Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K (the "Annual 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. For a more detailed discussion on our forward-looking statements, kindly refer to "Forward Looking Statements" prior to Item 1: Part I: Business contained in this Annual Report.

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, refer to our 2024 Annual 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 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"), the JV, and Dragon agreed to provide approximately $27.6 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 change in fair value in the Company's investment in GMP Bio, and the income and expenses of the JV are not consolidated in the Company's financial statements.

The Company announced in November 2025 that the JV obtained a preliminary independent third-party valuation of approximately $2.3 billion for its therapeutic pipeline, assuming and implying an illustrative value of approximately $1 billion based on the Company's 45% ownership interest in the JV. The Company had previously stated that this valuation was non-binding, forward-looking, and not determinative of fair value under U.S. GAAP, and that a separate ASC-compliant valuation process would be done. Under the fair value option, the Company periodically conducts a fair value assessment and records a change in the value when circumstances warrant reassessing the value of investment in GMP Bio. The Company conducted an ASC-compliant valuation, including through an independent valuation expert based on the same parameters and conditions envisioned in the valuation conducted by the JV. Based on the Company's evaluation, the Company proceeded to record a change in the value of the Company's interest in the JV of approximately $365.4 million. The Company relied on the inputs by the JV valuation, however, certain parameters like lack of marketability and lack of control discounts and other standard discounts, specific to the Company, have been applied to the independent valuation done by the Company to derive the ASC-compliant valuation. The Company will also appropriately adjust the fair value of the interest of the Company's interest in the JV at the end of reporting periods and when key value inflection points are met. 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. For more information on, refer to Recent Joint Venture Developments below.

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 Mesothelioma.("MPM") and has started clinical development for OT-101 for pancreatic cancer. Over ten patent families have 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 patents in China and Germany.

In addition to OT-101, the JV has 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 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 2026. These are expected to go through the 505(b)2 bioequivalence pathway for a more rapid entrance into the market
	●	In addition, the JV has also identified developing carboplatin and intends to begin the development as soon as the other products clinical trials are under way.

The Nano or Deciparticle^TM 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 June 30, 2025. In May 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 and beyond. 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 approximately late 2026. In connection with the planned public offering, the JV venture has retained an investment banker and a big four accounting firm 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. GMP Bio completed an independent third-party valuation, which preliminarily estimated the potential value of the drug pipeline under development at approximately $2.3 billion. As of December 31, 2025, the Company owns 45% of GMP Bio.

The JV's planned public offering is subject to a number of risks and uncertainties, some involving the JV's ability to execute 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 believed that its ownership interest in the JV would be significantly higher than the reported value on its financial statements, which was based on the valuation at the time of its initial investment in the JV in 2022.

All these factors formed a basis for a triggering event of significant development for the JV and justified the JV, and consequently the Company, to reassess the fair value of the JV. After the business valuation exercise by GMP Bio, the Company proceeded to conduct its own independent assessment of the valuation of the JV. The basis for the valuation was utilizing the same conditions, financial projection, risks and parameters of assessment as done by the offshore independent valuation firm, and then applying additional independent parameters required to adhere to the strict ASC-compliant standards as generally used in the United States. The Company hired the services of an independent, ASC-compliant valuation firm to review, perform and validate the assumptions considered by the Company and provide an ASC-compliant valuation of the JV under U.S. GAAP standards. The valuation conducted by the independent ASC-compliant valuation firm of the JV was based on various methods compliant with ASC and US GAAP to derive the fair value. The Company then utilized the fair value of GMP Bio, as assessed by the ASC-compliant valuation firm, attributed the ownership percentage of the Company in GMP Bio, to ascertain the Company's interest in GMP Bio and recorded the resulting gain to the investment in GMP Bio at fair value of approximately $365.4 million. The Company relied on the inputs by the JV valuation, however, certain parameters like lack of marketability and lack of control discounts and other standard discounts, specific to the Company, have been applied to the independent valuation done by the Company to derive the ASC-compliant valuation. The Company will also appropriately adjust the fair value of the interest of the Company's interest in the JV at the end of reporting periods and when key value inflection points are met.

PDAOAI

PDAOAI is the Company's proprietary artificial intelligence-enabled knowledge platform, developed to support scientific, translational, and regulatory activities across its oncology pipeline. The platform was initially implemented by Oncotelic Therapeutics to streamline document search, synthesis, and analysis in knowledge-intensive environments, particularly within pharmaceutical research and development. Since its initial deployment, the Company has progressively expanded PDAOAI into a core infrastructure layer supporting research generation, biomarker discovery, and regulatory documentation across multiple programs. Unlike general-purpose artificial intelligence tools, PDAOAI has been designed specifically for pharmaceutical and biotechnology applications, with an emphasis on regulatory-grade documentation, scientific traceability, and reproducibility. The platform is intended to operate as an "evidence-interrogation" system rather than a black-box predictive engine, enabling structured ingestion, semantic indexing, and clustering of large biomedical corpora. This design allows users to query, retrieve, and synthesize information in a manner that is auditable and aligned with regulatory expectations for data provenance and scientific justification. During 2025, the Company significantly expanded the functional scope of PDAOAI and integrated it into its translational research workflow. This included the use of PDAOAI to support the preparation of peer-reviewed manuscripts, development reports, and regulatory documentation, as well as to enable interactive interrogation of scientific literature. The Company introduced interfaces that allow users to query individual publications and their associated reference networks, thereby facilitating deeper exploration of mechanistic hypotheses and clinical correlations within defined therapeutic areas. PDAOAI has also been applied to the assembly and interrogation of multi-omic and clinical datasets, particularly in the context of biomarker-driven oncology research. The platform has been used to identify, prioritize, and validate biomarkers associated with treatment response, disease progression, and survival outcomes. This capability has been most prominently demonstrated in the Company's work on TGFB2 signaling and tumor microenvironment biology, where PDAOAI has supported analyses across multiple tumor types, including ovarian cancer, breast cancer, pancreatic cancer, hepatocellular carcinoma, and glioblastoma.

As disclosed in Company press releases, PDAOAI contributed to the generation of at least seven peer-reviewed publications during 2025. These publications collectively span bioinformatic biomarker discovery, tumor microenvironment analysis, nanoparticle drug delivery, and clinical outcome correlations, and include studies demonstrating prognostic and predictive roles of TGFB2 methylation and expression across multiple cancers. The Company believes that this body of work provides validation of PDAOAI's utility as a research acceleration platform and supports its role in generating clinically relevant insights.

By late 2025, the Company had further evolved PDAOAI into a large-scale knowledge platform built around a comprehensive TGF-β-centric biomedical corpus, comprising over one hundred thousand curated abstracts and associated datasets. Within this framework, PDAOAI enables semantic retrieval, clustering of related concepts, and cross-referencing of molecular, clinical, and literature-derived data. The platform is designed to generate hypotheses that are not only computationally derived but also traceable to underlying evidence, thereby facilitating scientific validation and regulatory acceptance. The Company has now positioned PDAOAI as a cross-program decision-support system integrating molecular biology, pharmacology, clinical outcomes, and regulatory-grade literature. The platform is used to inform multiple aspects of the Company's operations, including target identification, biomarker strategy, clinical trial design, and regulatory positioning. In particular, PDAOAI is intended to complement the Company's nanomedicine and biomarker platforms by identifying patient subpopulations most likely to benefit from specific therapeutic approaches and by supporting the development of precision oncology strategies.

The Company believes that PDAOAI represents a differentiating capability within its integrated platform, enabling the convergence of artificial intelligence, molecular biology, and clinical data into a unified framework. By embedding PDAOAI across its discovery and development processes, the Company aims to accelerate insight generation, improve decision-making, and enhance the probability of clinical and commercial success across its pipeline.

On April 2, 2026, the Company announced that it had entered into a strategic partnership with TechForce Robotics, Inc. ("TechForce") to advance the commercialization of its PDAOAI-enabled, GMP-compliant robotics platform. This milestone reflects the culmination of several years of research and development efforts, resulting in an integrated platform designed to combine Oncotelic's proprietary PDAOAI capabilities with TechForce's robotics hardware and manufacturing expertise. The system under development is designed to operate within GMP-regulated environments and is intended to enable automated material handling, real-time monitoring, and PDAOAI-enhanced compliance workflows across pharmaceutical manufacturing and related applications. The key highlights of the commercialization include:

	1.	Integrated AI + robotics platform, combining the Company's PDAOAI capabilities with TechForce's scalable robotics systems to automate critical operational workflows;
	2.	Form a GMP-Compliant Design, designed to support regulatory requirements, including data capture, audit readiness, and validation frameworks;
	3.	Improve operational efficiency and compliance, intended to reduce human intervention, minimize contamination risk, and enhance process consistency through real-time monitoring and intelligent automation; and
	4.	Achieve scalable manufacturing capability, intended to leverage TechForce's hardware expertise and manufacturing network to support commercial deployment and future growth.

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.

In August 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.

Further in January 2026, the Company entered into a Securities Purchase Agreement (the "2026 Mast Hill Purchase Agreement"), with Mast Hill Fund, LP ("Mast Hill"), and the Company issued a convertible promissory note in the aggregate gross principal amount of approximately $398,333 (the "2026 Mast Hill Note"). The 2026 Mast Hill Note is convertible into shares of the Company's Common Stock

The 2026 Mast Hill Note has an original issue discount of 10%, carries an interest rate of 10% per annum and matures on the earlier of (a) the one-year anniversary of the date of the 2026 Mast Hill Purchase Agreement, or (b) the acceleration of the maturity of the 2026 Mast Hill Note by Mast Hill upon occurrence of an Event of Default (as defined below) or (c) on prepayment in full. The 2026 Mast Hill Note contains a voluntary conversion mechanism whereby Mast Hill may convert the outstanding principal and accrued interest under the terms of the 2026 Mast Hill Note into shares of Common Stock (the "Conversion Shares"), at a fixed price of $0.07 per share (the "Conversion Price"), subject to adjustments upon the occurrence of certain corporate events. The 2026 Mast Hill Note is secured against the assets of the Company, including all the assets owned by the Company's direct or indirect subsidiaries, but other than and excluding the equity interests and the assets of the Company licensed or assigned within our joint venture agreement with Dragon Overseas Capital Limited, namely GMP Biotechnology and its subsidiaries. These assets include OT-101, CA4P, Oxi4503, AI and AI CDMO technologies and the nanoparticle platform. The Company also issued 1,422,613 warrants to purchase shares (the "Note Warrants") of Common Stock of the Company at an exercise price of $0.15. Prepayment of the 2026 Mast Hill Note may be made at any time upon three trading days' prior written notice to the respective holder, by payment of the then outstanding principal amount plus accrued and unpaid interest and reimbursement of such holder's administrative fees. The 2026 Mast Hill Note contains customary events of default (each an "Event of Default"). If an Event of Default occurs, at the respective holder's election, the outstanding principal amount of the 2026 Mast Hill Note, plus accrued but unpaid interest, will become immediately due and payable in cash. The 2026 Mast Hill Purchase Agreement require the Company to use the proceeds for general working capital, and not for (i) the repayment of any indebtedness owed to officers, directors or employees of the Company or their affiliates, (iii) any loan to or investment in any other corporation, partnership, enterprise or other person (except in connection with the Company's currently existing operations), (iv) any loan, credit, or advance to any officers, directors, employees, or affiliates of the Company, or (v) in violation or contravention of any applicable law, rule or regulation. Further, on January 23, 2026, the Company entered into a Registration Rights Agreement with Mast Hill (the "Mast Hills Registration Rights Agreement - Note"), to register the shares of Common Stock issuable under and related to the 2026 Mast Hill Notes and the attached Note Warrants to purchase shares of the Company's Common Stock.

Jefferson Capital Ventures, LLC and Valor Nation, Inc Independent Contractor Agreements

In August, 2025, the Company 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 20,322,930 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, which were a) the Company's market capitalization exceeding $45 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. Subsequently, on January 6, 2026, there was an amendment to the agreement with Jefferson. The amendment amended one clause within the original agreement for Jefferson to earn the first milestone shares upon the Company reaching $45 million of market capitalization on any single trading day and which was achieved by the Company in November 2025. 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 and on January 7, 2026.

New Private Placement with JH Darbie

In December 2025, the Company entered into a series of subscription agreements with 44 accredited investors which resulted in a conversion of 87 convertible promissory notes with an aggregate principal amount of approximately $2.2 million, under the prior JH Darbie Financing into new debt to the Company. JH Darbie and the Company are parties to a May 2024 placement agent agreement ("Agreement") pursuant to which JH Darbie has the right to sell/convert a minimum of 10 Units and a maximum of 200 Units on a best-efforts basis. The December 2025 conversions fully converted JH Darbie PPM-2 notes into PPM-3 notes. For more information on the new JH Darbie Financing, refer to Note 8 of these Notes to the Consolidated Financial Statements.

Short-term loans from related parties / families

As of January 1, 2025, approximately $2.1 million was outstanding and payable to Autotelic. During the year ended December 31, 2025, Autotelic Inc. provided additional short-term funding of approximately $0.9 million to the Company. As such, approximately $3 million was outstanding and payable to Autotelic at December 31, 2025.

As of January 1, 2025, approximately $76,000 was outstanding and payable to the Company's CFO. During the year ended December 31, 2025, the CFO further 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 December 31, 2025.

At January 1, 2025, $50,000 was outstanding and payable to the Company's CEO. During the year ended December 31, 2025, the PPM-2 note of $125,000 with the CEO was converted into a short term loan. As such, $175,000 was outstanding to the Company's CEO at December 31, 2025. As of December 31, 2025, approximately $210,000 was outstanding as short-term advances from certain bridge investors.

During the year ended December 31, 2025, one accredited investor from PPM-2 did not participate in PPM-3 and his balance of $50,000 was converted into short-term loan to the Company Such short term loan, including accrued interest thereon, was repaid to the investor during the first quarter of 2026, after the period covered by the financial statements included in this Annual Report.

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles ("US GAAP") 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 considering 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 financial statements included elsewhere in this Annual 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.

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.

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 of 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 reviewed 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.

Research and Development Expense

Research and development expense consists 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 expenses, 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 in this Report.

Results of Operations

Years Ended December 31, 2025 and 2024.

A comparison of the Company's operating results for the year ended December 31, 2025, and 2024, respectively, is as follows.

		December 31, 2025				December 31, 2024				Variance
Operating expense:
Research and development		$	4,357			$	-			$	4,357
General and administrative			3,182,242				376,013				2,806,229
Goodwill impairment			-				3,200,000				(3,200,000	)
Total operating expense			3,186,599				3,576,013				(389,414	)
Income (loss) from operations			(3,186,599	)			(3,576,013	)			389,414
Change in fair value of investment in GMP Bio			365,346,775				-				365,346,775
Interest expense, net			(885,488	)			(857,723	)			(27,765	)
Reimbursement for expenses - related party			-				22,937				(22,937	)
Change in the value of derivatives on debt			353,572				(280,402	)			633,974
Loss on debt conversion			(1,058,976	)			(88,258	)			(970,718	)
Miscellaneous Income			5,631				-				5,631
Net income (loss) before income taxes			360,574,915				(4,779,459	)			365,354,374
Provision for income taxes (deferred)			(111,550,000	)			-				(111,550,000	)
Net income (loss) after income taxes		$	249,024,915			$	(4,779,459	)			253,804,374

Net Income (Loss)

We recorded a net income after tax of approximately $249.0 million for the year ended December 31, 2025, compared to a net loss of approximately $4.8 million for the same period in 2024. The higher net income of approximately $253.8 million for the year ended December 31, 2025, as compared to the same period of 2024, was primarily due to recording the increase in fair value in our investment in GMP Bio of approximately $365.4 million, lower goodwill impairment of approximately $3.2 million recorded in 2024, compared to no similar impairment in 2025, higher provision for deferred income taxes of approximately $111.6 million, higher general and administrative expenses of approximately $2.8 million, higher loss on conversion of debt of approximately $1.0 million, partially offset by a favorable change in the value of derivatives on debt of approximately $0.6 million and lower interest expense of approximately $28 thousand.

Research and Development Expense

Research and Development ("R&D") expense nominally increased by approximately $4 thousand incurred during the year ended December 31, 2025 as compared to no similar expenses during the same period of 2024.

As a result of our JV, we expect our R&D expense to remain low for the remainder of the year 2026 and will be subject to our ability to secure sufficient funding to fund any planned operations.

General and Administrative Expense

General and administrative ("G&A") expense increased by approximately $2.8 million, to approximately $3.2 million for the year ended December 31, 2025, as compared to approximately $0.4 million for the same period of 2024, primarily due to higher stock based compensation of approximately $2.4 million incurred for common stock and preferred stock issued in connection with services, approximately $0.2 million to settle litigation related to an ex-employee and approximately $0.2 million due to lower other general and administrative expenses.

Goodwill Impairment

During the year ended December 31, 2024, we recorded goodwill impairment of $3.2 million, on the approximately $12.0 million goodwill which we recorded upon our acquisition of PointR, based on the difference between our market capitalization and our net assets. No similar impairment was recorded during the year ended December 31, 2025.

Change in fair value of investment in GMP Bio

We recorded a change in fair value of our investment in GMP Bio for the year ended December 31, 2025 of approximately $365.4 million for the year ended December 31, 2024, compared to no similar change in fair value for the year ended December 31, 2024. The change in fair value was recorded based on a third-party ASC-compliant fair valuation of GMP Bio in accordance with US GAAP. As of December 31, 2025, the Company assessed that the fair value of its investment in the JV had materially changed due to all the development work that had occurred in the JV, hired the services of an ASC-compliant valuation firm to reassess the fair value of the JV and determined that a change in the fair value was required. As such, the Company recorded the change in fair value based on its 45% ownership in the JV. For more information, refer to Recent Joint Venture Developments above and Note 2 of the Notes to the Consolidated Financial Statements under Change in Fair Value of equity securities of GMP Bio.

Interest Expense, Net

We recorded interest expense, including amortization of debt costs, of approximately $0.9 million for the years ended December 31, 2025 and 2024, primarily in connection with debt raised from convertible notes and the JH Darbie Financing, March 2022 financing, May 2022 financing and July 2025 financing. For more information on debt raised from convertible notes and the JH Darbie Financing, see Note 5, Note 7 and Note 8 of the Consolidated Financial Statements of this Annual Report.

Reimbursement of expenses

There was no reimbursement of expenses from related parties for the year ended December 31, 2025, where-as the Company was reimbursed approximately $23 thousand, by Autotelic Inc. a related party, during the year ended December 31, 2024 for expenses incurred by the Company on behalf of our JV.

Change in value of derivatives

During the year ended December 31, 2025, we recorded a gain of approximately $0.4 million, as compared to loss of approximately $0.3 million, recorded during the year ended December 31, 2024, due to the change in value of derivatives on the notes issued to our CEO and the bridge investors.

Loss on Conversion of Debt

During the year ended December 31, 2025, we recorded a loss on conversion of debt of approximately $1.1 million, as compared to a similar loss of approximately $0.1 million during the same period of 2024. The higher loss incurred during the year ended December 31, 2025 was primarily due to the conversion of the PPM-2 debt to the PPM-3 debt.

Provision for income taxes (deferred)

During the year ended December 31, 2025, we recorded deferred income tax expenses of approximately $111.6 million, as compared to no similar expenses during the same period of 2024. The higher income tax expense incurred during the year ended December 31, 2025 was due to the recording of a change in the fair value of the Company's investment in GMP Bio of approximately $365.4 million.

Liquidity, Financial Condition and Capital Resources ($s in '000's)

		December 31,				December 31,
		2025				2024
Cash, including restricted cash		$	109			$	106
Working capital			(16,945	)			(19,065	)
Stockholders' Equity			262,761				8,252

Except the year ending December 31, 2025, the Company has experienced net losses every year since inception. Since inception, and at the end of the year ending December 31, 2024, the Company had an accumulated deficit of approximately $38 million. As of December 31, 2025, the Company recorded net income of approximately $249 million after deferred taxes, and as such had positive equity of approximately $262.8 million. As of December 31, 2025, the Company had approximately $0.1 million in cash, approximately $1.1 million of prepaid and other current assets and current liabilities of approximately $18.1 million, of which approximately $1.3 million are net assumed liabilities of the Company as part of the Oncotelic Inc. reverse merger, $11.9 million of short term debt, including accrued interest, and $2.6 million is contingent liability to issue common shares of the Company to PointR shareholders upon achievement of certain milestones. The Company also had approximately $1.9 million of long-term debt on account of the PPM-3 and $111.6 million of deferred income taxes Management expects to incur significantly lower costs and losses, especially due to the transfer of costs over to the JV since April 2022, in the foreseeable future but also recognizes the need to raise capital to remain viable. 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.

The principal source of the Company's working capital deficit to date has been the issuance of convertible notes and short term loans. A substantial part of the short term loans have been provided by officers and certain insiders, and sale of equity under the EPA with Peak One. The Company will need to raise additional capital in order to fund its operations and continue development of its product candidates. The Company is evaluating the options to further the development of the Company's product candidates, 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 has been developing OT-101 for various cancers, as well as a nanoparticle platform through the JV. Substantial development on that front has occurred during the past year.

The Company hopes to raise substantial additional capital through the sale of equity securities and/or debt, but no new financing arrangements, other than the EPA with Mast Hill, is 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.

Cash Flows ($s in '000s)

		Year ended December 31,
		2025				2024
Net cash used in operating activities		$	(1,383	)		$	(740	)
Net cash provided by financing activities			1,386				656
Increase/ (decrease) in cash		$	3			$	(84	)

Operating Activities

For the year ended December 31, 2025, net cash used in operating activities was approximately $1.4 million. This was due to the net income of approximately $249.0 million, offset by approximately $365.4 million recorded due to the change in fair value of the Company's investment in GMP Bio; approximately recording deferred income taxes of approximately $111.6 million; $0.4 million due to the favorable change in fair value of the derivatives; increased by approximately $2.4 million stock-based expenses; by approximately $1.1 million of loss on conversion of debt; approximately $0.2 million of amortization of deferred financing costs and approximately $0.1 million due to changes in operating assets and liabilities.

For the year ended December 31, 2024, net cash used in operating activities was approximately $0.7 million. This was due to the net loss of approximately $4.8 million, primarily reduced by approximately $3.2 million of goodwill impairment, approximately $0.3 million due to a change in fair value of derivatives, approximately $0.1 million of amortization of debt and finance discounts, approximately $0.1 million of loss on conversion of debt and increased by approximately $0.3 million due to changes in operating assets and liabilities.

Financing Activities

For the year ended December 31, 2025, net cash provided by financing activities was approximately $1.4 million, due to approximately $0.5 million from convertible debt and approximately $0.9 million raised through short term loans.

For the year ended December 31, 2024, net cash provided by financing activities was approximately $0.7 million due to approximately $0.7 million raised through short term loans.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Effects of Inflation

We do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented.

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.