SCHEDULE: Activist Investor Farb Nominates Directors at Artelo Biosciences

Activist investor Daniel S. Farb, holding a 9.8% stake in Artelo Biosciences, has nominated himself and Scott D. Pomfret to the company's Board of Directors, citing undervaluation and a desire to unlock shareholder value.

Summary

• Daniel S. Farb, a Canadian citizen and President/Managing Member of Mill Pond Capital, LLC and Big Mill Pond Capital Management, LLC, has filed a Schedule 13D for Artelo Biosciences, Inc.
• Mr. Farb beneficially owns 153,000 shares of Common Stock, representing approximately 9.8% of the 1,555,493 shares outstanding as of September 16, 2025.
• He also holds 11,299 $10 Warrants and 3 $5.82 Warrants, which are currently not exercisable due to a 4.99% beneficial ownership limitation.
• Mr. Farb believes the shares were undervalued and represent an attractive investment opportunity.
• On September 19, 2025, Mr. Farb nominated himself and Scott D. Pomfret for election to the Board of Directors at the 2025 annual meeting of stockholders.
• The nominees possess extensive experience in investment management, capital markets, public company boards, legal, regulatory, and compliance.
• Mr. Farb intends to engage with management, the Board, and other stockholders to unlock stockholder value, including discussions on capital allocation, board structure, potential business combinations, and operational performance.
• He previously engaged in discussions regarding potential investments in cryptocurrencies, including Solana, and related extraordinary corporate transactions.
• Recent transactions by Mr. Farb include numerous purchases and sales of common stock between August 4, 2025, and September 17, 2025, with prices ranging from $4.4396 to $11.3594 per share.
• Mr. Farb acquired 11,299 shares, 22,598 $5.82 Warrants, and 11,299 $10 Warrants for an aggregate purchase price of $70,000.00 through a June 2025 Securities Purchase Agreement (SPA).
• Upon exercising 22,598 $5.82 Warrants for $131,520.36, Mr. Farb only received 22,595 shares, with the Issuer intending to refund $17.46 for the 3 undelivered shares.
• Mr. Farb and Mr. Pomfret entered into a Joint Filing and Solicitation Agreement on September 18, 2025, to form a group for seeking board representation and soliciting proxies, with Mr. Farb bearing all pre-approved expenses.

Sentiment

Score: 7

Explanation: The filing indicates a proactive investor seeking to unlock value and improve governance, which is generally positive for long-term shareholders. However, the activist nature and potential for a proxy contest introduce uncertainty and potential short-term volatility. The issue with undelivered shares is a minor negative, but the overall intent is value-accretive.

Positives

• Reporting Person Daniel S. Farb believes Artelo Biosciences shares are undervalued, indicating potential for price appreciation.
• Nomination of two highly qualified director candidates, Daniel S. Farb and Scott D. Pomfret, brings extensive experience in investment management, capital markets, corporate governance, legal, regulatory, and compliance.
• The activist investor's stated purpose is to unlock stockholder value, which could lead to strategic improvements or changes beneficial to shareholders.
• Mr. Farb's willingness to engage with management and the Board suggests a proactive approach to improving company performance and strategy.

Negatives

• The Issuer failed to deliver 3 shares to Mr. Farb after he exercised 22,598 warrants, instead offering a refund of $17.46, indicating a potential operational or administrative issue.
• The beneficial ownership limitation of 4.99% (currently) prevents Mr. Farb from exercising a significant portion of his warrants (11,299 $10 Warrants and 3 $5.82 Warrants), limiting his immediate upside from these instruments.
• The formation of an activist group and nomination of directors could lead to a contentious proxy contest, potentially diverting management's focus and resources.
• Discussions about potential investments in cryptocurrencies, including Solana, and extraordinary corporate transactions could introduce new, potentially high-risk, strategic directions for the company.

Risks

• **Proxy Contest:** The nomination of directors by an activist investor could lead to a contested election at the 2025 annual meeting, potentially causing disruption and significant costs for the company.
• **Management Resistance:** Current management and the Board may resist the proposed changes or director nominations, leading to prolonged disagreements.
• **Strategic Shift Risk:** Discussions about potential investments in cryptocurrencies and extraordinary corporate transactions could lead to a significant shift in the company's business model, introducing new and potentially higher risks.
• **Warrant Exercise Limitations:** The 4.99% beneficial ownership limitation on Mr. Farb's warrants restricts his ability to fully exercise them, potentially impacting his investment strategy and influence.
• **Share Price Volatility:** Activist campaigns often lead to increased share price volatility due to speculation and uncertainty surrounding potential corporate changes.

Future Outlook

Daniel S. Farb intends to continuously review his investment in Artelo Biosciences. Depending on market conditions, investment opportunities, and share prices, he may increase or decrease his position. He plans to engage in further communications with management, the Board, and stockholders, potentially making recommendations regarding capital allocation, capitalization, ownership structure, Board composition, business combinations or dispositions, and operational performance. He may also engage in additional share purchases, sales, short selling, or hedging transactions.

Industry Context

This filing reflects a growing trend of activist investor engagement in publicly traded companies, particularly in sectors where investors perceive undervaluation or opportunities for strategic change. The involvement of an investor with a background in investment management and experience on biotech company boards (PharmaCyte Biotech, Inc.) suggests a focus on unlocking value, potentially through operational improvements, strategic re-evaluation, or capital structure adjustments. The mention of discussions around cryptocurrency investments, while not a core business for most traditional companies, indicates a willingness to explore unconventional value creation avenues, which could be seen as either innovative or high-risk depending on the company's existing strategy and industry.

Comparison to Industry Standards

• Activist campaigns, such as the one initiated by Daniel S. Farb, are a common feature in the public markets, often seen when investors believe a company's stock is undervalued relative to its peers or intrinsic potential. For example, similar campaigns have been waged by firms like Starboard Value or Elliott Management, which frequently target companies with underperforming assets or perceived governance issues.
• The nomination of independent directors with strong financial and regulatory backgrounds, like Mr. Farb and Mr. Pomfret, aligns with best practices in corporate governance, aiming to bring fresh perspectives and enhance board oversight, a strategy often employed by activist investors to improve shareholder representation.
• The beneficial ownership limitation on warrants (4.99% with an option to increase to 9.99%) is a standard anti-takeover or anti-dilution provision often seen in financing agreements, designed to prevent a single investor from rapidly accumulating a controlling stake without broader shareholder approval.

Management Changes

Corporate Governance

Related Party Transactions

• Daniel S. Farb entered into a Securities Purchase Agreement (SPA) with the Issuer on June 24, 2025, for the purchase of shares and warrants.
• Daniel S. Farb and Scott D. Pomfret entered into a Joint Filing and Solicitation Agreement on September 18, 2025, to form a group for seeking board representation and soliciting proxies.
• Scott D. Pomfret granted Daniel S. Farb a Power of Attorney on September 16, 2025, for SEC filings and proxy solicitation related to the group's activities.

Stakeholder Impact

• **Shareholders:** Potential for increased shareholder value if the activist campaign is successful in driving strategic changes or improving operational performance. Risk of share price volatility and uncertainty during a potential proxy contest.
• **Board of Directors:** Faces a challenge from an activist investor, potentially leading to changes in board composition and increased scrutiny of strategic decisions and governance.
• **Management:** May face pressure to implement changes proposed by the activist investor and could be challenged on current strategies and performance.
• **Employees:** No direct impact mentioned, but significant strategic shifts or corporate transactions resulting from the activist campaign could indirectly affect employees.

Next Steps

• The Issuer's 2025 annual meeting of stockholders will be held, where Daniel S. Farb and Scott D. Pomfret will be nominated for election to the Board of Directors.
• Daniel S. Farb intends to continue engaging in communications with management, the Board, and other stockholders regarding potential opportunities to unlock stockholder value.
• Mr. Farb may increase or decrease his position in the Issuer through open market purchases or sales, private transactions, short selling, or hedging activities.
• The Issuer is expected to refund $17.46 to Mr. Farb for 3 undelivered shares from a warrant exercise.

Key Dates

Recommendation

The filing indicates an activist investor, Daniel S. Farb, has taken a significant stake and is nominating directors, believing the shares are undervalued. While this could be a catalyst for value creation, the immediate outlook involves uncertainty due to a potential proxy contest and strategic shifts. A 'hold' recommendation is appropriate as investors await further developments regarding the outcome of the board nominations and the specific strategies proposed by the activist group. The situation presents both opportunities for upside if the activist succeeds and risks if the campaign becomes protracted or disruptive.

Keywords

Artelo Biosciences, Daniel S. Farb, Schedule 13D, Activist Investor, Board Nomination, Corporate Governance, Proxy Contest, Common Stock, Warrants, Investment Firm, Shareholder Value, SEC Filing