Company: ARTL
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001640334-25-002022
Chunk: 54

Company: ARTELO BIOSCIENCES, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 2
Chunk 54
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 Factors – Risks relating to SOL” in our filings with the SEC for a description of the material risks that apply to our holdings of SOL.

 23Table of Contents

Description of Solana (SOL) and Rationale for Acquisition

SOL is the native digital asset of the Solana blockchain, an open-source, high-performance blockchain designed for speed and scalability. Solana employs a unique hybrid consensus mechanism that combines proof-of-history (PoH) with proof-of-stake (PoS), enabling high throughput and low transaction costs. SOL is primarily used to pay transaction fees (as the network’s “gas” token) and as a means of staking to support the network’s consensus and security, with validators and delegators earning rewards for their participation.

The Solana blockchain supports a wide range of decentralized applications (dApps), including decentralized finance (DeFi) protocols, non-fungible token (NFT) marketplaces, and other Web3 projects. As of the date of this filing, Solana has a robust and growing ecosystem, with significant developer activity and adoption across multiple sectors.

From a tokenomics perspective, Solana was launched with an initial supply of 500 million SOL, with new tokens created through inflationary rewards distributed to validators and delegators. The inflation rate is designed to decrease over time, providing a long-term supply schedule that supports both network security and economic sustainability.

The Board determined that acquiring SOL as a treasury asset is supported by several factors: (i) exposure to SOL offers potential long-term appreciation and may help preserve the purchasing power of our excess liquidity; (ii) SOL is highly liquid relative to many other digital assets, with deep spot markets on multiple U.S.-regulated trading venues; (iii) the Solana ecosystem continues to expand, particularly in DeFi, NFT infrastructure, and other Web3 use cases, which may drive further demand and utility for SOL. The Board also considered the technical maturity of the Solana network, its institutional-grade custody solutions, and the optionality for future yield generation through staking, subject to further Board approval.

 24Table of Contents

Key Trends and Factors Affecting Comparability Between Periods

 ·Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future from holding or selling significant amounts of SOL. The prices of digital assets have historically been subject to dramatic price fluctuations and are highly volatile. In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-08,