7896~~(0.7454 and ~~0.7455 for the~~0.7896 CAD to 1 US dollar and 1.3413 and 1.3784 ~~and 1.2805 for the~~ GBP to 1 US dollar for each of the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively). Equity accounts are translated at historical exchange rates. The resulting translation adjustments are recognized in stockholders’ equity as a component of accumulated other comprehensive income.

Comprehensive income (loss) is defined as the change in equity of an entity from all sources other than investments by owners or distributions to owners and includes foreign currency translation adjustments as described above. During the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recorded other comprehensive ~~gain~~ (loss) income of ~~$189,348~~($728,081) and ~~($1,844,205),~~$189,348, respectively, as a result of foreign currency translation adjustments.

Foreign currency gains and losses resulting from transactions denominated in foreign currencies, including intercompany transactions, are included in results of operations. The Company ~~recorded~~recognized ($142) and $11,148 ~~and $5,334~~ of foreign currency transaction (losses) gains for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. Such amounts have been classified within general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive ~~loss.~~income (loss).

Accrued Issuable Equity

The Company records accrued issuable equity when it is contractually obligated to issue shares and sometimes there are administrative delays in the issuance of such shares. Accrued issuable equity is recorded and carried at fair value with changes in its fair value recognized in the Company’s condensed consolidated statement of operations. Once the underlying shares of common stock are issued, the accrued issuable equity is reclassified as of the share issuance date at the then current fair market value of the common stock.

Net ~~Loss~~Income (Loss) Per Common Share

Basic net ~~loss~~income (loss) per common share is computed by dividing net ~~loss attributable to common shareholders~~income (loss) by the weighted average number of common shares outstanding during the period. Diluted net ~~loss~~income (loss) per common share is computed by dividing net ~~loss attributable to common shareholders~~income (loss) by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if the common share equivalents had been issued (computed using the treasury stock or if converted method), if dilutive.

The following table details the net income (loss) per share calculation, reconciles between basic and diluted weighted average shares outstanding, and presents the potentially dilutive shares that are excluded from the calculation of the weighted average diluted common shares outstanding, because their inclusion would have been anti-dilutive:

	For the Three Months Ended March 31,
	2022		2021
Numerator:
Net income (loss)	$	1,563,713	$	(16,198,585	)

Weighted average shares outstanding (denominator for basic earnings per share)		34,059,927		27,953,302

Effects of dilutive securities:
Assumed exercise of stock options, treasury stock method		8,834		-
Assumed exercise of warrants, treasury stock method		-		-
Dilutive potential common shares		8,834		-

Weighted average shares and assumed potential common shares (denominator for diluted earnings per share, treasury method)		34,068,762		27,953,302

Basic earnings per share	$	0.05	$	(0.58	)
Diluted earnings per share	$	0.05	$	(0.58	)

The following common share equivalents are excluded from the calculation of weighted average common shares outstanding, because their inclusion would have been anti-dilutive:

March 31,
2021 2020
Options 1,630,000 -
Warrants 8,628,908 -
Convertible debt ^(a) 100,361 888,187
Total 10,359,269 888,187

	For the Three Months Ended March 31,
	2022		2021
Options		2,691,000		1,630,000
Warrants		11,153,908		8,628,908
Convertible debt ^(a)		-		100,361
Total potentially dilutive shares		13,844,908		10,359,269

The Company has computed the fair value of warrants and options ~~convertible notes and convertible preferred stock issued~~ using ~~the Monte-Carlo and~~a Black-Scholes ~~option pricing models.~~model. The expected term used for warrants ~~convertible notes and convertible preferred stock are~~is the contractual life and the expected term used for options issued is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” option grants. The Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

The Company has evaluated events that have occurred after the balance sheet date but before these condensed consolidated financial statements were issued. Based upon that evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements, except as disclosed in Note ~~12,~~11 - Subsequent Events.

~~Certain prior year balances~~Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have ~~been reclassified in order to conform to current year presentation. These reclassifications have no~~a material effect on ~~previously reported results of operations or loss per share.~~the Company’s unaudited condensed consolidated financial statements.

Accrued expenses consist of the following as of March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, accrued expenses - related parties were ~~$512,992~~$37,640 and ~~$454,951,~~$18,370, respectively. ~~As of March 31, 2021, accrued expenses – related parties consisted primarily of professional fees and services.~~ See Note ~~11 –~~10 - Related Parties for details.

The Company entered into five separate agreements with consultants who are members of the Scientific Advisory Board (“SAB”) and will provide for services and duties which will be requested by the Company’s Chief Scientific Officer from time to time. The agreements, which have a term of two years, provide for the issuance of 2,400 share of common stock to each consultant annually, with each grant vesting monthly over twenty-four months. As of March 31, 2022, these shares have yet to be issued. The shares were recorded as a liability on the balance sheet at a market price of $4.05 per share for an aggregate value of $48,600; upon assessment of fair value of $2.59 per share at March 31, 2022, the Company recorded a change in fair market value of $17,520. A summary of the accrued issuable equity activity during the three months ended March 31, ~~2021~~2022 is presented below:

~~There was no accrued issuable equity activity during the three months ended March 31, 2020.~~

The following table sets forth a summary of the changes in the fair value of Level 3 derivative liabilities (except the Public SPAC warrants as defined below, which are Level 1 derivative liabilities) that are measured at fair value on a recurring basis:

The fair value of the derivative liabilities as of March 31, 2022 and December 31, 2021 ~~was~~were estimated using the ~~Monte-Carlo and~~ Black Scholes option ~~price models,~~pricing model, with the following assumptions used:

Between January 15, 2021 and February 5, 2021, the fair value of derivative liabilities extinguished in connection with the conversion of debt were estimated using the Monte-Carlo and Black Scholes option price models with the following assumptions used:

Participants in KBL’s initial public offering received an aggregate of 11,500,000 warrants (“Public SPAC Warrants”). Each Public SPAC Warrant entitles the holder to purchase one-half of one share of the Company’s common stock at an exercise price of $5.75 per half share ($11.50 per whole share) until November 6, 2025, subject to adjustment. No fractional shares will be issued upon exercise of the Public SPAC Warrants. Management has determined that the Public SPAC Warrants contain a tender offer provision which could result in the Public SPAC Warrants settling for the tender offer consideration (including potentially cash) in a transaction that didn’t result in a change-in-control. This feature results in the Public SPAC Warrants being precluded from equity classification. Accordingly, the Public SPAC Warrants are classified as liabilities measured at fair value, with changes in fair value each period reported in earnings. The Public SPAC Warrants were revalued on March 31, 2022 at $6,196,200, which resulted in a $1,852,650 decrease in the fair value of the derivative liabilities during the three months ended March 31, 2022.

Participants in KBL’s initial private placement in connection with its initial public offering received an aggregate of 502,500 warrants (“Private SPAC Warrants”). Each Private SPAC Warrant entitles the holder to purchase one-half of one share of the Company’s common stock at an exercise price of $5.75 per half share ($11.50 per whole share) until November 6, 2025, subject to adjustment. No fractional shares will be issued upon exercise of the Private SPAC Warrants. Management has determined that the Private SPAC Warrants contain a tender offer provision which could result in the Private SPAC Warrants settling for the tender offer consideration (including potentially cash) in a transaction that didn’t result in a change-in-control. This feature (amongst others) results in the Private SPAC Warrants being precluded from equity classification. Accordingly, the Private SPAC Warrants are classified as liabilities measured at fair value, with changes in fair value each period reported in earnings. The Private SPAC Warrants were revalued on March 31, 2022 at $216,075, which resulted in a $251,250 decrease in the fair value of the derivative liabilities during the three months ended March 31, 2022.

On February 23, 2021, the Company issued five-year warrants (the “PIPE Warrants”) to purchase 2,564,000 shares of common stock at an exercise price of $5.00 per share in connection with a private placement offering. The PIPE Warrants did not meet the requirements for equity classification due to the existence of a tender offer provision that could potentially result in cash settlement of the PIPE Warrants that didn’t meet the limited exception in the case of a change-in-control. Accordingly, the PIPE Warrants are liability-classified and the Company recorded the $7,294,836 fair value of the PIPE Warrants, which was determined using the Black-Scholes option pricing model, as derivative liabilities. The PIPE Warrants were revalued on March 31, 2022 at $3,471,500, which resulted in a $3,044,800 decrease in the fair value of the derivative liabilities during the three months ended March 31, 2022.

In connection with the ~~closing~~transactions contemplated by the Company’s Business Combination Agreement (as amended, the “Business Combination Agreement”), dated as of ~~the Business Combination~~July 25, 2019 (the “Business Combination”), on November 6, 2020, the Company became obligated to assume five-year warrants for the purchase of 63,658 shares of the Company’s common stock at an exercise price of $5.28 per share (the “AGP Warrant Liability”) that had originally been issued by KBL to an investment banking firm in connection with a prior private placement.

On March 12, 2021, the Company issued a warrant to ~~AGP (the~~Alliance Global Partners (“AGP” and the “AGP Warrant”) to purchase up to an aggregate of 63,658 shares of the Company’s common stock at a purchase price of $5.28 per share, subject to adjustment, in full satisfaction of the AGP Warrant Liability. The ~~purchase~~exercise of ~~shares pursuant to~~ the AGP Warrant is limited at any given time ~~not~~ to ~~exceed a~~prevent AGP from exceeding beneficial ownership of 4.99% of the then total number of issued and outstanding shares of the Company’s common ~~stock.~~stock upon such exercise. The ~~AGP Warrant~~warrant is exercisable at any time between May 2, 2021 and May 2, 2025. The ~~newly issued~~ AGP Warrant did not meet the requirements for equity classification due to the existence of a tender offer provision that could potentially result in cash settlement of the AGP Warrant that did not meet the limited exception in the case of a change-in-control. Accordingly, the AGP Warrant will continue to be liability-classified. The AGP Warrant was revalued on March 31, ~~2021~~2022 at ~~$403,332~~$86,447, which resulted in a ~~$237,436 increase~~$57,884 decrease in the fair value of the derivative ~~liabilities.~~liabilities during the three months ended March 31, 2022.

~~On February 23,~~In connection with that certain Mutual Release and Settlement Agreement dated July 31, 2021 (agreed to on July 29, 2021) between the Company and Alpha Capital Anstal (“Alpha” and the “Alpha Settlement Agreement”), the Company issued ~~five-year warrants (the “PIPE Warrants”) to~~a three-year warrant for the purchase ~~2,564,000~~of 25,000 shares of the Company’s common stock at an exercise price of ~~$5.00~~$7.07 per share ~~in connection with~~(the “Alpha Warrant Liability” and the ~~private offering (see Note 10 – Stockholders’ Equity – Common Stock)~~“Alpha Warrant”). The ~~PIPE Warrants~~exercise of shares of the Alpha Warrant is limited at any given time to prevent Alpha from exceeding a beneficial ownership of 4.99% of the then total number of issued and outstanding shares of the Company’s common stock upon such exercise. The warrant is exercisable until August 2, 2024. The Alpha Warrant did not meet the requirements for equity classification due to the existence of a tender offer provision that could potentially result in cash settlement of the ~~PIPE Warrants~~Alpha Warrant that ~~didn’t~~did not meet the limited exception in the case of a change-in-control. Accordingly, the Alpha Warrant is liability-classified and the Company ~~reclassified~~recorded the ~~$7,294,836~~$95,677 fair value of the ~~PIPE Warrants,~~Alpha Warrant, which was determined using the Black-Scholes option pricing model, ~~from additional paid-in-capital to~~as a derivative ~~liabilities.~~liability. The ~~PIPE Warrants were~~Alpha Warrant was revalued on March 31, ~~2021~~2022 at ~~$11,876,704~~$20,031, which resulted in a ~~$4,581,868 change~~$23,530 decrease in the fair value of the derivative ~~liabilities.~~liabilities during the three months ended March 31, 2022. The following assumptions were used to value the ~~PIPE Warrants~~Alpha Warrant at issuance:

A summary of the warrant activity (including the August 2021 PIPE Warrants, which are equity-classified) during the three months ended March 31, 2022 is presented below:

A summary of outstanding and exercisable warrants as of March 31, 2022 is presented below:

The ~~below~~following table summarizes the activity of loans payable during the three months ended March 31, ~~2021:~~2022:

~~On March 3, 2021, the Company repaid the Kingsbrook loans payable in cash for an aggregate of $166,313, which included the principal of $150,000 and accrued interest of $16,313.~~

During the three months ended March 31, ~~2021,~~2022, the Company paid an aggregate of ~~$218,532~~$481,321, $3,131 and $30,967 in partial satisfaction of ~~other loans payable.~~the First Assurance Funding loan, the Bounce Back Loan Scheme and the Paycheck Protection Program loan, respectively.

The below table summarizes the ~~activity~~activities of loans payable -– related parties during the three months ended March 31, ~~2021:~~

On February 10, 2021, the Company entered into amended loan agreements to modify the terms of certain loan agreements in the aggregate principal amount of $432,699, previously entered into with Sir Marc Feldmann and Dr. Lawrence Steinman, the Co-Executive Chairmen of the Board of Directors. The loan agreements were extended and modified to be paid back at the Company’s discretion, either by 1) repayment in cash, or 2) by converting the outstanding amounts into shares of common stock at the same price per share as the next financing transaction. Subsequently, on February 25, 2021, and effective as of the date of the original February 10, 2021 amendments, the Company determined that such amendments were entered into in error and each of Sir Feldmann and Dr. Steinman rescinded such February 10, 2021 amendments. See Note 12 – Subsequent Events.

For the three months ended March 31, 2022, the Company recognized interest expense and interest income — related parties associated with loans of $7,415 and $4,562, respectively. During the three months ended March 31, 2021, the Company recognized interest expense and interest expense — related parties associated with ~~the~~ loans of $8,257 and $10,103, respectively. ~~During the three months ended~~

As of March 31, ~~2020,~~2022, the Company ~~recognized~~had accrued interest ~~expense~~ and accrued interest ~~expense~~ — related parties associated with ~~the~~ loans of ~~$14,885~~$27,086 and ~~$6,638,~~$12,818, respectively.

As of ~~March~~December 31, 2021, the Company had accrued interest and accrued interest — related parties associated with ~~the~~ loans of ~~$16,946~~$24,212 and ~~$47,694, respectively. As of December 31, 2020, the Company had accrued interest and accrued interest — related parties associated with the loans of $24,824 and $37,539,~~$812, respectively. See Note 1110 — Related Parties for additional details.

During the three months ended March 31, 2021, certain noteholders elected to convert certain convertible notes payable with an aggregate principal balance of $1,234,334 and an aggregate accrued interest balance of $105,850 into an aggregate of 467,123 shares of the Company’s common stock at conversion prices ranging from $2.45-$3.29 per share. The shares issued upon the conversion of the convertible promissory notes had a fair value at issuance of $1,941,125. In connection with the conversion of convertible notes payable, derivative liabilities in the amount of $591,203 related to the bifurcated embedded conversion feature of such notes were extinguished. The Company recorded a loss on extinguishment of convertible notes payable of $9,737 during the three months ended March 31, 2021 as a result of the conversion of debt and the extinguishment of the related derivative liabilities.

During the three months ended March 31, 2021, certain noteholders elected to convert bridge notes with an aggregate principal balance of $365,750 and an aggregate accrued interest balance of $66,633 into an aggregate of 158,383 shares of the Company’s common stock at a conversion price of $2.73 per share.

On February 3, 2021, there was an event of default in connection with the Alpha Capital convertible note (the “Alpha Capital Note”), which resulted in an increase in the settlement value of the Alpha Capital Note. The additional liability is accounted for as a bifurcated derivative. See Note 6, Derivative Liabilities, and Note 12, Subsequent Events.

During the three months ended March 31, 2021 and 2020, the Company recorded interest expense of $104,676 and $138,031, respectively, related to convertible notes payable, and recorded interest expense - related parties of $3,846 and $13,210, respectively, related to convertible notes payable - related parties.

As of March 31, 2021 and December 31, 2020, accrued interest related to convertible notes payable was $85,087 and $182,181, respectively, and accrued interest expense - related parties related to convertible notes payable - related parties was $90,845 and $124,833, which is included in accrued expenses and accrued expenses - related parties, respectively, on the accompanying condensed consolidated balance sheets.

The Company records liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company has no liabilities recorded for loss contingencies as of December 31, 2021. See Legal Matters – Action Against Former Executive of KBL below for information related to a March 31, ~~2021 or December 31, 2020.~~2022 accrual.

~~The Company may initiate legal action against former executives of KBL for non-disclosure in~~On September 1, 2021, the KBL original June 30, 2020 and September 30, 2020 Quarterly Reports on Form 10-Q of the matters disclosed in Note 14 (as restated) of the September 30, 2020 financial statements in the amended Quarterly Report on Form 10-Q filed on February 5, 2021. If such legal action is initiated, the Company would seek damages to cover, at a minimum, the unrecorded and contingent liability obligations and legal fees. There can be no assurance that, if such legal action is initiated, the Company will be successful in its legal actions.

~~The Company has~~ initiated legal action in the Chancery Court of Delaware against ~~Tyche Capital LLC~~Dr. Marlene Krauss (“~~Tyche”~~Dr. Krauss”) ~~for breaching its obligations under a term sheet entered into between KBL,~~and two of her affiliated companies, KBL IV Sponsor, LLC ~~180~~ and ~~Tyche on April 10, 2019 and~~KBL Healthcare Management, Inc. (collectively, the “KBL Affiliates”) for, breaching its obligations under the Guarantee and Commitment Agreement entered into between KBL and Tyche on July 25, 2019. The Company is seeking damages to bring the net tangible asset balance of KBL as of November 6, 2020, the closing dateamong other things, engaging in monetary transfers of the ~~Business Combination,~~Company’s assets, non-disclosure of financial liabilities in the Company’s Consolidated Financial Statements, issuing shares of stock without authorization; and allowing stockholder redemptions to ~~$5,000,001.~~take place. The Company’s complaint alleges causes of action against Dr. Krauss and/or the KBL Affiliates for breach of fiduciary duties, ultra vires acts, unjust enrichment, negligence and declaratory relief, and seeks compensatory damages in excess of $11,286,570, together with interest, attorneys’ fees and costs. There can be no assurance that the Company will be successful in its legal actions. As of December 31, 2021, the Company recorded a legal accrual of $250,000 to cover the legal expenses of the former executives of KBL.

On October 5, 2021, Dr. Krauss and the KBL Affiliates filed an Answer, Counterclaims and Third-Party Complaint (the “Krauss Counterclaims”) against the Company and twelve individuals who are, or were, directors and/or officers of the Company, i.e., Marc Feldmann, Lawrence Steinman, James N. Woody, Teresa DeLuca, Frank Knuettel II, Pamela Marrone, Lawrence Gold, Donald A. McGovern, Jr., Russell T. Ray, Richard W. Barker, Shoshana Shendelman and Ozan Pamir (collectively, the “Third-Party Defendants”). On October 27, 2021, the Company and Ozan Pamir filed an Answer to the Krauss Counterclaims, and all of the other Third-Party Defendants filed a Motion to Dismiss as to the Third-Party Complaint.

On January 28, 2022, in lieu of filing an opposition to the Motion to Dismiss, Dr. Krauss and the KBL Affiliates filed a Motion for leave to file amended counterclaims and third-party complaint, and to dismiss six of the current and former directors previously named, i.e., to dismiss Teresa DeLuca, Frank Knuettel II, Pamela Marrone, Russell T. Ray, Richard W. Barker and Shoshana Shendelman. The Motion was granted by stipulation and, on February 24, 2022, Dr. Krauss filed an amended Answer, Counterclaims and Third-Party Complaint (the “Amended Counterclaims”). In essence, the Amended Counterclaims allege (a) that the Company and the remaining Third-Party Defendants breached fiduciary duties to Dr. Krauss by making alleged misstatements against Dr. Krauss in SEC filings and failing to register her shares in the Company so that they could be traded, and (b) the Company breached contracts between the Company and Dr. Krauss for registration of such shares, and also failed to pay to Dr. Krauss the amounts alleged to be owing under a promissory note in the principal amount of $371,178, plus an additional $300,000 under Dr. Krauss’s resignation agreement. The Amended Counterclaims seek unspecified amounts of monetary damages, declaratory relief, equitable and injunctive relief, and attorney’s fees and costs.

On March 16, 2022, Donald A. McGovern, Jr. and Lawrence Gold filed a Motion to Dismiss the Amended Counterclaims against them, and the Company and the remaining Third-Party Defendants filed an Answer to the Amended Counterclaims denying the same. The Company and the Third-Party Defendants intend to continue to vigorously defend against all of the Amended Counterclaims, however, there can be no assurance that they will be successful in the legal defense of such Amended Counterclaims. In April 2022, Donald A. McGovern, Jr. and Lawrence Gold were removed from the lawsuit as parties. Discovery has not yet commenced in the case.

On August 19, 2021, Dr. Krauss initiated legal action in the Chancery Court of Delaware against the Company. The original Complaint sought expedited relief and made the following two claims: (1) it alleged that the Company is obligated to advance expenses including, attorney’s fees, to Dr. Krauss for the costs of defending against the SEC and certain Subpoenas served by the SEC on Dr. Krauss; and (2) it alleged that the Company is also required to reimburse Dr. Krauss for the costs of bringing this lawsuit against the Company. On or about September 3, 2021, Dr. Krauss filed an Amended and Supplemental Complaint (the “Amended Complaint”) in this action, which added the further claims that Dr. Krauss is also allegedly entitled to advancement by the Company of her expenses, including attorney’s fees, for the costs of defending against the Third-Party Complaint in the Tyche action referenced below, and the costs of defending against the Company’s own Complaint against Dr. Krauss as described above. On or about September 23, 2021, the Company filed its Answer to the Amended Complaint in which the Company denied each of Dr. Krauss’ claims and further raised numerous affirmative defenses with respect thereto.

On November 15, 2021, Dr. Krauss filed a Motion for Summary Adjudication as to certain of the issues in the case, which was opposed by the Company. A hearing on such Motion was held on December 7, 2021, and, on March 7, 2022, the Court issued a decision in the matter denying the Motion for Summary Adjudication in part and granting it in part. The Court then issued an Order implementing such a decision on March 29, 2022. The parties are now engaging in proceedings set forth in that implementing Order. The Court granted Dr. Krauss’s request for advancement of certain legal fees and the Company was required to pay a portion of those fees while it objects to the remaining portion of the fees. These legal fees have been accrued on the Company’s balance sheet as of March 31, 2022 (see Note 11 – Subsequent Events for more details). Notwithstanding any requirement by the Court for the Company to advance attorneys’ fees to Dr. Krauss, no adjudication has yet been made as to whether Dr. Krauss will ultimately be entitled to permanently retain such advancements. The Company is seeking payment for a substantial portion of such amounts from its director and officers’ insurance policy, of which no assurance can be provided that the directors and officers insurance policy will cover such amounts.

The Company commenced and filed an action against defendant Tyche Capital LLC (“Tyche”) in the Supreme Court of New York, in the County of New York, on April 15, 2021. In its Complaint, the Company alleged claims against Tyche arising out of Tyche’s breach of its written contractual obligations to the Company as set forth in a “Guarantee And Commitment Agreement” dated July 25, 2019, and a “Term Sheet For KBL Business Combination With CannBioRex” dated April 10, 2019 (collectively, the “Subject Guarantee”). The Company alleges in its Complaint that, notwithstanding demand having been made on Tyche to perform its obligations under the Subject Guarantee, Tyche has failed and refused to do so, and is currently in debt to the Company for such failure in the amount of $6,776,686, together with interest accruing thereon at the rate set forth in the Subject Guarantee.

On or about May 17, 2021, Tyche ~~filed a counterclaim~~ responded to the Company’s Complaint by filing an Answer and Counterclaims against the Company alleging that it was the Company, rather than Tyche, that had breached the ~~Guarantee and Commitment Agreement entered into between KBL and Tyche on July 25, 2019~~.Subject Guarantee. Tyche also filed a ~~complaint~~Third-Party Complaint against six third-party defendants, including three members of the Company’s management, Sir Marc ~~Feldman,~~Feldmann, Dr. James Woody, and Ozan Pamir (collectively, the “Individual Company Defendants”), claiming that they allegedly breached fiduciary duties to Tyche with regards to the ~~Guarantee and Commitment Agreement. The~~Subject Guarantee. In that regard, on June 25, 2021, each of the Individual Company ~~denies~~Defendants filed a Motion to Dismiss Tyche’s Third-Party Complaint against them.

On November 23, 2021, the Court granted the Company’s request to issue an Order of attachment against all of ~~such claims, as do the three individual members~~Tyche’s shares of the Company’s ~~management,~~stock that had been held in escrow. In so doing, the Court found that the Company had demonstrated a likelihood of success on the merits of the case based on the facts alleged in the Company’s Complaint.

On February 18, 2022, Tyche filed an Amended Answer, Counterclaims and ~~will~~Third-Party Complaint. On March 22, 2022, the Company and each of the Individual Company Defendants filed a Motion to Dismiss all of Tyche’s claims. A hearing on such Motion to Dismiss is scheduled by the Court for August 17, 2022. The Company and the Individual Company Defendants intend to continue to vigorously defend against all of Tyche’s claims,. however, there can be no assurance that they will be successful in the legal defense of such claims. Written discovery proceedings have commenced among the parties.

~~Cantor Fitzgerald~~Action Against Ronald Bauer & ~~Co. Breach of Contract~~Samantha Bauer

On February 27, 2018, KBL entered into a service contract with Cantor Fitzgerald & Co. (“CF&CO”) whereby CF&CO would receive a transaction fee in cash arising out of any contemplated business combination by the Company. On July 25, 2019, KBL entered into the Business Combination Agreement whereby CF&CO became entitled to a transaction fee of $1,500,000 (the “Transaction Fee”). On November 6, 2020, theThe Company and ~~CF&CO entered into a settlement agreement (the “Settlement Agreement”) whereby CF&CO agreed to release~~two of its wholly-owned subsidiaries, Katexco Pharmaceuticals Corp. and CannBioRex Pharmaceuticals Corp. (collectively, the ~~Company from~~“Company Plaintiffs”), initiated legal action against Ronald Bauer and Samantha Bauer, as well as two of their companies, Theseus Capital Ltd. and Astatine Capital Ltd. (collectively, the obligation to pay the Transaction Fee in cash and to instead accept 150,000 fully paid shares of the Company’s common stock, but only if the Company would take all necessary action to permit the sale of the Shares by filing with the Securities and Exchange Commission (the “SEC”“Bauer Defendants”) a shelf registration statement within 30 days following the closing of the merger. On November 6, 2020, the Company closed the merger and in breach of the Settlement Agreement, did not file a registration statement with the SEC within 30 days of the November 6, 2020 closing, due to the need to restate the previously filed KBL financial statements.

~~In April 2021, Cantor Fitzgerald & Co. (“Cantor”) filed a complaint against the Company~~, in the Supreme Court of ~~the State of New York, County of New York (Index No. 652709/2021), alleging causes of action~~British Columbia on February 25, 2022. The Company Plaintiffs are seeking damages against the ~~Company relating to the claimed breach of a fee agreement between the parties from February 2018 which required the Company to pay Cantor a transaction fee in cash~~Bauer Defendants for misappropriated funds and stock shares, unauthorized stock sales, and improper travel expenses, in the ~~event~~combined sum of at least $4,395,000 CAD [$3,460,584 USD] plus the ~~Company completed a business transaction, as well as the alleged breach~~additional sum of ~~a settlement agreement subsequently entered into with Cantor as described above. The complaint seeks $1,500,000 in damages, pre-and-post judgment interest and attorneys’ fees.~~

~~On April 4, 2021, the Company received a court summons in connection with the alleged breach~~$2,721,036 USD. Service of the settlement agreement pursuant to which Cantor is currently pursuing litigation. The Company plans to file a response with the court pursuant to an extension that was granted to file an answer. The Company believes itprocess has meritorious defenses to the allegations, and the Company intends to continue to vigorously defend against the litigation. Further, the Company believes that it has counterclaims against Cantor and plans to plead such counterclaims in defense of claims raised. The outcome of the matter is currently unknown. The Company is in discussions with Cantor regarding the registration of the 150,000 shares that have been ~~issued to Cantor and hopes to resolve this dispute by registering the shares that have been issued to Cantor, of which there is no assurance.~~

~~The holder of the Alpha Convertible Note has alleged that the default event described in Note 9, Convertible Notes Payable, also applies to $300,000 of principal that was converted~~effected on ~~February 4, 2021, which would result in an additional increase to the settlement amount of the Alpha Convertible Note. The Company is in discussions with the noteholder regarding this dispute.~~

The Company leased office space in London, UK through an operating lease agreement, which was terminated pursuant to the terms of the lease in August 2020. Total operating lease expenses were $0 and $17,397 for each of the ~~three months ended March 31, 2021~~Bauer Defendants, and ~~2020 and is recorded in general and administrative expenses~~the Bauer Defendants filed an answer on ~~the condensed consolidated statements of operations.~~

On February 22, 2021, the Company entered into a consultancy agreement (as amended, the “Consulting Agreement”) with a related party (the “Consultant”). The Consulting Agreement is effective December 1, 2020.

Pursuant to the Consulting Agreement, the Company agreed to pay the Consultant 15,000 British Pounds (GBP) per month (approximately $20,800) during the term of the agreement, increasing to 23,000 GBP per month (approximately $32,000) on the date (a) of publication of the data from the phase 2b clinical trial for Dupuytren’s disease (RIDD) and (b) the dateMay 6, 2022. There can be no assurance that the Company ~~has successfully raised over $15 million in capital. The Company also agreed to pay the Consultant the following bonus amounts:~~

The Consulting Agreement has an initial term of three years, and renews thereafter for additional three-year terms, until terminated as provided in the agreement. The Consulting Agreement can be terminated by either party with 12 months prior written notice (provided the Company’s right to terminate the agreement may only be exercised if the Consultant fails to perform his required duties under the Consulting Agreement), or by the Company immediately under certain conditions specified in the Consulting Agreement if (a) the Consultant fails or neglects efficiently and diligently to perform the services required thereunder or is guilty of any breach of its or his obligations under the agreement (including any consent granted under it); (b) the Consultant is guilty of any fraud or dishonesty or acts in a manner (whether in the performance of the services or otherwise) which, in the reasonable opinion of the Company, has brought or is likely to bring the Consultant, the Company or any of its affiliates into disrepute or is convicted of an arrestable offence (other than a road traffic offence for which a non-custodial penalty is imposed); or (c) the Consultant becomes bankrupt or makes any arrangement or composition with his creditors. If the Consulting Agreement is terminated by the Company for any reason other than cause, the Consultant is entitled to a lump sum payment of 12 months of his fee as at the date of termination.

Effective March 30, 2021, in satisfaction of amounts owed to the Consultant for 50% of Bonus 2, the Company issued 100,699 shares of the Company’s common stock to the Consultant. Additionally, on April 15, 2021, in satisfaction of amounts owed to the Consultant for an additional 19% of Bonus 2, the Company issued 37,715 of the Company’s common stock to the Consultant. The remainder of Bonus 2Plaintiffs will be ~~due to the Consultant at such time as the Company has raised $15 million, which obligation was waived by the Company~~successful in ~~connection with the issuance of the shares described above.~~this legal action.

On February 25, 2021, the Company entered into an amended agreement with the Chief Executive Officer of the Company (the “CEO”) (the “A&R Agreement”), dated February 24, 2021, and effective November 6, 2020, which replaced the CEO’s prior agreement with the Company. Pursuant to the A&R Agreement, the CEO agreed to serve as an officer of the Company for a term of three years, which is automatically renewable thereafter for additional one-year periods, unless either party provides the other at least 90 days written notice of their intent to not renew the agreement. The CEO’s annual base salary under the agreement will initially be $450,000 per year, with automatic increases of 5% per annum.

The CEO is also eligible to receive an annual bonus, with a target bonus equal to 45% of his then-current base salary, based upon the Company’s achievement of performance and management objectives as set and approved by the Board of Directors and/or Compensation Committee in consultation with the CEO. At the CEO’s option, the annual bonus can be paid in cash or the equivalent value of the Company’s common stock or a combination. The Board of Directors, as recommended by the Compensation Committee, may also award the CEO bonuses from time to time (in stock, options, cash, or other forms of consideration) in its discretion. Under the A&R Agreement, the CEO is also eligible to participate in any stock option plans and receive other equity awards, as determined by the Board of Directors from time to time.

The A&R agreement can be terminated any time by the Company for cause (subject to the cure provisions of the agreement), or without cause (with 60 days prior written notice to the CEO), by the CEO for good reason (as described in the agreement, and subject to the cure provisions of the agreement), or by the CEO without good reason. The agreement also expires automatically at the end of the initial term or any renewal term if either party provides notice of non-renewal as discussed above.

In the event the A&R Agreement is terminated without cause by the Company, or by the CEO for good reason, the Company agreed to pay him the lesser of 18 months of salary or the remaining term of the agreement, the payment of any accrued bonus from the prior year, his pro rata portion of any current year’s bonus and health insurance premiums for the same period that he is to receive severance payments (as discussed above).

The A&R Agreement contains standard and customary invention assignment, indemnification, confidentiality and non-solicitation provisions, which remain in effect for a period of 24 months following the termination of his agreement.

On February 25, 2021, the Company entered into an Employment Agreement (the “CFO Agreement”) dated February 24, 2021, and effective November 6, 2020, with the Company’s Interim Chief Financial Officer. Pursuant to the agreement, the CFO agreed to serve as the Interim Chief Financial Officer (“CFO”) of the Company for an initial salary of $300,000 per year, subject to increase to a mutually determined amount upon the closing of a new financing as well as annual increases.

Under the agreement, the CFO is eligible to receive an annual bonus, in a targeted amount of 30% of his then salary, based upon the Company’s achievement of performance and management objectives as set and approved by the CEO, in consultation with the CFO. The bonus amount is subject to adjustment. The Board of Directors, as recommended by the Compensation Committee of the Company (and/or the Compensation Committee), may also award the CFO bonuses from time to time (in stock, options, cash, or other forms of consideration) in its discretion. Under the CFO Agreement, the CFO is also eligible to participate in any stock option plans and receive other equity awards, as determined by the Board of Directors from time to time. As of March 31, 2021, the Company recorded $15,750 of accrued bonus payable to the CFO.

The agreement can be terminated any time by the Company with or without cause with 60 days prior written notice and may be terminated by the CFO at any time with 60 days prior written notice. The agreement may also be terminated by the Company with six days’ notice in the event the agreement is terminated for cause under certain circumstances. Upon the termination of the CFO’s agreement by the Company without cause or by the CFO for good reason, the Company agreed to pay him three months of severance pay.

The agreement contains standard and customary invention assignment, indemnification, confidentiality and non-solicitation provisions, which remain in effect for a period of 24 months following the termination of his agreement.

On February 19, 2021, the Company entered into a Securities Purchase Agreement with certain purchasers (the “Purchasers”), pursuant to which the Company agreed to sell an aggregate of 2,564,000 shares of common stock (the “Shares”) and warrants to purchase up to an aggregate of 2,564,000 shares of common stock (the “PIPE Warrants”), at a combined purchase price of $4.55 per share and PIPE Warrant (the “Private Offering”). The Private Offering closed on February 23, 2021. Aggregate gross proceeds from the Private Offering were approximately $11.7 million. Net proceeds to the Company from the Private Offering, after deducting the placement agent fees and estimated offering expenses payable by the Company, were $10.7 million. The placement agent fees and offering expenses were accounted for as a reduction of additional paid in capital.

The PIPE Warrants have an exercise price equal to $5.00 per share, are immediately exercisable and are subject to customary anti-dilution adjustments for stock splits or dividends or other similar transactions. However, the exercise price of the PIPE Warrants will not be subject to adjustment as a result of subsequent equity issuances at effective prices lower than the then-current exercise price. The PIPE Warrants are exercisable for 5 years following the closing date. The PIPE Warrants are subject to a provision prohibiting the exercise of such Warrants to the extent that, after giving effect to such exercise, the holder of such Warrant (together with the holder’s affiliates, and any other persons acting as a group together with the holder or any of the holder’s affiliates), would beneficially own in excess of 4.99% of the Company’s outstanding common stock (which may be increased to 9.99% on a holder by holder basis, with 61 days prior written consent of the applicable holder). The PIPE Warrants were determined to be liability-classified (see Note 6 – Derivative Liabilities – Warrants Issued in Private Offering). Of the $968,930 of placement agent fees and offering expenses, $364,812 was allocated to the common stock and $604,118 was allocated to the warrant liabilities. Because the PIPE Warrants are liability classified, the $604,118 allocated to the warrants was immediately expensed.

In connection with the Private Offering, the Company also entered into a Registration Rights Agreement, dated as of February 23, 2021, with the Purchasers (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) on or prior to April 24, 2021 to register the resale of the Shares and the shares of common stock issuable upon exercise of the Warrants (the “Warrant Shares”), and to cause such registration statement to be declared effective on or prior to June 23, 2021 (or, in the event of a “full review” by the SEC, August 22, 2021). The Company is currently in default of the terms of the Registration Rights Agreement as the registration statement to register the Shares and Warrant Shares was not filed by April 24, 2021. As a result of this default, the Company is required to pay damages to the Purchasers in the aggregate amount of $174,993 each month, up to a maximum of $583,310, beginning on April 24, 2021 and until such date that the registration statement is filed with the SEC.

During the three months ended March 31, ~~2021,~~2022, the Company issued an aggregate ~~197,790~~ of 51,319 immediately vested shares of the Company’s common stock as compensation to consultants, directors, and officers, with an aggregate issuance date fair value of ~~$925,404~~$149,718, which was charged immediately to the condensed consolidated statement of operations for the three months ended March 31, ~~2021.~~2022.

~~During~~A summary of the option activity during the three months ended March 31, 2022 is presented below:

As indicated in the table above, no options were issued for the three months ended March 31, 2022. For options issued during the three months ended March 31, 2021, the ~~Company issued 959,809 shares of its common stock upon the exchange of common stock equivalents.~~

On February 26, 2021, the Company issued ten-year options to purchase an aggregate of 1,580,000 shares of the Company’s common stock to two officers of the Company. The options have an exercise price of $4.43 per share and shall vest at the rate of (a) 1/5th of such Options on the date of grant; and (b) the remaining 4/5th of such options ratably on a monthly basis over the following 36 months on the last day of each calendar month; provided, however, that the equity awards will vest immediately upon executive’s death or disability. The options had a grant date fair value of $5,280,632, which will be recognized over the vesting term.

~~The~~ assumptions used in the ~~Black-Scholes~~Black Scholes valuation method were as follows:

A summary of outstanding and exercisable stock options as of March 31, 2022 is presented below:

The Company recognized stock-based compensation expense of $596,467 for the three months ended March 31, 2022, related to the amortization of stock ~~options~~options. Expense of $514,696 is included within general and administrative expenses and expense of $81,771 is included within research and development expenses on the condensed consolidated statements of operations. The full amount of stock-based compensation recognized for the period ended March 31, 2022 is considered to be related party expense. Stock-based compensation expense for the three months ended March 31, 2021 ~~and 2020 of $1,092,399 and $0, respectively, which is~~was $1,092,399; these expenses were included within general and administrative expenses on the condensed consolidated ~~statements~~statement of ~~operations.~~operations for that period. The full amount of stock-based compensation recognized for the period ended March 31, 2021 was considered to be related party expense. As of March 31, ~~2021,~~2022, there was ~~$3,803,903~~$5,705,889 of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of ~~2.88~~2.81 years.

~~Due from related parties was $300,000 as of March 31, 2021 and December 31, 2020, and consists of a receivable due from a research and development company that has shared officers and directors.~~

Accounts payable - related parties was $236,534 as of March 31, 2021 and consists of $217,189 for professional services provided by the Company’s directors and $19,345 for accounting fees for services provided by a director and his company. Accounts payable - related parties was $215,495 as of December 31, 2020 and consists of $196,377 for professional services provided by the Company’s directors and $19,118 for accounting fees for services provided by a director and his company.

Accrued expenses - related parties was ~~$512,992~~$37,640 as of March 31, ~~2021~~2022 and consists of ~~$138,538~~$12,818 of interest accrued on loans due to a certain investor in the Company and $24,820 of accrued consulting fees for services provided by certain directors of the Company. Accrued expenses - related parties of $18,370 as of December 31, 2021, consists of interest accrued on loans and convertible notes due to certain officers and directors of the Company and $374,454 of accrued professional fees for services provided by certain directors of the Company. Accrued expenses - related parties of $454,951 as of December 31, 2020, consists of $124,833 of interest accrued on loans and convertible notes due to certain officers and directors of the Company and $330,118 of accrued professional fees for services provided by certain directors of the Company.

Loans payable - related parties consists of ~~$514,140~~$86,034 and ~~$513,082~~$81,277 as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. ~~Please refer to~~See Note 7 - ~~Loan Payables~~Loans Payable for more information.

~~Convertible Notes Payable~~Research and Development Expenses - Related Parties

Convertible notes payable - related parties of $270,000 and $270,000 as of March 31, 2021 and December 31, 2020, respectively, represents the principal balance of convertible notes owed to certain officers and directors of the Company.

~~During~~ were $47,718 and $267,053 during the three months ended March 31, 2022 and 2021, ~~the Company incurred $267,056 of research~~respectively, and ~~development expenses in connection with~~are related to consulting and professional fees paid to current or former officers, directors or greater than ~~10% investors,~~5% stockholders, or affiliates thereof.

General and Administrative Expenses – Related Parties during the three months ended March 31, ~~2020, the Company incurred $30,605 of research~~2022 and ~~development~~2021 were $5,261 and $39,120, respectively. These expenses ~~related~~relate to professional fees paid to current or former officers, directors or greater than ~~10% investors,~~5% stockholders, or affiliates thereof.

During the three months ended March 31, 2021, the Company incurred $39,120 of general and administrative expenses related to professional fees paid to current or former officers, directors or greater than 10% investors, or affiliates thereof.

During the three months ended March 31, 2020, the Company incurred $68,067 of general and administrative expenses related to professional fees paid to current or former officers, directors or greater than 10% investors, or affiliates thereof.

~~During the three months ended March 31, 2021 and 2020,~~2022, the Company recorded ~~$0 and $240,000, respectively,~~$4,562 of ~~other~~interest income - related parties related to ~~a one-year research and development agreement with a company who shares common officers and directors with~~loans from greater than 5% stockholders or affiliates of the Company.

During the three months ended March 31, 2021, the Company recorded $13,949 of interest expense - related parties, of which $11,526 related to interest on certain convertible notes held by officers and directors of the Company and $2,423 related to interest expense on loans from officers, directors ~~and a~~ greater than ~~10% investor~~5% stockholders, or affiliates thereof, of the Company.

During the three months ended March 31, 2020, the Company recorded $19,848 of interest expense - related parties, of which $13,480 related to interest on certain convertible notes held by officers and directors of the Company and $6,368 related to interest expense on loans from officers, directors and a greater than 10% investor of the Company.

~~During~~As disclosed in the Company’s previous filings, on April 2021, the Company issued 37,715 shares of common stock in partial satisfaction of bonuses earned by the Consultant pursuant to the terms of the Consulting Agreement. See Note 9 – Commitments and Contingencies, Consulting Agreement.

~~On April 12, 2021,~~27, 2022, the Company entered into amendments with six of its officers, executives and a consultant to revise the compensation agreements currently in place with such individuals. The agreements for three officers were amended ~~loan agreements with Sir Marc Feldmann~~to increase their base salaries by 3% and ~~Dr. Lawrence Steinman,~~then, effective March 1, 2022, the ~~Co-Executive Chairman~~base salaries of two of the officers were reduced by 20% each and the other salary was reduced by 25%; such reduced amounts (the “Accrued Amounts”) will be accrued until such time as the Company has sufficient cash on hand to pay the Accrued Amounts, which the Company expects will not be until it has raised a minimum of $15,000,000 (the “Funding Determination Date”). On the Funding Determination Date, their salaries will increase to the full new base salary and the Accrued Amounts will be paid by the Company, provided that in addition, at the discretion of the Board of Directors, ~~which extended~~ the ~~date~~base salaries on the Funding Determination Date of ~~all~~each executive may be further increased by 2%.

Pursuant to the amendments for two executives’ agreements, effective March 1, 2022, each of their ~~outstanding loan agreements to September 30, 2021 (see Note 7 – Loans Payable, Loans Payable – Related Parties).~~salaries were reduced by $225,000 (100%) and $56,250 (25%), respectively, and such reduced amounts will be accrued and paid on the Funding Determination Date.

~~Cantor Fitzgerald & Co. Litigation~~In addition, pursuant to the consultant’s agreement, upon acceptance of the data for the Phase 2b clinical trial for Dupuytren’s Contracture for publication, which has occurred, his monthly fee increased to £23,000, provided that £4,000 of such increase will be accrued and £19,000 of such fees will be payable monthly per the payroll practices of the Company in cash effective March 1, 2022 and until the earlier of (a) November 1, 2022 or (b) the Funding Determination Date, at which time all Accrued Amounts will be due.

On April ~~4, 2021,~~29, 2022, pursuant to the legal matter described in Note 8 – “Legal Matters – Action Against the Company ~~received a court summons in connection with the alleged breach of a settlement agreement with Cantor Fitzgerald & Co.~~by Dr. Krauss”, ~~and Cantor Fitzgerald & Co. is currently pursuing litigation. See Note 9 – Commitments and Contingencies, Potential Legal Matters.~~

~~On April 23, 2021,~~ the Company ~~settled the amounts due~~paid $975,121 for advancement of legal fees incurred by Dr. Krauss, pursuant to a ~~certain finder agreement entered into with EarlyBird Capital, Inc. (“EarlyBird”) on October 17, 2017 (the “Finder Agreement”).~~court order. The ~~Company’s Board of Directors determined it~~payment was inmade to an escrow account and the ~~best interests to settle all claims which had been made or could be made with respect~~Company has objected to the ~~Finder Agreement~~amounts and ~~entered into a settlement agreement (the “Settlement Agreement”). Pursuant to~~nature of the ~~Settlement Agreement,~~expenses. Furthermore, the Company ~~paid EarlyBird~~has filed a ~~cash payment of $275,000 and issued 225,000 shares of the Company’s restricted common stock to EarlyBird.~~

On April 29, 2021, the Company entered into a consulting agreement with Glenn Larsen, the former Chief Executive Officer of 180 Therapeutics LP, to act in the capacity as negotiator for the licensing of four patents. In consideration for services provided, the Company agreed to compensate Mr. Larsen with $50,000 of its restricted common stock (valued based on the closing sales price of the Company’s common stock on the date the Board of Directors approved the agreement, which shares have not been issued to date) which vests upon the Company entering into a licensing transaction with the assistance of Mr. Larsen.

On May 17, 2021, Tyche Capital LLC (“Tyche”) who had previously entered into a Guarantee and Commitment Agreement with the Company, filed counterclaims against the Company claiming breaches of fiduciary duties, and is seeking compensatory damages. See Note 9 – Commitments and Contingencies, Potential Legal Matters.

~~On May 19, 2021, the Company applied for loan forgiveness~~reimbursement claim for the amount advanced net of ~~$51,051 in connection~~its deductible of $250,000 with ~~amounts borrowed by Katexco under~~its director and officers’ insurance policy carrier, of which no assurance can be provided that the ~~Paycheck Protection Program. The result of the application has not yet been determined.~~

~~On May 24, 2021, the Company entered into another research agreement with Oxford (the “Fifth Oxford Agreement”), pursuant to which the Company~~directors and officers’ insurance policy will sponsor work at the University of Oxford to conduct a multi-center, randomized, double blind, parallel group, feasibility study of anti-TNF injection for the treatment of adults with frozen shoulder during the pain-predominant phase. As consideration, the Company agreed to make the following payments to Oxford:cover such amounts.

~~Item~~ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations

This Quarterly Report on Form 10-Q (“Report”), including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” set forth below, contains forward-looking statements, within the federal securities laws, including the Private Securities Litigation Reform Act of 1995, regarding future events and the future results of the Company that are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the management of the Company. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed elsewhere in this Report, including under “Risk Factors”, and in other reports the Company files with the Securities and Exchange Commission (“SEC”), including the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 31, 2022 (under the heading “Risk Factors” and in other parts of that report), and include, but are not limited to, statements about:

All forward-looking statements speak only at the date of the filing of this Report. The reader should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Report are reasonable, we provide no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Report and our Annual Report on Form 10-K for the year ended December 31, 2021. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

The following discussion is based upon our unaudited Condensed Consolidated Financial Statements included elsewhere in this Report, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, and in other reports we file with the SEC, and in our most recent Annual Report on Form 10-K. All references to years relate to the calendar year ended December 31^stof the particular year.

This information should be read in conjunction with the interim unaudited condensed consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q, and the audited financial statements and notes thereto and “Part II. Other Information – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the Securities and Exchange Commission on ~~July 9, 2021~~March 31, 2022 (the “Annual Report”).

Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited condensed consolidated financial statements included above under “Part I – Financial Information” – “Item 1. Financial Statements”.

Please see the section entitled “Glossary” inbeginning on page ii of our Annual Report for a list of abbreviations and definitions commonly used in the pharmaceutical and biotechnology industry which are used throughout this Report.

Our logo and some of our trademarks and tradenames are used in this Report. This Report also includes trademarks, tradenames and service marks that are the property of others. Solely for convenience, trademarks, tradenames and service marks referred to in this Report may appear without the ®, ™ and SM symbols. References to our trademarks, tradenames and service marks are not intended to indicate in any way that we will not assert to the fullest extent under applicable law our rights or the rights of the applicable licensors if any, nor that respective owners to other intellectual property rights will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

The market data and certain other statistical information used throughout this Report are based on independent industry publications, reports by market research firms or other independent sources that we believe to be reliable sources. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We are responsible for all of the disclosures contained in this Report, and we believe these industry publications and third-party research, surveys and studies are reliable. While we are not aware of any misstatements regarding any third-party information presented in this Report, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed under, and incorporated by reference in, the section entitled “Item 1A. Risk Factors” of this Report. These and other factors could cause our future performance to differ materially from our assumptions and estimates. Some market and other data included herein, as well as the data of competitors as they relate to the Company, is also based on our good faith estimates.

See also “~~Cautionary Note~~“Cautionary Statement Regarding Forward-Looking ~~Statements~~”Statements”, above, which includes information on forward-looking statements ~~within the meaning of the Private Securities Litigation Reform Act of 1995,~~ used herein and other matters which are applicable to this Report, including, but not limited to this “~~Item~~“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~.Operations.”

Unless the context requires otherwise, references to the “~~Company,~~“Company,” “~~we,~~“we,” “~~us,~~“us,” “~~our,~~“our,” “~~180 Life~~”“180 Life”, “~~180LS~~”“180LS” and “~~180~~“180 Life Sciences Corp.” refer specifically to 180 Life Sciences Corp. and its consolidated subsidiaries. References to “KBL” refer to the Company prior to the November 6, 2020 Business Combination.

In addition, unless the context otherwise requires and for the purposes of this Report only:

~~Where You Can Find Other Information~~“CAD” refers to Canadian dollars;

“SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and

As of March 31, 2022, we had an accumulated deficit of $67,118,573 and net income for the three months ended March 31, 2022 of $1,563,713. As of March 31, 2022, we had a working capital deficit of $6,120,408. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. As we are not generating revenues, we need to raise a significant amount of capital in order to pay our debts and cover our operating costs. While the Company raised money in August 2021, there is no assurance that we will be able to raise additional needed capital or that such capital will be available under favorable terms.

We ~~file annual, quarterly,~~are subject to all the substantial risks inherent in the development of a new business enterprise within an extremely competitive industry. Due to the absence of a long-standing operating history and ~~current reports, proxy statements~~the emerging nature of the markets in which we compete, we anticipate operating losses until we can successfully implement our business strategy, which includes all associated revenue streams. We may never achieve profitable operations or generate significant revenues.

We currently have a minimum monthly cash requirement spend of approximately $800,000. We believe that in the aggregate, we will require significant additional capital funding to support and expand the research and development and marketing of our products, fund future clinical trials, repay debt obligations, provide capital expenditures for additional equipment and development costs, payment obligations, office space and systems for managing the business, and cover other ~~information~~operating costs until our planned revenue streams from products are fully-implemented and begin to offset our operating costs, if ever.

Since our inception, we have funded our operations with the ~~SEC. Our SEC filings~~proceeds from equity and debt financings. We have experienced liquidity issues due to, among other reasons, our limited ability to raise adequate capital on acceptable terms. We have historically relied upon the issuance of equity and promissory notes that are ~~available~~convertible into shares of our common stock to fund our operations and have devoted significant efforts to reduce that exposure. We anticipate that we will need to issue equity to fund our operations and repay our outstanding debt for the foreseeable future. If we are unable to achieve operational profitability or we are not successful in securing other forms of financing, we will have to evaluate alternative actions to reduce our operating expenses and conserve cash.

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the consolidated financial statements do not include any adjustments relating to the ~~public over~~recoverability of assets and classification of liabilities that might be necessary should the ~~Internet at~~Company be unable to continue as a going concern. The consolidated financial statements included in this prospectus also include a going concern footnote.

Additionally, wherever possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the ~~SEC’s website at~~ ~~www.sec.gov~~ ~~and are available for download, free~~non-cash consideration will consist of ~~charge, soon after such reports are filed with or furnished to the SEC, on the “Investors”—“SEC Filings”—“All SEC Filings” page~~restricted shares of our ~~website~~common stock, preferred stock or warrants to purchase shares of our common stock. Our Board of Directors has authority, without action or vote of the shareholders, but subject to NASDAQ rules and regulations (which generally require shareholder approval for any transactions which would result in the issuance of more than 20% of our then outstanding shares of common stock or voting rights representing over 20% of our then outstanding shares of stock), to issue all or part of the authorized but unissued shares of common stock, preferred stock or warrants to purchase such shares of common stock. In addition, we may attempt to raise capital by selling shares of our common stock, possibly at ~~www.180lifesciences.com. Copies~~a discount to market in the future. These actions will result in dilution of ~~documents filed by us with~~ the ~~SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at the address~~ownership interests of existing shareholders, may further dilute common stock book value, and ~~telephone number set forth on the cover page of this Report. Our website address is~~ ~~www.180lifesciences.com/. The information on, or~~ that dilution may be ~~accessed through, our website is not incorporated by reference into this Report and should not~~material. Such issuances may also serve to enhance existing management’s ability to maintain control of us, because the shares may be ~~considered a part of this Report.~~issued to parties or entities committed to supporting existing management.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “~~MD&A~~”“MD&A”) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:

On November 6, 2020 ~~(the “~~(“Closing ~~Date~~”Date”), the ~~previously announced~~ Business Combination was consummated following a special meeting of stockholders, where the stockholders of KBL considered and approved, among other matters, a proposal to adopt the Business Combination Agreement. Pursuant to the Business Combination Agreement, KBL Merger Sub, Inc. merged with 180, ~~Life Corp (f/k/a 180 Life Sciences Corp.),~~ with 180 continuing as the surviving entity and becoming a wholly-owned subsidiary of KBL. As part of the Business Combination, KBL issued 17,500,000 shares of common stock and equivalents to the stockholders of 180, in exchange for all of the outstanding capital stock of 180. The Business Combination became effective November 6, 2020 and in connection therewith, 180 filed a Certificate of Amendment of its Certificate of Incorporation in Delaware to change its name to 180 Life Corp., and KBL changed its name to 180 Life Sciences Corp.

This MD&A and the related financial statements for the three months ended March 31, 2021 included herein includes the combined operations of KBL and 180 because the results are combined after the Closing Date.

This MD&A and the related financial statements for the three months ended March 31, 2020 includes the combined operations of 180 and its three operating entities, but does not include KBL because this period precedes the Business Combination.

Following the Closing of the Business Combination, we transitioned our operations to those of 180, which is a clinical stage ~~pharmaceutical~~biotechnology company headquartered in ~~Menlo Park,~~Palo Alto, California, focused on the development of therapeutics for unmet medical needs in chronic pain, inflammation, fibrosis and other inflammatory diseases, where anti-TNF therapy will provide a clear benefit to patients, by employing innovative research, and, where appropriate, combination therapy. We have three product development platforms:

We have several future product candidates in development, including one product candidate inwhich has recently completed a successful Phase ~~2b/3~~2b clinical trial in the United Kingdom for Dupuytren’s ~~disease,~~Contracture, a condition that affects the development of fibrous connective tissue in the palm of the hand. 180 was founded by several world-leading scientists in the biotechnology and pharmaceutical sectors.

We intend to invest resources to successfully complete the clinical programs that are underway, discover new drug candidates, and develop new molecules to build on our existing pipeline ~~with the goal of addressing~~to address unmet clinical needs. The product candidates are designed via a platform comprised of defined unit operations and technologies. This work is performed in a research and development environment that evaluates and assesses variability in each step of the process in order to define the most reliable production conditions.

We may rely on third-party contract manufacturing organizations (“CMOs”) and other third parties for the manufacturing and processing of ~~our~~the product candidates in the ~~future, to the extent we determine to move forward with the manufacturing of such candidates, and subject to applicable approvals.~~future. We believe the use of contract manufacturing and testing for the first clinical product candidates is cost-effective and has allowed us to rapidly prepare for clinical trials in accordance with our development plans. We expect that third-party manufacturers will be capable of providing and processing sufficient quantities of these product candidates to meet anticipated clinical trial demands.

In December 2019, a ~~novel~~new strain of the coronavirus ~~which causes the infectious disease known as COVID-19,~~(COVID-19) was reported in ~~Wuhan, China. The World Health Organization declared COVID-19 a “Public Health Emergency~~Mainland China and during the first quarter of ~~International Concern” on January 30,~~ 2020 ~~and~~the virus had spread to over 150 countries, resulting in a global ~~pandemic on March 11, 2020. The~~pandemic. This COVID-19 pandemic and the public health responses to contain it have resulted in global recessionary conditions, which did not exist at December 31, 2019. Among other effects, government-mandated closures, stay-at-home orders and other related measures have significantly impacted global economic activity and business investment in general. A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on our ability to access capital, and on our business, results of operations and financial condition. We have been closely monitoring the developments and have taken active measures to protect the health of our employees, their families, and our communities. The ultimate impact ~~of the pandemic~~ on the ~~2021~~2022 fiscal year and beyond will depend heavily on the duration of the COVID-19 pandemic and public health responses, including government-mandated closures, stay-at-home orders ~~vaccine availability and efficacy~~ and social distancing mandates, as well as the substance and pace of macroeconomic recovery, all of which are uncertain and difficult to predict considering the rapidly evolving landscape of the COVID-19 pandemic and the public health responses to contain it. ~~As of March 31, 2021, only the follow-up~~

The follow up time for patient data and the statistical analysis for the Phase 2b Dupuytren’s ~~disease~~Contracture clinical trial ~~has been~~was delayed as a result of COVID-19, but such follow-up isand statistical analysis are now ~~completed. However,~~completed and the Company announced the top-line data results from the Phase 2b trial on December 1, 2021 and the data was published on April 29, 2022 in a peer-reviewed journal. Additionally, COVID-19 has delayed the initiation of certain clinical trials and may delay the initiation of ~~certain~~other clinical ~~trials.~~

As described above, on November 6, 2020 (the “Closing Date”), the Company consummated the previously announced business combination The Business Combination was accounted for as a reverse recapitalization of 180. All of 180’s capital stock outstanding immediately prior to the merger was exchanged for (i) 15,736,348 shares of 180LS common stock, (ii) 2 shares of Class C and Class K Special Voting Shares exchangeable into 1,763,652 shares of 180LS common stock which are presented as outstandingtrials in the ~~accompanying Statement of Changes in Stockholders’ Equity due to the reverse recapitalization. KBL’s 6,928,645 outstanding shares of common stock are presented as being issued~~future or otherwise have a material adverse effect on ~~the date of the Business Combination.~~our future operations.

Maxim Group LLC (the “Placement Agent”) acted as exclusive placement agent in connection with the Offering pursuant to an Engagement Letter between the Company and the Placement Agent dated January 26, 2021 (as amended on February 18, 2021). Pursuant to the Engagement Letter, the Placement Agent received a commission equal to seven percent (7%) of the aggregate gross proceeds of the Offering, or $816,634.

On March 8, 2021, the holders of the Company’s convertible bridge notes, which were issued in December 27, 2019 and January 3, 2020 to various purchasers, converted an aggregate of $432,383, which included accrued interest of $66,633 owed under such convertible bridge notes, into an aggregate of 158,383 shares of common stock pursuant to the terms of such notes, as amended, at a conversion price of $2.73 per share.

From November 27, 2020 to February 5, 2021, the holders of the Company’s convertible promissory notes converted an aggregate of $4,782,107 owed under such convertible notes into an aggregate of 1,986,751 shares of common stock, pursuant to the terms of such notes, as amended, at conversion prices of between $2.00 and $3.29 per share.

To date, 180’s research and development expenses have related primarily to discovery efforts and preclinical and clinical development of its three product platforms: fibrosis and anti-TNF; drugs which are derivatives of CBD, and α7nAChR. Research and development expenses consist primarily of costs associated with those three product platforms, which include:

We expense all research and development costs in the periods in which they are incurred. We accrue for costs incurred as services are provided by monitoring the status of each project and the invoices received from our external service providers. We adjust our accrual as actual costs become known. When contingent milestone payments are owed to third parties under research and development arrangements or license agreements, the milestone payment obligations are expensed when the milestone results are achieved.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that research and development expenses will increase over the next several years as clinical programs progress and as we seek to initiate clinical trials of additional product candidates. It is also expected that increased research and development expenses will be incurred as additional product candidates are selectively identified and developed. However, it is difficult to determine with certainty the duration and completion costs of current or future preclinical programs and clinical trials of product candidates.

The duration, costs and timing of clinical trials and development of product candidates will depend on a variety of factors that include, but are not limited to, the following:

In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and fund in response to the scientific and clinical success of each product candidate, as well as an assessment of each product candidate’s commercial potential.

Because the product candidates are still in clinical and preclinical development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of product candidates or whether, or when, we may achieve profitability. Due to the early-stage nature of these programs, we do not track costs on a project-by-project basis. As these programs become more advanced, we intend to track the external and internal cost of each program.

General and administrative expenses consist primarily of salaries and other staff-related costs, including stock-based compensation for shares of common stock issued and options granted to founders, directors and personnel in executive, commercial, finance, accounting, legal, investor relations, facilities, business development and human resources functions and include vesting conditions.

Other significant general and administrative costs include costs relating to facilities and overhead costs, legal fees relating to corporate and patent matters, litigation, SEC filings, insurance, investor relations costs, fees for accounting and consulting services, and other general and administrative costs. General and administrative costs are expensed as incurred, and we accrue amounts for services provided by third parties related to the above expenses by monitoring the status of services provided and receiving estimates from our service providers and adjusting our accruals as actual costs become known.

It is expected that the general and administrative expenses will increase over the next several years to support our continued research and development activities, manufacturing activities, potential commercialization of our product candidates and the increased costs of operating as a public company. These increases are anticipated to include increased costs related to the hiring of additional personnel, developing commercial infrastructure, fees to outside consultants, lawyers and accountants, and increased costs associated with being a public company, as well as expenses related to services associated with maintaining compliance with Nasdaq listing rules and SEC requirements, insurance and investor relations costs.

Other income primarily represents fees earned for research and development work performed for other companies, some of which are related parties.

Interest expense consists primarily of interest expense related to debt instruments.

Gain (loss) on extinguishment of convertible notes represents the shortfall (excess) of the reacquisition cost of convertible notes as compared to their carrying value.

Change in fair value of derivative liabilities represents the non-cash change in fair value of derivative liabilities during the reporting period. Gains resulting from change in fair value of derivative liabilities during the three months ended March 31, 2022, were driven by decreases in stock price during the period, resulting in a lower fair value of the underlying liability.

Change in offering costs allocated to warrant liabilities represents placement agent fees and offering expenses which were allocated to the PIPE Warrants and expensed immediately as they are liability classified.

Change in fair value of accrued issuable equity represents the non-cash change in fair value of accrued equity prior to its formal issuance.

For the Three Months Ended March 31, ~~2021~~2022 Compared to the Three Months Ended March 31, ~~2020~~2021

We incurred research and development expenses of $658,939 for the three months ended March 31, 2022, compared to $99,899 for the three months ended March 31, 2021, ~~compared to $472,862~~representing an increase of $559,040 or 560%. The increase includes a $175,000 increase in consulting expenses for the ~~three months ended March 31, 2020, representing a decrease~~Scientific Advisory Board, an increase in salaries of ~~$372,963 or 79%. The decrease is primarily attributable to a $217,000 decrease~~$140,000, an increase in research and development expenses of $90,000 related to ~~the temporary halting~~our agreements with Oxford University, a $50,000 increase in Anti-TNF therapies expenses and an increase in stock-based compensation expense of ~~drug discovery services in 2020 provided by Evotec International GmbH in connection with a research and development agreement until the Company raises additional capital, as well as~~ approximately ~~$158,000 of research tax credits earned during the first quarter of 2021.~~$80,000.

We incurred research and development expenses – related parties of $47,718 for the three months ended March 31, 2022, compared to $267,053 for the three months ended March 31, 2021, ~~compared~~representing a decrease of $219,335, or 82%. The decrease is primarily attributable to ~~$30,605~~some reversals of consultancy expenses in the prior period totaling approximately $440,000, offset by increases in various other expenses.

We incurred general and administrative expenses of $2,969,151 and $2,542,231 for the three months ended March 31, ~~2020,~~2022 and 2021, respectively, representing an increase of ~~$236,448~~$426,920 or ~~773%~~17%. The increase ~~is primarily attributable to approximately $430,000~~resulted from an increase in patents expenses of ~~fees~~$135,000 and ~~bonuses accrued~~an increase in ~~connection with a consulting agreement with a founder~~insurance expenses of 180 Therapeutics, LP that became effective on December 1, 2020 for research in connection with the Company’s product candidate for the treatment of Dupuytren’s disease, offset by approximately $190,000 of research tax credits earned during the first quarter of 2021.$280,000.

We incurred general and administrative expenses - related parties of ~~$2,542,231~~$5,261 and ~~$995,328~~$39,120 for the three months ended March 31, 2022 and 2021, respectively, representing a decrease of $33,859, or 87%. The decrease is attributable to a change in cost center for consulting fees from the prior period of approximately $35,000.

We incurred other income, net of $5,244,782 during the three months ended March 31, 2022, as compared to other expenses, net of $13,255,686 for the three months ended March 31, 2021, and 2020, respectively, representing an increase of $1,546,903 or 155%. Increases of (i) approximately $283,000 in compensation expenses and approximately $248,000 insurance expense primarily resulting from expenses incurred by the acquired entity (180LS) and (ii) approximately $1,221,000 of stock-based compensation expense were partially offset by decreases of approximately $209,000 in professional fees and consulting expenses.

We incurred general and administrative expenses – related parties of $39,120 and $68,067 respectively for the three months ended March 31, 2021 and 2020, respectively, representing a decrease of $28,947 or 43%, resulting from an increase in related party consulting fees during the period.

~~We incurred other expenses, net of $13,255,686 during the three months ended March 31, 2021 as compared to $819,500 for the three months ended March 31, 2020,~~ representing an increase in other ~~expenses~~income of ~~$12,436,186~~approximately $18,500,468 or ~~1,518%~~140%. The increase was primarily attributable to the change in fair value of the Company’s derivative liabilities ~~of $13,229,308 and offering costs allocated to warrant liabilities of $604,118, partially offset~~from the prior period, which increased by ~~$723,764 of gains recognized related to the settlement of certain accounts payable and accrued expenses, and a decrease in the loss on extinguishment of convertible notes payable of $876,999.~~approximately $18.5 million.

As of March 31, ~~2021~~2022 and December 31, ~~2020~~2021, we had cash balances of ~~$6,052,862~~$5,668,915 and ~~$2,108,544,~~$8,244,508, respectively, and working capital deficits of ~~$25,324,166~~$6,120,408 and ~~$17,406,356,~~$8,498,193, respectively.

For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, cash used in operating activities was $2,072,931 and $6,330,045, respectively. Our cash used in operations for the three months ended March 31, 2022 was primarily attributable to our net income of $1,563,713, adjusted for non-cash expenses in the aggregate amount of $4,497,319 as well as $860,675 of net cash used to fund changes in the levels of operating assets and ~~$409,006, respectively.~~liabilities. Our cash used in operations for the three months ended March 31, 2021 was primarily attributable to our net loss of $16,198,585, adjusted for non-cash expenses in the aggregate amount of $15,169,872 as well as $5,301,332 of net cash used to fund changes in the levels of operating assets and liabilities. Our cash used in operations for the three months ended March 31, 2020 was primarily attributable to our net loss of $2,381,260, adjusted for non-cash expenses in the aggregate amount of $908,593, as well as $1,063,661 of net cash provided by changes in the levels of operating assets and liabilities.

For the three months ended March 31, 2022 and 2021, ~~and 2020,~~ cash (used in) provided by financing activities was ($515,419) and $10,362,538, ~~and $333,364,~~ respectively. Cash used in financing activities during the three months ended March 31, 2022 was due to repayments of loans in the amount of $515,419. Cash provided by financing activities during the three months ended March 31, 2021 was due to $10,731,070 of net proceeds from our offering of common stock and warrants, partially offset by the repayment of loans in the amount of $368,532. The net cash provided by financing activities during the three months ended March 31, 2020 was comprised of $260,864 of proceeds from the issuance of debt instruments and $72,500 of proceeds from the issuance of equity instruments.

Our product candidates may never achieve commercialization and we anticipate that we will continue to incur losses for the foreseeable future. We expect that our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase. As a result, until such time, if ever, as we are able to generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements, which may not be available on favorable terms, if at all. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then stockholders. Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, license payments or milestone obligations that may arise, laboratory and related supplies, clinical costs, potential manufacturing costs, legal and other regulatory expenses and general overhead costs.

Our material cash requirements and time periods of such requirements from known contractual and other obligations include milestone and royalty payments related to license agreements with Oxford University and Yissum Research Development Company of the Hebrew University of Jerusalem, Ltd., payments related to directors and officers (“D&O”) insurance, payments to consultants and payments related to outside consulting firms, such as legal counsel, auditors, accountants, etc. These cash requirements, in the aggregate, are expected to amount to approximately $7,100,000 for 2022 and $33,400,000 for the years 2023 through 2026.

Further, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development activities. We currently have no credit facility or committed sources of capital. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated product development programs.

We have not yet achieved profitability and expect to continue to incur cash outflows from operations. It is expected that our research and development and general and administrative expenses will continue to increase and, as a result, we expect to need to raise additional capital to fund our operations. If we are unable to obtain adequate funds on reasonable terms, we may be required to significantly curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms. Our operating needs include the planned costs to operate our business, including amounts required to fund working capital and capital expenditures. The conditions outlined above indicate that there is substantial doubt about our ability to continue as a going concern within one year after the financial statement issuance date.

Our condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

~~February 2021 Private Purchase~~There have been no financing or settlement transactions during the three months ended March 31, 2022.

The Company’s condensed consolidated financial statements are prepared in accordance with accounting principles that are generally accepted in the United States. The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of its assets, liabilities, revenue and expenses. The Company has identified certain policies and estimates as critical to its business operations and the understanding of its past or present results of operations related to (i) goodwill and (ii) intangible assets and in-process research and development. These policies and estimates are considered critical because they had a ~~Securities Purchase Agreement (the “Purchase Agreement”) with~~material impact, or they have the ~~purchasers identified~~potential to have a material impact, on the ~~signature pages thereto (the “Purchasers”) pursuant~~Company’s condensed consolidated financial statements and because they require management to make significant judgments, assumptions or estimates. The Company believes that the estimates, judgments and assumptions made when accounting for the items described below were reasonable, based on information available at the time they were made. However, actual results may differ from those estimates, and these differences may be material.

Goodwill/Intangible Assets and In-Process Research and Development (“IPR&D”)

The Company has a significant amount of goodwill, intangible assets and IPR&D assets that are assessed at least annually for impairment. As of March 31, 2022 and December 31, 2021, goodwill, intangible assets and IPR&D assets totaled $50.7 million and $51.5 million, or 85% and 82%, respectively, of the Company’s total assets. The impairment analyses of these assets are considered critical because of their significance to the Company. Intangible assets arising from business combinations or acquisitions, such as goodwill, patents and IPR&D assets are initially recorded at estimated fair value. Licensed patents are amortized over the remaining life of the patent. IPR&D assets are considered to be indefinite-lived until the completion or abandonment of the associated research and development projects. Our goodwill was derived from acquisitions where the purchase price exceeded the fair value of the net assets acquired. The Company is required to reassign goodwill to reporting units whenever reorganizations of the internal reporting structure change the composition of its reporting units. The Company identified one reporting unit which represents its sole operating segment.

The Company is required to assess goodwill/intangible assets and IPR&D assets at least annually, or more frequently, if an event occurs or circumstances change that indicates it is more likely than not the fair value of the Company’s reporting unit was less than its carrying value. In assessing goodwill/intangible assets and IPR&D assets for impairment, the Company ~~agreed~~may first assess qualitative factors to ~~sell~~determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying value. For December 31, 2021, the Company elected to bypass the qualitative analysis and proceeded directly to the ~~Purchasers an aggregate~~two- step test.

The first step of ~~2,564,000~~the goodwill/intangible assets and IPR&D assets impairment test used to identify potential impairment compares the fair value of the reporting unit with its carrying amount, including goodwill/intangible assets and IPR&D assets. The Company determined the fair market value of its single reporting unit as of December 31, 2021 to be its market capitalization of $132,760,680, which represents $3.90 per share (the market close price on December 31, 2021) multiplied by 34,021,200 shares ~~(the “Shares”)~~(consisting of ~~common stock and warrants to purchase up to an aggregate of 2,564,000~~34,035,925 shares of common stock ~~(the “SPA Warrants”)~~plus 5,275 special voting shares which are exchangeable into common stock for no additional consideration) on December 31, 2021. The carrying amount of the reporting unit as of December 31, 2021 was $39,322,695 (total assets of $62.7 million less total liabilities of $23.4 million).

Since the fair value of the Company ($132,760,680) exceeded the carrying value of the Company ($39,322,695) as of December 31, 2021, and the carrying value of the Company is greater than zero, management concluded the goodwill/intangible assets and IPR&D assets of the reporting unit was not impaired. The Company will continue to perform goodwill/intangible assets and IPR&D assets impairment testing on an annual basis, or as needed if there are changes to the composition of its reporting unit. As of March 31, 2022, there have been no changes to the composition of the reporting unit.

The Company evaluates its debt and equity issuances to determine if those contracts or embedded components of those contracts qualify as derivatives requiring separate recognition in the Company’s financial statements. As of March 31, 2022 and December 31, 2021, derivative liabilities totaled $10.0 million and $15.2 million, or 53% and 65%, ~~at a combined purchase price~~respectively, of ~~$4.55 per Share and accompanying SPA Warrant (the “Offering”). Aggregate gross proceeds from~~ the ~~Offering were approximately $11.7 million, prior~~Company’s total liabilities. The analyses of these liabilities are considered critical because of their significance to ~~deducting placement agent fees and estimated offering expenses payable by~~ the Company. ~~Net proceeds~~Entities must consider whether to classify contracts that may be settled in its own stock, such as warrants, as equity of the entity or as an asset or liability. If an event that is not within the entity’s control could require net cash settlement, then the contract should be classified as an asset or a liability rather than as equity.

The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market at each balance sheet date and recorded as a liability and the change in fair value is recorded in other (expense) income, net in the consolidated statements of operations. In circumstances where there are multiple embedded instruments that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within twelve months of the balance sheet date.

If the embedded conversion options do not require bifurcation, the Company then evaluates for the existence of a beneficial conversion feature by comparing the fair value of the Company’s underlying stock as of the commitment date to the ~~Company from the Offering, after deducting the placement agent fees and estimated offering expenses payable by the Company, were approximately $10.8 million. The Offering closed on February 23, 2021.~~

The SPA Warrants have an exercise price equal to $5.00, were immediately exercisable and are subject to customary anti-dilution adjustments for stock splits or dividends or other similar transactions. However, the exerciseeffective conversion price of the ~~SPA Warrants will not~~instrument (the intrinsic value).

The Company has computed the fair value of warrants, options, convertible notes and convertible preferred stock issued using the Monte-Carlo and Black-Scholes option pricing models. The expected term used for warrants, convertible notes and convertible preferred stock are the contractual life and the expected term used for options issued is the estimated period of time that options granted are expected to be ~~subject~~outstanding. The Company utilizes the “simplified” method to ~~adjustment as~~develop an estimate of the expected term of “plain vanilla” option grants. The Company is utilizing an expected volatility figure based on a ~~result~~review of ~~subsequent equity issuances at effective prices lower than~~ the ~~then-current exercise price. The SPA Warrants are exercisable until February 23, 2026. The SPA Warrants are subject to~~historical volatilities, over a ~~provision prohibiting the exercise~~period of ~~such SPA Warrants~~time, equivalent to the ~~extent that, after giving effect to such exercise,~~expected life of the ~~holder~~instrument being valued, of ~~such Warrant (together~~similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the ~~holder’s affiliates, and any other persons acting as a group together with the holder or any~~expected term of the holder’s affiliates), would beneficially own in excess of 4.99% of the outstanding common stock (which may be increased to 9.99% on a holder by holder basis, with 61 days prior written consent of the applicable holder).instrument being valued.

~~In connection with the Offering, the~~The Company also entered into a Registration Rights Agreement, dated as of February 23, 2021, with the Purchasers (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) on or prior to April 24, 2021 to register the resale of the Shares and the shares of common stock issuable upon exercise of the SPA Warrants (the “Warrant Shares”), and to cause such registration statement to be declared effective on or prior to June 23, 2021 (or, in the event of a “full review” by the SEC, August 22, 2021). We are currently in default ofevaluated the terms of ~~the Registration Rights Agreement as we~~its AGP Warrants (see Note 6 – Derivative Liabilities) when they were ~~unable to file the registration statement to register the Shares~~originally earned and Warrant Shares by April 24, 2021. As a result of this default, the Company is required to pay damages to the Purchasers in the aggregate amount of $174,993 each month, up to a maximum of $583,310, beginning on April 24, 2021 and until such datedetermined that the ~~registration statement is filed~~AGP Warrants should initially be liability-classified at their fair value at issuance with ~~the SEC.~~

~~The Company agreed in the Purchase Agreement that, until the earlier~~subsequent remeasurement (mark-to-market) at period ends. As of (1) thirty (30) days after the date on which the registration statement that is filed pursuant to the Registration Rights Agreement to register the resale by the Purchasers of the Shares and the Warrant Shares is declared effective by the SEC (such date, the “Effective Date”) and (2) thirty (30) days after such date that the Shares may be sold without limitation pursuant to Rule 144 under the Securities Act, neither the Company nor any subsidiary thereof would (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock (or common stock equivalents) or (ii) file any registration statement or any amendment or supplement thereto, in each case other than (A) as contemplated pursuant to the Registration Rights Agreement and (B) as contemplated by that certain Registration Rights Agreement, dated June 12, 2020, by and between the Company and the parties signatory thereto.

~~Each of the directors and executive officers of~~March 31, 2022, the Company has ~~entered into a lock-up agreement~~concluded that its warrants should remain liability-classified as of March 31, 2022 due to the presence of the Tender Offer Provision combined with the ~~Company in connection with the Offering (each, a “Lock-Up Agreement”). Under the Lock-Up Agreements, from the date~~existence of the lock-up agreements until the earlier of (x) sixty (60) days after the Effective Date and (y) November 6, 2021, the directors and executive officers will not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the director or executive officer), directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act,Exchangeable Shares that have voting rights consistent with ~~respect to, any shares of~~ common ~~stock or securities convertible, exchangeable or exercisable into, shares of common stock, subject to limited exceptions.~~stockholders.

~~Maxim Group LLC (the “Placement Agent~~”) acted as exclusive placement agent in connection with the Offering pursuant to an Engagement Letter between the Company and the Placement Agent dated January 26, 2021 (together with the amendment letter dated February 18, 2021 (such amendment letter, the “~~Amendment Letter”), the “Engagement Letter~~”). The Engagement Letter provides, among other things, that the Placement Agent would receive a commission equal to seven percent (7%) of the aggregate gross proceeds of the Offering, which commission totaled $791,634.

There are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on financial conditions, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

~~See Note 3 – Summary of Significant Accounting Policies of our condensed consolidated financial statements included within this Quarterly Report for our critical accounting policies.~~

See Note 3 – Summary of Significant Accounting Policies of our consolidated financial statements included within our ~~2020~~2021 Annual Report on Form 10-K for a summary of recently issued accounting pronouncements.

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

We have established and maintain a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed with the SEC pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO)(principal executive officer) and ~~Interim~~ Chief Financial Officer (CFO) (principal accounting/financial officer), as appropriate, to allow timely decisions regarding required disclosures.

~~As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and~~The Company’s management evaluated, with the participation of ~~our management, including~~ our principal executive officer and principal financial and accounting officer, of the effectiveness ~~of the design and operation~~ of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange ~~Act.~~Act, as of the end of the period covered by this Report.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on their evaluation, our principal executive officer and principal financial and accounting officer concluded that, as of March 31, ~~2021,~~2022, our disclosure controls and procedures were not effective to provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosures as of March 31, ~~2021.~~2022.

Management’s ~~conclusion~~evaluation was based on the following material weaknesses in our internal control over financial reporting which existed as of December 31, ~~2020,~~2021, and ~~continued~~which continue to exist, ~~at March 31, 2021,~~ as discussed in the Company’s Annual Report on Form 10-K:

A material weakness is a control deficiency or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. As a company with limited accounting resources, a significant amount of management’s time and attention has been and will be diverted from our business to ensure compliance with these regulatory requirements.

Our management plans to establish procedures to monitor and evaluate the effectiveness of our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing necessary enhancements or improvements. Management expects to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting during ~~2021.~~the second half of 2022. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management intends to take steps to develop and enhance its internal controls over financial reporting, including:

There ~~has~~have been no ~~change~~changes in our internal control over financial reporting that occurred during the ~~first~~ quarter ~~of 2021~~ended March 31, 2022 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we may be a party to litigation that arises in the ordinary course of its business. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We believe the ultimate resolution of any such current proceeding will not have a material adverse effect on our continued financial position, results of operations or cash flows.

Such current litigation or other legal proceedings are described in, and incorporated by reference in, this “Item 1. Legal Proceedings” of this Form 10-Q from, “Part I – Item 1. Financial Statements” in the Notes to Condensed Consolidated Financial Statements in “Note 98 – Commitments and Contingences”, under the heading ~~Potential~~ Legal Matters. The Company believes that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on our financial condition or results of operations. However, assessment of the current litigation or other legal claims could change in light of the discovery of facts not presently known to the Company or by judges, juries or other finders of fact, which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims.

Additionally, the outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.

There have been no material changes from the risk factors previously disclosed in Part I, Item 31A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, as filed with the Commission on ~~July 9, 2021,~~March 30, 2022, under the heading “Risk Factors”, which risk factors are incorporated by reference herein, except as described below, and investors should review the risks provided in the Form 10-K and below prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Form 10-K for the year ended December 31, ~~2020,~~2021, under “Risk Factors”, and below, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.

Except as set forth below, there have been no sales of unregistered securities during the quarter ended March 31, ~~2021~~2022 and from the period from April 1, ~~2021,~~2022, to the filing date of this report, which have not previously been disclosed in a Current Report on Form 8-K.

We claim an exemption from registration pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act, for such issuances described above, since the foregoing issuances did not involve a public offering, the recipients were (a) “accredited investors”; and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Securities Act. The securities were offered without any general solicitation by us or our representatives. The securities are subject to transfer restrictions, and the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

We claim an exemption from registration provided by Section 3(a)(9) of the Securities Act, for such note conversions, as the securities were exchanged by us with our existing security holders in transactions where no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange.

To the extent required by Form 8-K and in an abundance of caution, the following information is being disclosed below instead of pursuant to a Current Report on Form 8-K filed with the Commission during the period pursuant to ~~Item 1.01~~ ~~and~~ ~~Item 1.02~~ ~~of Form 8-K:~~

~~To the extent required by Form 8-K, the information set forth above in~~ ~~Item 1.01~~ ~~is incorporated into this~~ ~~Item 1.02~~ ~~by reference.~~

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	March 31,		December 31,
	2021		2020
Consulting fees	$	1,391,923	$	1,718,559
Professional fees		658,069		1,261,751
Employee and director compensation		582,878		878,292
Research and development fees		134,072		17,817
Interest		104,434		184,576
Patent costs		8,974		-
Travel expenses		4,600		4,600
Other		-		45,321
	$	2,884,950	$	4,110,916

	March 31,		December 31,
	2022		2021
Consulting fees	$	427,197	$	548,281
Professional fees		195,765		252,973
Litigation settlements ⁽¹⁾		1,025,122		300,000
Employee and director compensation		786,721		725,569
Research and development fees		159,694		91,737
Interest		28,067		25,433
Other		4,895		20,587
	$	2,627,461	$	1,964,580

Balance at January 1, 2021	$	43,095
Reclassification to equity		(43,095	)
Balance at March 31, 2021	$	-

Balance at January 1, 2022	$	-
Additions		48,600
Mark to market		(17,520	)
Balance at March 31, 2022	$	31,080

	For the Three Months Ended March 31, 2021
	Warrants		Convertible Notes			Total
Beginning balance as of January 1, 2021	$	4,217,170	$	225,800		$	4,442,970
Extinguishment of derivative liabilities in connection with conversion of debt		-		(591,203	)		(591,203	)
Warrants issued in private offering		7,294,836		-			7,294,836
Change in fair value of derivative liabilities		12,573,904		665,404			13,229,308
Ending balance as of March 31, 2021	$	24,085,910	$	290,001		$	24,375,911

	For the Three Months Ended
	March 31,
	2021			2020
Operating Expenses:
Research and development	$	99,899		$	472,862
Research and development - related parties		267,053			30,605
General and administrative		2,542,231			995,328
General and administrative - related parties		39,120			68,067
Total Operating Expenses		2,948,303			1,566,862
Loss From Operations		(2,948,303	)		(1,566,862	)

Other (Expense) Income:
Gain on settlement of payables and accrued expenses		723,764			-
Other income - related parties		-			240,000
Interest expense		(112,933	)		(152,916	)
Interest expense - related parties		(13,949	)		(19,848	)
Loss on extinguishment of convertible notes payable, net		(9,737	)		(886,736	)
Change in fair value of derivative liabilities		(13,229,308	)		-
Offering costs allocated to warrant liabilities		(604,118	)		-
Change in fair value of accrued issuable equity		(9,405	)		-
Total Other Expense, Net		(13,255,686	)		(819,500	)

Loss Before Income Taxes		(16,203,989	)		(2,386,362	)
Income tax benefit		5,404			5,102
Net Loss		(16,198,585	)		(2,381,260	)

Other Comprehensive Income:
Foreign currency translation adjustments		189,348			(1,844,205	)
Total Comprehensive Loss	$	(16,009,237	)	$	(4,225,465	)

Basic and Diluted Net Loss per Common Share	$	(0.58	)	$	(0.14	)

Weighted Average Number of Common Shares Outstanding:		27,953,302			16,840,668

	For the Three Months Ended
	March 31,
	2021			2020
Cash Flows From Operating Activities
Net loss	$	(16,198,585	)	$	(2,381,260	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation
Shares issued for services		925,404			-
Amortization of stock options		1,092,399			-
Depreciation and amortization		28,668			32,293
Gain on settlement of payables and accrued expenses		(723,764	)		-
Loss on extinguishment of convertible note payable		9,737			886,736
Gain on exchange rate transactions		-			(5,334	)
Deferred tax benefit		(5,403	)		(5,102	)
Change in fair value of derivative liabilities		13,229,308			-
Offering costs allocated to warrant liabilities		604,118			-
Change in fair value of accrued issuable equity		9,405			-
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(342,045	)		267,716
Due from related parties		-			(240,000	)
Accounts payable		(3,966,486	)		302,380
Accrued expenses		(940,301	)		733,565
Accrued issuable equity		(52,500	)		-
Total adjustments		9,868,540			1,972,254
Net Cash Used In Operating Activities		(6,330,045	)		(409,006	)

Cash Flows From Financing Activities
Shares issued for cash, net of issuance costs		10,731,070			-
Repayment of loans payable		(368,532	)		-
Proceeds from sale of common stock		-			72,500
Proceeds from loans payable		-			3,500
Proceeds from loans payable - related parties		-			174,864
Proceeds from convertible notes payable - related parties		-			82,500
Cash Provided By Financing Activities		10,362,538			333,364

Effect of Exchange Rate Changes on Cash		(88,175	)		89,810

Net Increase In Cash		3,944,318			14,168
Cash - Beginning of Period		2,108,544			83,397
Cash - End of Period	$	6,052,862		$	97,565

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest	$	-		$	-

Non-cash investing and financing activities:
Warrants issued in connection with the private offering	$	7,294,836		$	-
Conversion of convertible debt and accrued interest into common stock	$	1,340,185		$	-
Conversion of notes payable and accrued interest into common stock	$	432,383		$	-
Exchange of common stock equivalents for common stock	$	96		$	-
Accrued interest reclassified to convertible notes principal	$	-		$	99,702
Accrued interest reclassified to convertible notes, related party principal	$	-		$	8,129
Recognition of beneficial conversion feature as loss on extinguishment of convertible note principal	$	-		$	339,200
Redemption premium and restructuring fee recognized as an increase in convertible note principal	$	-		$	557,444
Proceeds from loans payable paid directly to vendors in satisfaction of accounts payable	$	-		$	7,537
Proceeds from loans payable - related parties paid directly to vendors in satisfaction of accounts payable	$	-		$	9,263
Increase in loans payable in satisfaction of certain accounts payable	$	-		$	3,000
Security deposit applied to accounts payable	$	7,030		$	-

	Warrants
	Public			Private
	SPAC			SPAC			PIPE			Other			Total
Balance as of January 1, 2022	$	8,048,850		$	467,325		$	6,516,300		$	187,892		$	15,220,367
Change in fair value of derivative liabilities		(1,852,650	)		(251,250	)		(3,044,800	)		(81,414	)		(5,230,114	)
Balance as of March 31, 2022	$	6,196,200		$	216,075		$	3,471,500		$	106,478		$	9,990,253

	~~For the~~ ~~Three Months Ended~~March 31, 2022
Risk-free interest rate	~~March 31,~~ ~~2021~~	2.30% - 2.44%
~~Risk-free interest rate~~Expected term in years	~~0.00%~~2.34 - ~~0.92%~~	3.90
Expected ~~term (years)~~volatility	~~0.02 – 4.90~~	91.0% - 105%
Expected ~~volatility~~dividends	~~85% - 192%~~
~~Expected dividends~~	0%

	~~January 15,~~December 31, 2021 to
Risk-free interest rate	~~February 5, 2021~~	0.85% - 1.14%
~~Risk-free interest rate~~Expected term in years	~~0.00% - 0.14%~~	2.59 – 4.15
Expected ~~term (years)~~volatility	~~0.02 - 0.18~~	98.5%
Expected ~~volatility~~dividends	~~120% - 161%~~
~~Expected dividends~~	0%

		~~February 23,~~ ~~2021~~
~~Risk-free interest rate~~		~~0.59%~~
~~Expected term (years)~~		~~5.00~~
~~Expected volatility~~		~~85.0%~~
~~Expected dividends~~		~~0.0%~~

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Remaining Life in Years		Intrinsic Value

Outstanding, December 31, 2021		11,153,908		9.06		4.1
Issued		-		-
Exercised		-		-
Cancelled		-		-
Expired		-		-
Outstanding, March 31, 2022		11,153,908	$	9.06		3.8		-

Exercisable, March 31, 2022		11,153,908	$	9.06		3.8		-

Warrants Outstanding				Warrants Exercisable
				Weighted
				Average
Exercise		Number of		Remaining		Number of
Price		Shares		Life in Years		Shares
$	5.00		2,564,000		3.9		2,564,000
$	5.28		63,658		3.1		63,658
$	7.07		25,000		2.3		25,000
$	7.50		2,500,000		4.4		2,500,000
$	11.50		6,001,250		3.6		6,001,250
			11,153,908		3.8		11,153,908

	Principal Balance at December 31, 2020		Repayments			Effect of Foreign Exchange Rates		Principal Balance at March 31, 2021
Kingsbrook	$	150,000	$	(150,000	)	$	-	$	-
Paycheck Protection Program		53,051		-			-		53,051
Bounce back loan scheme		68,245		-			582		68,827
Other loans payable		810,913		(218,532	)		-		592,381
Total loans payable		1,082,209		(368,532	)		582		714,259
Less: loans payable - current portion		968,446		(362,151	)		-		606,295
Loans payable - non-current portion	$	113,763	$	(6,381	)	$	582	$	107,964

	Principal Balance at December 31, 2021		Forgiveness		Principal Repaid in Cash			Adjustment			Effect of Foreign Exchange Rates			Principal Balance at March 31, 2022
Paycheck Protection Program	$	41,312	$	-	$	(30,967	)	$	-		$	-		$	10,345
Bounce Back Loan Scheme		61,169		-		(3,131	)		-			(1,710	)		56,328
First Assurance Funding		1,618,443		-		(481,321	)		(14,042	)⁽²⁾		-			1,123,080
Other loans payable		155,320		-		-			(5,000	)⁽¹⁾		-			150,320
Total loans payable	$	1,876,244	$	-	$	(515,419	)	$	(19,042	)	$	(1,710	)	$	1,340,073
Less: loans payable - current portion		1,828,079													1,296,466
Loans payable - noncurrent portion	$	48,165												$	43,607

	Principal Balance at December 31, 2021		Reclass from Loans Payable		Effect of Foreign Exchange Rates			Principal Balance at March 31, 2022
Loans payable issued between
September 18, 2019 through November 4, 2020	$	81,277	$	5,000	$	(243	)	$	86,034

	Principal Balance December 31, 2020		Converted to Equity			Principal Balance March 31, 2021
Dominion	$	833,334	$	(833,334	)	$	-
Kingsbrook		101,000		(101,000	)		-
Alpha Capital		616,111		(300,000	)		316,111
Convertible bridge notes		365,750		(365,750	)		-
Total Convertible Notes Payable	$	1,916,195	$	(1,600,084	)	$	316,111

	For the Three Months Ended March 31, ~~2021~~	2022
~~Risk free~~Risk-free interest rate	0.75%
Expected term ~~(years)~~in years	5.27 -– 5.38
Expected volatility	100%
Expected dividends	0%

Stock Options Outstanding				Stock Options Exercisable
				Weighted
				Average
Exercise		Number of		Remaining		Number of
Price		Shares		Life in Years		Shares
$	2.49		50,000		8.7		50,000
$	4.43		1,580,000		8.9		772,444
$	7.56		436,000		9.3		72,667
$	3.95		675,000		9.7		210,417
			2,741,000		9.1		1,105,528

	~~Amount Due~~
~~Milestone~~	~~(excluding VAT)~~
~~Upon~~ ~~signing of the Fifth Oxford Agreement~~	£	~~70,546~~
~~6 months post signing of the Fifth Oxford Agreement~~	£	~~70,546~~
~~12 months post signing of the Fifth Oxford Agreement~~	£	~~70,546~~
~~24 months post signing of the Fifth Oxford Agreement~~	£	~~70,546~~

	●	Expectations for the clinical and preclinical development, manufacturing, regulatory approval, and commercialization of our product candidates;

	●	regulatory developments in the United States and foreign countries;

	For the Three Months Ended
	March 31,
	2022			2021
Operating Expenses:
Research and development	$	658,939		$	99,899
Research and development - related parties		47,718			267,053
General and administrative		2,969,151			2,542,231
General and administrative - related parties		5,261			39,120
Total Operating Expenses		3,681,069			2,948,303
Loss From Operations		(3,681,069	)		(2,948,303	)

Other Income (Expense):
Gain on settlement of payables and accrued expenses		-			723,764
Interest expense		(7,414	)		(112,933	)
Interest income (expense) - related parties		4,562			(13,949	)
Loss on extinguishment of convertible notes payable, net		-			(9,737	)
Offering costs allocated to warrant liabilities		-			(604,118	)
Change in fair value of accrued issuable equity		17,520			(9,405	)
Change in fair value of derivative liabilities		5,230,114			(13,229,308	)
Total Other Income (Expense), Net		5,244,782			(13,255,686	)
Income (Loss) Before Income Taxes		1,563,713			(16,203,989	)
Income tax benefit		-			5,404
Net Income (Loss)	$	1,563,713		$	(16,198,585	)

	●	We issued ~~2,503~~20,000 shares of restricted common stock to ~~Donald A. McGovern, Jr., and 2,101 shares of common stock~~an external consultant for professional relations services to ~~Larry Gold, Ph.D., our directors, in consideration for services rendered to the Company as directors of the Company.~~

	●	~~100,699 restricted shares of common stock were issued for services rendered in connection with a Bonus to Prof. Jagdeep Nanchahal, our Chairman of our Clinical Advisory Committee.~~be rendered.

Exhibit		Incorporated by Reference (Unless Otherwise Indicated)
Number	Exhibit Description	Form	File No.	Exhibit	Filing Date
4.1	Form of Warrant (February 2021 Private Offering)	8-K	001-38105	4.1	February 24, 2021
10.1%	Securities Purchase Agreement dated as of February 19, 2021 by and between 180 Life Sciences Corp. and the purchasers identified on the signature pages thereto.	8-K	001-38105	10.1	February 24, 2021
10.2	Engagement Letter dated January 26, 2021 between 180 Life Sciences Corp. and Maxim Group LLC.	8-K	001-38105	10.2	February 24, 2021
10.3	Amendment to Engagement Letter between 180 Life Sciences Corp. and Maxim Group LLC dated February 18, 2021.	8-K	001-38105	10.3	February 24, 2021
10.4	Registration Rights Agreement dated as of February 23, 2021 by and between 180 Life Sciences Corp. and the purchasers signatory thereto.	8-K	001-38105	10.4	February 24, 2021
10.5#	Form of Lock-Up Agreement (February 2021 Private Offering)	8-K	001-38105	10.5	February 24, 2021
10.6#	Consultancy Agreement dated February 22, 2021, by and between 180 Life Sciences Corp. and Prof Jagdeep Nanchahal	8-K	001-38105	10.1	March 3, 2021
10.7#	Amended and Restated Employment Agreement dated February 25, 2021, and effective November 6, 2020, by and between 180 Life Sciences Corp. and James N. Woody	8-K	001-38105	10.2	March 3, 2021
10.8#	James N. Woody - Stock Option Agreement effective February 26, 2021 (1,400,000 shares)	8-K	001-38105	10.3	March 3, 2021
10.9#	Employment Agreement dated February 24, 2021, and effective November 6, 2020, by and between 180 Life Sciences Corp. and Ozan Pamir and Amendment and Correction Thereto dated March 1, 2021	8-K	001-38105	10.4	March 3, 2021
10.10#	Ozan Pamir - Stock Option Agreement effective February 26, 2021 (180,000 shares)	8-K	001-38105	10.5	March 3, 2021
10.11#	First Amendment to Consultancy Agreement dated March 31, 2021, by and between 180 Life Sciences Corp. and Prof Jagdeep Nanchahal	8-K	001-38105	10.2	April 2, 2021
10.12	Settlement and Mutual Release Agreement dated May 4, 2021, by and between 180 Life Sciences Corp. and EarlyBirdCapital, Inc.	8-K	001-38105	10.1	May 7, 2021
10.13#	Second Amendment to Employment Agreement dated May 27, 2021, and effective November 6, 2020, by and between 180 Life Sciences Corp., Katexco Pharmaceuticals Corp. and Ozan Pamir	8-K	001-38105	10.2	May 27, 2021
10.14#	Form of Director Nominee Offer Letter (May 2021)	8-K	001-38105	10.1	May 27, 2021

	180 LIFE SCIENCES CORP.

Date: ~~July~~May 16, ~~2021~~2022		/s/ James N. Woody, M.D., Ph.D.
	By:	James N. Woody, M.D., Ph.D., Chief Executive Officer (Principal Executive Officer)

Date: ~~July~~May 16, ~~2021~~2022		/s/ Ozan Pamir
	By:	Ozan Pamir Interim Chief Financial Officer (Principal Financial and Accounting Officer)