[10-Q] Oncotelic Therapeutics, Inc. Quarterly Earnings Report
Oncotelic Therapeutics, Inc. reported no revenue for the three and nine months ended September 30, 2025 and continued to operate at a loss. Net loss attributable to the company was $1.05 million for the quarter, improving from $3.30 million a year earlier, and $1.07 million for the nine‑month period versus $3.92 million in 2024. Operating expenses fell sharply year over year due to the absence of a prior $3.2 million goodwill impairment.
Cash and restricted cash totaled $429,000 at September 30, 2025, while current liabilities were $20.1 million, including $10.3 million of convertible and short‑term debt and $3.5 million of related‑party debt. Management discloses a substantial doubt about the company’s ability to continue as a going concern, citing cumulative losses of about $39.1 million, negative working capital of roughly $18.5 million, and negative operating cash flow. The company is relying on convertible notes, short‑term related‑party loans, and equity purchase agreements with Peak One and Mast Hill, while its 45% stake in JV partner GMP Bio is carried at $22.65 million based on a Level 3 fair value election.
- None.
- None.
Insights
Oncotelic shows narrower losses but remains highly leveraged with going concern risks.
Oncotelic Therapeutics significantly reduced its reported net loss to
The balance sheet is dominated by financing obligations. At
To fund operations, the company raised
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||
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ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025
TABLE OF CONTENTS
| Page | ||
| PART I. FINANCIAL INFORMATION | 3 | |
| ITEM 1. | Financial Statements (unaudited) | 3 |
| Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 | 3 | |
| Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 | 4 | |
| Consolidated Statements of Changes in Stockholders’ Equity for the Three Months and Nine Months Ended September 30, 2025 and 2024 | 5 | |
| Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 | 7 | |
| Notes to Consolidated Financial Statements | 8 | |
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 35 |
| ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk | 49 |
| ITEM 4. | Controls and Procedures | 49 |
| PART II. OTHER INFORMATION | 51 | |
| ITEM 1. | Legal Proceedings | 51 |
| ITEM 1A. | Risk Factors | 51 |
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 51 |
| ITEM 3. | Defaults Upon Senior Securities | 51 |
| ITEM 4. | Mine Safety Disclosures | 51 |
| ITEM 5. | Other Information | 51 |
| ITEM 6. | Exhibits, Financial Statement Schedules | 52 |
| SIGNATURES | 53 | |
| 2 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | $ | |||||||
| Accounts receivable | ||||||||
| Prepaid & other current assets | ||||||||
| Total current assets | ||||||||
| In process R&D | ||||||||
| Goodwill, net of impairment | ||||||||
| Investment in GMP Bio at fair value | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accounts payable - related party | ||||||||
| Contingent consideration | ||||||||
| Derivative liability on notes | ||||||||
| Convertible and short-term debt, net of costs | ||||||||
| Convertible debt and short-term debt - related party, net of costs | ||||||||
| Convertible debt | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 13) | - | - | ||||||
| Stockholders’ equity: | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Oncotelic Therapeutics, Inc. stockholders’ equity | ||||||||
| Non-controlling interests | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
| 3 |
ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three MONTHS AND NINE MONTHS ended SEPTEMBER 30, 2025 and 2024
(Unaudited)
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Service Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
| Total Revenue | - | - | - | - | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Goodwill impairment (Note 2 and 3) | - | - | ||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Reimbursement for expenses - related party | - | - | - | |||||||||||||
| Change in fair value of derivative on debt | ( | ) | ||||||||||||||
| Loss on debt conversion | - | - | - | ( | ) | |||||||||||
| Total other expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss before non-controlling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to Oncotelic Therapeutics, Inc. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic net loss per share attributable to common stock | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic weighted average common stock outstanding | ||||||||||||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
| 4 |
ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES
Consolidated STATEMENT of STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025
(Unaudited)
| Shares | Amount | Shares | Amount | Capital | Deficit | Interests | Equity | |||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Non-controlling | Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Interests | Equity | |||||||||||||||||||||||||
| Balance at January 1, 2025 | - | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| Common shares issued upon partial conversion of debt | - | - | - | - | ||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance at March 31, 2025 | - | - | $ | $ | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net Income (Loss) | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||
| Balance at June 30, 2025 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Common shares issued upon partial conversion of debt | - | - | - | - | ||||||||||||||||||||||||||||
| Shares and warrants issued in connection with debt, equity purchase agreement and services | - | - | - | - | ||||||||||||||||||||||||||||
| Net Loss | - | - | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance at September 30, 2025 | - | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
| 5 |
ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES
Consolidated STATEMENT of STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
(Unaudited)
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Non-controlling | Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Interests | Equity | |||||||||||||||||||||||||
| Balance at January 1, 2024 | - | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| ASU 2020-06 adoption | - | |||||||||||||||||||||||||||||||
| Common shares issued upon partial conversion of debt | - | - | - | - | ||||||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at March 31, 2024 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Common shares issued upon partial conversion of debt | - | - | - | - | ||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance at June 30, 2024 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Net income (loss) | - | - | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance at September 30, 2024 | - | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| Balance | - | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
| 6 |
ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES
Consolidated STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
(Unaudited)
| 2025 | 2024 | |||||||
| For the Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Goodwill impairment | - | |||||||
| Amortization of debt discount and deferred finance costs | ||||||||
| Stock based compensation | - | |||||||
| Change in fair value of derivative | ( | ) | ( | ) | ||||
| Loss on debt conversion | - | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Accounts payable to related party | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from convertible debt | ||||||||
| Proceeds from short term loans, others | - | |||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash and restricted cash - beginning of period | ||||||||
| Cash and restricted cash - end of period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | - | $ | - | ||||
| Non-cash investing and financing activities: | ||||||||
| Common shares issued upon partial conversion of debt | $ | $ | ||||||
| Common shares and warrants issued in connection with debt, equity purchase agreement and services | $ | $ | - | |||||
| Beneficial Conversion Feature on convertible debt and restricted common shares | $ | - | $ | ( | ) | |||
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
Oncotelic Therapeutics, Inc. (“Oncotelic” or the “Company”) was originally incorporated in the State of New York in 1988 as OXiGENE, Inc. The Company reincorporated in the State of Delaware in 1992, changed its name to Mateon Therapeutics, Inc. (“Mateon”) in 2016, and subsequently changed its name to Oncotelic Therapeutics, Inc. in November 2020. The Company conducts business through Oncotelic and its wholly owned subsidiaries, including Oncotelic, Inc., PointR Data, Inc. (“PointR”), Pet2DAO, Inc. (“Pet2DAO”), and EdgePoint AI, Inc. (“EdgePoint”), a consolidated subsidiary with non-controlling interests. (Collectively, “Oncotelic,” “we,” “our,” or “the Company”). Further detail on prior mergers and corporate history is provided in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on April 15, 2025.
The Company is principally focused on the development of immuno-oncology therapeutics, including OT-101, a transforming growth factor-beta (TGF-β) inhibitor being advanced for difficult-to-treat cancers and viral respiratory diseases. OT-101 is being developed through our joint venture (“JV”) with Dragon Overseas Capital Limited (“Dragon”) and GMP Biotechnology Limited (“GMP Bio”), affiliates of Golden Mountain Partners (“GMP”).
As
of September 30, 2025, the Company owns
Oncotelic is in the process of seeking a separate, ASC-compliant valuation performed under U.S. GAAP standards. The results of this valuation, or other events that indicate a change in the value of the Company’s holdings in GMP Bio will be incorporated into future reporting periods consistent with the Company’s fair value reporting under U.S. GAAP.
The JV is advancing OT-101 for high-grade gliomas, pancreatic cancer, and other oncology indications, as well as for epidemic and pandemic respiratory diseases. In addition, the JV is developing five additional therapeutic candidates, which—if successfully developed and approved—are anticipated to contribute meaningful long-term value to both the JV and the Company.
Separately from the JV, the Company plans to develop OT-101 for select animal-health indications and is evaluating the use of digital assets and blockchain-based technologies to support that platform. The Company has also acquired apomorphine for potential uses in Parkinson’s disease, erectile dysfunction, and female sexual dysfunction. The Company continues to evaluate advancement opportunities for OXi4503 (for acute myeloid leukemia and myelodysplastic syndromes) and CA4P (in combination with checkpoint inhibitors for metastatic melanoma).
The Company’s core scientific focus is the development of its proprietary self-immunization protocol (“SIP™”), designed to stimulate a patient’s immune system to recognize and target tumors without requiring tumor extraction or antigen identification. The SIP™ platform is supported by more than three decades of RNA-based research and is being applied initially to oncology, with potential expansion to Duchenne Muscular Dystrophy (“DMD”) and other diseases driven by TGF-β overexpression.
The
JV continues preparing for planned Phase 2 and Phase 3 trials for OT-101 in high-grade glioma, pancreatic cancer, and other indications.
The JV is also sponsoring investigator-initiated clinical studies in additional oncology applications. Under an agreement and supplemental
agreement with GMP, the Company received approximately $
The Company remains committed to advancing its therapeutic pipeline, strengthening the clinical and commercial prospects of GMP Bio, and pursuing programs intended to address significant unmet medical needs in oncology and related therapeutic areas.
| 8 |
Fundraising
Private Placement 2 & JH Darbie Financing
Between
July 2023 and January 2024, the Company entered into a series of subscription agreements with 46 accredited investors which resulted
in a conversion of a gross amount of approximately $
Equity Purchase Agreement -2021
In
May 2021, the Company entered into an Equity Purchase Agreement (the “EPL”) and Registration Rights Agreement (the
“Registration Rights Agreement”) with Peak One Opportunity Fund, L.P. (“Peak One”), pursuant to
which the Company shall have the right, but not the obligation, to direct Peak One to purchase up to $
March 2022 Notes
In
March 2022, the Company entered into a Securities Purchase Agreement with Fourth Man, pursuant to which the Company issued convertible
promissory note in the aggregate principal amount of $
For more information on the debt financing of the Company, refer to Note 5 of the Notes to the Consolidated Financial Statements.
| 9 |
May 2022 Note
In
May 2022, the Company entered into a Securities Purchase Agreement with Mast, pursuant to which the Company issued convertible promissory
notes in the aggregate principal amount of $
June 2022 Note
In
June 2022, the Company entered into a Securities Purchase Agreement with Blue Lake, pursuant to which the Company issued convertible
promissory notes in the aggregate principal amount of approximately $
For more information on the debt financing of the Company, refer to Note 5 of the Notes to the Consolidated Financial Statements.
July 2025 Note
In
July 2025, the Company entered into a Securities Purchase Agreement with Mast Hill, pursuant to which the Company issued convertible
promissory notes in the aggregate principal amount of $
For more information on the debt financing of the Company, refer to Note 5 of the Notes to the Consolidated Financial Statements.
Mast Hill Equity Purchase Agreement
In August, 2025, the Company entered into an Equity Purchase Agreement (the “Mast EPA”) and a Registration Rights Agreement (the “Mast Registration Rights Agreement”) with Mast, pursuant to which the Company shall have the right, but not the obligation, to direct Mast, to purchase up to $25 million (the “Maximum Commitment Amount”) in shares of the Company’s Common Stock in multiple tranches. The Company plans to file a registration statement with the SEC at the earliest.
For more information on the Mast EPA, refer to Note 10 of the Notes to the Consolidated Financial Statements.
Jefferson Capital Ventures, LLC and Valor Nation, Inc Independent Contractor Agreements
In
August, 2025, Oncotelic Therapeutics, Inc. (the “Company” or “Our”) entered into independent contractor
agreements (“ICA”) with Jefferson Capital Ventures, LLC (“Jefferson”) and Valor Nation, Inc.
(“Valor”) for providing certain consulting and advisory services. The ICAs call for Jefferson and Valor to provide
consulting and advisory services including strategic planning meetings, coordination non-legal support for SEC compliance, balance
sheet and income statement optimization strategies, shareholder and investor communication planning, liaison with investment
bankers, analysts, and institutional investors, operational efficiency and cost-saving recommendations and ancillary strategic
services not requiring a license, corporate planning, operations and capital markets advisory services not requiring licenses. Such
services shall be provided by Jefferson and Valor for a period of 18 months from the signing of the ICA, unless terminated earlier
by either party under certain predefined conditions. Jefferson has agreed to be compensated $
| 10 |
Forever Prosperity (previously GMP) Note purchase agreements and unsecured notes
Between
June 2020 and January 2022, the Company entered into various purchase agreements and promissory notes with GMP, cumulatively totaling
gross $
For more information on the GMP debt financing, refer to Note 5 of the Notes to the Consolidated Financial Statements.
Joint Venture with GMP Bio
In March 2022, the Company formalized a JV, GMP Bio, with Dragon , both affiliates of GMP. Although no assurances can be given, GMP Bio currently intends to conduct an initial public offering of the JV, at a future date, on either the Hong Kong Exchange or other stock exchange. For more information on the JV, refer to Note 6 of the unaudited Notes to the Consolidated Financial Statements.
Pet2DAO
In November 2022, the Company formed a Decentralized autonomous organization (“DAO”) entity, Pet2DAO LLC (“Pet2DAO”), as a wholly owned subsidiary. For more information on Pet2DAO, refer to our 2023 Annual Report on Form 10-K filed with the SEC on April 12, 2024.
Mosaic ImmunoEngineering, Inc. Term Sheet
In April 2024, the Company entered into a binding term sheet (the “Term Sheet”) with Mosaic ImmunoEngineering, Inc. (“Mosaic”). For more information on the Term Sheet, refer to the Current Report on Form 8-K filed with the SEC on April 29, 2024. In August 2024, Mosaic and the Company mutually agreed to extend the date of the Term Sheet to expire at the earlier of (1) the signing of definitive agreements or (2) December 31, 2024. In December 2024, the Company and Mosaic further extended the term of the term-sheet to expire at the earlier of (1) the signing of definitive agreements or (2) June 30, 2025. Currently, both parties are in discussions to extend the timeline to complete the due diligence and finalize the signing of definitive agreements to a date mutually acceptable to both.
Principles of Consolidation
The consolidated financial statements include the accounts of Oncotelic, its wholly owned subsidiaries, Oncotelic Inc. and PointR; and Edgepoint our non-controlled interest entity. Intercompany accounts and transactions have been eliminated in consolidation. The Company’s investment in GMB Bio is recorded and reported as a minority investment in equity securities.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the SEC for quarterly reports on Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America. The accompanying unaudited condensed consolidated financial statements should therefore be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 31, 2024 included in the Company’s 2024 Annual Report on Form 10-K filed with the SEC on April 15, 2025. The unaudited condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and entities in which the Company has non-controlling interests. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair presentation of the results for the interim period presented. Our consolidated operations comprise a single operating segment and reporting unit.
| 11 |
Liquidity and Going Concern
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company
has incurred net accumulated losses of approximately $
The
Company’s long-term plans include continued development of its current pipeline of products, in addition to continue the
development of OT-101 which is exclusively out-licensed to the JV and the JV will be responsible for the funding required to support
the development in entirety, to generate sufficient revenues, through either technology transfer or product sales, or raise
additional financing to cover its anticipated expenses. The Company has supported its operations through a combination of debt and
equity financing. See Note 3, 5 and 10 below). Until the Company is able to generate sufficient revenues from its current pipeline,
the Company plans on funding its operations through the sale of equity and/or the issuance of debt, combined with or without
warrants or other equity instruments. The Company obtained short-term loans of approximately $
Although no assurances can be given as to the Company’s ability to deliver on its revenue plans, or that unforeseen expenses may arise, management believes that the potential equity and debt financing or other potential financing will provide the necessary funding for the Company to continue as a going concern. Also, management cannot guarantee any potential debt or equity financing will be available on favorable terms or at all. As such, management does not believe the Company has sufficient cash for 12 months from the date of this report. If adequate funds are not available on acceptable terms, or at all, the Company will need to curtail operations, or cease operations completely.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity-based transactions and disclosure of contingent liabilities at the date of the financial statements and revenues and expense during the reporting period. Actual results could materially differ from those estimates.
The Company believes the following critical accounting policies affect and require more significant judgments and estimates used in the preparation of the financial statements, including but not limited to, the valuation of goodwill and intangible assets for impairment, deferred tax asset and valuation allowance, and fair value of financial instruments.
Cash
As
of September 30, 2025, and December 31, 2024 the Company held all its cash in banks. The Company considers investments in highly liquid
instruments with a maturity of three months or less to be cash equivalents. The Company did
| 12 |
Debt issuance Costs and Debt discount
Issuance costs are specific incremental costs that are (1) paid to third parties and (2) directly attributable to the issuance of a debt or equity instrument. The issuance costs attributable to the initial sale of the instrument are offset against the associated proceeds in the determination of the instrument’s initial net carrying amount.
Debt issuance costs and debt discounts are being amortized over the lives of the related financings on a basis that approximates the effective interest method. Costs and discounts are presented as a reduction of the related debt in the accompanying balance sheets if related to the issuance of debt or presented as a reduction of additional paid in capital if related to the issuance of an equity instrument. The Company applies the relative fair value to allocate the issuance costs among freestanding instruments that form part of the same transaction.
If the Company amends the terms of its convertible notes, the Company reviews and applies the guidance per ASC 470-60 Troubled debt restructurings and ASC 470-50 Debt-Modifications and Extinguishments, evaluates and concludes whether the terms of the agreements were or were not substantially different as of a particular reporting date and accounts the transaction as a debt modification or a troubled debt restructuring.
Fair Value of Financial Instruments
The carrying value of cash, accounts payable and accrued expense approximate their fair values based on the short-term maturity of these instruments. As defined in ASC 820, “Fair Value Measurements and Disclosures,” fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement.
The three levels of the fair value hierarchy defined by ASC 820 are as follows:
| ● | Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. |
| ● | Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars. |
| ● | Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. |
The Company did not have any Level 1 or Level 2 assets and liabilities at September 30, 2025 and December 31, 2024.
| 13 |
Investment in equity securities
The following table summarizes the cumulative gross unrealized gains and losses and fair values for long-term investments accounted for at fair value under the fair value option, with the unrealized gains and losses reported within earnings on the Condensed Consolidated Statements of Operation as of September 30, 2025 and December 31, 2024:
SCHEDULE OF UNREALIZED GAINS AND LOSSES
| Initial Book Value | Cumulative Gross Unrealized Gains | Cumulative Gross Unrealized Losses | Fair Value | |||||||||||||
| September 30, 2025 | ||||||||||||||||
| Investment in GMP Bio (equity securities) | $ | $ | - | $ | - | $ | ||||||||||
| Total | $ | $ | - | $ | - | $ | ||||||||||
| Initial Book Value | Cumulative Gross Unrealized Gains | Cumulative Gross Unrealized Losses | Fair Value | |||||||||||||
| December 31, 2024 | ||||||||||||||||
| Investment in GMP Bio (equity securities) | $ | $ | - | $ | - | $ | ||||||||||
| Total | $ | $ | - | $ | - | $ | ||||||||||
The table above sets forth a summary of the recording of the initial value of the long-term value of investment in equity securities of GMP Bio on a negotiated value, based on a third-party valuation report, and changes in the fair value of such equity securities, if such change occurs, as a Level 3 fair value as of September 30, 2025 and December 31, 2024.
Derivative Liability
The Company has certain derivative liabilities associated with its 2019 bridge financing Convertible Notes (see Note 5), which consisted of conversion feature derivatives at September 30, 2025 and December 31, 2024, are Level 3 fair value measurements.
The table below sets forth a summary of the changes in the fair value of the Company’s derivative liabilities classified as Level 3 as of September 30, 2025 and December 31, 2024:
SUMMARY OF CHANGES IN FAIR VALUE OF DERIVATIVE LIABILITIES
| September 30, 2025 Conversion Feature | December 31, 2024 Conversion Feature | |||||||
| Balance at January 1, 2025 and 2024 | $ | $ | ||||||
| Change in fair value | ( | ) | ||||||
| Balance at June 30, 2025 and December 31, 2024 | $ | $ | ||||||
| 14 |
As of September 30, 2025, and December 31, 2024, the Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures based on assumptions used in the Black-Scholes valuation model. The key valuation assumptions used consists, in part, of the price of the Company’s Common Stock, a risk-free interest rate based on the yield of a Treasury note and expected volatility of the Company’s Common Stock all as of the measurement dates. The Company used the following assumptions to estimate fair value of the derivatives as of September 30, 2025 and December 31, 2024, respectively:
SUMMARY OF ESTIMATE FAIR VALUE OF DERIVATIVE LIABILITIES
September 30, 2025 | December 31, 2024 | |||||||
| Key | Key | |||||||
| Assumptions | Assumptions | |||||||
| for fair value | for fair value | |||||||
| of conversions | of conversions | |||||||
| Risk free interest | % | % | ||||||
| Market price of share | $ | $ | ||||||
| Life of instrument in years | ||||||||
| Volatility | % | % | ||||||
| Dividend yield | % | % | ||||||
A contingent consideration of
$
If, and when, the Company changes its valuation inputs for measuring financial liabilities at fair value, either due to changes in current market conditions or other factors, it may need to transfer those liabilities to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur. For the periods ended September 30, 2025 and 2024, respectively, there were no transfers of financial assets or financial liabilities between the hierarchy levels.
Net Income (Loss) Per Share
Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share includes the effect of Common Stock equivalents (notes convertible into Common Stock, stock options and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. For the three and nine months ended September 30, 2025 and 2024, no equivalent shares of the Common Stock were included as the Company has incurred a loss in each of the periods, and addition of such stock equivalents in the computation would have been anti-dilutive.
Stock-Based Compensation
The Company applies the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the statements of operations.
For stock options issued to employees and members of the Board of Directors (the “Board”) for their services, the Company estimates the grant date fair value of each option using the Black-Scholes option pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock. For awards subject to service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised.
For warrants issued in connection with fund raising activities, the Company estimates the grant date fair value of each warrant using the Black-Scholes pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the warrant, the expected volatility of the Common Stock consistent with the expected life of the warrant, risk-free interest rates and expected dividend yields of the Common Stock. If the warrants are issued upon termination or cancellation of prior issued warrants, then the Company estimates the grant date fair value of the new warrants using the Black-Scholes pricing model and evaluates whether the new warrants are deemed as equity instruments or liability instruments. If the warrants are deemed to be equity instruments, the Company records stock compensation expense and an addition to additional paid in capital. If, however, the warrants are deemed to be liability instruments, then the fair value is treated as a deemed dividend and credited to additional paid in capital.
| 15 |
For shares issued in connection with provision of services, the Company estimates the cost of the shares at a price of the Company’s stock on the date of issuance and records that cost as a stock based compensation cost.
Impairment of Long-Lived Assets
The
Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances
indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the
forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined
to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets
of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature
of the assets. For the three and nine months ended September 30, 2025 and 2024, respectively, there were
Intangible Assets
The
Company records its intangible assets at cost in accordance with ASC 350, Intangibles – Goodwill and Other. The Company reviews
the intangible assets for impairment on an annual basis or if events or changes in circumstances indicate it is more likely than not
that they are impaired. These events could include a significant change in the business climate, legal factors, a decline in operating
performance, competition, sale or disposition of a significant portion of the business, or other factors. If the review indicates the
impairment, an impairment loss would be recorded for the difference of the value recorded and the new value. For the nine months ended
September 30, 2025 and September 30, 2024, there were
Goodwill
Goodwill represents the excess of the purchase price of acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least once annually, at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the reporting unit. If, on the basis of qualitative factors, it is considered not more likely than not that the fair value of the reporting unit is less than the carrying amount, further testing of goodwill for impairment would not be required. Otherwise, goodwill impairment is tested using a two-step approach.
The
first step involves comparing the fair value of the reporting unit to its carrying amount. If the fair value of the reporting unit is
determined to be greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount is determined
to be greater than the fair value, the second step must be completed to measure the amount of impairment, if any. The second step involves
calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill,
of the reporting unit from the fair value of the reporting unit as determined in step one. The implied fair value of the goodwill in
this step is compared to the carrying value of goodwill. If the implied fair value of the goodwill is less than the carrying value of
the goodwill, an impairment loss equivalent to the difference is recorded. For the three and nine months ended September 30, 2025; and three months ended September 30, 2024, no impairment was recognized
towards goodwill. For the nine months ended September 30, 2024, we recorded an impairment loss of approximately $
| 16 |
Derivative Financial Instruments Indexed to the Company’s Common Stock
We have generally issued derivative financial instruments, such as warrants, in connection with our equity offerings. We evaluate the terms of these derivative financial instruments in order to determine their accounting treatment in our financial statements. Key considerations include whether the financial instruments are freestanding and whether they contain conditional obligations. If the warrants are freestanding, do not contain conditional obligations and meet other classification criteria, we account for the warrants as an equity instrument. However, if the warrants contain conditional obligations, then we account for the warrants as a liability until the conditional obligations are met or are no longer relevant. Because no established market prices exist for the warrants that we issue in connection with our equity offerings, we must estimate the fair value of the warrants based on the price of our Common Stock as of December 31 each year, which is as inherently subjective as it is for stock options, and for similar reasons as noted in the stock-based compensation section above. For financial instruments which are accounted for as a liability, we report any changes in their estimated fair values as gains or losses in our Consolidated Statement of Income.
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging”.
ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”
The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20 “Debt – Debt with Conversion and Other Options.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Original issue discounts (“OID”) under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note.
ASC 815-40 “Derivatives and Hedging – Contracts in Entity’s Own Equity” provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.
Variable Interest Entity (VIE) Accounting
The
Company evaluates its ownership, contractual relationships and other interests in entities to determine the nature and extent of the
interests, whether such interests are variable interests and whether the entities are VIEs in accordance with ASC 810, Consolidations.
These evaluations can be complex and involve Management judgment as well as the use of estimates and assumptions based on available historical
information, among other factors. Based on these evaluations, if the Company determines that it is the primary beneficiary of a VIE,
the entity is consolidated into the financial statements. At September 30, 2025 and December 31, 2024, the Company identified EdgePoint
to be the Company’s sole VIE. At September 30, 2025 and December 31, 2024, the Company’s ownership percentage of EdgePoint
was
| 17 |
Investments - Equity Method
The Company accounts for equity method investments at cost, adjusted for the Company’s share of the investee’s earnings or losses, which are reflected in the consolidated statements of operations. The Company periodically reviews the investments for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Investment in GMP Bio represents the investment into equity securities for which the Company elected the fair value option pursuant to ASC 825-10-15 and subsequent fair value changes in the GMP Bio shares shall be included in the result from other income. Refer to Note 6 to these Notes to the Consolidated Financial Statements.
Joint Venture agreement
We have equity interest in unconsolidated arrangement that is primarily engaged in the business of drug discovery, development, and commercialization, including but not limited to development and commercialization of TGF-beta therapeutics as well as establishing and operating contract development and manufacturing organization (“CDMO”) facilities and capabilities. The Company first reviews the arrangement to determine if it meets the definition of an accounting joint venture pursuant to ASC 323-10-20. In order to meet the definition of a joint venture, the arrangement must have all of the following characteristics, (i) the arrangement is organized within a separate legal entity, (ii) the entity is under the joint control of the venturers, (iii) the venturers must be able to exercise joint control through their equity investments, (iv) the qualitative characteristics of the entity, including its purpose and design must be consistent with the definition of a joint venture.
We consolidate arrangements that are considered to be VIEs where we are the primary beneficiary. We analyze our investments in joint ventures to determine if the joint venture is considered a VIE and would require consolidation. We (i) evaluate the sufficiency of the total equity investment at risk, (ii) review the voting rights and decision-making authority of the equity investment holders as a group and whether there are limited partners (or similar owning entities) that lack substantive participating or kick out rights, guaranteed returns, protection against losses, or capping of residual returns within the group and (iii) establish whether activities within the venture are on behalf of an investor with disproportionately few voting rights in making this VIE determination.
To the extent that we own interests in a VIE and we (i) have the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) have the obligation or rights to absorb losses or receive benefits that could potentially be significant to the VIE, then we would be determined to be the primary beneficiary and would consolidate the VIE. To the extent that we own interests in a VIE, then at each reporting period, we re-assess our conclusions as to which, if any, party within the VIE is considered the primary beneficiary.
To the extent that our arrangements do not qualify as VIEs, they are consolidated if we control them through majority ownership interests or if we are the managing entity (general partner or managing member) and our partner does not have substantive participating rights. Control is further demonstrated by our ability to unilaterally make significant operating decisions, refinance debt, and sell the assets of the joint venture without the consent of the non-managing entity and the inability of the non-managing entity to remove us from our role as the managing entity.
We use the equity method of accounting for those arrangements where we exercise significant influence but do not have control. Under the equity method of accounting, our investment in each arrangement is included on our consolidated balance sheet; however, the assets and liabilities of the joint ventures for which we use the equity method are not included on our consolidated balance sheet.
When we sell or contribute properties to unconsolidated arrangements and retain a non-controlling ownership interest in such assets, we recognize the difference between the consideration received and the carrying amount of the asset sold or contributed when its derecognition criteria are met. The equity method investment we retain in such partial sale transactions is noncash consideration and is measured at fair value. As a result, the accounting for a partial sale will result in the recognition of a full gain or loss.
| 18 |
When circumstances indicate there may have been a reduction in the value of an equity investment, we evaluate whether the loss in value is other than temporary. If we conclude it is other than temporary, we recognize an impairment charge to reflect the equity investment at fair value.
The Company elected the fair value option under the fair value option Subsection of Section 825-10-15 to account for its equity-method investment as the Company believes that the fair value option is most appropriate for a company in the biotechnology industry, The fair value option is more appropriate for companies that are involved in extensive and usually very expensive research and development efforts, which are not appropriately reflected in the market value or reflective of the true value of the development activities of the company.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (Topic 606).
Under Topic 606, the Company recognizes revenue when its customers obtain control of the promised good or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company applies the following five-step: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.
At contract inception, once the contract is determined to be within the scope of Topic 606, the Company identifies the performance obligation(s) in the contract by assessing whether the goods or services promised within each contract are distinct. The Company then recognizes revenue for the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
The Company anticipates generating revenues from rendering services to other third-party customers for the development of certain drug products and/or in connection with certain out-licensing agreements. In the case of services rendered for development of the drugs, revenue is recognized upon the achievement of the performance obligations or over time on a straight-line basis over the extended service period. In the case of out-licensing contracts, the Company records revenues either upon achievement of certain pre-defined milestones, when there is no obligation of the Company achieve any performance obligations in connection with the said pre-defined milestones, or upon achievement of the performance obligations if the milestones require the Company to provide the performance obligations.
The Company occasionally collects advance payments from customers toward commitments to provide services or performance obligations, in which case the advance payment is recorded as a liability until the obligations are fulfilled and revenue is recognized.
Research & Development Costs
In accordance with ASC 730-10-25 “Research and Development”, research and development costs are charged to expense as and when incurred.
Recent Accounting Pronouncements
All newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.
| 19 |
NOTE 3 - INTANGIBLE ASSETS AND GOODWILL
Goodwill from 2019 Reverse Merger with Oncotelic and PointR
The Company completed the reverse merger with Oncotelic Inc. (“Merger”) in April 2019. The Company completed the merger with PointR Data Inc (“PointR Merger”) in November 2019. For more details on the two mergers, refer to our 2020 Annual Report on Form 10-K for the year ended December 31, 2020 filed by the Company on April 15, 2021.
The
Oncotelic merger gave rise to Goodwill of approximately $
Further,
we added goodwill of approximately $
We have one operating segment and reporting unit. Accordingly, our review of goodwill impairment indicators was performed at the entity-wide level. In performing our annual impairment assessment, we determined if we should qualitatively assess whether it was more likely than not the fair value of goodwill was less than its carrying amount (the qualitative impairment test). The factors we considered in the assessment included our market capitalization, general macroeconomic conditions, conditions specific to the industry and market and whether there had been sustained declines in our share price. If we concluded, it was more likely than not, the fair value of the reporting unit was less than its carrying amount, or elected not to use the qualitative impairment test, a quantitative impairment test would be performed.
We
used our market capitalization as an indicator of fair value. While we believe the fair value measurement need not be based solely on
the quoted market price of an individual share of our Common Stock, and that we also could consider the impact of a control premium in
measuring the fair value of its reporting unit. In the absence of any other valuation metrics, the Company believed using a control premium
utilized would not be appropriate under the current circumstances. We also considered some other market comparables’ trends in
our stock price as well as the industry over a period of two successive quarters and prospective quarter to evaluate whether the fair
value of our reporting unit was greater than our carrying amount. As such, we performed a quantitative impairment assessment of goodwill
for our single reporting unit at the end of 2024, due to a sustained decline in our market capitalization and an increase in negative
economic outlook for biotech markets We estimated and reconciled the fair value of our reporting unit utilizing our market capitalization
based on the stock price of our Common Stock as of December 31, 2024. Before completing our goodwill impairment test, we first tested
our indefinite-lived intangible asset then our remaining long-lived assets for impairment. We concluded our indefinite-lived intangible
assets were not impaired. Based on the market capitalization, we further concluded the fair value of our single reporting unit was less
than its carrying value and therefore recognized an impairment charge of $
A summary of our goodwill as of September 30, 2025 and December 31, 2024 is shown below:
SCHEDULE OF GOODWILL
September 30, 2025 | December 31, 2024 | |||||||
| Balance at January 1, 2025 and 2024 | $ | $ | ||||||
| Less: Goodwill impairment due to market capitalization | - | ( | ) | |||||
| Balance at September 30, 2025 and December 31, 2024 | $ | $ | ||||||
In general, the goodwill is tested on an annual impairment date of December 31, unless we observe any further deterioration in our market capitalization in any interim periods, in which case we may, depending on the materiality of the impairment, record an impairment at the end of other reporting periods.
| 20 |
In-Process Research & Development (“IPR&D”) Summary
The
IPR&D assets were acquired in the PointR Merger during the year ended December 31, 2019. Since January 2021, the Company has determined
that the IPR&D should be reported as an indefinitely lived asset and therefore will evaluate, on an annual basis, for any impairment
on the IPR&D and will record an impairment if identified. The balance of IPR&D as of September 30, 2025 and December 31, 2024,
respectively, was $
NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expense consists of the following amounts:
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES
September 30, 2025 | December 31, 2024 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued expense | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
September 30, 2025 | December 31, 2024 | |||||||
| Accounts payable – related party | $ | $ | ||||||
NOTE 5 – CONVERTIBLE DEBENTURES, NOTES AND OTHER DEBT
As of September 30, 2025 and December 31, 2024, special purchase agreements (SPAs) with convertible debentures and notes, net of debt discount and including accrued interest, if any, consist of the following amounts:
SCHEDULE OF CONVERTIBLE DEBENTURES AND NOTES, NET OF DISCOUNT
September 30, 2025 | December 31, 2024 | |||||||
| Current Debt | ||||||||
| Convertible debentures | ||||||||
| 10% Convertible note payable, due April 23, 2022 – Bridge Investor | $ | $ | ||||||
| 10% Convertible note payable, due April 23, 2022 – Related Party | ||||||||
| 10% Convertible note payable, due August 6, 2022 – Bridge Investor | ||||||||
| Convertible note payable | ||||||||
| Fall 2019 Notes | ||||||||
| 5% Convertible note payable – Stephen Boesch | ||||||||
| 5% Convertible note payable – Related Party | ||||||||
| 5% Convertible note payable – Dr. Sanjay Jha (Through his family trust) | ||||||||
| 5% Convertible note payable – CEO & CFO – Related Parties | ||||||||
| 5% Convertible note payable – Bridge Investors | ||||||||
| Convertible note payable | ||||||||
August 2021 Convertible Notes | ||||||||
| 5% Convertible note – Autotelic Inc– Related Party | ||||||||
| 5% Convertible note – Bridge investors | ||||||||
| 5% Convertible note – CFO – Related Party | ||||||||
| Convertible note payable | ||||||||
| March 2022 Notes | ||||||||
| 16% Convertible Notes – Accredited Investors | ||||||||
| Debt for Clinical Trials – Forever Prosperity (Formerly GMP) | ||||||||
| 2% Convertible Notes – Forever Prosperity | ||||||||
| May and June 2022 Note | ||||||||
| 12% Convertible Notes – Accredited Investors | ||||||||
| July 2025 Note | ||||||||
| 10% Convertible Note – Accredited Investor | - | |||||||
| JH Darbie PPM 2 Debt | ||||||||
| 16% Convertible Notes - Non-related parties | ||||||||
| 16% Convertible Notes – CEO – Related Party | ||||||||
| Convertible note payable | ||||||||
| Other Debt | ||||||||
| Short term debt – Bridge investors | ||||||||
| Short term debt from CFO – Related Party | ||||||||
| Short term debt – Autotelic Inc. – Related Party | ||||||||
| Short Term Debt from CEO – Related Party | ||||||||
| Short term debt | ||||||||
| Total of short-term convertible debentures & notes and other debt | $ | |||||||
| 21 |
Convertible Debentures
As
of September 30, 2025, the Company had a derivative liability of approximately $
Bridge Financing
Notes with Officer and Bridge Investor
In
April 2019, the Company entered into a Securities Purchase Agreement (the “Bridge SPA”) with our CEO and the Bridge
Investor with a commitment to purchase convertible notes in the aggregate of $
Fall 2019 Debt Financing
In
December 2019, the Company closed its Fall 2019 Debt Financing, raising an additional $
All
the Fall 2019 Notes provided for interest at the rate of
There
was no activity during the nine months ended September 30, 2025 and 2024. The total unamortized principal amount of the Fall 2019 Notes
was $
Further,
the Company recorded interest expense of approximately $
Forever Prosperity (Formerly GMP) Notes
In
June 2020, the Company secured $
In
September 2021, the Company secured a further $
In
October 2021, the Company entered into an Unsecured Convertible Note Purchase Agreement (the “October Purchase Agreement”)
with GMP, pursuant to which the Company issued a convertible promissory note in the aggregate principal amount of $
Between
June 2020 and January 2022, the Company entered into four Unsecured Convertible Note Purchase Agreements with Forever Prosperity, for
a total amount of $
| 22 |
During
the three and nine months ended September 30, 2025, and 2024, the Company incurred approximately
$
August 2021 Notes
In
August 2021, the Company entered into Note Purchase Agreements with Autotelic - a related party, our CFO – a related party,
and certain accredited investors (the “August 2021 investors”), whereby the Company issued four convertible notes in the
aggregate principal amount of $
As of September 30, 2025, and December 31, 2024, the August 2021 Notes, inclusive of accrued interest, consist of the following amounts:
SCHEDULE OF CONVERTIBLE NOTES, NET OF DISCOUNT
September 30, 2025 | December 31, 2024 | |||||||
| Autotelic Related party convertible note, 5% coupon December 2025 | $ | $ | ||||||
| Accredited investors convertible note, 5% coupon December 2025 | ||||||||
| CFO Related party convertible note, 5% coupon December 2025 | ||||||||
| Convertible notes | $ | $ | ||||||
During
the three and nine months ended September 30, 2025 and 2024, the Company recognized approximately $
At
September 30, 2025 and December 31, 2024, accrued interests on these convertible notes totaled approximately $
| 23 |
March 2022 Financing
In
March 2022, the Company entered into a Securities Purchase Agreement with Fourth Man, pursuant to which the Company issued
convertible promissory note in the aggregate principal amount of $
As of September 30, 2025, and December 31, 2024, the Fourth Man Note, including accrued interest and net of debt discount, consist of the following amounts:
September 30, 2025 | December 31, 2024 | |||||||
| Fourth Man Convertible note, 16% coupon March 2023 inclusive of accrued interest and default provision | $ | $ | ||||||
| Unamortized debt discount | - | - | ||||||
| Convertible notes, net | $ | |||||||
During
the nine months ended September 30, 2025, the Company converted approximately $
The
Company recognized approximately $
May 2022 Mast Financing
In
May 2022, the Company entered into a securities purchase agreement with
Mast Hill Fund (“Mast”), whereby the Company issued one convertible note in the aggregate principal amount of $
As of September 30, 2025, and December 31, 2024, the May 2022 Mast Note, net of debt discount, consist of the following amounts:
September 30, 2025 | December 31, 2024 | |||||||
| Mast Hill Convertible note, 12% coupon May 2025, inclusive of accrued interest and penalty | $ | $ | ||||||
| Convertible notes, net | $ | $ | ||||||
| 24 |
During
the nine months ended September 30, 2025, the Company converted approximately $
Accrued
interest was approximately $
June 2022 Blue Lake Financing
In
June 2022, the Company entered into a securities purchase agreement with Blue Lake Partners, LLC (“Blue Lake”), whereby
the Company issued one convertible note in the aggregate principal amount of $
In
May 2024, Blue Lake converted the balance of their note of approximately $
July 2025 Mast Financing
On
July 31, 2025, the Company entered into a securities purchase agreement with Mast, whereby the Company issued a secured convertible note in the
aggregate principal amount of $
| 25 |
As of September 30, 2025, and December 31, 2024, July 2025 Mast Note, net of debt discount, consist of the following amounts:
SCHEDULE OF NET OF DEBT DISCOUNT
September 30, 2025 | December 31, 2024 | |||||||
| Mast Hill Convertible note, inclusive of accrued interest 10% coupon due August 2026 | $ | $ | - | |||||
| Convertible notes, gross | $ | $ | - | |||||
| Less: debt discount recorded | ( | ) | - | |||||
| Amortization of debt discount | - | |||||||
| Convertible notes, net | $ | $ | - | |||||
The
Company recognized approximately $
Other short-term advances
As of September 30, 2025 compared to December 31, 2024, other short-term advances consist of the following amounts obtained from various employees and related parties:
SCHEDULE OF SHORT-TERM LOANS
| Other Advances | September 30, 2025 | December 31, 2024 | ||||||
| Short term advance from CFO – Related Party | $ | $ | ||||||
| Short term advance from CEO – Related Party | ||||||||
| Short term advances – bridge investors & others | ||||||||
| Short term advances – Autotelic Inc. – Related Party | ||||||||
| Short term advance | $ | $ | ||||||
As
of January 1, 2024, approximately $
As
of January 1, 2024, approximately $
NOTE 6 - JOINT VENTURE WITH GMP BIO AND AFFILIATES, EQUITY METHOD INVESTMENT
On March 31, 2022, the Company entered into (i) an agreement to form the JV with Dragon and GMP Bio, both affiliates of GMP, (ii) a license agreement for rights to OT-101for the territory within the United States of America with Sapu Holdings, LLC, a wholly owned subsidiary of GMP Bio and (iii) a license agreement for rights to OT-101 for the rest of the world with GMP Bio. For more information on the JV and the related agreements, refer to our 2022 Annual Report on Form 10-K/A filed with the SEC on April 19, 2023.
| 26 |
As
of the effective date of the formation of the JV, the Company received
a
The JV has initiated phase 2 and 3 clinical trials for OT-101 in both high-grade glioma and pancreatic cancer. In late 2023, the JV initiated a plan to start evaluating various nanoparticles that could treat various cancers. In this regard, the JV identified a total of 4 compounds, in addition to OT-101, which had the potential of significant revenue generation for the JV. In the same year, the JV signed a lease agreement to set up a GMP manufacturing facility in San Diego (“SD”), California. The main purpose of this facility was to initially commence an aggressive formulation development of newly planned nanoparticle platform (“Nano Platform”). The GMP manufacturing facility was initiated in January 2024. Upon the initiation of this facility by the JV, the JV commenced the development work on two of the four identified compounds, as well as other activities, in tandem with the development of OT-101. The JV has since completed the formulation development of one of the products and is moving to complete the formulation development for the three additional products. The JV is also working on improved formulations for OT-101 with new nanoparticle sizes. The JV also has started clinical development for OT-101 for pancreatic cancer. Significant progress has been made in the development of the products and the JV anticipates to complete the formulation development work in 2025 and pushing to initiate clinical trials for the various compounds. In late 2024, the GMP facility in San Diego was issued a Drug Manufacturing License by the State of California Department of Public Health and Food and Drug Branch. Further, in late 2024, the JV identified a sixth candidate as a compound for development for the JV and has already started to work on the formulation development of that compound as well. All manufacturing including Phase 1 clinical trial materials will be performed at the SD site.
In
early 2025, the Company announced that it had entered into a strategic partnership with Shanghai Medicilon, Inc. (“Medicilon”)
to access its industry-leading rapid investigational new drug (“IND”) development platform to support up to 20 IND
projects, which the JV can also utilize to support their INDS. All six of our compounds the JV is developing are planned to be these
INDs and are focused on becoming next-generation anticancer agents. The JV anticipates that all these six anticancer agents have the
potential to become significant growth contributors to the JV, which in turn would add substantial value to the Company. The Company
successfully completed a Phase 1 clinical trial evaluating OT-101, in combination with IL-2 for advanced or metastatic solid tumors.
These results set the stage for new studies that combine OT-101, an antisense therapeutic targeting Transforming Growth Factor Beta 2
(TGFβ2), with checkpoint inhibitors (“CKIs”) and recombinant IL-2 (aldesleukin) (“IL-2”). The Phase 1 trial
(ClinicalTrials.gov ID: NCT04862767) investigated the safety and tolerability of OT-101 in combination with recombinant IL-2 in patients
with advanced or metastatic solid tumors. The combination showed a tolerable safety profile at the planned dosing schedule, with no unexpected
safety signals identified. Based on the favorable safety data, Oncotelic plans to advance OT-101 plus IL-2 into further clinical studies,
exploring synergies with CKIs such as PD-1 blockers. The Company elected the fair value option under subsection of Section 825-10-15
to account for its equity-method investment as the Company believes that it the most appropriate method to properly value the Company
and record a change in value when and upon conducting a fair value assessment. During the year ended December 31, 2023, and based on
the results of the valuation study and the
A summary of the change in fair value of our investment in GMP Bio, as of September 30, 2025 and December 31, 2024 is shown below:
SCHEDULE OF CHANGE IN FAIR VALUE OF OUR INVESTMENT
| September 30, 2025 | December 31, 2024 | |||||||
| Balance at January 1, 2025 and 2024 | $ | $ | ||||||
| Add: change in fair value of investment in GMP Bio | - | - | ||||||
| Balance at September 30, 2025 and December 31, 2024 | $ | $ | ||||||
For information on the various notes from GMP, refer to Note 5 – GMP Notes of the Notes to the Consolidated Financial Statements above.
| 27 |
NOTE 7 – PRIVATE PLACEMENT -2 (PPM-2) AND JH DARBIE FUNDING
During
the period between July 2023 to January 2024, the Company entered into a series of subscription agreements with forty six accredited
investors, whereby the Company issued and converted a total of
| ● | One | |
| ● |
JH
Darbie and the Company are parties to a March 2023 placement agent agreement (“Agreement”) pursuant to which DH Darbie had
the right to sell a minimum of
In connection with the PPM-2 Financing, the Company entered into a Registration Rights Agreement granting certain registration rights with respect to the shares of the Company’s Common Stock issued in connection with the PPM-2 Financing. The issuance of the Units is exempt from the registration requirements of the Securities Act of 1933, as amended (“Securities Act”), in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as provided in Rule 506 of Regulation D promulgated thereunder. The shares of common stock and warrants and any shares of common stock issuable upon exercise of the warrants, have not been registered under the Securities Act or any other applicable securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act.
As of September 30, 2025 and December 31, 2024, the PPM2 - JH Darbie Financing, net of debt discounts, consisted of the following amounts:
SCHEDULE OF FUNDS RECEIVED UNDER THE SUBSCRIPTION AGREEMENT
September 30, 2025 | December 31, 2024 | |||||||
| Convertible promissory notes | ||||||||
| PPM-2 Darbie Financing, inclusive of accrued interest, including related parties | $ | $ | ||||||
| Total PPM-2 Darbie Financing, net of discounts | $ | $ | ||||||
The
Company incurred approximately $
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Management
reviewed the guidance per ASC 470-60 Troubled debt restructurings and ASC 470-50 Debt-Modifications and Extinguishments and
concluded that the terms of the agreements were substantially different and, accounted for the transaction as a debt extinguishment.
The transaction related to T4 resulted in a loss from debt extinguishment of approximately $
SCHEDULE OF FAIR VALUE WARRANTS
| Expected Term | ||||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
| Dividend | % |
The
Company recorded approximately $
During
the nine months ended September 30, 2025, and 2024, the Company incurred approximately $
NOTE 8 - RELATED PARTY TRANSACTIONS
Master Service Agreement with Autotelic Inc.
In October 2015, Oncotelic entered into a Master Service Agreement (the “MSA”) with Autotelic Inc., a related party that is partly-owned by the Company’s CEO Vuong Trieu, Ph.D. Dr. Trieu, a related party, is a control person in Autotelic Inc. Autotelic Inc. currently owns less than 10% of the Company. The MSA stated that Autotelic Inc. would provide business functions and services to the Company and allowed Autotelic Inc. to charge the Company for these expenses paid on its behalf. The MSA includes personnel costs allocated based on amount of time incurred and other services such as consultant fees, clinical studies, conferences and other operating expenses incurred on behalf of the Company. The Company had minimally used the services under the MSA since the formation of the JV with Dragon. The MSA requires a 90-day written termination notice in the event either party requires to terminate such services.
Expenses
related to the MSA were approximately $
License Agreement with Autotelic Inc.
In September 2021, the Company entered into an exclusive License Agreement with Autotelic. For more information on the exclusive license Agreement with Autotelic, refer to our 2024 Annual Report on Form 10-K filed with SEC on April 15, 2025.
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Note Payable and Short-Term Loan – Related Parties
In
April 2019, the Company issued a convertible note to Dr. Trieu totaling $
As
of January 1, 2024, approximately $
In
October 2025, Autotelic paid $
Artius Consulting Agreement
In March 2020, the Company and Artius Bioconsulting, LLC (“Artius”), for which Mr. King is the Managing Member, entered into an amendment to an existing Consulting Agreement, under which Artius agreed to serve as a consultant to the Company for services related to the Company’s business from time to time. For more information on this Agreement, refer to our 2024 Annual Report on Form 10-K filed with the SEC on April 15, 2025.
Maida Consulting Agreement
Effective May 5, 2020, the Company and Dr. Maida entered into an independent consulting agreement, commencing April 1, 2020, under which Dr. Maida will assist the Company in providing medical expertise and advice from time to time in the design, conduct and oversight of the Company’s existing and future clinical trials. For more information on this Agreement, refer to our 2024 Annual Report on Form 10-K filed with the SEC on April 15, 2025.
Effective April 1, 2022, Dr Maida’s compensation has been borne by the JV. No expense was recorded during the nine months ended September 30, 2025 and 2024, respectively, related to this Agreement.
Mosaic ImmunoEngineering, Inc.
In
April 2024, the Company entered into a Term Sheet with Mosaic. For more information on the Term Sheet, refer to Note 1 of this Quarterly
Report. Steven King, our Board member, is the CEO of Mosaic. The Company had advanced $
NOTE 9 - EQUITY PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT (PEAK ONE)
On May 3, 2021, the Company entered into an Equity Purchase Agreement (“EPL”) and Registration Rights Agreement with Peak One Opportunity Fund LP (“Peak One” or the “Investor”). For further information on EPL, refer to our 2023 Annual Report on Form 10-K filed with the SEC on April 12, 2024. The Company also filed a post-effective amendment Registration Statement on Form S-1 with the Commission on April 12, 2024, and the Form S-1 was declared effective on April 21, 2025. The Company filed the prospectus under rule 424b3 with the SEC on April 29, 2025.
During the nine months ended September 30, 2025 and 2024, the Company did not sell any shares of Common Stock under the EPL.
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NOTE 10 - EQUITY PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT (MAST HILL)
On
August 1, 2025, the Company entered into an Equity Purchase Agreement (“EPA”) and Registration Rights Agreement with Mast
Hill Fund LP (“Mast Hill” or the “Investor”). Under the terms of the EPA, the Company issued warrants to purchase
Following
effectiveness of the Registration Statement, and subject to certain limitations and conditions set forth in the Equity Purchase Agreement,
the Company shall have the discretion to deliver put notices to the Investor and the Investor will be obligated to purchase shares of
the Company’s Common Stock based on the investment amount specified in each put notice. The minimum amount that the Company shall
be entitled to put to the Investor in each put notice is $
In
connection with the EPA, the Company issued
NOTE 11 - STOCKHOLDERS’ EQUITY
The following transactions affected the Company’s Stockholders’ Equity:
Issuance of Common Stock during the nine months ended September 30, 2025
In
March 2025, Fourth Man partially converted approximately $
In
July 2025, the Company issued
In
August 2025, the Company issued
In
August 2025, the Company issued
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In
August 2025, Mast Hill partially converted approximately $
In
September 2025, Fourth Man issued notice to the Company to partially convert approximately $
Issuance of Common Stock during the nine months ended September 30, 2024
In
February 2024, Fourth Man partially converted $
In
May 2024, Blue Lake converted the balance of their $
NOTE 12– STOCK-BASED COMPENSATION
Options
Pursuant to the Merger, the Company’s Common Stock and corresponding outstanding options survived. The below information details the Company’s associated option activity.
As
of September 30, 2025, the Company had options to purchase Common Stock that were outstanding under three stock option plans –
the 2017 Equity Incentive Plan (the “2017 Plan”), the 2015 Equity Incentive Plan (the “2015
Plan”) and the 2005 Stock Plan (the “2005 Plan”). No further awards may be granted under the 2005 Plan,
although options previously granted remain outstanding in accordance with their terms. Under the 2017 Plan, up to
Compensation based stock option activity for qualified and unqualified stock options are summarized as follows:
SCHEDULE OF COMPENSATION BASED STOCK OPTION ACTIVITY
| Weighted | ||||||||
| Average | ||||||||
| For the nine months ended September 30, 2025 | Shares | Exercise Price | ||||||
| Outstanding at January 1, 2025 | $ | |||||||
| Expired or cancelled | ( | ) | - | |||||
| Outstanding at September 30, 2025 | ||||||||
| Options exercisable at September 30, 2025 | ||||||||
| Weighted | ||||||||
| Average | ||||||||
| For the nine months ended September 30, 2024 | Shares | Exercise Price | ||||||
| Outstanding at January 1, 2024 | $ | |||||||
| Expired or cancelled | - | - | ||||||
| Outstanding at September 30, 2024 | ||||||||
| Options exercisable at September 30, 2024 | ||||||||
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The following table summarizes information about options to purchase shares of the Company’s Common Stock outstanding and exercisable at September 30, 2025:
SCHEDULE OF OPTIONS TO PURCHASE SHARES OF COMMON STOCK OUTSTANDING AND EXERCISABLE
| Exercise prices | Outstanding Options | Weighted- Average Remaining Life In Years | Weighted- Average Exercise Price | Number Exercisable | ||||||||||||||
| $ | $ | |||||||||||||||||
| $ | ||||||||||||||||||
The
compensation expense attributed to the issuance of the options is recognized as they are vested. The employee stock option plan stock
options are generally exercisable for
As
of September 30, 2025, there was
The
Company amortized $
Warrants
The Company has issued warrants in connection with the various financings conducted by the Company. For more information on the prior warrant issuances, refer our 2024 Annual Report on Form 10-K filed with the SEC on April 15, 2025.
The issuance of warrants to purchase shares of the Company’s Common Stock, including those attributed to debt issuances, as of September 30, 2025 and 2024 are summarized as follows:
SCHEDULE OF WARRANTS ACTIVITY
| Average | ||||||||
| For the nine months ended September 30, 2025 | Shares | Exercise Price | ||||||
| Outstanding at January 1, 2025 | $ | |||||||
| Issued during the nine months ended September 30, 2025 | ||||||||
| Outstanding at September 30, 2025 | $ | |||||||
| Average | ||||||||
| For the nine months ended September 30, 2024 | Shares | Exercise Price | ||||||
| Outstanding at January 1, 2024 | $ | |||||||
| Issued during the nine months ended September 30, 2024 | ||||||||
| Exercised / cancelled during the nine months ended September 30, 2024 | ( | ) | ||||||
| Outstanding at September 30, 2024 | $ | |||||||
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The following table summarizes information about warrants outstanding and exercisable at September 30, 2025:
SCHEDULE OF WARRANTS OUTSTANDING AND EXERCISABLE
| Outstanding and exercisable | ||||||||||||||||||
| Weighted- | Weighted- | |||||||||||||||||
| Average | Average | |||||||||||||||||
| Number | Remaining Life | Exercise | Number | |||||||||||||||
| Exercise Price | Outstanding | in Years | Price | Exercisable | ||||||||||||||
| $ | ||||||||||||||||||
| $ | ||||||||||||||||||
NOTE 13 – COMMITMENTS AND CONTINGENCIES
Leases
Currently, the Company is leasing the office located at 29397 Agoura Road, Suite 107, Agoura Hills, CA 91301 on a month-to-month basis until such time a new office is identified. The Company believes the office is sufficient for its current operations.
PointR Merger Contingent Consideration
The
total purchase price in the PointR Merger of $
Other claims
From time to time, the Company may become involved in certain claims arising in the ordinary course of business.
During the year ended December 2022, a former employee brought suit for
breach of employment contract claim against the Company in Honorable Supreme Court of California. The Company filed a counter claim. A
liability of $
NOTE 14 – SUBSEQUENT EVENTS
As
previously disclosed in Note 13 above, in October 2025, the Company settled
the outstanding litigation with the ex-employee. In connection with the settlement, Autotelic paid $
In
October 2025, the Company partially converted approximately $
In November 2025, the Company partially converted approximately $
On November 17, 2025, the Company
entered into a restricted stock agreement with Dr. Trieu, our CEO and a related party, to provide incentive compensation for his extra-ordinary
efforts and time to raise capital and successful achievement of certain milestones. The restricted stock agreement provides for
a grant of up to
On November 13,
the Board approved a grant of
| 34 |
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (the “Quarterly Report” or “Report”) includes a number of forward-looking statements that reflect management’s current views with respect to future events and financial performance. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team, as well as the assumptions on which such statements are based.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance, especially the forward-looking statements enumerated below. These statements are only predictions and involve known and unknown risks, uncertainties and other factors. Some of these risks are included in the section entitled “Risk Factors” set forth in this Quarterly Report and in other reports that we file with the SEC. The occurrence of any of these risks, or others of which we are currently unaware, may cause our company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and without limitation:
| ● | our ability to successfully commercialize our products and services on a large enough scale to generate profitable operations; | |
| ● | our ability to maintain and develop relationships with customers and suppliers; | |
| ● | our ability to successfully integrate acquired businesses or new products, or to realize anticipated synergies in connection with acquisitions of businesses or products; | |
| ● | expectations concerning our ability to raise additional funding and to continue as a going concern; | |
| ● | our ability to successfully implement our business plan; | |
| ● | GMP Bio anticipates its current fair valuation to be approximately $1.7 billion, however, the Company cannot predict or estimate what the fair value may be; | |
| ● | our ability to avoid, or to adequately address any intellectual property claims brought by third parties; and | |
| ● | the anticipated impact of any changes in industry regulation. | |
| ● | building and the success of our nanoparticle platform and the related success of launching the platform | |
| ● | the success of the launch of a company with a DAO infrastructure, the success of the entity and the plans surrounding the pet and animal health, the ability for the Company to register the tokens of Pet2Dao, the actual filing of a registration statement and approval of the tokens as registrable securities with the SEC through a registration statement, the ability of the tokens to be tradable or any value such tokens may have if they become tradable. |
Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.
| 35 |
Corporate History
Oncotelic Therapeutics, Inc. (“Oncotelic”), was formed in the State of New York in 1988 as OXiGENE, Inc., was reincorporated in the State of Delaware in 1992, and changed its name to Mateon Therapeutics, Inc. in 2016, and Oncotelic Therapeutics, Inc. in November 2020. Oncotelic conducts business activities through Oncotelic and its wholly-owned subsidiaries, Oncotelic, Inc., a Delaware corporation, PointR Data, Inc. (“PointR”), a Delaware corporation, Pet2DAO Inc., a Delaware corporation and EdgePoint AI, Inc. (“Edgepoint”), a Delaware Corporation for which there are non-controlling interests, (Oncotelic, Oncotelic Inc., PointR, Pet2DAO and Edgepoint are collectively called the “Company” or “We”). The Company completed a reverse merger with Oncotelic Inc in April 2019, a merger with PointR in November 2019 and formed a subsidiary Edgepoint in February 2020. For more information on these mergers, 2024Annual Report on Form 10-K filed with the SEC on April 15, 2025.
Company Overview
The Company is a clinical stage biopharmaceutical company developing drugs for the treatment of cancer. The Company’s proprietary product candidates have shown promising clinical activity in phase 2 trials for the treatment of gliomas and pancreatic cancers. The Company aims to translate its unique insights, which span more than three decades of original work using RNA therapeutics, into the deployment of antisense as a RNA therapeutic for diseases which are caused by TGF-β overexpression, starting with cancer and expanding to Duchenne Muscular Dystrophy and others. OT-101, the Company’s lead product candidate, is being developed as a broad-spectrum anti-cancer drug that can also be used in combination with other standard cancer therapies to establish an effective multi-modality treatment strategy for difficult-to-treat cancers.
Since April 2022, the Company entered has conducted the vast majority of its development efforts for OT-101 through a joint venture (the “JV”), with Dragon Overseas Capital (“Dragon”). In connection with the formation of the JV, the Company contributed license rights OT-101 for both U.S. and the rest of the world, in exchange for a 45% equity interest in GMP Biotechnology Limited (“GMP Bio”), and Dragon agreed to provide approximately $27 million of research and development funding in exchange for a 55% ownership stake in GMP Bio. The Company accounts for its holdings in GMP Bio as an equity investment under the fair value option. Accordingly, the Company accounts for only its investment in GMP Bio, and the income and expenses of the JV are not consolidated in the Company’s financial statements.
Under the fair value option, the Company periodically conducts a fair value assessment and records a change in the value when circumstances warrant, such as in connection with a third-party financing event, or other significant event that suggests reassessing the value of investment in GMP Bio is warranted. As of September 30, 2025, the Company assessed the fair value of its investment in GMP Bio and determined that no change in the fair value was required at that time. However, as previously announced, GMP Bio is progressing with its strategic and operational plans, which include efforts to secure third-party financing and a possible initial public offering in Hong Kong during 2026. Based on current information from GMP Bio, the potential valuation for GMP Bio in any third-party financing or initial public offering could be significantly in excess of $2 billion. While GMP Bio continues to advance its research and development activities, no third-party transactions have transpired which would establish the basis for a fair value reassessment. If a financing or other transaction is completed at such a valuation, of if the JV goes into an initial public offering as is planned in the Hong Kong Stock Exchange, the Company will reassess and report the increase in fair value of its investment in GMP Bio at that time.
The Company has retained, outside of the JV, and is independently planning to develop OT-101 for certain animal health indications and is contemplating using crypto currencies for that platform. The Company also acquired Apomorphine for Parkinson’s Disease, erectile dysfunction and female sexual dysfunction. In addition, the Company is evaluating the further development of its product candidates OXi4503 as a treatment for acute myeloid leukemia and myelodysplastic syndromes and CA4P in combination with a checkpoint inhibitor for the treatment of advanced metastatic melanoma.
| 36 |
Recent Joint Venture Developments
The JV’s principal activities centered on the commercialization of OT-101 for certain oncology indications in the US and looking at other territories as well. In March 2025, the JV successfully completed a Phase 1 clinical trial evaluating OT-101, in combination with IL-2 for advanced or metastatic solid tumors. These results set the stage for new studies that combine OT-101, an antisense therapeutic targeting Transforming Growth Factor Beta 2 (TGFβ2), with checkpoint inhibitors (“CKIs”) and recombinant IL-2 (aldesleukin) (“IL-2”). The Phase 1 trial (ClinicalTrials.gov ID: NCT04862767) investigated the safety and tolerability of OT-101 in combination with recombinant IL-2 in patients with advanced or metastatic solid tumors. The combination showed a tolerable safety profile at the planned dosing schedule, with no unexpected safety signals identified. Based on the favorable safety data, the JV plans to advance OT-101 plus IL-2 into further clinical studies, exploring synergies with CKIs such as PD-1 blockers. The JV is also sponsoring investigator-initiated studies for OT-101 for other oncology indications including lung cancer (non small cell lung cancer- NSCLC- and ugh Mesothelioma.- MPM) and has started clinical development for OT-101 for pancreatic cancer. Over ten patent family has been filed exploiting the central role of TGFB2 as prognostic indicator for cancer survival and one patent family for the intracranial delivery device of brain cancer with issued patent in China and Germany.
In addition to OT-101, the JV as developed a nanoparticle platform (“Nano Platform”) that entails the formulation of products in new nanoparticle sizes. The JV anticipates that the Nano Platform may offer superior platform for the absorption of water insoluble drugs across a broad spectrum of cancers. The JV is working on improved formulations for OT-101 with new nanoparticle sizes. In addition, the JV has identified five additional compounds as product candidates on the Nano Platform, including the following:
| ● | The JV has completed the formulation development of the first product--everolimus for injection. The JV has initiated a global clinical trial for that product, including open patient enrollment in Australia. The JV hopes to complete the Phase 1 trial and to move to a Phase 3 noninferiority trial against Affinitor. Phase 3 trial is slated to initiate within one year with completion and submission for marketing approval no less than three years thereafter. | |
| ● | The JV is developing palbociclib for injection on the Nano Platform and expects to file the investigational new drug (“IND”) and to initiate a Phase 1 trial in late 2025 or early 2026. | |
| ● | The JV is developing docetaxel and paclitaxel for injection on the Nano Platform and expects to file the IND to initiate a Phase 1 trial for this product candidate in late 2025 or early 2026. These are expected to go through the 505(b)2 bioequivalence pathway which should result in rapid entrance into the market |
The DeciparticleTM platform has proven robust and is being expand to other drug candidates through partnering. The platform is protected by more than 15 patent families covering chemical composition, manufacturing, and method of use.
The JV built a GMP manufacturing facility in San Diego, California (the “San Diego Facility”). In late 2024, the San Diego Facility was issued a Drug Manufacturing License by the State of California Department of Public Health and Food and Drug Branch. A significant portion of the manufacturing for the Nano Platform, including the development of Phase I clinical trial materials, is conducted at the San Diego Facility. Evaluation of larger commercial scale manufacturing is ongoing.
In early 2025, the Company entered into a strategic partnership with Shanghai Medicilon, Inc. (“Medicilon”) to access its industry-leading rapid IND development platform to support up to 20 IND projects, including INDs developed by the JV. All six of the compounds that the JV is developing are planned to be initiated under these INDs, and are focused on next-generation anticancer agents.
The JV was initially funded by equity contributions from Dragon under the terms of the joint venture agreement. That equity funding commitment has been fully paid as of September 30, 2025. On May 31, 2025, GMP Bio and Golden Mountain Partners, an affiliate of Dragon, entered into a note purchase agreement and promissory note pursuant to which Golden Mountain Partners agreed to loan funds to the JV sufficient to meet its operating expenses for 2025. The loans are made as monthly advances, bear interest at the Wall Street Journal “Prime” rate, and matures on December 31, 2026. Amounts due under the promissory note are convertible into equity of the JV at the election of Golden Mountain Partner at a price equal to 80% of the price for shares issued in connection with an equity financing of $20 million or more, or otherwise at a mutually agreed price.
The JV is planning to conduct an initial public offering on the Hong Kong Stock Exchange in the late 2026 time frame. In connection with the planned public offering, the JV venture has retained an investment banker and Deloitte LLP as its independent accounting firm to audit the financial statements that would be included in the public filings. The JV also hired a valuation consultant to provide guidance on the potential pricing for the planned IPO. That initial valuation, and the JV’s current plans, contemplate a public offering with a total enterprise valuation significantly higher than 1B. As of September 30, 2025, the Company owns 45% of GMP Bio. During the quarter, GMP Bio completed an independent third-party valuation by Frost & Sullivan (Hong Kong), which preliminarily estimated the potential value of the drug pipeline under development at approximately $1.7 billion..
The JV’s planned public offering is subject to a number of risks and uncertainties, some involving the JV’s ability to executed on its business plan, but others outside the JV’s control including market forces. Consequently there is no assurance that the planned Hong Kong public offering will take place in late 2026, or at all, and there is no assurance as to what enterprise value would be ascribed to the JV at that time.
Based on the JV’s advances, including the development of the Nano Platform and pipeline and the planned Hong Kong public offering the Company believes that its ownership interest in the JV may be significantly higher than the reported value on its financial statements, which is based on the valuation at the time of its initial investment in the JV in 2022. The Company intends to re-evaluate the carrying value of the minority interest in the coming quarter.
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Recent Financing Transactions
In July, 2025, the Company entered into a securities purchase agreement with Mast Hill Fund LP (“Mast Hill”), under which the Company issued one convertible note in the aggregate principal amount of $560,000 to Mast Hill (“2025 Mast Note”). The 2025 Mast Hill Note has an original issue discount of 10%, carries an interest rate of 10% per annum and matures on the earlier of July 31, 2026, subject to acceleration in an event of default. Mast Hill has the right, at any time, to convert all or any part of the outstanding and unpaid balance under of the 2025 Mast Hill Note into shares of Company’s Common Stock at a conversion price of $0.07 per share. In connection with the issuance of the 2025 Mast Note, the Company issued Mast Hill 2,000,000 warrants to purchase Common Stock at a strike price of $0.15 up to five years after issuance. The Company also issued to Mast Hill 2,250,000 shares of the Company’s Common Stock as a commitment fee. For more information on the 2025 Mast Note, refer to Note 5 of the Notes to the Consolidated Financial Statements included in this report.
On August 1, 2025, the Company entered into an Equity Purchase Agreement (the “Mast EPA”) and Registration Rights Agreement with Mast Hill. Under the terms of the Mast EPA, Mast Hill agreed to purchase from the Company up to $25,000,000 of shares of the Company’s Common stock upon effectiveness of a registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission and subject to certain limitations and conditions set forth in the Mast EPA. The Registration Rights Agreement provided that the Company would (i) file the Registration Statement with the SEC by October 1, 2025: and (ii) use its best efforts to have the Registration Statement declared effective by the Commission at the earliest possible date (in any event, within 90 after days after the execution date of the definitive agreements). The Company intends to file the Registration Statement on Form S-1 with the SEC as soon as possible. In connection with the EPA, the Company issued 3,350,000 warrants to Mast Hill and recorded a fair value deferred finance cost of approximately $122,000.
Following effectiveness of the Registration Statement, and subject to certain limitations and conditions set forth in the Mast EPA, the Company shall have the discretion to deliver put notices to the Investor and the Investor will be obligated to purchase shares of the Company’s Common Stock based on the investment amount specified in each put notice. The minimum amount that the Company shall be entitled to put to the Investor in each put notice is $5,000 and the maximum amount is up to the lesser of $0.5 million or twenty percent (20%) of the average daily trading value of the Company’s Common stock. Pursuant to the Equity Purchase Agreement, the Mast Hill will not be permitted to purchase, and the Company may not put shares of the Company’s Common Stock to the Investor that would result in the Investor’s beneficial ownership of the Company’s outstanding Common Stock exceeding 4.99%. The price of each put share shall be equal to ninety seven percent (97%) of the market price, which is defined as the lesser of (i) closing bid price of the Common stock on the trading date immediately preceding the respective put date, or (ii) the lowest closing bid price of the Common Stock during the seven (7) trading days immediately following the clearing date associated with the applicable put notice.
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Jefferson Capital Ventures, LLC and Valor Nation, Inc Independent Contractor Agreements
In August, 2025, the entered into independent contractor agreements with each of Jefferson Capital Ventures, LLC (“Jefferson”) and Valor Nation, Inc. (“Valor”) to provide consulting and advisory services including strategic planning meetings, coordination non-legal support for SEC compliance, balance sheet and income statement optimization strategies, shareholder and investor communication planning, liaison with investment bankers, analysts, and institutional investors, operational efficiency and cost-saving recommendations and ancillary strategic services not requiring a license, corporate planning, operations and capital markets advisory services not requiring licenses. Such services shall be provided by Jefferson and Valor for a period of 18 months, unless terminated earlier by either party under certain predefined conditions. Jefferson has agreed to be compensated $20,000 per month in cash and to be issued 20,320,930 restricted shares of the Company’s Common Stock and Valor has agreed to be compensated with 4,064,586 shares of Common Stock. While the shares of Common Stock will be issued to Jefferson they are subject to forfeiture, and Jefferson will earn the Common Stock only upon the achievement of milestones. The milestones include (a) the Company’s market capitalization exceeding $100 million on any single trading day’s close, (b) the cumulative increase of at least $10 million in shareholder equity from the start of engagement, and (c) the successful uplisting to a U.S. national exchange (e.g., Nasdaq or NYSE American) with at least one full day of trading. On the accomplishment of each milestone an amount equal to the greater of 6,774,300 or 1.663% of the Company’s fully diluted outstanding shares shall vest. For more information on the Jefferson and Valor ICAs, refer to our Current Report on Form 8-K filed with the SEC on August 12, 2025.
Short-term loans
As of January 1, 2024, approximately $1.5 million was outstanding and payable to Autotelic. During the year ended December 31, 2024 Autotelic Inc. provided additional short-term funding of approximately $0.6 million to the Company. During the nine months ended September 30, 2025 Autotelic Inc. provided additional short-term funding of $435,000 to the Company. As such, approximately $2.5 million was outstanding and payable to Autotelic at September 30, 2025.
As of January 1, 2024, approximately $35,000 was outstanding and payable to the Company’s CFO. During the year ended December 31, 2024, the CFO provided additional short-term funding of $41,000. In the nine months ended September 30, 2025, the CFO provided additional short-term funding of $10,000 to the Company. As such, approximately $86,000 was outstanding and payable to the Company’s CFO at September 30, 2025. In December 2023, the Company received $50,000 from the Company’s CEO. As such, $50,000 was outstanding to the Company’s CEO at September 30, 2025. As of September 30, 2025, approximately $210,000 was outstanding as short-term advances from certain bridge investors.
Equity Purchase Agreement (Peak One)
In May 2021, the Company entered into an Equity Purchase Agreement (the “EPL”) and Registration Rights Agreement (the “Registration Rights Agreement”) with Peak One Opportunity Fund, L.P. (“Peak One”), pursuant to which the Company shall have the right, but not the obligation, to direct Peak One to purchase up to $10.0 million (the “Maximum Commitment Amount”) in shares of the common stock, par value $0.01 per share (“Common Stock”) in multiple tranches. The Company filed a post-effective amendment for EPL on April 15, 2025 with the SEC and the SEC has made the post-effective amendment effective on April 21, 2025. The Company filed a prospectus under rule 424b3 with the SEC on April 29, 2025. For more information on the EPL, refer to Note 10 of the Notes to the Unaudited Consolidated Financial Statements.
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Mosaic ImmunoEngineering, Inc. Term Sheet
In April 2024, the Company entered into a binding term sheet (the “Term Sheet”) with Mosaic ImmunoEngineering, Inc. (“Mosaic”). For more information on the Term Sheet, refer to the Current Report on Form 8-K filed with the SEC on April 29, 2024. In August 2024, Mosaic and the Company mutually agreed to extend the date of the Term Sheet to expire at the earlier of (1) the signing of definitive agreements or (2) December 31, 2024. Mosaic and the Company further agreed to extend the Term Sheet to expire at the earlier of (1) the signing of definitive agreements or (2) June 30, 2025. Both parties are in discussions to extend the date to the end of 2025 to allow for both Companies to complete due diligence as well as agree and finalize the definitive agreements.
Critical Accounting Policies and Significant Judgments and Estimates
The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expense during the reporting periods. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances at the time we make such estimates. Actual results and outcomes may differ materially from our estimates, judgments and assumptions. We periodically review our estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in the financial statements prospectively from the date of the change in estimate. Our significant accounting policies are more fully described in Note 2 to our Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report.
We define our critical accounting policies as those accounting principles that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. We believe the critical accounting policies used in the preparation of our financial statements that require significant estimates and judgments are the following:
Impairment of Long-Lived Assets
The Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets.
Intangible Assets
The Company records its intangible assets at cost in accordance with ASC 350, Intangibles – Goodwill and Other. The Company reviews the intangible assets for impairment on an annual basis or if events or changes in circumstances indicate it is more likely than not that they are impaired. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors.
Goodwill
Goodwill represents the excess of the purchase price of acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least once annually, at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the reporting unit. If, on the basis of qualitative factors, it is considered not more likely than not that the fair value of the reporting unit is less than the carrying amount, further testing of goodwill for impairment would not be required. Otherwise, goodwill impairment is tested using a two-step approach.
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The first step involves comparing the fair value of the reporting unit to its carrying amount. If the fair value of the reporting unit is determined to be greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount is determined to be greater than the fair value, the second step must be completed to measure the amount of impairment, if any. The second step involves calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit as determined in step one. The implied fair value of the goodwill in this step is compared to the carrying value of goodwill. If the implied fair value of the goodwill is less than the carrying value of the goodwill, an impairment loss equivalent to the difference is recorded.
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging”.
ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards.
The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20 “Debt – Debt with Conversion and Other Options.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Original issue discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.
ASC 815-40 “Derivatives and Hedging – Contracts in Entity’s Own Equity” provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.
Derivative Financial Instruments Indexed to the Company’s Common Stock
We have generally issued derivative financial instruments, such as warrants, in connection with our equity offerings. We evaluate the terms of these derivative financial instruments in order to determine their accounting treatment in our financial statements. Key considerations include whether the financial instruments are freestanding and whether they contain conditional obligations. If the warrants are freestanding, do not contain conditional obligations and meet other classification criteria, we account for the warrants as an equity instrument. However, if the warrants contain conditional obligations, then we account for the warrants as a liability until the conditional obligations are met or are no longer relevant. Because no established market prices exist for the warrants that we issue in connection with our equity offerings, we must estimate the fair value of the warrants, which is as inherently subjective as it is for stock options, and for similar reasons as noted in the stock-based compensation section above. For financial instruments which are accounted for as a liability, we report any changes in their estimated fair values as gains or losses in our Consolidated Statement of Income.
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Variable Interest Entity (VIE) Accounting
We evaluate our ownership, contractual relationships and other interests in entities to determine the nature and extent of the interests, whether such interests are variable interests and whether the entities are VIEs in accordance with ASC 810, Consolidations. These evaluations can be complex and involve Management judgment as well as the use of estimates and assumptions based on available historical information, among other factors. Based on these evaluations, if the Company determines that it is the primary beneficiary of a VIE, the entity is consolidated into the financial statements.
Investments - Equity Method
The Company accounts for equity method investments at cost, adjusted for the Company’s share of the investee’s earnings or losses, which are reflected in the consolidated statements of operations. The Company periodically reviews the investments for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.
The Investment in GMP Bio represents the investment into equity securities for which the Company elected the fair value option pursuant to ASC 825-10-15 and subsequent fair value changes in the GMP Bio shares are included in the result from continuing operations. Refer to Note 6 to these Notes to the Consolidated Financial Statements.
Joint Venture agreement
We have equity interest in unconsolidated arrangement that is primarily engaged in the business of drug discovery, development, and commercialization, including but not limited to development and commercialization of TGF-beta therapeutics as well as establishing and operating contract development and manufacturing organization (CDMO) facilities and capabilities. The Company first review the arrangement to determine if it meets the definition of an accounting joint venture pursuant to ASC 323-10-20. In order to meet the definition of a joint venture, the arrangement must have all of the following characteristics, (i) the arrangement is organized within a separate legal entity, (ii) the entity is under the joint control of the venturers, (iii) the venturers must be able to exercise joint control through their equity investments, (iv) the qualitative characteristics of the entity, including its purpose and design must be consistent with the definition of a joint venture
We consolidate arrangements that are considered to be VIEs where we are the primary beneficiary. We analyze our investments in joint ventures to determine if the joint venture is considered a VIE and would require consolidation. We (i) evaluate the sufficiency of the total equity investment at risk, (ii) review the voting rights and decision-making authority of the equity investment holders as a group and whether there are limited partners (or similar owning entities) that lack substantive participating or kick out rights, guaranteed returns, protection against losses, or capping of residual returns within the group and (iii) establish whether activities within the venture are on behalf of an investor with disproportionately few voting rights in making this VIE determination. To the extent that we own interests in a VIE and we (i) have the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) have the obligation or rights to absorb losses or receive benefits that could potentially be significant to the VIE, then we would be determined to be the primary beneficiary and would consolidate the VIE. To the extent that we own interests in a VIE, then at each reporting period, we re-assess our conclusions as to which, if any, party within the VIE is considered the primary beneficiary. To the extent that our arrangements do not qualify as VIEs, they are consolidated if we control them through majority ownership interests or if we are the managing entity (general partner or managing member) and our partner does not have substantive participating rights. Control is further demonstrated by our ability to unilaterally make significant operating decisions, refinance debt, and sell the assets of the joint venture without the consent of the non-managing entity and the inability of the non-managing entity to remove us from our role as the managing entity. We use the equity method of accounting for those arrangements where we exercise significant influence but do not have control. Under the equity method of accounting, our investment in each arrangement is included on our consolidated balance sheet; however, the assets and liabilities of the joint ventures for which we use the equity method are not included on our consolidated balance sheet.
When we sell or contribute properties to unconsolidated arrangements and retain a non-controlling ownership interest in such assets, we recognize the difference between the consideration received and the carrying amount of the asset sold or contributed when its derecognition criteria are met. The equity method investment we retain in such partial sale transactions is noncash consideration and is measured at fair value. As a result, the accounting for a partial sale will result in the recognition of a full gain or loss. When circumstances indicate there may have been a reduction in the value of an equity investment, we evaluate whether the loss in value is other than temporary. If we conclude it is other than temporary, we recognize an impairment charge to reflect the equity investment at fair value. The Company elected the fair value option under the fair value option Subsection of Section 825-10-15 to account for its equity-method investment.
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Research and Development Expense
Research and development expense consist of costs we incur for the development of our investigational drugs and, to a lesser extent, for preclinical research activities. Research and development costs are expensed as incurred. Research and development expense include clinical trial costs, salaries and benefits of employees, including associated stock-based compensation, payments to clinical investigators, drug manufacturing costs, laboratory supplies and facility costs. Clinical trial costs are a significant component of our research and development expense, and these can be difficult to accurately estimate. Included in clinical trial costs are fees paid to other entities that conduct certain research and development activities on our behalf, such as clinical research organizations, or CROs. We estimate clinical trial expense based on the services performed pursuant to contracts with research institutions such as CROs and the actual clinical investigators. These estimates are based on actual time and expenses incurred by the CRO and the clinical investigators. Also included in clinical trial expense are costs based on the level of patient enrollment into the clinical trial and the actual services performed under the related clinical trial agreement. Changes in clinical trial assumptions, such as the length of time estimated to enroll all patients, rate of screening failures, patient drop-out rates, number and nature of adverse event reports and the total number of patients enrolled can impact the average and expected cost per patient and the overall cost of the clinical trial. Based on patient enrollment reports and services provided, we may periodically adjust estimates for the clinical trial costs. If we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of services performed, the length of time for these services or the costs of these services, our actual expenses could differ from our estimates.
Share-Based Compensation
We record the estimated fair value of all share-based payments issued to employees and other service providers. Our share-based payments consist primarily of stock options. The valuation of stock options is an inherently subjective process, since market values are not available for any stock options in our equity securities. Market values are also not available on long-term, non-transferable stock options in other equity securities. With no market values on options to trade in our common stock and no comparable market values on any long-term non-transferable stock options, the process of valuing our stock options is even more uncertain and subjective. Accordingly, we use a Black-Scholes option pricing model to derive an estimated fair value of the stock options which we issue. The Black-Scholes option pricing model requires certain input assumptions, including the expected term of the options and the expected volatility of our common stock. Changes in these assumptions could have a material impact on the estimated fair value that we record for share-based payments that we issue. We determine the term of the options based on the simplified method, which averages the vesting period and the contractual life of the stock option. We determine the expected volatility based on the historical volatility of our common stock over a period commensurate with the option’s expected term. The Black-Scholes option pricing model also requires assumptions for risk-free interest rates and the expected dividend yield of our common stock, but we feel that these values are more objective and note that changes in these values do not have a significant impact on the estimated value of the options when compared to the volatility and term assumptions.
We are also required to estimate the level of award forfeitures expected to occur and record compensation expense only for those awards that are ultimately expected to vest. Accordingly, we perform a historical analysis of option awards that are forfeited prior to vesting, and record total stock option expense that reflects this estimated forfeiture rate.
The impacts of any of the critical accounting policies and significant judgments and estimates, if applicable, have been reflected in the Notes to the Consolidated Financial Statements (unaudited) in this Report.
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Results of Operations
Comparison of the Results of Operations for the three Months Ended September 30, 2025 to the three Months Ended September, 2024
A comparison of the Company’s operating results for the three months ended September 30, 2025 and 2024, respectively, is as follows.
| September 30, 2025 | September 30, 2024 | Variance | ||||||||||
| Operating expense: | ||||||||||||
| Research and development | 426 | 480 | (54 | ) | ||||||||
| General and administrative | 490,547 | 80,277 | 410,270 | |||||||||
| Goodwill impairment | - | 3,200,000 | (3,200,000 | ) | ||||||||
| Total operating expense | 490,973 | 3,280,757 | (2,789,784 | ) | ||||||||
| Loss from operations | (490,973 | ) | (3,280,757 | ) | 2,789,784 | |||||||
| Interest expense, net | (231,338 | ) | (205,616 | ) | (25,722 | ) | ||||||
| Change in the value of derivatives on debt | (392,058 | ) | 114,722 | (506,780 | ) | |||||||
| Net income (loss) before controlling interests | $ | (1,114,369 | ) | $ | (3,371,651 | ) | $ | 2,257,282 | ||||
Net Income (Loss)
We recorded a net loss of approximately $1.1 million for the three months ended September 30, 2025, as compared to net loss of approximately 3.4 million for the three months ended September 30, 2024. The difference in net loss of approximately $2.3 million between the three months ended September 30, 2025 as compared to the same period of 2024 was primarily due to lower goodwill impairment of approximately $3.2 million recorded during the three months ended September 30, 2024, offset by higher other operating expenses of approximately $0.4 million recorded during the three months ended September 30, 2025, higher change in value of derivatives on debt of approximately $0.5 million, and higher interest expense of approximately $26 thousand, for the three months ended September 30, 2025 as compared to the same period of 2024. A description of the various descriptions resulting in the net loss for the three month periods of September 30, 2025 and 2024, respectively, are reflected below.
Research and Development Expenses
Research and development (“R&D”) expenses for the three months ended September 30, 2025 compared to the same period in 2024 were similar.
As previously disclosed, and as a result of our JV, we expect our R&D expense to decrease for the remainder of the year 2024, specifically for activities related to OT-101, including the initiation of new clinical trials. Any other development expenses will be subject to our continuing ability to secure sufficient funding to continue planned operations.
General and Administrative Expenses
General and administrative (“G&A”) expenses increased by approximately $0.4 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to higher stock-based expense of approximately $0.2 million for services, higher operational expenses of approximately $0.2 million incurred with fees for certain investor relation and public relations services under our ICA and for the settlement of our litigation with an ex-employee; and higher legal and professional expenses of approximately $43 thousand.
As previously disclosed and as a result of our JV, we expect our G&A activities to remain steady or marginally increase for the remainder of 2025. Any other G&A expenses will be subject to our continuing ability to secure sufficient funding to continue planned operations or to improve shareholder value for the Company.
Goodwill Impairment
Our stock price has held up since the beginning of 2025 and therefore did not make a downward impact on our goodwill during the three months ended September 30, 2025. We recorded goodwill impairment of $3.2 million, on the approximately $12.0 million goodwill which we recorded upon our acquisition of PointR, for the three months ended September 30, 2024.
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Interest Expense, Net
We recorded interest expense, including amortization of debt costs, of approximately $0.23 million for the three months ended September 30, 2025, compared to $0.2 million for the three months ended September 30, 2024, primarily in connection with debt raised from convertible notes and the JH Darbie Financing, March 2022 and May/June 2022 financing and July 2025 financing. For more information on debt raised from convertible notes and the JH Darbie Financing, see Note 5 and Note 7 of the Unaudited Consolidated Financial Statements of this Quarterly Report.
Change in Value of Derivatives
During the three months ended September, 2024, we recorded approximately $0.4 million of an increase in change in value upon conversion of certain debt owed on the convertible promissory notes issued to our CEO and a bridge investor (collectively, the “Convertible Notes”). The Company recorded approximately $0.1 million of a decrease in change in value during the same period in 2024. For more information on value of derivatives, refer to the Note 5 of the Unaudited Consolidated Financial Statements of this Quarterly Report.
Comparison of the Results of Operations for the Nine Months Ended September 30, 2025 to the Nine Months Ended September 30, 2024
A comparison of the Company’s operating results for the nine months ended September 30, 2025 and 2024, respectively, is as follows.
| September 30, 2025 | September 30, 2024 | Variance | ||||||||||
| Service Revenue | $ | - | $ | - | $ | - | ||||||
| Total Revenue | ||||||||||||
| Operating expense: | ||||||||||||
| Research and development | 1,020 | 1,212 | (192 | ) | ||||||||
| General and administrative | 657,019 | 343,347 | 313,672 | |||||||||
| Goodwill impairment | - | 3,200,000 | (3,200,000 | ) | ||||||||
| Total operating expense | 658,039 | 3,544,559 | (2,886,520 | ) | ||||||||
| Loss from operations | (658,039 | ) | (3,544,559 | ) | 2,886,520 | |||||||
| Interest expense, net | (642,917 | ) | (655,946 | ) | 13,029 | |||||||
| Reimbursement for expenses – related party | - | 22,937 | (22,937 | ) | ||||||||
| Change in the value of derivatives on debt | 32,772 | 140,828 | (108,056 | ) | ||||||||
| Loss on conversion of debt | - | (88,258 | ) | 88,258 | ||||||||
| Net income (loss) before controlling interests | $ | (1,268,184 | ) | $ | (4,124,998 | ) | $ | 2,856,814 | ||||
Net Income
We recorded a net loss of approximately $1.3 million for the nine months ended September 30, 2025 as compared to a net loss of approximately $4.1 million for the same period ended September 30, 2024. The difference in net loss, of approximately $2.9 million, for the nine months ended September 30, 2025 as compared to the same period of 2024, was primarily due to lower goodwill impairment of approximately $3.2 million incurred in 2024 but no similar expense during the same period in 2025, lower change in value of derivatives on debt of approximately $0.1 million, lower reimbursement of expenses by a related party of approximately $20 thousand, offset by lower operating expense of approximately $0.3 million, lower interest cost of approximately $13 thousand, and lower loss on conversion of debt of approximately $0.1 million, compared to the same period in 2024. A description of the various descriptions resulting in the net loss for the nine month periods of September 30, 2025 and 2024, respectively, are reflected below.
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Research and Development Expenses
Research and development (“R&D”) expenses for the nine months ended September 30, 2025 compared to the same period in 2024, were similar.
As previously disclosed and as a result of our JV, we expect our G&A activities to remain steady or marginally increase for the remainder of 2025. Any other G&A expenses will be subject to our continuing ability to secure sufficient funding to continue planned operations.
General and Administrative Expenses
General and administrative (“G&A”) expenses increased by approximately $0.3 million for the nine months ended September 30, 2025 compared to the same period ended September 30, 2024, primarily due to higher stock-based expense of approximately $0.2 million associated with fees for certain investor relation and public relations services under our ICA, and higher other operational costs of approximately $0.2 million, of which $0.1 million was recorded in connection with the settlement of our litigation with an ex-employee, offset by lower legal expense of approximately $43 thousand.
As previously disclosed and as a result of our JV, we expect our G&A activities to remain steady or marginally increase for the remainder of 2025. Any other G&A expenses will be subject to our continuing ability to secure sufficient funding to continue planned operations or to improve shareholder value for the Company.
Goodwill Impairment
Since our stock price was not negatively impacted during the nine months ended September 30, 2025, we did not record an impairment on our goodwill. We recorded goodwill impairment of $3.2 million, on the approximately $12.0 million goodwill which we recorded upon our acquisition of PointR, due to a reduction of our stock price during the nine months ended September 30, 2024.
Interest Expense, Net
We recorded interest expense, including amortization of debt costs, of approximately $0.65 million for the nine months ended September 30, 2025 and September 30, 2024 primarily in connection with debt raised from convertible notes, JH Darbie Financing, March 2022 and May/June 2022 Financing and July 2025 financing. For more information on debt raised from convertible notes and the JH Darbie Financing, see Note 5 and Note 7 of the Unaudited Consolidated Financial Statements of this Quarterly Report.
Reimbursement of expenses
There was no reimbursement of expenses with related parties for nine months ended September 30, 2025. The Company was reimbursed $23 thousand during the nine months ended September 30, 2024 by Autotelic Inc. a related party, on behalf of our JV.
Change in Value of Derivatives
During the nine months ended September 30, 2025, we recorded approximately $32 thousand gain in value upon conversion of the debt to liabilities as a derivative as well as new debt converting to liabilities on the Convertible Notes as compared to approximately $0.1 million gain during the same period of 2024. The Convertible Notes became convertible 180 days after issuance, and as such the CEO and the bridge investor had the ability to convert that debt into equity at: (i) the variable conversion price of 65% of the Company’s lowest traded price after the first 180 days, or (ii) at the lower of $0.10 per share or 55% of the Company’s traded stock price under certain circumstances. This gave rise to a derivative feature within the debt instrument which resulted in the recording of a derivative liability and change in value of the derivative.
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Loss on Conversion of Debt
During the nine months ended September 30, 2025, we recorded no loss on conversion of debt. related to the difference in fair value to the price at which the debt was converted, compared to approximately $0.1 million loss on conversion of debt during the nine months ended September 30, 2024.
Liquidity, Financial Condition and Capital Resources ($s in ‘000’s)
| September 30, 2025 | December 31, 2024 | |||||||
| Cash, including restricted cash of $20 | $ | 429 | $ | 106 | ||||
| Working capital | (18,467 | ) | (19,065 | ) | ||||
| Stockholders’ Equity | 8,077 | 8,252 | ||||||
The Company has experienced net losses every year since inception and as of September 30, 2025 had an accumulated deficit of approximately $39 million. As of September 30, 2025, the Company had approximately $0.4 million in cash, and current liabilities of approximately $20.1 million. Of the approximately $20.1 million in current liabilities, of which approximately $1.3 million are net assumed liabilities of the Company as part of the Oncotelic Inc. reverse merger, $4.9 million was debt for conducting clinical trials for OT-101 from GMP and $2.6 million related to contingent liability to issue Common Stock of the Company to PointR shareholders upon achievement of certain milestones.
The Company does not expect to generate any meaningful revenue from product sales or licensing in the near future and expects to incur additional operating losses over the next several years, primarily as a result of the Company’s plans to continue clinical trials for its investigational drugs. The Company’s limited capital resources, history of recurring losses and uncertainties as to whether the Company’s operations will become profitable raise substantial doubt about its ability to continue as a going concern. The financial statements contained in this report do not include any adjustments related to the recoverability of assets or classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Since the Company formed the JV with Dragon, all costs associated with developing the assets licensed to the JV and a substantial portion of the Company’s general and administrative expenses have shifted to the JV reducing the Company’s direct expenses and capital requirements.
The Company requires capital in order to fund its operations and continue development of product candidates. including AL-101, Artemisinin for COVID-19, developing AI technologies to support the COVID-19 therapies; in addition to evaluating the development pathway of its product candidates; OXi4503 and/or CA4P. The Company is also independently planning to develop OT-101 for certain animal health indications and contemplating using crypto currencies for that platform.
The Company anticipates raising substantial additional capital through the sale of equity securities and/or debt. The Company has entered into the Mast EPA, but the ability to sell securities to Mast under that arrangement are subject to limitations based on the trading volume of the Company’s Common Stock. There are no other financing arrangements in place at this time.
If the Company is unable to access additional funds when needed, it may not be able to continue the development of these investigational drugs and the Company could be required to delay, scale back or eliminate some or all of its development programs and operations. Any additional equity financing, if available, would be dilutive to the current stockholders and may not be available on favorable terms. Additional debt financing, if available, may involve restrictive covenants and could also be dilutive. The Company’s ability to access capital is not assured and, if access is not achieved on a timely basis, would materially harm the Company’s financial condition, the value of its Common Stock and its business prospects.
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| Nine month ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (600 | ) | $ | (636 | ) | ||
| Net cash provided by financing activities | 923 | 615 | ||||||
| Increase (decrease) in cash | $ | (323 | ) | $ | (21 | ) | ||
Operating Activities
Net cash used in operating activities was approximately $0.6 million for the nine months ended September 30, 2025. This was due to the net loss of approximately $1.3 million and by approximately $33 thousand of change in fair value of derivative, offset primarily by changes in operating assets and liabilities of approximately $0.4 million, by approximately $0.1 million due to amortization of debt discounts, and approximately $0.2 million of stock based compensation.,
Net cash used in operating activities was approximately $0.6 million for the nine months ended September 30, 2024. This was due to the net loss of approximately $4.1 million, primarily offset by approximately $3.2 million of amortization of goodwill, approximately $88 thousand from loss on conversion of debt, approximately $0.1 million of change in fair value of derivative, approximately $0.1 million due to amortization of debt discounts and deferred financing costs and changes in operating assets and liabilities of approximately $0.2 million.
Financing Activities
For the nine months ended September 30, 2025, net cash provided by financing activities was approximately $0.9 million, primarily due to receipt of a short-term loan from a related party of approximately $0.4 million and proceeds from a convertible debt of approximately $0.5 million.
For the nine months ended September 30,2024, net cash provided by financing activities was approximately $0.6 million, primarily due to receipt of a short-term loan from a related party.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Contractual Obligations
Our current drug development programs are based on a series of compounds called combretastatins, which we have exclusively licensed from Arizona State University, or ASU. If our current drug candidates are approved, we will be required to pay low to mid-single-digit royalties on future net sales of products associated with the ASU patent rights until these patent rights expire.
We also have an exclusive license from Bristol-Myers Squibb, or BMS, for certain patent rights to particular combretastatins, including CA4P. If CA4P is approved, we will be required to pay low-single-digit royalties on future net sales of products associated with the BMS patent rights until these patent rights expire.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
Our cash is maintained in U.S. dollar accounts. We have adopted a policy for the cash that we hold, and also for any cash equivalents and investments that we may hold, the primary objective of which is to preserve principal, while also maintaining liquidity to meet our operating needs and maximize yields to the extent possible. Although our investments can be subject to credit risk, we follow procedures to limit the amount of credit exposure in any single issue, issuer or type of investment. Our investments are also subject to interest rate risk and would be likely to decrease in value if market interest rates increase. However, due to the generally conservative nature of our investments and relatively short duration, we believe that interest rate risk is mitigated.
Although we may from time-to-time manufacture drugs and conduct preclinical or clinical trials outside of the United States, we believe our exposure to foreign currency risk to be immaterial. We do not engage in any foreign currency hedging.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.
As required by Rule 13a-15(b) under the Exchange Act our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”) conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.. Based on that evaluation, our CEO and our CFO each concluded that our disclosure controls and procedures were not effective for the purposes set forth above as a result of certain material weaknesses in internal control over financial reporting.
Material Weaknesses in Internal Control over Financial Reporting
Management conducted an assessment of the effectiveness of our internal control over financial reporting as of September 30, 2025 based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that the Registrant’s internal control over financial reporting as of September 30, 2025 was not effective as a result of certain material weaknesses.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
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The ineffectiveness of our internal control over financial reporting was due to the following material weaknesses which are observed in many small companies with a small number of accounting and financial reporting staff:
| ● | Lack of formal policies and procedures; |
| ● | Lack of a functioning audit committee and independent directors on the Company’s board of directors to oversee financial reporting responsibilities; |
| ● | Inadequate or lack of segregation of duties; |
| ● | Lack of dedicated resources and experienced personnel to design and implement internal control procedures to support financial reporting objectives; |
| ● | Lack of qualified accounting personnel to prepare and report financial information in accordance with GAAP; and |
| ● | Lack of risk assessment procedures on internal controls to detect financial reporting risks on a timely manner. |
Management’s Plan to Remediate the Material Weaknesses
Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions planned include:
| ● | Continue to search for, evaluate and recruit qualified independent outside directors; |
| ● | Hire qualified accounting personnel to prepare and report financial information in accordance with GAAP; |
| ● | Identify gaps in our skills base and the expertise of our staff required to meet the financial reporting requirements of a public company; and |
| ● | Continue to develop policies and procedures on internal control over financial reporting and monitor the effectiveness of operations on existing controls and procedures. |
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2025, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
We are committed to maintaining a strong internal control environment and believe that these remediation efforts will represent significant improvements in our control environment. Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, to remediate weaknesses in our internal controls, as necessary and as funds allow.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. Historically, the outcome of all such legal proceedings has not, in the aggregate, had a material adverse effect on our business, financial condition, results of operations or liquidity. Other than as set forth below, we are not aware of any additional material pending or threatened legal proceedings at this time.
During the year ended December 31, 2022, a former employee brought suit for breach of employment contract claim against the Company in Honorable Superior Court of California. The Company filed a counter claim. In October 2025, after the period covered by this report, the Company and the former employee agreed to settle both the claim and counter claims. In connection with the settlement, Autotelic Inc. a related party of the Company, paid $162,500 to the former employee in full and final settlement of the claim and counter claim, with neither party admitting any wrongdoing. The legal proceedings, including the claim and counterclaims, have now been dismissed. The Company has recorded such payment as a debt from Autotelic.
Item 1A. Risk Factors
For information about the risks and uncertainties related to our business, please see the risk factors described in our 2024 Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on April 15, 2025 (“2024 Annual Report”) and other SEC filings. The risks described below and in our 2024 Annual Report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds
In March and September 2025, Fourth Man partially converted approximately $112,600 debt (Fourth Man March 2022 note), inclusive of accrued interest and penalty, into 1,658,914 shares of Common Stock of the Company. Such shares of Common Stock were issued at a rate of $0.07 in accordance with the terms of the Fourth Man March 2022 Note.
In July 2025, the Company issued 2,250,000 shares of Common Stock to Mast Hill as additional consideration in connection with the issuance of a $560,000 senior secured promissory note.
In August 2025, the Company issued 20,322,930 restricted shares of Common Stock to Jefferson Capital Ventures, LLC and 4,064,586 shares of Common Stock to Valor Nation, Inc. as partial payment for certain advisory and consulting services to be provided under independent contractor agreements with each entity, including strategic planning meetings, coordination non-legal support for SEC compliance, balance sheet and income statement optimization strategies, shareholder and investor communication planning, liaison with investment bankers, analysts, and institutional investors, operational efficiency and cost-saving recommendations and ancillary strategic services not requiring a license, corporate planning, operations and capital markets advisory services not requiring licenses. The shares issued to Jefferson Capital Ventures, LLC are subject to forfeiture and will be vested and earned upon achievement of certain corporate milestones as outlined in the independent contractor agreements.
In August 2025, the Company issued 3,860,000 shares of Common Stock to Mast Hill in payment of approximately $270,200 of principal and accrued interest issued under the May 2022 Mast Note. The shares were issued at a conversion price of $0.07 per share.
In September 2025, the Company recorded an obligation to issue 656,082 shares of Common Stock to Fourth Man in connection with the conversion of approximately $42,000 of principal and accrued interest, and a $2,000 fee. The shares were issued at a conversion price of $[0.07] per share. As the Company had received the request at the end of the quarter, the Company recorded 656,082 shares of Common stock as ‘Equity to be issued” to Fourth Man in the financial statements accompanying this report.
Each of the foregoing transactions was effected without registration pursuant to the exemption for limited offerings provided by Section 4(a)(2) of the Securities Act.
Item 3. Defaults upon Senior Securities
As of September 30, 2025, the Company was in default under the Forever Prosperity Notes (formerly GMP Notes) for failure to pay the outstanding principal and interest under the Forever Prosperity Notes at their maturity date. The total principal outstanding on all the Forever Prosperity Notes, inclusive of accrued interest, was approximately $4.9 million as of September 30, 2025. Forever Prosperity, the current holder of the notes, is an affiliate of Dragon, the other party in the Company’s JV, and has not called for the repayment of the debt. For additional information on the Forever Prosperity Notes see Note 5 of the consolidated financial statements included in this report.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
In reviewing the agreements included as exhibits to this Quarterly Report, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:
| ● | should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; | |
| ● | have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; | |
| ● | may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and | |
| ● | were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Quarterly Report and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
The following exhibits are included as part of this Quarterly Report and is not a complete list of all relevant and material agreements. A more complete list of previously filed Exhibits can be found with our 2023Annual Report on Form 10K filed with the SEC on April 12, 2024:
| Incorporated by Reference | ||||||||||
| Exhibit Number |
Description | Form | Filing Date | Exhibit Number | Filed Herewith | |||||
| 10.1 | Securities Purchase Agreement – Mast Hill | 8-K | 08/06/2025 | 10.1 | ||||||
| 10.2 | Senior Secured Promissory Note – Mast Hill | 8-K | 08/06/2025 | 10.2 | ||||||
| 10.3 | Registration Rights Agreement – Mast Hill | 8-K | 08/06/2025 | 10.3 | ||||||
| 10.4 | Equity Purchase Agreement – Mast Hill | 8-K | 08/06/2025 | 10.4 | ||||||
| 10.5 | Registration Rights Agreement – EPA – Mast Hill | 8-K | 08/06/2025 | 10.5 | ||||||
| 10.6 | Independent Contractor Agreement – Jefferson | 8-K | 08/12/2025 | 10.1 | ||||||
| 10.7 | Independent Contractor Agreement – Valor | 8-K | 08/12/2025 | 10.2 | ||||||
| 10.8 | Restricted Stock Grant – Vuong Trieu | x | ||||||||
| 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a). | x | ||||||||
| 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a). | x | ||||||||
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | x | ||||||||
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | x | ||||||||
| 101.1 | Interactive Data Files for the Three and Six months ended June 20, 2024 and June 30, 2023 | x | ||||||||
| 101.INS | Inline XBRL Instance Document | x | ||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema | x | ||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | x | ||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | x | ||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | x | ||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | x | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | x | ||||||||
| * | Confidential treatment has been granted for portions of this Exhibit. Redacted portions filed separately with the Securities and Exchange Commission. |
| + | Management contract or compensatory plan or arrangement. |
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SIGNATURES
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.
ONCOTELIC THERPAEUTICS INC.
| By: | /s/ Vuong Trieu | |
| Vuong Trieu, Ph.D. | ||
| Chief Executive Officer and Director (Principal Executive Officer) | ||
| Date: | November 17, 2025 | |
| By: | /s/ Amit Shah | |
| Amit Shah | ||
Chief Financial Officer (Principal Financial and Accounting Officer) |
||
| Date: | November 17, 2025 |
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