OTLC 10-K & 10-Q changes, risk factors and insider trading

Our principal asset is our minority investment in a JV, which makes an evaluation of our financial condition more difficult for investors.

Our principal asset is our minority interest in GMP Bio in connection with the JV. We account for our interest on the fair value method and our financial statements reflect only the fair value of that investment. Our financial statements do not include a balance sheet or statement of operations for the JV. We will adjust the value of our holdings in the JV from time to time when sufficient indications of a change in value exist, but the timing of those changes may depend on circumstances that are outside of our control. Accordingly, investors may find it more difficult to assess the underlying value of our company.

The JV is a pre-revenue life sciences venture that is difficult to value, and changes in development results, market conditions, valuation methodology or assumptions could result in material impairment charges, significant volatility in our financial results and/or a material reduction in our reported asset values.

Our principal asset is our investment in the JV. The JV is in the development stage, has not generated any revenue and has no approved or commercially marketed products. There is currently no established public trading market for interests in the JV, and the fair value of our investment is inherently difficult to determine. A recent third party ASC-compliant valuation substantially increased the estimated value of the JV and, as a result, increased the carrying value of our investment on our balance sheet. There can be no assurance that this increased valuation accurately reflects the realizable value of our investment or that such valuation will be sustained in future periods.

The valuation is based in part on management estimates and assumptions, including projections regarding development milestones, the probability of technical and regulatory success, market opportunity, timing of commercialization, comparable company or transaction metrics, discount rates and other inputs. There can be no assurance that this increased valuation is, or will remain, realizable. Future events—such as delays or failures in development, adverse clinical or regulatory outcomes, changes in the competitive landscape, deterioration in capital market conditions, higher discount rates, changes in comparable company valuations, or the JV’s inability to obtain additional financing, could cause the JV’s estimated value to decline, potentially materially.

If the carrying value of our investment is not recoverable or is otherwise required to be adjusted under applicable accounting standards, we could be required to recognize material non-cash impairment charges, mark-to-market adjustments, or other valuation-related losses in future periods. Any such charges could adversely affect our results of operations, financial condition, stockholders’ equity and key financial metrics, and could increase volatility in our reported earnings. In addition, because our ability to monetize our investment may depend on a future financing, sale, collaboration, licensing arrangement or other liquidity event at the JV level, we may not be able to realize value on a timeline or at a valuation that supports the current carrying value of our investment, or at all.

As of December 31, 2025, our gross intangible assets and goodwill, from our 2019 PointR acquisition, represented approximately $1.1 million and approximately $2.8 million, respectively and the fair value of our investment in our JV was approximately $388 million, combined representing approximately 99% of our total assets. Goodwill is generated in our acquisitions when the cost of an acquisition exceeds the fair value of the net tangible and identifiable intangible assets we acquire. Goodwill and indefinite-lived intangible assets are subject to an impairment analysis at least annually based on fair value. Intangible assets relate primarily to in-process research and development (“IPR&D”) and patents acquired by us as part of our acquisitions of other companies and are subject to an impairment analysis whenever events or changes in circumstances exist that indicate that the carrying value of the intangible asset might not be recoverable. If market and economic conditions or business performance deteriorates, the likelihood that we would record an impairment charge would increase, which impairment charge could materially and adversely affect our financial condition and operating results.

RISKS RELATED TO OUR FINANCIAL CONDITION

The JV may not be able to successfully complete its planned IPO which could reduce its access to capital and may impair the value of our investment in the JV.

The JV is planning to secure additional financing for its operations through an initial public offering in Hong Kong. While the JV has engaged an investment banker and is taking active steps to progress to an initial public offering, there are no firm commitments to underwrite any public offering at this time. We cannot assure you that any public offering will occur at all, will occur within a specific timeframe, will raise sufficient funds to meet the JV’s needs, or will be on terms that will be beneficial to the Company. If the JV is unsuccessful in its efforts to complete the IPO it will have to find alternative financing to support its operations. There are no arrangement for any such financing at this time, and a lack of capital could cause the JV to have to reduce or suspend its operations. Any adverse financing impact on the JV could decrease its value, the value of our investment and the price of our common stock.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.

We rely on a limited number of employees at the JV to manage and operate our business.

We had thirty eight full-time employees, five part-time employees and thirteen consultants as of December 31, 2025, however, all employees and consultants were compensated by the JV during the years ended December 31, 2025 and 2024, respectively. We rely on external consultants or outsource nearly all our research, development, preclinical testing, and clinical trial activity, although we maintain managerial and quality control over our clinical trials. We expect to continue to rely on external service providers and to maintain a small number of executives and other employees. Our limited financial resources require us to manage and operate our business in a highly efficient manner. We cannot assure you that we will be able to retain adequate staffing levels to run our operations and/or to accomplish all the objectives that we otherwise would seek to accomplish.

We believe that our success depends, and will likely continue to depend, upon our ability to retain the services of our current executive officers, particularly our Chief Executive Officer, Chief Business Officer, Chief Medical Officer, Chief Regulatory Officer and Chief Financial Officer, our principal consultants, and others. The loss of the services of any of these individuals could have a material adverse effect on our business. In addition to these key service providers, we have established relationships with universities, hospitals and research institutions, which have historically provided, and continue to provide, us with access to research laboratories, clinical trials, facilities and patients. Additionally, we believe that we may, at any time and from time to time, materially depend on the services of consultants and other unaffiliated third parties. We cannot assure you that consultants and other unaffiliated third parties will provide the level of service to us that we require in order to achieve our business objectives.

We and the JV intend to take advantage of regulatory pathways to accelerate product candidate development, and failure to secure such pathways would result in increased product development costs and longer regulatory approval as we seek to commercialize our product candidates.

In addition to regular pathways of filing INDs and NDAs, we, or our partners, including the JV, also plan to follow expedited pathways such as 505(b)(2) pathway of expedited approvals so as to get our products to market and patients for unmet medical needs on an expedited basis. However, we cannot guarantee that the regulatory bodies would approve our approach or approve our products as planned. If we are unable to secure approval for such expedited pathways, we will incur increased research and development costs and longer regulatory approval times as we seek to commercialize our products.

We cannot assure you that an investment in our common stock will not fluctuate significantly. One or more of these factors could significantly harm our business and cause a decline in the price of our common stock in the public market.

A limited trading market may increase the volatility of trading in our stock.

Our common stock is currently quoted on the OTCQB Market. The quotation of our common stock on the OTCQB Market does not assure that a meaningful, consistent, and liquid trading market currently exists, and in recent years such market has experienced extreme price and volume fluctuations that have particularly affected the market prices of many smaller companies like us. Our common stock is subject to this volatility.

Substantially all of the shares of our common stock issuable upon exercise of outstanding options and warrants have been registered or are likely to be registered for resale or are available for sale pursuant to Rule 144 under the Securities Act and may be sold from time to time. As of December 31, 2025, we had approximately 205.6 million shares of common stock underlying currently outstanding convertible debt, warrants and options. Sales of any of these shares on the market, as well as future sales of our common stock by existing stockholders, or the perception that sales may occur at any time, could adversely affect the market price of our common stock.

Sales of substantial amounts of common stock, or the perception that such sales might occur, could adversely affect prevailing market prices of our common stock and our stock price may decline substantially in a short time and our stockholders could suffer losses or be unable to liquidate their holdings.

We may not be able to uplist our stock to a national stock exchange which could subject our stockholders to significant restrictions and costs.

Our common stock is not currently eligible for trading on the Nasdaq Capital Market or on a national securities exchange. While we are working to get our stock to trade on a nationally recognized stock exchange, we may not be able to do so.

Additionally, the Company has authorized 15,000,000 shares of Convertible Preferred Stock. As of December 31, 2025, 24,388 shares of the Company’s Preferred Stock were issued to our CEO, of which 4,065 were earned and vested and an additional 8,131 shares have been earned but not yet issued. Each share of Preferred Stock is convertible into 1,000 shares of the Company’s Common Stock, and votes with the Common Stock on an as converted basis.

RISKS RELATED TO MAST HILL EQUITY LINE

Mast Hill’s sales of our Shares into the open market may cause material decreases in our stock price.

On August 1, 2025 we entered into an Equity Purchase Agreement with Mast Hill Fund L.P. (“Mast Hill”). In connection with that agreement we filed a Registration Statement covering the re-sale of up to 115.6 million shares of our common stock may be sold into the market by Mast Hill under the terms of the Equity Purchase Agreement and related agreements. Under the terms of the Equity Purchase Agreement, we can issue Put Notices to sell shares of common stock to Mast Hill, at prices based on recent trading prices. The sale of shares common stock by Mast Hill under the Registration Statement could cause our stock price to decline. In turn, if our stock price declines and we issue more Put Notices, this could cause more shares to come into the market, which could cause a further drop in our stock price.

Funding from our Equity Purchase Agreement with Mast Hill will be limited by our current shares outstanding and may be insufficient to fund our operations or to implement our strategy.

Under the Equity Purchase Agreement, and subject to other conditions, we may direct Mast Hill to purchase up to $25,000,000 worth of shares of our common stock over a 24-month period. However, we have limited shares of our common stock that have not already been reserved for outstanding derivative securities. Accordingly, we have registered 100,000,000 shares for issuance under the Equity Purchase Agreement. At an assumed hypothetical purchase price of $0.0912 equal to 97% of the closing price of our common stock of $0.0940 on December 17, 2025, as defined in the section entitled “Equity Purchase Agreement with Mast Hill Fund” in this prospectus) and assuming the sale by us to Mast Hill of all 100,000,000 Shares we would receive gross proceeds of approximately $9.1 million. We would need to eliminate outstanding derivative securities, authorize additional capital stock or effect another capital reorganization in order to sell more shares to Mast Hill and secure access to the full $25,000,000 in proceeds.

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.

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 Nano or 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 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:

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.

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.

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.

For more information on, refer to Recent Joint Venture Developments below.

Transactions with Lunai Bioworks

During the three and six months ended June 30, 2026, the Company recorded services revenue of approximately $0.3 million in connection with the IP Services Agreement described above. No similar services revenue was recorded in the three and six months ended June 30, 2025.

The Company received Series B Preferred Stock from Lunai with a stated Value of $12.5 million in exchange for the Company’s 62.5% equity interest in Neurobridge IP Holdings Incorporated. The transaction was accounted for as a sale of nonfinancial asset under FASB ASC 610-20 since the Company transferred control of the nonfinancial asset. The Series B Preferred Stock received was recorded at its initial fair value of $1.1 million. Because the net book value of the contributed asset was $0, the Company recognized a pre-tax gain on derecognition of non-financial assets of $1.1 million, which is included within “Other Income” in the unaudited Condensed Consolidated Statement of Operations.

The subsequent remeasurement of the Series B Preferred Stock at fair value is governed by FASB ASC 321, Investments – Equity Securities. The Company holds its investment in publicly traded companies that have readily determinable fair value based on quoted market prices. Its investment is carried at fair value on the unaudited Condensed Consolidated balance sheets. Realized and unrealized gains and losses resulting from changes in the fair value are recognized each period in earnings within other income on the unaudited Condensed Consolidated Statements of Operations. The Company recognized $0.3 million changes in fair value of its equity investment during the three and six months ended June 30, 2026.

The consideration payable to Autotelic is contingent on the Company uplisting its Common Stock to a nationally recognized stock exchange. Such shares of the Company have not been issued to Autotelic as of the date of this filing and are not due to be issued till the uplisting of the Company’s stock onto a nationally recognized stock exchange. If the uplisting does not occur, then the shares would not be issuable and neither would the transaction with Lunai be invalidated.

2026 Pacific Pier Note

In June 2026, the Company entered into a Securities Purchase Agreement (the “2026 Pacific Pier SPA”), with Pacific Pier Capital II, LP (“Pacific Pier”), pursuant to which Company issued a convertible promissory note in the aggregate gross principal amount of $178,410 (the “2026 Pacific Pier Note”). The 2026 Pacific Pier Note is convertible into shares of the Company’s common stock, par value $0.01 per share. For more information on the 2026 Pacific Pier Note, refer to Note 5 of the Notes to the unaudited Condensed Consolidated Financial Statements.

The 2026 Pacific Pier Note has an original issue discount of 12%, carries an interest rate of 12% per annum and matures on the earlier of (a) the one-year anniversary of the date of the 2026 Pacific Pier Purchase Agreement, or (b) the acceleration of the maturity of the 2026 Pacific Pier Note by Pacific Pier upon occurrence of an event of default or (c) on prepayment in full. The 2026 Pacific Pier Note contains a voluntary conversion mechanism whereby Pacific Pier may convert the outstanding principal and accrued interest under the terms of the 2026 Pacific Pier Note into shares of Common Stock (the “Conversion Shares”), following six (6) calendar months after the Issue Date, at a price that is lesser of (i) $0.06 (as adjusted for any stock dividend, stock split, stock combination, rights offerings, reclassification or similar transaction that proportionately decreases or increases the Common Stock) or (ii) 85% of the lowest traded price of the Common Stock on the Principal Market on any Trading Day during the ten (10) Trading Days prior to the respective conversion date, subject to adjustments upon the occurrence of certain corporate events. The Company also issued 500,000 shares of Common Stock as commitment shares. For more information on the 2026 Pacific Pier Note, refer to Note 5 of the Notes to the unaudited Condensed Consolidated Financial Statements included in this report.

In addition, on August 3, 2026, the Company entered into a new SPA and note with Pacific Pier, with the exact same terms and conditions, for an additional approximately $0.2 million. For more information on the new SPA and note, refer to Note 16 of the Notes to the unaudited Condensed Consolidated Financial Statements included in this report.

We have the option to first perform a qualitative assessment (commonly referred to as “Step 0”) to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, no further quantitative testing is required. If we choose to bypass the qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we perform a quantitative impairment test. The quantitative test compares the fair value of the reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its estimated fair value, an impairment charge is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

Fair Value of the Company’s equity investment

The Company accounts for its investment in the Series Preferred stock of Lunai Bioworks in accordance with ASC 321. Because the asset’s underlying common stock has a readily determinable fair value via an active public exchange, the investment is measured at fair value at each reporting date. The investment is measured using an as-converted basis, anchoring to the observable, quoted market price of Lunai’s underlying common stock on the Nasdaq. Because the preferred shares cannot be immediately liquidated on the open market, management applies a Discount for lack of marketability and other valuation discounts to reflect contractual and regulatory holding restrictions.

The following table sets forth key components of our results of operations for the periods indicated:

Net Income before controlling interests

Net income for the three months ended June 30, 2026, was approximately $0.3 million, a $0.1 million increase from the $0.2 million recorded in the same period of 2025.. The increase was primarily driven by a $1.1 million non-cash gain on derecognition of non-financial asset attributable to the Lunai Series preferred received in exchange for the Company’s equity interest in Neurobridge IP Holdings Incorporated, a gain of $0.3 million from the mark to market of such investment at period end in accordance with ASC 321, and approximately $0.3 million recorded due to services provided to Lunai under the IP Services Agreement (See Transactions with Lunai Bioworks described above). No similar income was recorded during the three months ended June 30, 2025.

The Company recorded higher operating expenses of approximately $1 million, of which approximately $0.7 million related to higher stock-based compensation, approximately $0.4 million of higher legal and professional expenses and approximately $0.1 million of higher other operational expenses during the three months ended June 30, 2026, as compared to the same period of 2025. In addition, the Company recorded higher interest expense of approximately $0.1 million following the additional convertible debts incurred in the period and a lower gain from change in fair value of derivatives by approximately $0.4 million, incurred during the three months ended June 30, 2026, as compared to the same period of 2025.

Service revenue

During the three months ended June 30, 2026, we recorded service revenue of $250,000 as received from Lunai for certain services in connection with the IP Services Agreement. No similar revenues were recorded during the same period in 2025.

Now that we have formed a joint venture with GMP Bio, whereby we are able to transfer the responsibility of our drug development program related to OT-101 to the JV, we plan to increase research and development activities related to apomorphine, the initiation of new clinical trials for our other oncology indications as well continuing or expanding on the trials and development of AI based tools and applications for OT-101; and Artemisinin for COVID-19 and other epidemics, and therefore believe that research and development expense may increase in the future, 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 $1.0 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in stock-based compensation of approximately $0.7 million, and approximately $0.4 million in legal and professional fee. The higher legal and professional costs are primarily attributed to the Company’s efforts to uplist the Company’s Common Stock to a nationally recognized stock exchange. The higher operating expenses were partially offset by lower operating expenses of approximately $0.1 million incurred during the three months ended June 30, 2026 as compared to the same period of 2025.

Gain on derecognition of non-financial asset and change in value of equity securities of Lunai During the three months ended June 30, 2026, the Company recorded total non-cash income of $1.4 million related to transactions with Lunai. This income consists of a $1.1 million gain on the derecognition of a non-financial asset, alongside a subsequent $0.3 million upward fair value adjustment on the underlying equity securities received in exchange for the Company’s interest in Neurobridge IP Holdings Incorporated. While the Series B Preferred Stock received from Lunai carries a stated value of $12.5 million, the Company recorded such consideration based on the fair value of these equity securities. No similar income was recorded during the three months ended June 30, 2025. For more information on the fair value of the equity securities in Lunai, refer to Note 2 of the unaudited Condensed Consolidated Financial Statement under “Fair Value Hierarchy – Lunai”.