10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _________ to _________

Commission file number: 000-21990

Oncotelic Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware	13-3679168
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

29397 Agoura Road Suite 107 Agoura Hills, CA	91301
(Address of principal executive offices)	(Zip Code)

(650) 635-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of exchange on which registered
None	OTLC	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” a “smaller reporting company” and an “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 16, 2022, there were 385,722,559 shares of the registrant’s common stock outstanding.

ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements (unaudited)	3
	Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	3
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021	4
	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months and Six Months Ended June 30, 2022 and 2021	5
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	7
	Notes to Consolidated Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	49
ITEM 4.	Controls and Procedures	49
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	50
ITEM 1A.	Risk Factors	50
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
ITEM 3.	Defaults Upon Senior Securities	51
ITEM 4.	Mine Safety Disclosures	51
ITEM 5.	Other Information	51
ITEM 6.	Exhibits, Financial Statement Schedules	51
SIGNATURES		53

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30,			December 31,
	2022			2021
ASSETS
Current assets:
Cash	$	399,772		$	568,769
Restricted cash		20,000		$	20,000
Accounts receivable		19,748			19,748
Prepaid & other current assets		23,710			18,778
Total current assets		463,230			627,295
Intangibles, net of accumulated amortization of $201,180 and $188,339 as of June 30, 2022 and December 31, 2021, respectively		-			821,841
In process R&D		1,101,760			1,101,760
Goodwill		16,182,457			21,062,455
Investment in GMP Bio at fair value		22,640,521			-
Total assets	$	40,387,968		$	23,613,351
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,932,984		$	3,092,723
Accounts payable to related party		339,460			403,423
Contingent consideration		2,625,000			2,625,000
Derivative liability on notes		408,212			340,290
Convertible and short-term debt, net of costs		8,951,358			8,166,622
Convertible debt and short-term debt - related party, net of costs		850,844			826,862
Total current liabilities		16,107,858			15,454,920
Commitments and contingencies (Note 12)
Stockholders’ equity:
Convertible preferred stock, $0.01 par value, 15,000,000 shares authorized; 0 shares issued and outstanding		-			-
Common stock, $.01 par value; 750,000,000 shares authorized; 386,041,862 and 375,288,146 issued and outstanding, respectively		3,860,418			3,752,881
Additional paid-in capital		40,357,610			35,223,842
Accumulated deficit		(19,858,712	)		(31,021,050	)
Total Oncotelic Therapeutics, Inc. stockholders’ equity		24,359,316			7,955,673
Non-controlling interests		(79,206	)		202,758
Total stockholders’ equity		24,280,110			8,158,431
Total liabilities and stockholders’ equity	$	40,387,968		$	23,613,351

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

3

ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three MONTHS AND SIX MONTHS ended JUNE 30, 2022 and 2021

(Unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2022			2021			2022			2021
Operating expenses:
Research and development	$	108,707		$	956,814		$	689,004		$	2,513,486
General and administrative		147,608			2,807,398			3,911,518			3,288,607
Total operating expenses		256,315			3,764,212			4,600,522			5,802,093
Loss from operations		(256,315	)		(3,764,212	)		(4,600,522	)		(5,802,093	)
Other income (expense):
Reimbursement for expenses -related party		247,492			-			247,492			-
Interest expense, net of interest income		(1,094,878	)		(433,979	)		(1,392,341	)		(954,886	)
Gain on derecognition of non-financial asset		16,951,477			-			16,951,477			-
Change in fair value of derivative on debt		122,919			630,174			(67,922	)		93,829
Loss on debt conversion		-			-			(257,810	)		(27,504	)
Total other income (expense)		16,227,010			196,195			15,480,896			(888,561	)
Net income (loss) before non-controlling interests		15,970,695			(3,568,017	)		10,880,374			(6,690,654	)
Net income (loss) attributable to non-controlling interests		(41,424	)		(336,737	)		(281,964	)		(656,294	)
Net income (loss) attributable to Oncotelic Therapeutics, Inc.	$	16,012,119		$	(3,231,280	)	$	11,162,338		$	(6,034,360	)
Basic net income (loss) per share attributable to common stock	$	0.04		$	(0.01	)	$	0.03		$	(0.03	)
Basic weighted average common stock outstanding		379,203,841			369,547,235			378,588,600			232,700,641
Diluted net income (loss) per share attributable to common stock	$	0.04		$	(0.01	)	$	0.03		$	(0.03	)
Diluted weighted average common stock outstanding		418,758,755			369,547,235			418,040,372			232,700,641
Reconciliation for basic to diluted weighted average common stock outstanding
Basic weighted average common stock outstanding		379,203,841			369,547,235			378,588,600			232,700,641
Add: Dilutive Common Stock Instruments		13,797,183			-			13,508,747			-
Shares issuable upon conversion of debt		25,757,731			-			25,943,025			-
Diluted weighted average common stock outstanding		418,758,755			369,547,235			418,040,372			232,700,641

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

4

ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES

Consolidated STATEMENT of STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022

(Unaudited)

									Additional						Non
	Preferred Stock				Common Stock				Paid-in			Accumulated			controlling			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Interests			Equity
Balance at January 1, 2022		-	$	-		375,288,146	$	3,752,881	$	35,223,842		$	(31,021,050	)	$	202,758		$	8,158,431
Common shares issued upon cashless exercise of warrants						3,041,958		30,420		(30,420	)		-			-			-
Common shares issued for cash						300,000		3,000		48,805									51,805
Stock compensation expense		-		-		-		-		297,360			-			-			297,360
Warrants issued in connection with note extension		-		-		-		-		2,905,316			-			-			2,905,316
Net loss		-		-									(4,849,781	)		(240,540	)		(5,090,321	)
Balance at March 31, 2022		-		-		378,630,104		3,786,301		38,444,903			(35,870,831	)		(37,782	)		6,322,591
Beneficial Conversion Feature on convertible debt		-		-		-		-		570,717			-			-			570,717
Warrants issued in connection with debt issuance		-		-		-		-		368,375			-			-			368,375
Common shares issued for cash		-		-		300,000		3,000		43,822			-			-			46,822
Common shares issued in connection with debt conversion		-		-		4,525,000		45,250		286,001			-			-			331,251
Common shares issued upon cashless exercise of warrants		-		-		2,586,758		25,867		(25,867	)		-			-			(0	)
Stock compensation expense		-		-		-		-		25,196			-			-			25,196
Contribution from shareholder for payment of liabilities										644,463									644,463
Net income		-		-		-		-		-			16,012,119			(41,424	)		15,970,695
Balance as of June 30, 2022		-	$	-		386,041,862	$	3,860,418	$	40,357,610		$	(19,858,712	)	$	(79,206	)	$	24,280,110

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

5

ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021

											Additional						Non
	Preferred Stock						Common Stock				Paid-in			Accumulated			controlling			Stockholders’
	Shares			Amount			Shares		Amount		Capital			Deficit			Interests			Equity
Balance at January 1, 2021		278,188		$	2,782			90,601,912	$	906,019	$	32,493,086		$	(21,630,008	)	$	708,954		$	12,480,833
Common shares issued upon conversion of Preferred Stock		(278,188	)		(2,782	)		278,187,847		2,781,878		(2,779,096	)		-			-			-
Common shares issued upon conversion of debt		-			-			657,200		6,572		203,729			-			-			210,301
Beneficial Conversion Feature on convertible debt		-			-			-		-		605,719			-			-			605,719
Warrants issued in connection with private placement		-			-			-		-		166,575			-			-			166,575
Increase in non-controlling interest from issuance of additional Edgepoint stock		-			-			-		-		-			-			620,052			620,052
Net loss		-			-										(2,803,080	)		(319,557	)		(3,122,637	)
Balance at March 31, 2021		-			-			369,446,959		3,694,469		30,690,013			(24,433,088	)		1,009,449			10,960,843
Warrants issued in connection with private placement		-			-			-		-		2,023,552			-			-			2,023,552
Common shares issued in lieu of services		-			-			250,000		2,500		67,500			-			-			70,000
Common shares issued for cash								400,000		4,000		95,055									99,055
Net loss		-			-			-		-		-			(3,231,280	)		(336,737	)		(3,568,017	)
Balance as of June 30, 2021		-		$	-			370,096,959	$	3,700,969	$	32,876,120		$	(27,664,368	)	$	672,712		$	9,585,433

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

6

ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES

Consolidated STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(Unaudited)

	For the Six Months Ended June 30,
	2022			2021
Cash flows from operating activities:
Net income (loss)	$	10,880,374		$	(6,690,654	)
Adjustments to reconcile net profit to net cash provided by (used in) operating activities:
Gain on derecognition of non-financial asset		(16,951,477	)		-
Amortization of debt discount and deferred finance costs		1,133,270			737,330
Amortization of intangible assets		12,841			25,683
Warrants issued in connection with private placement		2,905,316			-
Stock-based compensation		322,556			2,093,552
Depreciation on development equipment		-			5,074
Change in fair value of derivative		67,922			(93,829	)
Loss on debt conversion		257,810			27,504
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(4,932	)		(91,534	)
Accounts payable and accrued expenses		276,704			1,589,592
Accounts payable to related party		(66,183	)		(68,635	)
Net cash provided by (used in) operating activities		(1,165,799	)		(2,465,917	)
Cash flows from financing activities:
Proceeds from / (repaid to) private placement		(25,000	)		1,613,200
Proceeds from sales of common stock		98,627			70,108
Proceeds from convertible debt		983,175			200,000
Proceeds from short term loans, others		500,000			744,875
Repaid to note holders		(500,000	)		(100,000	)
Repaid to related party and others		(60,000	)		(75,000	)
Net cash provided by financing activities		996,802			2,453,183
Net increase (decrease) in cash		(168,997	)		(12,734	)
Cash and restricted cash - beginning of period		588,769			494,019
Cash and restricted cash - end of period	$	419,772		$	481,285
Supplemental cash flow information:
Cash paid for:
Interest paid	$	328,181		$	197,579
Non-cash investing and financing activities:
Warrants issued in connection with private placement	$	2,905,316		$	2,190,127
Contribution from shareholder for payment of liabilities		644,463			-
Common shares issued upon conversion of debt	$	650,001		$	210,301
Common shares issued in lieu of services	$	-		$	70,000
Non-cash cost upon sale of common stock	$	-		$	28,947
Beneficial Conversion Feature on convertible debt and restricted common shares	$	570,717		$	605,719

The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

7

ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Oncotelic Therapeutics, Inc. (“Oncotelic”), 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: and EdgePoint AI, Inc. (“Edgepoint”), a Delaware Corporation for which there are non-controlling interests, (Oncotelic, Oncotelic Inc., PointR 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 2020 Annual Report on Form 10-K filed with the SEC on April 15, 2021.

The Company is currently developing OT-101 for various cancers and COVID-19, Artemisinin for COVID-19 and AI technologies for clinical development and manufacturing. The Company has acquired apomorphine for Parkinson’s Disease, erectile dysfunction and female sexual dysfunction. In addition, the Company is evaluating the further development of its product candidates OXi4503 as a treatment for acute myeloid leukemia and myelodysplastic syndromes and CA4P in combination with a checkpoint inhibitor for the treatment of advanced metastatic melanoma.

The Company is primarily a cancer immunotherapy company dedicated to the development of first in class self-immunization protocol (“SIP™”) candidates for difficult to treat cancers. The Company’s proprietary SIP™ candidates are expected to offer advantages over other immunotherapies because they do not require extraction of the tumor or isolation of the antigens, and they have the potential for broad-spectrum applicability for multiple cancer types. 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 (“DMD”) and others. Oncotelic Inc.’s lead product candidate, OT-101, 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. Together, the Company plans to initiate phase 3 clinical trials for OT-101 in both high-grade glioma and pancreatic cancer, and any other indications that may evolve. The Company is evaluating the further development of its product candidates OXi4503 as a treatment for acute myeloid leukemia and myelodysplastic syndromes and CA4P in combination with a checkpoint inhibitor for the treatment of advanced metastatic melanoma. The Company is also developing OT-101 for the various epidemics and pandemics, similar to the current corona virus (“COVID-19”) pandemic. In this connection, the Company entered into an agreement and supplemental agreement with Golden Mountain Partners (“GMP”) for a total of $1.2 million to render services and was paid for the development of OT-101. In 2020 and 2021, the Company was developing Artemisinin as a potential therapy for COVID-19. Artemisinin, purified from a plant Artemisia annua. For more information on GMP and Artemisinin, refer to our 2021 Annual report on Form 10-K filed with the SEC on April 15, 2022.

Fundraising

J.H. Darbie Financing Notes & Issuance of Oncotelic Warrants

Between July 2020 and March 2021, the Company issued and sold a total of 100 units (“Units”), with each Unit consisting of (i) 25,000 shares of Edgepoint common stock, par value $0.01 per share (“Edgepoint Common Stock”), for a price of $1.00 per share of Edgepoint Common Stock; (ii) one convertible promissory note issued by the Company (the “Unit Note”), convertible into up to 25,000 shares of EdgePoint Common Stock at a conversion price of $1.00 per share, or up to 138,889 shares of the Company’s Common Stock, at a conversion price of $0.18 per share; and (iii) 100,000 warrants, consisting of (a) 50,000 warrants to purchase an equivalent number of shares of EdgePoint Common Stock at $1.00 per share (“Edgepoint Warrant”), and (b) 50,000 warrants to purchase an equivalent number of shares of Company Common Stock at $0.20 per share (“Oncotelic Warrant”) (collectively, the “JH Darbie Financing”).For more information on the JH Darbie Financing, refer to our Annual Report on Form 10-K filed with the SEC on April 15, 2022.

8

In February 2022, the Company and 99 out of 100 of the Investors agreed to extend the maturity date of the Notes from March 31, 2022, to March 31, 2023. In addition, the Company issued approximately 33 million Oncotelic Warrants to purchase $50,000 of shares of Common Stock in connection with agreeing to extend the maturity date by one year. The issuance of the additional warrants resulted in the Company recording an expense of approximately $2.9 million in the Company’s statement of operations during the six months ended June 30, 2022.

Equity Purchase Agreement

In May 2021, the Company entered into an Equity Purchase Agreement (the “EPL”) and Registration Rights Agreement (the “Registration Rights Agreement”) with Peak One Opportunity Fund, L.P. (“Peak One”), pursuant to which the Company shall have the right, but not the obligation, to direct Peak One to purchase up to $10.0 million (the “Maximum Commitment Amount”) in shares of the common stock, par value $0.01 per share (“Common Stock”) in multiple tranches. The Company has directed Peak One on multiple occasions, for an aggregate of 4.0 million shares of Common Stock for aggregate net cash proceeds of approximately $0.5 million.

The Company filed a post-effective amendment to reregister the EPL on April 26, 2022 and the post-effective amendment was found effective by the SEC on May 6, 2022.

August 2021 Notes

In August 2021, the Company issued Note Purchase Agreements with Autotelic Inc., the Company’s Chief Financial Officer (“CFO”), and certain other accredited investors. Under the terms of the Note Purchase Agreements, the Company issued an aggregate of $698,500 (the “Principal Amount”) in debt in the form of unsecured convertible promissory notes (collectively, the “Notes”). For further information on the Agreement, refer to our 2021 Annual report on Form 10-K filed with the SEC on April 15, 2022 and Note 5 to these Notes to the Consolidated Financial Statements.

Joint Venture with GMP Bio

On March 31, 2022, the Company formalized a joint venture (“JV”) with Dragon Overseas Capital Limited (“Dragon”) and GMP Biotechnology Limited (“GMP Bio”), both affiliates of GMP. For more information on the JV, refer to Note 6 of the Notes to these Financial Statements and our Current Report on Form 8-K filed with the SEC on April 6, 2022. Although no assurances can be given, the Company and GMP currently intend to conduct an initial public offering of the JV, at a future date, on either the Hong Kong Exchange or other stock exchange. For more information on the JV, refer to Note 6 of the Notes to Consolidated Financial Statement.

For information on the September 2021 Note, the October 2021 Note and the January 2022 Note, refer to our 2021 Annual Report on Form 10K filed with the SEC on April 15, 2022.

9

November/December 2021 and March 2022 Notes

In November and December 2021, the Company entered into various Securities Purchase Agreements with Talos Victory Fund, LLC (the (“Talos”), Mast Hill Fund, LP (“Mast”), FirstFire Global Opportunities Fund, LLC (“FirstFire”), Blue Lake Partners, LLC (“Blue Lake”) and Fourth Man, LLC (“Fourth Man”), pursuant to which the Company issued convertible promissory notes in the aggregate principal amount of $0.25 million each, aggregating gross $1.25 million (the “Notes”), which Notes are convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”).

The Purchase Agreements were entered into as part of a convertible note financing round with aggregate gross proceeds to the Company of up to $1.25 million (the “Financing”), undertaken by the Company pursuant to that certain Finder’s Fee Agreement between the Company and JH Darbie & Co., Inc. (“JH Darbie”), dated October 26, 2021 (the “Agreement”). All of the Purchase Agreements and the Note contain identical terms except with reference to the name of the holders, the use of proceeds, which include repayment of certain debt, general corporate expenses and payroll, as applicable and the jurisdictions.

In January 2022, three of the five note holders under the November and December 2021 Notes exercised their warrants to purchase shares of Common Stock of the Company on a cashless basis. As such, the Company issued the note holders 3,041,958 shares of Common Stock.

In March 2022, the Company entered into a Securities Purchase Agreement with Fourth Man, pursuant to which the pursuant to which the Company issued convertible promissory note in the aggregate principal amount of $0.25 million, which Note is convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”). This Note was undertaken by the Company pursuant to that certain Finder’s Fee Agreement between the Company and JH Darbie, dated October 26, 2021 (the “Agreement”).

For more information on the notes, refer to Note 6: November – December 2021 Financing of these Notes to the Unaudited Consolidated Financial Statements.

May 2022 Note

In May 2022, the Company entered into a Securities Purchase Agreements with Mast, pursuant to which the Company issued convertible promissory notes in the aggregate principal amount of $0.6 million, which Note is convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”). This note was used to fully repay November 2021 Talos note and the December 2021 First Fire note.

In May 2022, the November 2021 Talos Note and the December 2021 First Fire Note were fully repaid. $35,000 of the First Fire Note was repaid and converted into 500,000 shares of Common Stock and the balance was repaid in cash.

In June 2022, Mast fully converted their November 2021 Note, for which the company issued 4,025,000 shares of Common Stock.

June 2022 Note

In June 2022, the Company entered into a Securities Purchase Agreements with Blue Lake, pursuant to which the Company issued convertible promissory notes in the aggregate principal amount of $0.34 million, which Note is convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”). This note was utilized for corporate expenses.

Licensing Agreement with Autotelic Inc.

In September 2021, the Company entered into an exclusive License Agreement (the “Agreement”) with Autotelic, Inc. (“Autotelic”). For further information on the Agreement, refer to our 2021 Annual report on Form 10-K filed with the SEC on April 15, 2022.

10

Principles of Consolidation

The consolidated financial statements include the accounts of Oncotelic, its wholly owned subsidiaries, Oncotelic Inc. and PointR, and Edgepoint our non-controlled interest entity. Intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission including Form 10-Q and Regulation S-X. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly state the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been omitted pursuant to such rules and regulations.

Liquidity and Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred net accumulated losses of approximately $19.9 million, negative working capital of over $15.6 million and negative cash flow from operations of approximately $1.2 million at June 30, 2022. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of this filing. Management expects to incur significantly lower costs and losses in the foreseeable future and recognizes the need to raise capital to remain viable. The accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. For more information on Liquidity and Going Concern, refer to our 2021 Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The Company’s long-term plans include continued development of its current pipeline of products, in addition to continue the development of OT-101, which is exclusively out-licensed to the JV and the JV will be responsible for the cash required to support the development in entirety, to generate sufficient revenues, through either technology transfer or product sales, to cover its anticipated expenses. Until the Company is able to generate sufficient revenues from its current pipeline, the Company plans on funding its operations through the sale of equity and/or the issuance of debt, combined with or without warrants or other equity instruments.

Although no assurances can be given as to the Company’s ability to deliver on its revenue plans, or that unforeseen expenses may arise, management believes that the potential equity and debt financing or other potential financing will provide the necessary funding for the Company to continue as a going concern. Also, management cannot guarantee any potential debt or equity financing will be available on favorable terms or at all. As such, management does not believe the Company has sufficient cash for 12 months from the date of this report. If adequate funds are not available on acceptable terms, or at all, the Company will need to curtail operations, or cease operations completely.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity-based transactions and disclosure of contingent liabilities at the date of the financial statements and revenues and expense during the reporting period. Actual results could materially differ from those estimates.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the financial statements. Significant estimates include the valuation of goodwill and intangible assets for impairment, deferred tax asset and valuation allowance, and fair value of financial instruments.

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Cash

As of June 30, 2022, and December 31, 2021 the Company held all its cash in banks. The Company considers investments in highly liquid instruments with a maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2022 and December 31, 2021, respectively. Restricted cash consists of certificates of deposits held at banks as collateral for various purposes.

Debt issuance Costs and Debt discount

Issuance costs are specific incremental costs that are (1) paid to third parties and (2) directly attributable to the issuance of a debt or equity instrument. The issuance costs attributable to the initial sale of the instrument are offset against the associated proceeds in the determination of the instrument’s initial net carrying amount.

Debt issuance costs and debt discounts are being amortized over the lives of the related financings on a basis that approximates the effective interest method. Costs and discounts are presented as a reduction of the related debt in the accompanying balance sheets if related to the issuance of debt or presented as a reduction of additional paid in capital if related to the issuance of an equity instrument. The Company applies the relative fair value to allocate the issuance costs among freestanding instruments that form part of the same transaction.

If the Company amends the terms of its convertible notes, the Company reviews and applies the guidance per ASC 470-60 Troubled debt restructurings and ASC 470-50 Debt-Modifications and Extinguishments, evaluates and concludes whether the terms of the agreements were or were not substantially different as of a particular reporting date and accounts the transaction as a debt modification or a troubled debt restructuring.

Fair Value of Financial Instruments

The carrying value of cash, accounts payable and accrued expense approximate their fair values based on the short-term maturity of these instruments. As defined in ASC 820, “Fair Value Measurements and Disclosures,” fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement.

The three levels of the fair value hierarchy defined by ASC 820 are as follows:

● Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

● Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

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● Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Investment in equity securities

The following table summarizes the cumulative gross unrealized gains and losses and fair values for long-term investments accounted for at fair value under the fair value option, with the unrealized gains and losses reported within earnings on the Condensed Consolidated Statements of Operation as at June 30, 2022. No similar investments were held by the Company at December 31, 2021:

	Initial Book Value		Cumulative Gross Unrealized Gains		Cumulative Gross Unrealized Losses		Fair Value
June 30, 2022
Investment in GMP Bio (equity securities)	$	22,640,521	$	-	$	-	$	22,640,521
Total	$	22,640,521	$	-	$	-	$	22,640,521

The table below sets forth a summary of the changes in the fair value of the Company’s long-term investment in equity securities, based on a third-party valuation report, as a Level 3 fair value as of June 30, 2022. The Company did not own similar investments as at June 30, 2021:

	June 30, 2022 Fair Value
Balance at January 1, 2022	$	-
Contribution at cost basis		5,689,044
Gain on derecognition of non-financial asset		16,951,477
Change in fair value		-
Balance at June, 2022	$	22,640,521

Derivative Liability

The Company has derivative liabilities associated with its 2019 bridge financing Convertible Notes (see Note 5), consisted of conversion feature derivatives at June 30, 2022 and 2021, are Level 3 fair value measurements.

The table below sets forth a summary of the changes in the fair value of the Company’s derivative liabilities classified as Level 3 as of June 30, 2022 and 2021:

	June 30, 2022 Conversion Feature		June 30, 2021 Conversion Feature
Balance at January 1, 2022 and 2021	$	340,290	$	777,024
New derivative liability		-		-
Reclassification to additional paid in capital from conversion of debt to common stock		-		(144,585	)
Change in fair value		67,922		(93,829	)
Balance at June, 2022 and 2021	$	408,212	$	538,610

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As of June 30, 2022, and December 31, 2021, the Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures based on assumptions used in the Black-Scholes valuation model. The key valuation assumptions used consists, in part, of the price of the Company’s Common Stock, a risk-free interest rate based on the yield of a Treasury note and expected volatility of the Company’s Common Stock all as of the measurement dates. The Company used the following assumptions to estimate fair value of the derivatives as of June 30, 2022:

	June 30, 2022 Key Assumptions for fair value of conversions
Risk free interest		0.17% -1.03%
Market price of share	$	0.17-0.23
Life of instrument in years		0.01 – 0.33
Volatility		107.50%-109.40%
Dividend yield		0%

When the Company changes its valuation inputs for measuring financial liabilities at fair value, either due to changes in current market conditions or other factors, it may need to transfer those liabilities to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur. For the periods ended June 30, 2022 and 2021, respectively, there were no transfers of financial assets or financial liabilities between the hierarchy levels.

The $2,625,000 of contingent consideration, of shares issuable to PointR shareholders which was recorded and associated with the PointR Merger, is also classified as Level 3 fair value measurements. The Company initially recorded the contingency based on a valuation conducted by a third-party valuation expert. The valuation was based on a probability of the completion of certain milestones by PointR for the shareholders to earn additional shares. The Company evaluated the probability of the earning of the milestones and concluded that the probability of achievement of the milestones had not changed, primarily due to the shifting of focus by the Company to develop AI technologies for the COVID-19 pandemic. As such, the Company did not record any change to the valuation during the six months ended June 30, 2022 or 2021, respectively.

Net Income (Loss) Per Share

Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share includes the effect of Common Stock equivalents (notes convertible into Common Stock, stock options and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. The Company has excluded from diluted loss per share the dilutive shares, since such inclusion would be anti-dilutive.

Stock-Based Compensation

The Company applies the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the statements of operations.

For stock options issued to employees and members of the Board of Directors (the “Board”) for their services, the Company estimates the grant date fair value of each option using the Black-Scholes option pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock. For awards subject to service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised.

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For warrants issued in connection with fund raising activities, the Company estimates the grant date fair value of each warrant using the Black-Scholes pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the warrant, the expected volatility of the Common Stock consistent with the expected life of the warrant, risk-free interest rates and expected dividend yields of the Common Stock. If the warrants are issued upon termination or cancellation of prior issued warrants, then the Company estimates the grant date fair value of the new warrants using the Black-Scholes pricing model and evaluates whether the new warrants are deemed as equity instruments or liability instruments. If the warrants are deemed to be equity instruments, the Company records stock compensation expense and an addition to additional paid in capital. If, however, the warrants are deemed to be liability instruments, then the fair value is treated as a deemed dividend and credited to additional paid in capital.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. For the three and six months ended June 30, 2022 and the year ended December 31, 2021, there were no impairment losses recognized for long-lived 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. If the review indicates the impairment, an impairment loss would be recorded for the difference of the value recorded and the new value. For the three and six months ended June 30, 2022 and the year ended December 31, 2021, there were no impairment losses recognized for intangible assets. 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. For the three and six months ended June 30, 2022, we derecognized the intangibles of $0.8 million associated with OT-101upon the transfer of our non-financial asset as a capital contribution for our 45% ownership in the JV.

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Goodwill

Goodwill represents the excess of the purchase price of acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least once annually, at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the reporting unit. If, on the basis of qualitative factors, it is considered not more likely than not that the fair value of the reporting unit is less than the carrying amount, further testing of goodwill for impairment would not be required. Otherwise, goodwill impairment is tested using a two-step approach.

The first step involves comparing the fair value of the reporting unit to its carrying amount. If the fair value of the reporting unit is determined to be greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount is determined to be greater than the fair value, the second step must be completed to measure the amount of impairment, if any. The second step involves calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit as determined in step one. The implied fair value of the goodwill in this step is compared to the carrying value of goodwill. If the implied fair value of the goodwill is less than the carrying value of the goodwill, an impairment loss equivalent to the difference is recorded. For the three and six months ended June 30, 2022 and the year ended December 31, 2021 there were no impairment losses recognized for Goodwill. 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. For the three and six months ended June 30, 2022, we derecognized the goodwill of $4.8 million associated with OT-101upon the transfer of our non-financial asset as a capital contribution for our 45% ownership in the JV.

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.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging”.

ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20 “Debt – Debt with Conversion and Other Options.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Original issue discounts 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.

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ASC 815-40 “Derivatives and Hedging – Contracts in Entity’s Own Equity” provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

Variable Interest Entity (VIE) Accounting

The Company evaluates its ownership, contractual relationships and other interests in entities to determine the nature and extent of the interests, whether such interests are variable interests and whether the entities are VIEs in accordance with ASC 810, Consolidations. These evaluations can be complex and involve Management judgment as well as the use of estimates and assumptions based on available historical information, among other factors. Based on these evaluations, if the Company determines that it is the primary beneficiary of a VIE, the entity is consolidated into the financial statements. At June 30, 2022 and December 31, 2021, the Company identified EdgePoint to be the Company’s sole VIE. At June 30, 2022 and December 31, 2021, the Company’s ownership percentage of EdgePoint was 29% and 29%, respectively. The VIE’s net assets were $0.1 million and $0.1 million at June 30, 2022 and December 31, 2021, respectively.

The Company signed a joint venture agreement (“JVA”) with Dragon to form a joint venture called GMP Biotechnology, LLC, both affiliates of GMP, on March 31, 2022. The JVA prescribes certain requirements to be completed during the three months ended June 30, 2022 to make the JV fully functional and operational, including issuance of the shares issuable to the Company and Dragon.

Investments - Equity Method

The Company accounts for equity method investments at cost, adjusted for the Company’s share of the investee’s earnings or losses, which are reflected in the consolidated statements of operations. The Company periodically reviews the investments for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

The Investment in GMP Bio represents the investment into equity securities for which the Company elected the fair value option pursuant to ASC 825-10-15 and subsequent fair value changes in the GMP Bio shares shall be included in the result from other income. Refer to Note 6 to these Notes to the Consolidated Financial Statements.

Joint Venture agreement

We have equity interest in unconsolidated arrangement that is primarily engaged in the business of drug discovery, development, and commercialization, including but not limited to development and commercialization of TGF-beta therapeutics as well as establishing and operating contract development and manufacturing organization (“CDMO”) facilities and capabilities. The Company first reviews the arrangement to determine if it meets the definition of an accounting joint venture pursuant to ASC 323-10-20. In order to meet the definition of a joint venture, the arrangement must have all of the following characteristics, (i) the arrangement is organized within a separate legal entity, (ii) the entity is under the joint control of the venturers, (iii) the venturers must be able to exercise joint control through their equity investments, (iv) the qualitative characteristics of the entity, including its purpose and design must be consistent with the definition of a joint venture.

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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 as the Company believes that the fair value option is most appropriate for a company in the biotechnology industry, The fair value option is more appropriate for companies that are involved in extensive and usually very expensive research and development efforts, which are not appropriately reflected in the market value or reflective of the true value of the development activities of the company

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (Topic 606).

Under Topic 606, the Company recognizes revenue when its customers obtain control of the promised good or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company applies the following five-step: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

At contract inception, once the contract is determined to be within the scope of Topic 606, the Company identifies the performance obligation(s) in the contract by assessing whether the goods or services promised within each contract are distinct. The Company then recognizes revenue for the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

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The Company anticipates generating revenues from rendering services to other third-party customers for the development of certain drug products and/or in connection with certain out-licensing agreements. In the case of services rendered for development of the drugs, revenue is recognized upon the achievement of the performance obligations or over time on a straight-line basis over the extended service period. In the case of out-licensing contracts, the Company records revenues either upon achievement of certain pre-defined milestones, when there is no obligation of the Company achieve any performance obligations in connection with the said pre-defined milestones, or upon achievement of the performance obligations if the milestones require the Company to provide the performance obligations.

The Company occasionally collects advance payments from customers toward commitments to provide services or performance obligations, in which case the advance payment is recorded as a liability until the obligations are fulfilled and revenue is recognized.

Research & Development Costs

In accordance with ASC 730-10-25 “Research and Development”, research and development costs are charged to expense as and when incurred.

Recent Accounting Pronouncements

In August 2020, the FASB issued “ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”) which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition was permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption was permitted no earlier than the fiscal year beginning after December 15, 2020. The is evaluating the impact of implementation on its financial statements, if any.

All other newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

Prior Period Reclassifications

Certain amounts in prior periods may have been reclassified to conform with current period presentation.

NOTE 3 - INTANGIBLE ASSETS AND GOODWILL

Goodwill from 2019 Reverse Merger with Oncotelic and PointR

The Company completed the merger with Oncotelic Inc. (“Merger”) in April 2019. The Company completed the merger with PointR Data Inc (“PointR Merger”) in November 2019. For more details, refer to our 2020 Annual Report on Form 10-K for the year ended December 31, 2020 filed by the Company on April 15, 2021.

The Oncotelic merger gave rise to Goodwill of $4,879,999. Further, we added goodwill of $16,182,456 upon the completion of the Merger with PointR. In general, the goodwill is tested on an annual impairment date of December 31. However, as of June 30, 2022, since both assets are currently being developed for various cancer and COVID-19 therapies, the Company does not believe the there are any factors or indications that the goodwill is impaired.

Upon the non-financial sale of our asset as contribution to our equity method investment we derecognized the balance of the carrying value of our goodwill of approximately $4.9 million from the Oncotelic Merger in accordance with our policy and authoritative accounting guidance.

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Assignment and Assumption Agreement with Autotelic, Inc.

In April 2018, Oncotelic Inc. entered into an Assignment and Assumption Agreement (the “Assignment Agreement”) with Autotelic Inc., an affiliate company, and Autotelic LLC, an affiliate company, pursuant to which Oncotelic acquired the rights to all intellectual property (“IP”) related to a patented product. As consideration for the Assignment Agreement, Oncotelic Inc. issued 204,798 shares of its Common Stock for a value of $819,191. The Assignment Agreement also provides that Oncotelic Inc. shall be responsible for all costs related to the IP, including development and maintenance, going forward.

Intangible Asset Summary

The following table summarizes the balances as of June 30, 2022 and December 31, 2021, of the intangible assets acquired, their useful life, and annual amortization:

	June 30, 2022			Remaining Estimated Useful Life (Years)
Intangible asset – Intellectual property	$	819,191			16.50
Intangible asset – Capitalization of license cost		190,989			16.50
		1,010,180
Less Accumulated Amortization		(201,180	)
Less: Derecognition of carrying value upon transfer of non-financial asset		809,000
Total	$	-

	December 31, 2021			Remaining Estimated Useful Life (Years)
Intangible asset – Intellectual property	$	819,191			17.00
Intangible asset – Capitalization of license cost		190,989			17.00
		1,010,180
Less Accumulated Amortization		(188,339	)
Total	$	821,841

Amortization of identifiable intangible assets for the three months ended June 30, 2022 and 2021 was $0 and $12,841, respectively. Amortization of identifiable intangible assets for the six months ended June 30, 2022 and 2021 was $12,841 and $25,683, respectively. Upon the non-financial sale of our asset as contribution to our equity method investment of approximately $809,000, we derecognized the balance of the carrying value of our intangibles in accordance with our policy and authoritative accounting guidance.

There will be no future yearly amortization expense related to our intangibles.

In-Process Research & Development (“IPR&D”) Summary

The IPR&D assets were acquired in the PointR Merger during the year ended December 31, 2019. Since January 2021, the Company has determined that the IPR&D should be reported as an indefinitely lived asset and therefore will evaluate, on an annual basis, for any impairment on the IPR&D and will record an impairment if identified. The balance of IPR&D as of June 30, 2022 and December 31, 2021 was $1,101,760. The following table summarizes the balances as of June 30, 2022 and December 31, 2021 of the IPR&D assets. The Company evaluates, on an annual basis, for any impairment and records an impairment if identified. The Company identified no impairment to IPR&D assets during its evaluation.

	June 30, 2022
Intangible asset – Intellectual property	$	1,377,200
		1,377,200
Less Accumulated amortization		(275,440	)
Total	$	1,101,760

	December 31, 2021
Intangible asset – Intellectual property	$	1,377,200
		1,377,200
Less Accumulated amortization		(275,440	)
Total	$	1,101,760

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NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expense consists of the following amounts:

	June 30, 2022		December 31, 2021
Accounts payable	$	1,870,809	$	1,927,749
Accrued expense		1,062,175		1,164,974
	$	2,932,984	$	3,092,723

	June 30, 2022		December 31, 2021
Accounts payable – related party	$	339,460	$	403,423

NOTE 5 – CONVERTIBLE DEBENTURES, NOTES AND OTHER DEBT

As of June 30, 2022 special purchase agreements (SPAs) with convertible debentures and notes, net of debt discount and including accrued interest, if any, consist of the following amounts:

	June 30, 2022
Convertible debentures
10% Convertible note payable, due April 23, 2022 – Bridge Investor	$	35,556
10% Convertible note payable, due April 23, 2022 – Related Party		164,444
10% Convertible note payable, due August 6, 2022 – Bridge Investor		198,332
		398,331
Fall 2019 Notes
5% Convertible note payable – Stephen Boesch		121,458
5% Convertible note payable – Related Party		282,483
5% Convertible note payable – Dr. Sanjay Jha (Through his family trust)		282,003
5% Convertible note payable – CEO, CTO* & CFO– Related Parties		92,407
5% Convertible note payable – Bridge Investors		189,322
		967,674
August 2021 Convertible Notes
5% Convertible note – Autotelic Inc– Related Party		261,301
5% Convertible note – Bridge investors		390,385
5% Convertible note – CFO – Related Party		78,390
		730,076
JH Darbie PPM Debt
16% Convertible Notes - Non-related parties		2,305,370
16% Convertible Notes – CEO – Related Party		122,616
		2,427,986
November/December 2021 & March 2022 Notes
12% Convertible Notes – Accredited Investors		333,262
Debt for Clinical Trials – GMP
2% Convertible Notes - GMP		4,614,411
May and June 2022 Note
12% Convertible Notes – Accredited Investors		62,290
Other Debt
Short term debt – Bridge investors		223,122
Short term debt from CFO – Related Party		25,050
Short term debt – Autotelic Inc– Related Party		20,000
		268,172
Total of convertible debentures & notes and other debt	$	9,802,202

For information on the special purchase agreements (SPAs) with convertible debentures and notes, net of debt discount and including accrued interest, if any, as of December 31, 2022, refer to our Annual Report on Form 10-K for the year ended December 31, 2021.

* The CTO was a related party till July 2021, when he resigned as the CTO due to health reasons.

21

Convertible Debentures

As of June 30, 2022, the Company had a derivative liability of approximately $408,000 and a change in fair value of approximately $68,000 on the Convertible Debentures issued in 2019 to our CEO and a bridge investor.

Bridge Financing

Notes with Officer and Bridge Investor

In April 2019, the Company entered into a Securities Purchase Agreement (the “Bridge SPA”) with our CEO and the Bridge Investor with a commitment to purchase convertible notes in the aggregate of $400,000. For more information on the Bridge SPA, refer to our Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The issuance of the Trieu Note resulted in a discount from the beneficial conversion feature totaling $131,555 related to the conversion feature. Total amortization of the OID and the discount totaled $19,493 and $2,743 for the six months ended June 30, 2022, and 2021. Total unamortized discount on this note was approximately $0 and $19,000 as of June 30, 2022, and December 31, 2021, respectively.

In April 2019, pursuant to the Bridge SPA the Company entered into Convertible Note Tranche #1 (“Tranche #1”) with the Bridge Investor. For more information on Tranche #1, refer to our Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The issuance of the note resulted in a discount from the beneficial conversion feature totaling $28,445. Total amortization of the OID and discount totaled approximately $4,400 and $8,130 for the six months June 30, 2022, and 2021, respectively. Total unamortized discount on this note was approximately $0 and $4,400 as of June 30, 2022, and December 31, 2021.

On August 6, 2019, pursuant to the Bridge SPA the Company entered into Convertible Note Tranche #2 (“Tranche #2”) with the Bridge Investor. For more information on Tranche #2, refer to our Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The issuance of the note resulted in a discount from the beneficial conversion feature totaling $175,000. Total amortization of the OID and discount totaled approximately $10,000 and $4,943 for the six months ended June 30, 2022, and 2021, respectively. Total unamortized discount on this note was $1,700 and $12,000 as of June 30, 2022, and December 31, 2021.

Fall 2019 Debt Financing

In December 2019, the Company closed its Fall 2019 Debt Financing, raising an additional $500,000 bringing the gross proceeds of all debt financings under the Fall 2019 Debt Financing to $1,000,000. For more information on the Fall 2019 Debt Financing, refer to our Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The Company repaid $0 and $50,000 of principal in the six months ended June 30, 2022, and 2021, respectively. The total unamortized principal amount of the Fall 2019 Notes was $850,000 as of June 30, 2022, and December 31, 2021, respectively.

The Company recorded interest expense of $10,625 and $21,250 for the three and six months ended June 30, 2022. The total amount outstanding under the Fall 2019 note, including accrued interest was $967,674 and $946,424 as of June 30, 2022 and December 31, 2021, respectively. The Company repaid $0 of principal during the three and six months ended June 30, 2022. The total unamortized principal amount was $850,000 as of June 30, 2022, and December 31, 2021.

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GMP Notes

In June 2020, the Company secured $2 million in debt financing, evidenced by a one-year convertible note (the “GMP Note”) from GMP, to conduct a clinical trial evaluating OT-101 against COVID-19 bearing 2% annual interest, and is personally guaranteed by Dr. Vuong Trieu, the Chief Executive Officer of the Company. The GMP Note is convertible into the Company’s Common Stock upon the GMP Note’s maturity of the GMP Note, at the Company’s Common Stock price on the date of conversion with no discount. GMP has waived the default in the maturity of the GMP Note and as such there is no event of default and also agreed to extend the date of maturity of the GMP Note to June 30, 2022. GMP does not have the option to convert prior to the GMP Note’s maturity. Such financing will be utilized solely to fund the clinical trial. The Company’s liability under GMP Note commenced to accrue when GMP first began to pay for services related to the clinical trial to our third-party clinical research organization, up to a maximum of $2 million. GMP has been invoiced by the clinical research organization for the full $2 million as of March 31, 2022, and as such the Company has recognized the liability as a convertible debt.

In September 2021, the Company secured a further $1.5 million in debt financing, evidenced by a one-year convertible note (the “GMP Note 2”) from GMP, to fund the same clinical trial evaluating OT-101 against COVID-19 bearing 2% annual interest. The GMP Note is convertible into the Company’s Common Stock upon the GMP Note 2’s maturity one year from the date of the GMP Note 2, at the Company’s Common Stock price on the date of conversion with no discount. GMP does not have the option to convert prior to the GMP Note 2’s maturity at the end of one year. Such financing was to be utilized solely to fund the clinical trial. As of March 31, 2022, GMP was invoiced by the clinical research organization for $0.5 million. GMP paid the clinical trial organization the first tranche of $0.5 million in October 2021.

In October 2021, the Company entered into an Unsecured Convertible Note Purchase Agreement (the “October Purchase Agreement”) with GMP, pursuant to which the Company issued a convertible promissory note in the aggregate principal amount of $0.5 million (the “October 2021 Note”), which October 2021 Note is convertible into shares of the Company’s Common Stock.

In January 2022, the Company entered into an Unsecured Convertible Note Purchase Agreement (the “January Purchase Agreement”) with GMP, pursuant to which the Company issued a convertible promissory note in the aggregate principal amount of $0.5 million (the “January 2022 Note”), which January 2022 Note is convertible into shares of the Company’s Common Stock.

The GMP Note 2, the October 2021 Note and the January 2022 Note carries an interest rate of 2% per annum and matures on the earlier of (a) the one-year anniversary of the date of the Purchase Agreement, or (b) the acceleration of the maturity by GMP upon occurrence of an Event of Default (as defined below). The GMP Note 2, the October 2021 Note and the January 2022 Note contains a voluntary conversion mechanism whereby GMP may convert the outstanding principal and accrued interest under the terms of the GMP Note 2, the October 2021 Note and the January 2022 Note into shares of Common Stock (the “Conversion Shares”), at the consolidated closing bid price of the Company’s Common Stock on the applicable OTC Market as of the date the Company receives a Notice of Conversion from GMP. Prepayment of the GMP Note 2, the October 2021 Note and the January 2022 Note may be made at any time by payment of the outstanding principal amount plus accrued and unpaid interest. The October Note contains customary events of default (each an “Event of Default”). If an Event of Default occurs, at GMP’s election, the outstanding principal amount of the GMP Note 2, the October 2021 Note and the January 2022 Note, plus accrued but unpaid interest, will become immediately due and payable in cash. The October Purchase Agreement and the January Purchase Agreement requires the Company to use of the proceeds received under the October 2021 Note and January 2022 Note to support the clinical development of OT-101, including payroll and has been made in continuation of the relationship between the Company and GMP.

The total principal outstanding on all the GMP notes, inclusive of accrued interest, was $4,614,411 and $4,069,781 as of June 30, 2022, and December 31, 2021, respectively.

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August 2021 Notes

In August 2021, the Company entered into Note Purchase Agreements with Autotelic - a related party, our CFO - a related party, and certain accredited investors (the “August 2021 investors”), whereby the Company issued four convertible notes in the aggregate principal amount of $698,500 convertible into shares of common stock of the Company for net proceeds of $690,825. The convertible notes carry a five (5%) percent coupon and mature one year from issuance. The majority of the August 2021 investors have the right, but not the obligation, not more than five days following the maturity date, to convert all, but not less than all, the outstanding and unpaid principal plus accrued interest into the Company’s common stock, at a conversion price of $0.18. The Company determined that the economic characteristics and risks of the embedded conversion option are not clearly and closely related to the economic characteristics and risks of the debt host instrument. Further, the Company determined that the embedded conversion feature meets the definition of a derivative but met the scope exception to the derivative accounting required under ASC 815 for certain contracts involving a reporting entity’s own equity.

As of June 30, 2022, and December 31, 2021, the August 2021 convertible notes, inclusive of accrued interest, consist of the following amounts:

	June 30, 2022		December 31, 2021
Autotelic Related party convertible note, 5% coupon August 2022	$	261,301	$	256,634
CFO Related party convertible note, 5% coupon August 2022		78,390		76,531
Accredited investors convertible note, 5% coupon August 2022		390,385		381,123
	$	730,076	$	714,288

During the three months ended June 30, 2022, and 2021, the Company recognized approximately $12,000 and $0 of interest, respectively. At June 30, 2022, and December 31, 2021, accrued interests on these convertible notes totaled approximately $32,000 and $14,000, respectively.

November – December 2021 and March 2022 Financing

In November and December 2021, the Company entered into securities purchase agreement with five institutional investors, whereby the Company issued five convertible notes in the aggregate principal amount of $1,250,000 convertible into shares of common stock of the Company. The convertible notes carry a twelve (12%) percent coupon and a default coupon of 16% and mature at the earliest of one year from issuance or upon event of default. Investors has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.07. The Company granted a total number of 9,615,385 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.13 up to five years after issuance. The Placement agent was also granted a total amount of 961,540 as part of a finder’s fee agreement.

In March 2022, the Company entered into a Securities Purchase Agreement with Fourth Man, pursuant to which the Company issued convertible promissory note in the aggregate principal amount of $0.25 million, convertible into shares of common stock of the Company. The convertible notes carry a twelve (12%) percent coupon and a default coupon of 16% and mature at the earliest of one year from issuance or upon event of default. Investors has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.10. The Company granted a total number of 1,250,000 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.20 up to five years after issuance. The Placement agent was also granted a total amount of 125,000 as part of a finder’s fee agreement.

24

During the six months ended June 30, 2022, the Company converted the Mast Hill convertible note into 4,025,000 shares of the Company’s common stock, which fully retired the convertible note as of June 30, 2022. Such conversion resulted in a loss from debt conversion of approximately $0.1 million, which was recorded in other expense in the Company’s consolidated statements of operations.

During the six months ended June 30, 2022, the Company repaid the Talos Victory and First Fire convertible notes with the proceeds from the May 2022 Mast Hill convertible note. Such repayment resulted in a loss from debt extinguishment of approximately $258,100, which was recorded in other expense in the Company’s consolidated statements of operations.

As of June 30, 2022, and December 31, 2021, convertible notes under the November-December 2021 Financing, net of debt discount, consist of the following amounts:

	June 30, 2022			December 31, 2021
Mast Hill Convertible note, 12% coupon November 21	$	-		$	250,000
Talos Victory Convertible note, 12% coupon November 2021		-			250,000
First Fire Global Opportunities LLC Convertible note, 12% coupon, December 2021		-			250,000
Blue Lake Partners LLC Convertible note, 12% coupon, December 2021		250,000			250,000
Fourth Man LLC Convertible note, 12% coupon December 2021		250,000			250,000
Convertible notes, gross	$	500,000		$	1,250,000
Less Debt discount recorded		(500,000	)		(1,250,000	)
Amortization debt discount		269,563			76,994
Convertible notes, net	$	269,563		$	76,994

The Company recognized approximately $112,600 and $0 of interest during the six months ended June 30, 2022, and 2021, respectively. The balance of Accrued interest was approximately $33,000 and $10,300 as of June 30, 2022, and December 31, 2021, respectively.

The Company recognized approximately $657,400 and $0 of interest expense attributable to the amortization of the debt discount from the original debt discount, deferred financing costs, fair value allocated to the warrants and the beneficial conversion feature during the six months ended June 30, 2022, and 2021, respectively.

The Company recorded an initial debt discount of approximately $0.4 million representing the intrinsic value of the conversion option embedded in the convertible debt instrument based upon the difference 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. The Company recognized amortization expense related to the debt discount and debt issuance costs of approximately $0.5 million for the three months ended June 30, 2022, which is included in interest expense in the consolidated statements of operations.

March 2022 Financing

In March 2022, the Company entered into a securities purchase agreement with an accredited investor, whereby the Company issued a promissory note in the aggregate principal amount of $250,000 convertible into shares of common stock of the Company. The convertible note carries a twelve (12%) percent coupon and a default coupon of 16% and mature one year from issuance. The investor has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.10. The Company also granted a total number of 1,250,000 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.20 up to five years after issuance.

25

As of June 30, 2022, and December 31, 2021, Fourth Man convertible note, net of debt discount, consist of the following amounts:

	June 30, 2022			December 31, 2021
Fourth Man Convertible note, 12% coupon March 2023	$	250,000		$	-
Debt Discount		(186,301	)		-
Convertible notes, net	$	63,699		$	-

The Company recognized approximately $7,644 and $0 of accrued interest during the three months ended June 30, 2022, and 2021, respectively. The Company recognized approximately $63,700 and $0 of interest expense attributable to the amortization of the debt discount from the original deferred financing costs, fair value allocated to the warrants and the beneficial conversion feature during the three months ended June 30, 2022, and 2021, respectively.

May 2022 Mast Financing

In May 2022, the Company entered into a securities purchase agreement with one institutional investor, whereby the Company issued one convertible note in the aggregate principal amount of $605,000 convertible into shares of common stock of the Company (“May 2022 Mast Note”). The convertible notes carry a twelve (12%) percent coupon and a default coupon of 16% and mature at the earliest of one year from issuance or upon event of default. Investor has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.10. The Company granted a total number of 3,025,000 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.20 up to five years after issuance. The Placement agent was also granted a total amount of 302,500 as part of a finder’s fee agreement. Portion of the proceeds will be used to retire some of the November/December 2021 notes. The extinguishment of existing notes resulted in the recognition of approximately $258,100 in loss on extinguishment of debt in the consolidated statement of operations in the six months ended June 30, 2022.

As of June 30, 2022, and December 31, 2021, convertible note under the May 2022 Mast Financing, net of debt discount, consist of the following amounts:

	June 30, 2022			December 31, 2021
Mast Hill Convertible note, 12% coupon May 2023	$	605,000		$	-
Convertible notes, gross	$	605,000		$	-
Less Debt discount recorded		(605,000	)		-
Amortization debt discount		53,257			-
Convertible notes, net	$	53,257		$	-

The Company recognized approximately $72,600 and $0 of accrued interest during the six months ended June 30, 2022, and 2021, respectively, which is the guaranteed twelve-month coupon and earned in full at issuance date. The Company recognized approximately $53,257 and $0 of interest expense attributable to the amortization of the debt discount from the original debt discount, deferred financing costs, fair value allocated to the warrants and the beneficial conversion feature during the six months ended June 30, 2022, and 2021, respectively.

26

June 2022 Financing

In June 2022, the Company entered into a securities purchase agreement with one institutional investor, whereby the Company issued one convertible note in the aggregate principal amount of $335,000 convertible into shares of common stock of the Company (“June 2022 Blue Lake Note”). The convertible notes carry a twelve (12%) percent coupon and a default coupon of 16% and mature at the earliest of one year from issuance or upon event of default. Investor has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.10. The Company granted a total number of 837,500 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.20 up to five years after issuance. The Placement agent was also granted a total amount of 83,750 warrants as part of a finder’s fee agreement. Portion of the proceeds will be used to retire some of the November/December 2021 notes.

As of June 30, 2022, and December 31, 2021, convertible note under the June 2022 Blue Lake Financing, net of debt discount, consist of the following amounts:

	June 30, 2022			December 31, 2021
Blue Lake Convertible note, 12% coupon June 2023	$	335,000		$	-
Convertible notes, gross	$	335,000		$	-
Less Debt discount recorded		(335,000	)		-
Amortization debt discount		9,034			-
Convertible notes, net	$	9,034		$	-

The Company recognized approximately $40,200 and $0 of accrued interest during the six months ended June 30, 2022, and 2021, respectively, which is the guaranteed twelve-month coupon and earned in full at issuance date. The Company recognized approximately $7,300 and $0 of interest expense attributable to the amortization of the debt discount from the original debt discount, deferred financing costs, fair value allocated to the warrants and the beneficial conversion feature during the six months ended June 30, 2022, and 2021, respectively.

Other short-term advances

As of June 30, 2022 compared to December 31, 2021, other short-term advances consist of the following amounts obtained from various employees and related parties:

Other Advances	June 30, 2022		December 31, 2021
Short term advance from CEO – Related Party	$	-	$	20,000
Short term advances – bridge investors		223,122		265,000
Short term advances from CFO – Related Party		25,050		45,050
Short term advance – Autotelic Inc. – Related Party		20,000		20,000
Accrued interest on advances		-		9,212
	$	268,172	$	359,262

During the year ended December 31, 2020, the Company’s CEO provided additional funding of $70,000 to the Company, of which $50,000 was repaid before December 31, 2020. Further, during the six months ended June 30, 2022, $20,000 repaid to the Company’s CEO. As such, $0 and $20,000 was outstanding at June 30, 2022 and December 31, 2021, respectively.

During the year ended December 31, 2021, Autotelic Inc. provided a short-term funding of $120,000 to the Company, which was repaid in 2021. In May 2021, Autotelic provided an additional short-term funding of $250,000 to the Company, which was converted into the August 2021 Notes. Autotelic provided an additional $20,000 short-term loan to the Company, and as such, $20,000 was outstanding and payable to Autotelic at June 30, 2022 and December 31, 2021, respectively.

27

During the year ended December 31, 2021, the Company’s CFO, a related Party, provided short term advances of approximately $45,000. During the year ended December 31, 2020, the Company’s CFO had provided a short-term advance of $25,000, which was repaid during the year ended December 31, 2021. $20,000 was repaid to the CFO in January 2022. As such approximately $25,000 and $45,000 was outstanding at June 30, 2022 and December 31, 2021, respectively.

NOTE 6 - JOINT VENTURE WITH GMP BIO AND AFFILIATES, EQUITY METHOD INVESTMENT

On March 31, 2022, the Company entered into (i) a joint venture (the “JV”) agreement with Dragon and GMP Bio, both affiliates of GMP, (and the Company, Dragon and GMP Bio are collectively called the “Parties”) (the “JVA”), (ii) a license agreement for rights to OT-101 (the “US License Agreement”) for the territory within the United States of America (the “US”) with Sapu Holdings, LLC, a subsidiary of GMP Bio and (iii) a license agreement for rights to OT-101 for the rest of the world with GMP Bio (the “Ex-US Rights Agreement”, and the US License Agreement and the Ex-US License Agreement are collectively called the “Agreements”).

Dragon and the Company entered into the JVA to regulate their relationship and the operation and management of the JV. The JVA contains provisions for the licensed products and licensed technologies related to OT-101 (the “Licensed products and technologies”). Pursuant to the JVA the Company is required to transfer to GMP Bio all of the Company’s rights and obligations under the research and development agreement dated 3 February 2020 between the Company and Golden Mountain Partners, LLC (“GMP”), an affiliate of Dragon, as amended, varied and/or supplemented by a supplement to research and Services Agreement dated 23 March 2020 between the Company, Mateon Therapeutics, Inc. (subsequently renamed the Company) and GMP (the “R&D Agreement”). The JVA permits GMP to seek conversion of certain convertible promissory notes entered into between the Company and GMP (see reference to Purchase Agreements and Notes below) into shares of the Common Stock of the Company within 15 business days of the execution of the JVA at a price of $0.2242 per Common Share, the closing price of the Common Share as traded on the OTCQB the day prior to the execution of the JVA, or the closing price of the Common Stock prior to the date of conversion if not within 15 business days of the JVA. Upon the execution of the JVA, Dragon will pay for and hold 55 shares of GMP Bio and the Company will pay for and hold 45 shares of GMP Bio, both to be acquired at $1.00 per share of GMP Bio. Such shares of GMP Bio were issued shortly after the date of the JVA. The JVA required the entering into of the Agreements on or before the execution of the JVA. The JVA defines the valuation of the Agreements (taking into account the transfer of the Company’s rights and obligations under the R&D Agreement) each at approximately $11.3 million, for an aggregate of approximately $22.7 million. The Parties also agreed that if a Rare Pediatric Disease (“RPD”) Priority Review Voucher, upon clinical approval of OT-101 Technologies for treatment of diffuse intrinsic pontine glioma (the “DIPG Voucher”), is issued to GMP Bio and GMP Bio, or a subsidiary thereof, sells the DIPG Voucher to a non-GMP subsidiary, then the Company shall be eligible to receive up to 50% of the net sales proceeds or $50 million, whichever is less. Dragon shall fund the JVA, for a total of approximately $27.7 million, based on the conditions contained in the JVA, and the Company will input the licenses under the Agreements into the JV. The Company is obligated to (i) (A) rectify the chain of legal title such that the Company is the sole legal owner of such rights, (B) complete registration as the sole owner of all the Company’s Patent Rights and (C) provide evidence of such registration that is satisfactory to Dragon; (ii) provide Dragon with copies of official documents issued by the relevant patent offices in the relevant countries evidencing the Company’s legal ownership of all the Company’s Patents Rights; and (iii) reflect the Company’s legal ownership of all the Company’s Patent Rights in the relevant online registers of the relevant patent offices in the relevant countries. The JVA intends to raise funding for the JVA through a Series A round of financing of not less than $20 million. Dragon can suspend funding the JVA if the Series A round of financing is not successfully completed by August 31, 2022, in which case Dragon’s funding obligation would be restricted to $250,000 per month to GMP Bio. If Dragon decides to terminate the JVA, the licenses granted under the Agreements shall be terminated and the OT-101 assets licensed by the Company will revert back to the Company. The rest of the JVA deals with the conduct of the JV, the board of directors of GMP Bio and other administrative matters. Dragon shall nominate up to three directors of their choosing to the board of directors of GMP Bio, two of whom are already nominated as “A” Directors and the Company shall nominate up to two directors of their choosing to the board of directors of GMP Bio, one of whom is already nominated as a “B” Director. The JVA defines how the board of directors will operate as well as the general management and operations of the JV. Other standard terms on shareholder rights, indemnification etc. are also defined in the JVA. Also included are the other terms with relation to insurance, indemnification, jurisdiction and other customary terms and conditions.

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The Agreements include terms of an exclusive, irrevocable, perpetual, royalty-free, sublicensable license under the Licensed Technology to manufacture, have manufactured, use, import, sell, offer for sale or otherwise exploit the Licensed Products, which is OT-101, in the Field, which is all therapeutic uses in humans, and in the Territories, which is the US and the rest of the world. In addition, the Company grants a non-exclusive, irrevocable, perpetual, royalty-free, non-sublicensable license for its sole use of the Company’s Vision Grid system for monitoring process, man flow, equipment flow, and material flow in contract development and manufacturing organization operations. These have been granted to GMP Bio and Sapu Holdings, LLC as the capital contribution by the Company to GMP Bio. The Agreements include the contributions by the key employees, as defined and included in the Agreements, standard representations and warranties, intellectual property protection, insurance, indemnification, jurisdiction and other customary terms and conditions.

The Company determined that the arrangement does not meet the accounting definition of a joint venture. Subsequently, we analyzed our investment and determined that such investment was not considered a VIE, which would require consolidation because the Company does not have the power to direct the activities that most significantly impact the economic performance of the JV. The Company does not control the JV through majority ownership interest or Board participation. As such, the Company followed the guidance in ASC 610-20 regarding the sale of nonfinancial assets to noncustomers when retaining a non-controlling ownership interest in such assets. The Company is deemed to have substantially transferred the actual intellectual property related to OT-101 as the investee can benefit from the risk and rewards of ownership of such intellectual property. This resulted in the derecognition of the carrying amount of our intangible assets for approximately $0.8 million and goodwill for $4.9 million for an aggregate amount of approximately $5.7 million , recorded its initial investment at its fair value for approximately $22.6 million and which resulted in a non-cash gain on non-financial asset disposal of approximately $17 million, which was reported in other income in the condensed consolidated statements of operations in the three and six months ended June 30, 2022. As of June 30, 2022, the JV had approximately $0.8 million in assets, recorded approximately $0.2 million in liabilities and incurred approximately $2.1 million in operational expenses. The Company elected the fair value option under subsection of Section 825-10-15 to account for its equity-method investment as the Company believes that it the most appropriate method to properly value the Company and record a change in value as and when an event occurs that requires a fair value assessment.

For information on the various notes from GMP, refer to Note 5 – GMP Notes of the Notes to the Consolidated Financial Statements above.

NOTE 7 - PRIVATE PLACEMENT AND JH DARBIE FINANCING

During the period from July 2020 to March 31, 2021, the Company entered into various subscription agreements with certain accredited investors, including the CEO, pursuant to the JH Darbie Financing, whereby the Company issued and sold a total of 100 Units, for total gross proceeds of approximately $5 million, pursuant to the JH Darbie Placement Agreement, with each Unit consisting of:

■ 25,000 shares of Edge Point Common stock for a price of $1.00 per share of Edge Point Common stock.

■ One convertible promissory note, convertible up to 25,000 shares of Edge Point Common stock, at a conversion price of $1.00 per share or up to 138,889 shares of the Company’s common stock, at a conversion price of $0.18 per share.

■ 50,000 warrants to purchase an equivalent number of shares of Edge Point Common stock at $1.00 per share and an equivalent number of shares of the Company’s common stock at $0.20 per share with a three-year expiration date. Either the Edgepoint or the Company’s warrants would be exercised.

As June 30, 2022 and December 31, 2021 funds received under the JH Darbie Financing, net of debt discount, consist of the following amounts:

	June 30, 2022		December 31, 2021
Convertible promissory notes
Subscription agreements - accredited investors	$	2,305,370	$	2,353,253
Subscription agreements – related party		122,616		109,046
Total convertible promissory notes	$	2,427,986	$	2,462,299

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The Company incurred approximately $0.64 million of issuance costs, including legal costs of approximately $39,000, that are incremental costs directly related to the issuance of the various instruments bundled in the offering.

Concurrently with the sale of the Units, JH Darbie was granted a warrant, exercisable over a five-year period, to purchase 10% of the number of Units sold in the JH Darbie Financing. As such, the Company granted 10 Units to JH Darbie pursuant to the JH Darbie Placement Agreement.

The terms of convertible notes are summarized as follows:

■ Term: Through March 31, 2022, extended further to March 31, 2023

■ Coupon: 16%.

■ Convertible at the option of the holder at any time in the Company’s Common Stock or Edgepoint Common Stock.

■ The conversion price is initially set at $0.18 per share for the Company’s Common Stock or $1.00 for Edgepoint Common Stock, subject to adjustment.

The Company allocated the proceeds among the freestanding financial instruments that were issued in the single transaction using the relative fair value method, which affects the determination of each financial instrument initial carrying amount. The Company utilized the relative fair value method as none of the freestanding financial instruments issued as part of the single transaction are measured at fair value. Under the relative fair value method, the Company made separate estimates of the fair value of each freestanding financial instrument and then allocated the proceeds in proportion to those fair value amounts. The Company recorded non-controlling interests of approximately $1 million in Edgepoint. Non-controlling interests represent the portion of net assets in consolidated entities that are not owned by the Company and are reported as a component of equity in the consolidated balance sheets.

As of the multiple closings of the Company during the six months ended June 30, 2021, under the private placement memorandum with JH Darbie, the estimated volume weighted grant date fair value of approximately $0.21 per share associated with the warrants to purchase up to 2,035,000 shares of common stock issued in this offering, or a total of approximately $ 0.7 million, was recorded to additional paid-in capital on a relative fair value basis. All warrants sold in this offering had an exercise price of $0.20 per share of the Company stock or $1.00 per share of Edge Point, subject to adjustment, are exercisable immediately and expire three years from the date of issuance. The fair value of the warrants was estimated using a Black Scholes valuation models using the following input values:

Expected Term	1.5 years
Expected volatility		152.3%-164.8	%
Risk-free interest rates		0.09%-0.11	%
Dividend yields		0.00	%

In February 2022, the Company and all except one of the Investors agreed to extend the maturity date of the Notes from March 31, 2022, to March 31, 2023. In consideration for the extension of the Notes, the Company issued to the Investors an aggregate of 33,000,066 Oncotelic Warrants at a price of $0.15 per share of Company’s Common Stock. Each Investor will be entitled to receive 333,334 Oncotelic Warrants for each Unit purchased. Upon the amendment of the terms of the convertible notes under the private placement memorandum. As incentive to extend the maturity date, approximately 33 million warrants were issued to the Unit Holders who participated in the amendment, The Company repaid the 1-unit holder who did not participate in the amendment shortly after March 31, 2022.

The Company reviewed the guidance per ASC 470-60 Troubled debt restructurings and ASC 470-50 Debt-Modifications and Extinguishments and concluded that the terms of the agreements were substantially different as of June 30, 2022, and, accounted for the transaction as a debt extinguishment. The loss is recognized equal to the difference between the net carrying amount of the original debt and the fair value of the modified debt instrument.

At March 31, 2022, the Company estimated the fair value of the warrants issued in conjunction with the amendment of the private placement under the JH Darbie financing based on assumptions used in the Black-Scholes valuation model. The key valuation assumptions used consists, in part, of the price of the Company’s Common Stock, a risk-free interest rate based on the yield of a Treasury note and expected volatility of the Company’s Common Stock all as of the measurement date. The Company used the following assumptions to estimate fair value of the warrants:

Strike price	$	0.15
Expected Term	1 year
Expected volatility		115.1	%
Risk-free interest rates		1.36	%
Dividend yields		0.00	%

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All the warrants issued in conjunction with the amendment #5 had an exercise price of $0.15 per share and are immediately exercisable and expire two years from the date of issuance or February 9, 2024. The warrants resulted in an aggregate fair value of approximately $2.9 million.

The Company recognized amortization expense related to the debt discount and debt issuance costs of $52,111 and $659,854 for the six months ended June 30, 2022 and June 30, 2021 respectively, which is included in interest expense in the statements of operations.

NOTE 8 - RELATED PARTY TRANSACTIONS

Master Service Agreement with Autotelic Inc.

In October 2015, Oncotelic entered into a Master Service Agreement (the “MSA”) with Autotelic Inc., a related party that is partly-owned by the Company’s CEO Vuong Trieu, Ph.D. Dr. Trieu, a related party, is a control person in Autotelic Inc. Autotelic Inc. currently owns less than 10% of the Company. The MSA stated that Autotelic Inc. will provide business functions and services to the Company and allowed Autotelic Inc. to charge the Company for these expenses paid on its behalf. The MSA includes personnel costs allocated based on amount of time incurred and other services such as consultant fees, clinical studies, conferences and other operating expenses incurred on behalf of the Company. The MSA requires a 90-day written termination notice in the event either party requires to terminate such services.

Expenses related to the MSA were approximately $1,000 for the three months ended June 30, 2022 as compared to approximately $120,000 for the same period of 2021. Expenses related to the MSA were approximately $67,000 for the six months ended June 30, 2022 as compared to approximately $482,000 for the same period of 2021. During the six months ended June 30, 2022, Autotelic, Inc. paid expenses and accrued liabilities in the aggregate amount of approximately $0.6 million on behalf of the Company. This payment, on the Company’s behalf, was recognized as a capital contribution from Autotelic, Inc.

In September 2021, the Company entered into an exclusive License Agreement (the “Agreement”) with Autotelic. For more information on this Agreement, refer to our 2021 Annual Report on Form 10-K filed with the SEC on April 15, 2022.

Note Payable and Short-Term Loan – Related Parties

In April 2019, the Company issued a convertible note to Dr. Trieu totaling $164,444, including OID of $16,444, receiving net proceeds of $148,000, which was used by the Company for working capital and general corporate purposes. The Company issued a Fall 2019 Note to Dr. Trieu in the principal amount of $250,000. Dr. Trieu also offset certain amounts due to him in the amount of $35,000 and was converted into the Fall 2019 debt. During the year ended December 31, 2020, Dr. Trieu provided additional short-term funding of $70,000 to the Company, of which the Company repaid $50,000 prior to December 31, 2020. During the year ended December 31, 2020, Dr. Trieu purchased a total of 5 Units under the private placement for a gross total of $250,000.

During the year ended December 2021, Autotelic Inc provided a short-term loan of $270,000, of which $250,000 was converted into the August 2021 loan and the balance of $20,000 continues to be a short-term loan. During the six months ended June 30, 2021, Autotelic Inc, provided a short-term loan of $120,000 to the Company. Such loan was repaid in April 2021. No loans or repayments were made to Autotelic Inc. during the same period in 2022.

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Artius Consulting Agreement

On March 9, 2020, the Company and Artius Bioconsulting, LLC (“Artius”), for which Mr. King is the Managing Member, entered into an amendment to the Consulting Agreement dated December 1, 2018, under which Artius agreed to serve as a consultant to the Company for services related to the Company’s business from time to time, effective December 1, 2019 (the “Effective Date”) (the “Artius Agreement”). For more information on this Agreement, refer to our 2021 Annual Report on Form 10-K filed with the SEC on April 15, 2022.

No expense was recorded during the three and six months ended June 30, 2021 or 2020, respectively, related to this Agreement.

Maida Consulting Agreement

Effective May 5, 2020, the Company and Dr. Maida entered into an independent consulting agreement, commencing April 1, 2020 (the “Maida Agreement”), under which Dr. Maida will assist the Company in providing medical expertise and advice from time to time in the design, conduct and oversight of the Company’s existing and future clinical trials. For more information on this Agreement, refer to our 2021 Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The Company recorded an expense of $0 during the three months ended June 30, 2022 related to this Agreement as compared to $45,000 during the same period in 2021. The Company recorded an expense of $75,000 during the six months ended June 30, 2022 related to this Agreement as compared to $90,000 during the same period in 2021. Effective April 1, 2022, Dr Maida’s compensation shall be borne by the JVA with GMP Bio.

NOTE 9 - EQUITY PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT

On May 3, 2021, the Company entered into an Equity Purchase Agreement (“EPL”) and Registration Rights Agreement with Peak One Opportunity Fund LP (“Peak One” or the “Investor”). For further information on EPL, refer to our 2021 Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The Company filed a post-effective amendment Registration Statement on Form S-1 with the Commission on April 26, 2022, and the Form S-1 was declared effective on May 6, 2022. The Company filed the prospectus in this connection on May 11, 2022.

During the six months ended June 30, 2022, the Company sold a total of 600,000 shares of Common Stock at price ranging from $0.16 and $0.22 for total gross proceeds of approximately $114,930 and approximately $98,627, net of issuance costs.

During the six months ended June 30, 2021, the Company sold a total of 1,300,000 shares of Common Stock at prices ranging from $0.11 and $0.23 for total gross proceeds of approximately $172,775, and approximately $168,752, net of issuance costs.

NOTE 10 - STOCKHOLDERS’ EQUITY

The following transactions affected the Company’s Stockholders’ Equity:

Issuance of Common Stock during the six months ended June 30, 2022

In January 2022, three of the five investors from the November/December 2021 financing made a cashless exercise for their warrants. In connection with this exercise, the Company issued 3,041,958 shares of Common Stock in exchange of approximately 5,769,231 million warrants.

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In March 2022, the Company sold 300,000 shares of its Common Stock to Peak One under the EPL for net proceeds of approximately $52 thousand.

In May 2022, Blue Lake made a cashless exercise for their warrants. In connection with this exercise, the Company issued 1,403,326 shares of Common Stock in exchange of 1,923,077 warrants.

In June 2022, the Company sold 300,000 shares of its Common Stock to Peak One under the EPL for net proceeds of approximately $47 thousand.

In June 2022, Mast Hill converted their debt of approximately $0.28 million. In connection with the Note conversion, the Company issued 4,025,000 shares of Common Stock to Mast Hill.

In June 2022, Company issued 500,000 shares of Common Stock to First Fire under partial repayment of convertible debt of $35,000.

In June 2022, First Fire made a cashless exercise for their warrants. In connection with this exercise, the Company issued 1,183,400 shares of Common Stock in exchange for 1,923,077 warrants.

For further information on Common Stock issuance, refer to our 2021 Annual Report on Form 10-K filed with the SEC on April 15, 2022.

NOTE 11 – STOCK-BASED COMPENSATION

Options

Pursuant to the Merger, the Company’s Common Stock and corresponding outstanding options survived. The below information details the Company’s associated option activity.

As of June 30, 2022, options to purchase Common Stock were outstanding under three stock option plans – the 2017 Equity Incentive Plan (the “2017 Plan”), the 2015 Equity Incentive Plan (the “2015 Plan”) and the 2005 Stock Plan (the “2005 Plan”). Under the 2017 Plan, up to 2,000,000 shares of the Company’s Common Stock may be issued pursuant to awards granted in the form of nonqualified stock options, restricted and unrestricted stock awards, and other stock-based awards. Under the 2015 and 2005 Plans, taken together, up to 7,250,000 shares of the Company’s Common Stock may be issued pursuant to awards granted in the form of incentive stock options, nonqualified stock options, restricted and unrestricted stock awards, and other stock-based awards.

Employees, consultants, and directors are eligible for awards granted under the 2017 and 2015 Plans. The Company registered an additional total of 20,000,000 shares of its Common Stock, which may be issued pursuant to the Registrant’s Amended and Restated 2015 Equity Incentive Plan (the “Plan”). Such additional shares were approved by the shareholders of the Company on August 10, 2020 and as reported to the Securities and Exchange Commission (the “SEC”) vide a Current Report on Form 8-K on August 14, 2020. As such, the total number of shares of the Company’s Common Stock available for issuance under the 2015 plan is 27,250,000. Since the adoption of the 2015 Plan, no further awards may be granted under the 2005 Plan, although options previously granted remain outstanding in accordance with their terms.

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Compensation based stock option activity for qualified and unqualified stock options are summarized as follows:

				Weighted
For the six months ended June 30, 2022				Average
	Shares			Exercise Price
Outstanding at January 1, 2022		16,592,620		$	0.30
Expired or cancelled		(2,359	)		11.88
Outstanding at June 30, 2022		16,590,261		$	0.30

Information on compensation-based stock option activity for qualified and unqualified stock options for the year ended December 31, 2021 can be found in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 15, 2022.

The following table summarizes information about options to purchase shares of the Company’s Common Stock outstanding and exercisable at June 30, 2022:

				Weighted-		Weighted-
				Average		Average
		Outstanding		Remaining Life		Exercise		Number
Exercise prices		Options		In Years		Price		Exercisable
$	0.14		7,150,000		9.17	$	0.14		3,972,500
	0.16		5,502,761		9.01		0.16		5,502,761
	0.22		1,750,000		3.84		0.22		1,750,000
	0.38		900,000		3.16		0.38		900,000
	0.73		762,500		2.78		0.73		762,500
	1.37		150,000		0.99		1.37		150,000
	1.43		300,000		2.91		1.43		300,000
	15.00		75,000		2.91		15.00		75,000
			16,590,261		7.38	$	0.30		13,412,761

The compensation expense attributed to the issuance of the options is recognized as they are vested.

The employee stock option plan stock options are generally exercisable for ten years from the grant date and vest over various terms from the grant date to three years.

The aggregate intrinsic value totaled approximately $0.26 million and was based on the Company’s closing stock price of $0.17 as of June 30, 2022, which would have been received by the option holders had all option holders exercised their options as of that date. Information on the aggregate intrinsic value for the year ended December 31, 2021 can be found in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 15, 2022.

The Company amortized approximately $25,000 and $50,000 of stock compensation expense during the three and the six months ended June 30, 2022 on the grants of certain milestone driven options that were granted during the year ended December 31, 2021. No similar expense was recorded during the same period of 2021.

In August 2019, the Company entered into Employment Agreements and incentive compensation arrangements with each of its executive officers, including Dr. Vuong Trieu, the Chief Executive Officer; Dr. Fatih Uckun, the Chief Medical Officer; Dr. Chulho Park, its Chief Technology Officer; and Mr. Amit Shah, the Chief Financial Officer. Details of the agreements and the incentive compensation is described in detail in Note 11 – Commitments & Contingencies under “Employment Agreements”. The incentive stock options or the restricted stock awards granted to the Company’s executive officers have not been granted as of the date of this filing.

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Warrants

Pursuant to the Merger, the Company’s Common Stock and corresponding outstanding warrants survived. The below information represents the Company’s associated warrant activity.

In February 2022, the Company and all except one of the Investors agreed to extend the maturity date of the Notes from March 31, 2022, to March 31, 2023. In consideration for the extension of the Notes, the Company issued to the Investors an aggregate of approximately 33 million Oncotelic Warrants at a price of $0.15 per share of Company’s Common Stock. At June 30, 2022, the Company estimated the fair value of the warrants issued in conjunction with the amendment of the private placement under the JH Darbie financing based on assumptions used in the Black-Scholes valuation model. The key valuation assumptions used consists, in part, of the price of the Company’s Common Stock, a risk-free interest rate based on the yield of a Treasury note and expected volatility of the Company’s Common Stock all as of the measurement date. The Company used the following assumptions to estimate fair value of the warrants as of June 30, 2022:

Expected Term		1 year
Strike price	$	0.15
Expected volatility		115.1	%
Risk-free interest rates		1.36	%
Dividend yields		0.00	%

All the warrants issued in conjunction with the amendment #5 had an exercise price of $0.15 per share and are immediately exercisable and expire two years from the date of issuance or February 9, 2024. The warrants resulted in an aggregate fair value of approximately $2.9 million.

The issuance of warrants to purchase shares of the Company’s Common Stock, including those attributed to debt issuances, as of June 30, 2022 are summarized as follows:

	Shares			Average Exercise Price
Outstanding at January 1, 2022		53,314,424		$	0.20
Issued during the six months ended June 30, 2022		34,375,066			0.15-0.20
Exercised / cancelled during the six months ended June 30, 2022		(9,615,385	)		0.13
Outstanding at June 30, 2022		82,322,855		$	0.18

The following table summarizes information about warrants outstanding and exercisable at June 30, 2022:

		Outstanding and exercisable
				Weighted-		Weighted-
				Average		Average
		Number		Remaining Life		Exercise		Number
Exercise Price		Outstanding		in Years		Price		Exercisable
$	0.20		42,737,500		0.75	$	0.20		4,237,500
	0.13		961,539		4.46		0.13		4,807,693
	0.15		33,000,066		1.75		0.15		33,000,066
	0.20		5,623,750		4.75-4.98		0.20		5,623,750
			82,322,855		2.0	$	0.18		81,920,259

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NOTE 12 – INCOME TAXES

The Company had gross deferred tax assets, which primarily relate to net operating loss carryforwards. As of December 31, 2021, the Company had gross federal and state net operating loss carryforwards of approximately $236.1 million and $76.3 million, respectively, which are available to offset future taxable income, if any. A portion of the gain on the sale of the non-financial asset may give rise to some taxable income, but such income is likely to be offset against the available net operating losses. The Company recorded a valuation allowance in the full amount of its net deferred tax assets since realization of such tax benefits has been determined by our management to be less likely than not. Information on our deferred tax assets and liabilities can be found in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 15, 2022.

Portions of these carryforwards will expire through 2038, if not otherwise utilized. The Company’s utilization of net operating loss carryforwards could be subject to an annual limitation. as a result of certain past or future events, such as stock sales or other equity events constituting a “change in ownership” under the provisions of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitations could result in the expiration of net operating loss carryforwards and tax credits before they can be utilized. We have not performed a formal analysis, but we believe our ability to use such net operating losses and tax credit carryforwards will be subject to annual limitations, due to change of ownership control provisions under Section 382 and 383 of the Internal Revenue Code, which would significantly impact our ability to realize these deferred tax assets.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Leases

Currently, the Company is leasing the office located at 29397 Agoura Road, Suite 107, Agoura Hills, CA 91301 on a month-to-month basis until such time a new office is identified. The Company believes the office is sufficient for its current operations.

Legal Claims

From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. The Company is not presently a party to any legal proceedings that it currently believes, if determined adversely to the Company, would individually or taken together have a material adverse effect on the Company’s business, operating results, financial condition or cash flows.

PointR Merger Contingent Consideration

The total purchase price of $17,831,427 represented the consideration transferred from the Company in the PointR Merger and was calculated based on the number of shares of Common Stock plus the preferred shares outstanding but convertible into Common Stock outstanding at the date of the PointR Merger and included $2,625,000 of contingent consideration of shares issuable to PointR shareholders, which can increase to $15 million of contingent consideration, upon achievement of certain milestones. The $2,625,000 of contingent consideration of shares issuable to PointR shareholders was recorded and associated with the PointR Merger is also classified as Level 3 fair value measurements. The Company initially recorded the contingency based on a valuation conducted by a third-party valuation expert. The valuation was based on a probability of the completion of certain milestones by PointR for the shareholders to earn additional shares. The Company evaluated the probability of the earning of the milestones and concluded that the probability of achievement of the milestones had not changed, primarily due to the shifting of focus by the Company to develop AI technologies for the COVID-19 pandemic. As such, the Company did not record any change to the valuation during the years ended and as of June 30, 2022 or December 31, 2021, respectively.

Other claims

From time to time, the Company may become involved in certain claims arising in the ordinary course of business. One of the Company’s ex-employees has made a claim against the Company. The Company is evaluating the validity of the claim, as the Company believes that such claim has limited merits and is hopeful to attain a positive outcome for such claim. Since the Company is still evaluating the claim, we are unable to quantify the amount such claim would be settled at, if at all settled.

NOTE 14 – SUBSEQUENT EVENTS

None

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (the “Quarterly Report” or “Report”) includes a number of forward-looking statements that reflect management’s current views with respect to future events and financial performance. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team, as well as the assumptions on which such statements are based.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance. These statements are only predictions and involve known and unknown risks, uncertainties and other factors. Some of these risks are included in the section entitled “Risk Factors” set forth in this Quarterly Report and in other reports that we file with the SEC. The occurrence of any of these risks, or others of which we are currently unaware, may cause our company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and without limitation:

● our ability to successfully commercialize our products and services on a large enough scale to generate profitable operations;

● our ability to maintain and develop relationships with customers and suppliers;

● our ability to successfully integrate acquired businesses or new products, or to realize anticipated synergies in connection with acquisitions of businesses or products;

● expectations concerning our ability to raise additional funding and to continue as a going concern;

● our ability to successfully implement our business plan; and

● our ability to avoid, or to adequately address any intellectual property claims brought by third parties; and

● the anticipated impact of any changes in industry regulation.

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC, including our Form 8-K/A filed with the SEC on July 8, 2019, which includes the audited financial statements for our subsidiary, Oncotelic, as of and for the years ended December 31, 2018 and 2017. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.

Corporate History

Oncotelic Therapeutics, Inc. (also d/b/a Mateon 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, changed its name to Mateon Therapeutics, Inc. in 2016, and then 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, and EdgePoint AI, Inc. (“Edgepoint”), a Delaware Corporation for which there are non-controlling interests, (Oncotelic, Oncotelic Inc., PointR and Edgepoint are collectively called the “Company”). The Company is evaluating the further development of its product candidates OXi4503 as a treatment for acute myeloid leukemia and myelodysplastic syndromes and CA4P in combination with a checkpoint inhibitor for the treatment of advanced metastatic melanoma.

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Company Overview

We are a clinical stage biopharmaceutical company developing drugs for the treatment of cancer. Our goal is to advance our drug candidates into late-stage pivotal clinical trials and either sell marketing rights to a larger pharmaceutical company or seek FDA approval ourselves.

The Company is also developing OT-101 for the various epidemics and pandemics, similar to the current corona virus (“COVID-19”) pandemic. In this connection, the Company entered into an agreement and supplemental agreement with Golden Mountain Partners (“GMP”) for a total of $1.2 million to render services for the development of OT-101. Such amount was recorded as revenue upon completion of all performance obligations under the agreement. Further, In June 2020, the Company secured $2 million in debt financing from GMP to conduct a clinical trial evaluating OT-101 against COVID-19. The Company discontinued enrollment in its OT-101 clinical trial in patients with COVID-19 in June 2021. In September 2021, the Company secured a further $1.5 million in debt from GMP to complete the study. The trial completed randomization of 32 out of 36 patients planned, on an intent to treat basis. The discontinuance of the trial was due to the continuing rise of more severe variants in Latin America, leading to exhaustion of medical care infrastructure in Latin America.

In 2020 and 2021, the Company was developing Artemisinin as a potential therapy for COVID-19. Artemisinin, purified from a plant Artemisia annua. It can inhibit TGF-β activity and is able to neutralize COVID-19. The Company initially conducted a study and the test results during an in vitro study at Utah State University showed Artemisinin having an EC50 of 0.45 ug/ml, and a Safety Index of 140. Artemisinin can target multiple viral threats, including COVID-19, by suppressing both viral replication and clinical symptoms that arise from viral infection. Viral replication cannot occur without TGF-β. In a clinical study undertaken in India, clinical consequences related to the TGF-β surge, including ARDS and cytokine storm, were suppressed by targeting TGF-β with Artemisinin. The ARTI-19 trials were conducted in India by Windlas Biotech Limited (“Windlas”), the Company’s business partner in India. Windlas had applied for regulatory approval for its Artemisinin based product, ArtiShield^TM, but has not been able to obtain regulatory approval for use of ArtiShield^TM as a COVID-19 therapy and as such, no significant revenues have been reported by Windlas nor have we accrued any royalties on Artemisinin due from Windlas. We intend to focus future development on Artemisinin against other respiratory viruses with unmet needs.

Between October 2021 and January 2022, GMP provided $1.0 million to the Company to fund operations on the way to complete a JV. On March 31, 2022, the Company formalized a joint venture (“JV”) with Dragon Overseas Capital Limited (“Dragon”) and GMP Biotechnology Limited (“GMP Bio”), both affiliates of GMP. For more information on the JV, refer to Note 6 of the Notes to the unaudited Consolidated Financial Statements for this Quarterly Report on Form 10Q.

Since April 2019, we have been operating under significant capital constraints, which has curtailed our ability to achieve meaningful progress in either of the Company’s two clinical programs – one of which is developing OXi4503 as a treatment for acute myeloid leukemia and myelodysplastic syndromes and the other of which is developing CA4P in combination with a checkpoint inhibitor for the treatment of advanced metastatic melanoma. We believe that the merger of Oncotelic and Oncotelic Inc. creates a combined company that has potential to generate shareholder value through a promising pipeline of next generation immunotherapies targeting several significant cancer markets where there is a lack of therapeutic options and lack of an effective immunotherapy protocol.

Joint Venture

On March 31, 2022, the Company entered into (i) a joint venture (the “JV”) agreement with Dragon and GMP Bio (and the Company, Dragon and GMP Bio are collectively called the “Parties”) (the “JVA”), (ii) a license agreement for rights to OT-101 (the “US License Agreement”) for the territory within the United States of America (the “US”) with Sapu Holdings, LLC, a subsidiary of GMP Bio and (iii) a license agreement for rights to OT-101 for the rest of the world with GMP Bio (the “Ex-US Rights Agreement”, and the US License Agreement and the Ex-US License Agreement are collectively called the “Agreements”).

The Company determined that the arrangement does not meet the accounting definition of a joint venture. Subsequently, we analyze our investment and determined that such investment was not considered a VIE, which would require consolidation. Besides, the Company does not have the power to direct the activities that most significantly impact the economic performance of the JV. The Company does not control the JV through majority ownership interest or Board participation. As such, the Company followed the guidance in ASC 610-20 regarding the sale of nonfinancial assets to noncustomers when retaining a non-controlling ownership interest in such assets. The Company is deemed to have substantially transferred the actual intellectual property related to OT-101 as the investee can benefit from the risk and rewards of ownership of such intellectual property. This resulted in the derecognition of the carrying amount of our intangible assets for approximately $0.8 million and goodwill for $4.9 million for an aggregate amount of approximately $5.7 million, recorded its initial investment at its fair value for approximately $22.6 million and which resulted in a non-cash gain on non-financial asset disposal of approximately $17 million, which was reported in other income in the condensed consolidated statements of operations in the three and six months ended June 30, 2022. The Company elected the fair value option under subsection of Section 825-10-15 to account for its equity-method investment as the Company believes that the fair value option is most appropriate for a company in the biotechnology industry, The fair value option is more appropriate for companies that are involved in extensive and usually very expensive research and development efforts, which are not appropriately reflected in the market value or reflective of the true value of the development activities of the company

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This JV is a significant milestone in the history of the Company as it permits the Company to monetize and develop the assets it holds, by minimal to no shareholder dilution. This transaction allows us to unburden the Company of the high cost of drug development, which the JV will be responsible for, while the Company will participate in its upside through appreciation in the value of its shares in the JV and up to $50 million on the sale of the RPD voucher following marketing approval of OT-101 for DIPG. Dragon has agreed to invest cash and other assets with a value of approximately $27.6MM for 55% ownership of the JV; and Oncotelic has granted the License to the JV for 45% ownership in the JV for a fair value of about $22.6 million. The cash contributions by Dragon will allow the JV to commence the development of OT-101.

For information on the JV, refer to Note 6 – Joint Venture and GMP of the Notes to the Consolidated Financial Statements above.

November – December 2021 and March 2022 Financing

In November and December 2021, the Company entered into securities purchase agreement with five institutional investors, whereby the Company issued five convertible notes in the aggregate principal amount of $1,250,000 convertible into shares of common stock of the Company. The convertible notes carry a twelve (12%) percent coupon and a default coupon of 16% and mature at the earliest of one year from issuance or upon event of default. Investors has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.07. The Company granted a total number of 9,615,385 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.13 up to five years after issuance. The Placement agent was also granted a total amount of 961,540 as part of a finder’s fee agreement.

In January 2022, three of the five investors made a cashless exercise for their warrants. In this connection, the Company issued 3,041,958 million shares of the Common Stock in exchange of approximately 5,761,231 million warrants.

In May 2022, November 2021 Talos note and the December 2021 First Fire note were fully repaid.

In June 2022, Mast converted their Note from November 2021 for which the company issued 4,025,000 shares of Common Stock.

In June 2022, First Fire exercised their warrant to purchase shares of Common Stock of the Company on a cashless basis. As such, the Company issued the note holders 500,000 shares of Common Stock.

In March 2022, the Company entered into a Securities Purchase Agreement with Fourth Man, pursuant to which the pursuant to which the Company issued convertible promissory note in the aggregate principal amount of $0.25 million, which Note is convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”). This Note was undertaken by the Company pursuant to that certain Finder’s Fee Agreement between the Company and JH Darbie, dated October 26, 2021 (the “Agreement”).

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May 2022 Financing

In May 2022, the Company entered into a Securities Purchase Agreements with Mast, pursuant to which the Company issued convertible promissory notes in the aggregate principal amount of $0.6 million, which Note is convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”). This note was used to fully repay November 2021 Talos note and the December 2021 First Fire note.

June 2022 Financing

In June 2022, the Company entered into a Securities Purchase Agreements with Blue Lake, pursuant to which the Company issued convertible promissory notes in the aggregate principal amount of $0.34 million, which Note is convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”). This note was utilized for corporate expenses.

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expense during the reporting periods. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances at the time we make such estimates. Actual results and outcomes may differ materially from our estimates, judgments and assumptions. We periodically review our estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in the financial statements prospectively from the date of the change in estimate. Our significant accounting policies are more fully described in Note 2 to our Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report.

We define our critical accounting policies as those accounting principles that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. We believe the critical accounting policies used in the preparation of our financial statements that require significant estimates and judgments are the following:

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. For the six months ended June 30, 2022 and 2021, there were no impairment losses recognized for long-lived assets.

Intangible Assets

The Company records its intangible assets at cost in accordance with ASC 350, Intangibles – Goodwill and Other. The Company reviews the intangible assets for impairment on an annual basis or if events or changes in circumstances indicate it is more likely than not that they are impaired. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors.

Goodwill

Goodwill represents the excess of the purchase price of acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least once annually, at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the reporting unit. If, on the basis of qualitative factors, it is considered not more likely than not that the fair value of the reporting unit is less than the carrying amount, further testing of goodwill for impairment would not be required. Otherwise, goodwill impairment is tested using a two-step approach.

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The first step involves comparing the fair value of the reporting unit to its carrying amount. If the fair value of the reporting unit is determined to be greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount is determined to be greater than the fair value, the second step must be completed to measure the amount of impairment, if any. The second step involves calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit as determined in step one. The implied fair value of the goodwill in this step is compared to the carrying value of goodwill. If the implied fair value of the goodwill is less than the carrying value of the goodwill, an impairment loss equivalent to the difference is recorded.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging”.

ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards.

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20 “Debt – Debt with Conversion and Other Options.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Original issue discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

ASC 815-40 “Derivatives and Hedging – Contracts in Entity’s Own Equity” provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

Derivative Financial Instruments Indexed to the Company’s Common Stock

We have generally issued derivative financial instruments, such as warrants, in connection with our equity offerings. We evaluate the terms of these derivative financial instruments in order to determine their accounting treatment in our financial statements. Key considerations include whether the financial instruments are freestanding and whether they contain conditional obligations. If the warrants are freestanding, do not contain conditional obligations and meet other classification criteria, we account for the warrants as an equity instrument. However, if the warrants contain conditional obligations, then we account for the warrants as a liability until the conditional obligations are met or are no longer relevant. Because no established market prices exist for the warrants that we issue in connection with our equity offerings, we must estimate the fair value of the warrants, which is as inherently subjective as it is for stock options, and for similar reasons as noted in the stock-based compensation section above. For financial instruments which are accounted for as a liability, we report any changes in their estimated fair values as gains or losses in our Consolidated Statement of Income.

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Variable Interest Entity (VIE) Accounting

We evaluate our ownership, contractual relationships and other interests in entities to determine the nature and extent of the interests, whether such interests are variable interests and whether the entities are VIEs in accordance with ASC 810, Consolidations. These evaluations can be complex and involve Management judgment as well as the use of estimates and assumptions based on available historical information, among other factors. Based on these evaluations, if the Company determines that it is the primary beneficiary of a VIE, the entity is consolidated into the financial statements.

Investments - Equity Method

The Company accounts for equity method investments at cost, adjusted for the Company’s share of the investee’s earnings or losses, which are reflected in the consolidated statements of operations. The Company periodically reviews the investments for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

The Investment in GMP Bio represents the investment into equity securities for which the Company elected the fair value option pursuant to ASC 825-10-15 and subsequent fair value changes in the GMP Bio shares are included in the result from continuing operations. Refer to Note 6 to these Notes to the Consolidated Financial Statements.

Joint Venture agreement

We have equity interest in unconsolidated arrangement that is primarily engaged in the business of drug discovery, development, and commercialization, including but not limited to development and commercialization of TGF-beta therapeutics as well as establishing and operating contract development and manufacturing organization (CDMO) facilities and capabilities. The Company first review the arrangement to determine if it meets the definition of an accounting joint venture pursuant to ASC 323-10-20. In order to meet the definition of a joint venture, the arrangement must have all of the following characteristics, (i) the arrangement is organized within a separate legal entity, (ii) the entity is under the joint control of the venturers, (iii) the venturers must be able to exercise joint control through their equity investments, (iv) the qualitative characteristics of the entity, including its purpose and design must be consistent with the definition of a joint venture

We consolidate arrangements that are considered to be VIEs where we are the primary beneficiary. We analyze our investments in joint ventures to determine if the joint venture is considered a VIE and would require consolidation. We (i) evaluate the sufficiency of the total equity investment at risk, (ii) review the voting rights and decision-making authority of the equity investment holders as a group and whether there are limited partners (or similar owning entities) that lack substantive participating or kick out rights, guaranteed returns, protection against losses, or capping of residual returns within the group and (iii) establish whether activities within the venture are on behalf of an investor with disproportionately few voting rights in making this VIE determination.

To the extent that we own interests in a VIE and we (i) have the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) have the obligation or rights to absorb losses or receive benefits that could potentially be significant to the VIE, then we would be determined to be the primary beneficiary and would consolidate the VIE. To the extent that we own interests in a VIE, then at each reporting period, we re-assess our conclusions as to which, if any, party within the VIE is considered the primary beneficiary.

To the extent that our arrangements do not qualify as VIEs, they are consolidated if we control them through majority ownership interests or if we are the managing entity (general partner or managing member) and our partner does not have substantive participating rights. Control is further demonstrated by our ability to unilaterally make significant operating decisions, refinance debt, and sell the assets of the joint venture without the consent of the non-managing entity and the inability of the non-managing entity to remove us from our role as the managing entity.

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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 consist of costs we incur for the development of our investigational drugs and, to a lesser extent, for preclinical research activities. Research and development costs are expensed as incurred. Research and development expense include clinical trial costs, salaries and benefits of employees, including associated stock-based compensation, payments to clinical investigators, drug manufacturing costs, laboratory supplies and facility costs. Clinical trial costs are a significant component of our research and development expense, and these can be difficult to accurately estimate. Included in clinical trial costs are fees paid to other entities that conduct certain research and development activities on our behalf, such as clinical research organizations, or CROs. We estimate clinical trial expense based on the services performed pursuant to contracts with research institutions such as CROs and the actual clinical investigators. These estimates are based on actual time and expenses incurred by the CRO and the clinical investigators. Also included in clinical trial expense are costs based on the level of patient enrollment into the clinical trial and the actual services performed under the related clinical trial agreement. Changes in clinical trial assumptions, such as the length of time estimated to enroll all patients, rate of screening failures, patient drop-out rates, number and nature of adverse event reports and the total number of patients enrolled can impact the average and expected cost per patient and the overall cost of the clinical trial. Based on patient enrollment reports and services provided, we may periodically adjust estimates for the clinical trial costs. If we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of services performed, the length of time for these services or the costs of these services, our actual expenses could differ from our estimates.

Share-Based Compensation

We record the estimated fair value of all share-based payments issued to employees and other service providers. Our share-based payments consist primarily of stock options. The valuation of stock options is an inherently subjective process, since market values are not available for any stock options in our equity securities. Market values are also not available on long-term, non-transferable stock options in other equity securities. With no market values on options to trade in our common stock and no comparable market values on any long-term non-transferable stock options, the process of valuing our stock options is even more uncertain and subjective. Accordingly, we use a Black-Scholes option pricing model to derive an estimated fair value of the stock options which we issue. The Black-Scholes option pricing model requires certain input assumptions, including the expected term of the options and the expected volatility of our common stock. Changes in these assumptions could have a material impact on the estimated fair value that we record for share-based payments that we issue. We determine the term of the options based on the simplified method, which averages the vesting period and the contractual life of the stock option. We determine the expected volatility based on the historical volatility of our common stock over a period commensurate with the option’s expected term. The Black-Scholes option pricing model also requires assumptions for risk-free interest rates and the expected dividend yield of our common stock, but we feel that these values are more objective and note that changes in these values do not have a significant impact on the estimated value of the options when compared to the volatility and term assumptions.

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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.

Results of Operations

Comparison of the Results of Operations for the three Months Ended June 30, 2022 to the three Months Ended June, 2021

A comparison of the Company’s operating results for the three months ended June 30, 2022 and 2021, respectively, is as follows.

	June 30, 2022			June 30, 2021			Variance
Operating expense:
Research and development		108,707			956,814			(848,107	)
General and administrative		147,608			2,807,398			(2,659,790	)
Total operating expense		256,315			3,764,212			(3,507,897	)
Loss from operations		(256,315	)		(3,764,212	)		3,507,897
Reimbursement for expenses – related party		247,492			-			247,492
Interest expense, net		(1,094,878	)		(433,979	)		(660,899	)
Gain on derecognition of non-financial asset		16,951,477			-			16,951,477
Change in the value of derivatives on debt		122,919			630,174			(507,255	)
Net income (loss) before controlling interests	$	15,970,695		$	(3,568,017	)	$	19,538,712

Net (Income) Loss

We recorded a net income of approximately $16.0 million for the three months ended June 30, 2022, compared to a net loss of approximately $3.6 million for the three months ended June 30, 2021. The higher gain of approximately $19.5 million for the three months ended June 30, 2022 as compared to the same period of 2021 was primarily due to gain on derecognition of non-financial asset, of approximately $17 million, reduced stock-based compensation by approximately $2 million recorded in the three months ended June 30, 2022 compared to the same period of 2021, lower compensation expenses of approximately $1 million, reimbursement of expenses by a related party of approximately $0.25 million and higher interest expense of $0.7 million.

Research and Development Expenses

Research and development (“R&D”) expenses decreased by approximately $0.8 million for the three months ended June 30, 2022 compared to the same period in 2021, primarily due to lower personnel expenses and other operational expenses relate to OT-101 being borne by the JV.

As a result of our JV, we expect our R&D expense to decrease for the remainder of the year 2022, specifically for activities related to OT-101, including the initiation of new clinical trials. Any other development expenses will be subject to our continuing ability to secure sufficient funding to continue planned operations.

General and Administrative Expenses

General and administrative (“G&A”) expenses decreased by approximately $2.7 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, primarily due to stock compensation expense of approximately $2.0 million during the three months ended June 30, 2021 as compared to $25 thousand during the three months ended June 30, 2022, and lower compensation expenses of approximately $0.3 million which was borne by the JV .

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As a result of our JV, we expect our G&A activities to reduce, and therefore believe that G&A expenses will decrease for the remainder of 2022. Any other G&A expenses will be subject to our continuing ability to secure sufficient funding to continue planned operations.

Reimbursement of expenses

The Company was reimbursed approximately $0.25 million, by Autotelic Inc. a related party, during the three months ended June 30, 2022 on behalf of our JV.

Interest Expense, Net

We recorded interest expense, including amortization of debt costs, of approximately $1.1 million for the three months ended June 30, 2022 primarily in connection with debt raised from convertible notes and the JH Darbie Financing, November/December 2021 Financing and May/June 2022 financing as compared to $0.4 million for the same period of 2021, in connection with debt raised from convertible notes and JH Darbie during 2021. For more information on debt raised from convertible notes and the JH Darbie Financing, see Note 5 and Note 6 of the Unaudited Consolidated Financial Statements of this Quarterly Report.

Gain on Derecognition of Non-financial Asset

During the three months ended June 30, 2022, we recorded a gain of approximately $16.9 million on the sale of our non-financial asset upon the transfer of OT-101 as our capital contribution for the JV. We adopted the fair value measurements under the equity method and the gain was net of the fair value of the asset of approximately $22.6 million as reduced by the removal of the value of the intangibles of approximately $0.8 million for OT-101 and the value of the goodwill of $4.8 million recorded at the time of the 2019 Merger with Oncotelic Inc.

Change in Value of Derivatives

During the three months ended June, 2022, we recorded approximately $0.1 million change in value upon conversion of certain debt owed to Peak One and TFK, to liabilities as a derivative, as well as new debt converting to liabilities on the convertible promissory notes issued to our CEO and a bridge investor (collectively, the “Convertible Notes”). The Company recorded $0.6 million change during the same period in 2021. The Convertible Notes became convertible 180 days after issuance, and as such the CEO and the bridge investor had the ability to convert that debt into equity at a variable conversion price, giving rise to a derivative feature within the debt instrument resulting in the recording of a derivative liability and change in value of the derivative. For more information on value of derivatives, refer to the Note 2 of the Unaudited Consolidated Financial Statements of this Quarterly Report.

Comparison of the Results of Operations for the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

A comparison of the Company’s operating results for the six months ended June 30, 2022 and 2021, respectively, is as follows.

	June 30, 2022			June 30, 2021			Variance
Operating expense:
Research and development		689,004			2,513,486			(1,824,482	)
General and administrative		3,911,518			3,288,607			622,911
Total operating expense		4,600,522			5,802,093			(1,201,571	)
Loss from operations		(4,600,522	)		(5,802,093	)		1,201,571
Reimbursement for expenses – related party		247,492			-			247,492
Interest expense, net		(1,392,341	)		(954,886	)		(437,455	)
Gain on derecognition of non-financial asset		16,951,477			-			16,951,477
Change in the value of derivatives on debt		(67,922	)		93,829			(161,751	)
Loss on conversion of debt		(257,810	)		(27,504	)		(236,306	)
Net income (loss) before controlling interests	$	10,880,374		$	(6,690,654	)	$	17,571,028

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Net Income

We recorded a net income of approximately $10.9 million for the six months ended June 30, 2022, compared to a net loss of approximately $6.7 million for the six months ended June 30, 2021. The higher income of approximately $17.6 million for the six months ended June, 2022 as compared to the same period of 2021, was primarily due to due to gain on sale of non-financial asset of approximately $17 million, lower operating expense of approximately $1.2 million, higher loss on conversion of debt of approximately $0.2 million, and higher interest expense of $0.4 million.

Research and Development Expenses

Research and development (“R&D”) expenses decreased by approximately $1.8 million for the six months ended June 30, 2022 compared to the same period in 2021 primarily due to reduced compensation cost of $0.7 million and reduced clinical trial cost of $1.3 million. As a result of our JV with Dragon and GMP Bio, the JV absorbed most of the compensation costs as well as some of the operational costs.

As a result of our JV, we expect our R&D expense to decrease for the remainder of the year 2022, specifically for activities related to OT-101, including the initiation of new clinical trials. Any other development expenses will be subject to our continuing ability to secure sufficient funding to continue planned operations.

General and Administrative Expenses

General and administrative (“G&A”) expenses increased by approximately $0.6 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to the lower compensation and legal costs of approximately $0.2 million, offset by higher stock-based compensation expense of approximately $ 0.8 million.

As a result of our JV, we expect our G&A activities to reduce, and therefore believe that G&A expenses will decrease for the remainder of 2022. Any other G&A expenses will be subject to our continuing ability to secure sufficient funding to continue planned operations.

Interest Expense, Net

We recorded interest expense, including amortization of debt costs, of approximately $1.4 million for the six months ended June 30, 2022 primarily in connection with debt raised from convertible notes, JH Darbie Financing, November/December 2021 Financing and May/June 2022 Financing, as compared to approximately $1.0 million for the same period of 2021, in connection with debt raised from convertible notes during 2019 and JH Darbie Financing.

Reimbursement of expenses

The Company was reimbursed approximately $0.25 million, by Autotelic Inc. a related party, during the six months ended June 30, 2022 on behalf of our JV.

Gain on Derecognition of Non-financial Asset

During the three months ended June 30, 2022, we recorded a gain of approximately $16.9 million on the sale of our non-financial asset upon the transfer of OT-101 as our capital contribution for the JV. We adopted the fair value measurements under the equity method and the gain was net of the fair value of the asset of approximately $22.6 million as reduced by the removal of the value of the intangibles of approximately $0.8 million for OT-101 and the value of the goodwill of $4.9 million recorded at the time of the 2019 Merger with Oncotelic Inc.

Change in Value of Derivatives

During the six months ended June 30, 2022, we recorded approximately $68 thousand change in value upon conversion of the debt to liabilities as a derivative as well as new debt converting to liabilities on the Convertible Notes. The Company recorded approximately $93 thousand change in value during the same period in 2021. The Convertible Notes became convertible 180 days after issuance, and as such Peak One, TFK, the CEO and the bridge investor had the ability to convert that debt into equity at: (i) the variable conversion price of 65% of the Company’s lowest traded price after the first 180 days, or (ii) at the lower of $0.10 per share or 55% of the Company’s traded stock price under certain circumstances. This gave rise to a derivative feature within the debt instrument which resulted in the recording of a derivative liability and change in value of the derivative.

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Loss on Conversion of Debt

During the six months ended June 30, 2022, we recorded a loss of $0.25 million on conversion of debt as compared to a loss of $27 thousand related to the difference in fair value to the price at which the debt was converted.

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

	June 30, 2022			December 31, 2021
Cash, including restricted cash of $20	$	419		$	589
Working capital		(15,645	)		(14,828	)
Stockholders’ Equity		24,280			8,158

The Company has incurred net accumulated losses of approximately $19.9 million, negative working capital of over $15 million and negative cash flow from operations of approximately $1.2 million at June 30, 2022. Management expects to incur significantly lower costs losses in the foreseeable future and 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, a substantial part of which has 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 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 anticipates raising substantial additional capital through the sale of equity securities and/or debt, but no other financing arrangements are 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 ($ in ‘000’s)

	Six month ended June 30,
	2022			2021
Net cash used in operating activities	$	(1,166	)	$	(2,466	)
Net cash provided by financing activities		997			2,453
Increase (decrease) in cash	$	(169	)	$	(13	)

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Operating Activities

Net cash used in operating activities was approximately $1.2 million for the six months ended June 30, 2022. This was due to the net income of approximately $10.9 million, primarily offset by non-cash gain on the sale of its non-financial asset of approximately $17 million, non-cash amortization of debt discounts and deferred financing costs of $1.1 million, non-cash stock compensation costs of $0.3 million, fair value of the warrants issued during the three months ended June 30, 2022 of $2.9 million, non-cash loss on debt conversion of approximately $0.5 million and changes in operating assets and liabilities of approximately $0.2 million.

Net cash used in operating activities was approximately $2.5 million for the six months ended June 30, 2021. This was due to the net loss of approximately $6.7 million, primarily offset by non-cash amortization of debt discounts and deferred financing costs of $0.7 million, non-cash stock compensation costs on fair value of the warrants issued during the three months ended June 30, 2021 of $2.1 million and changes in operating assets and liabilities of approximately $1.3 million.

Financing Activities

For the six months ended June 30,2022, net cash provided by financing activities was approximately $1.0 million, due to a receipt of cash from sale of shares under the EPA of approximately $0.1 million, a short-term convertible loan GMP of $0.5 million, approximately $1.0 million under the March 2022, May 2022 and June 2022 notes, offset by repayments of debt of approximately $0.5 million to some note holders and approximately $0.1 million to short term loan holders and one PPM note holder.

For the six months ended June 30, 2021, net cash provided by financing activities was $2.5 million, due to a receipt of cash from the JH Darbie Financing of $1.6 million, sale of equity of $0.1 million, proceeds of a convertible note of $0.3 million and a short-term loans from certain bridge investors of $0.8 million, partially offset by repayments of debt of approximately $0.2 million.

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.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our cash is maintained in U.S. dollar accounts. We have adopted a policy for the cash that we hold, and also for any cash equivalents and investments that we may hold, the primary objective of which is to preserve principal, while also maintaining liquidity to meet our operating needs and maximize yields to the extent possible. Although our investments can be subject to credit risk, we follow procedures to limit the amount of credit exposure in any single issue, issuer or type of investment. Our investments are also subject to interest rate risk and would be likely to decrease in value if market interest rates increase. However, due to the generally conservative nature of our investments and relatively short duration, we believe that interest rate risk is mitigated.

Although we may from time-to-time manufacture drugs and conduct preclinical or clinical trials outside of the United States, we believe our exposure to foreign currency risk to be immaterial.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”) conducted an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, our CEO and our CFO each concluded that our disclosure controls and procedures are not effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act, (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) is accumulated and communicated to our management, including our CEO and our CFO, as appropriate to allow timely decisions regarding required disclosure.

Material Weaknesses in Internal Control over Financial Reporting

Management conducted an assessment of the effectiveness of our internal control over financial reporting as of June 30, 2022 based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that the Registrant’s internal control over financial reporting as of June 30, 2022 was not effective as a result of certain material weaknesses.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The ineffectiveness of our internal control over financial reporting was due to the following material weaknesses which are observed in many small companies with a small number of accounting and financial reporting staff:

● Lack of formal policies and procedures;

● Lack of a functioning audit committee and independent directors on the Company’s board of directors to oversee financial reporting responsibilities;

● Inadequate or lack of segregation of duties;

● Lack of dedicated resources and experienced personnel to design and implement internal control procedures to support financial reporting objectives;

● Lack of qualified accounting personnel to prepare and report financial information in accordance with GAAP; and

● Lack of risk assessment procedures on internal controls to detect financial reporting risks on a timely manner.

49

Management’s Plan to Remediate the Material Weaknesses

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions planned include:

● Continue to search for, evaluate and recruit qualified independent outside directors;

● Hire qualified accounting personnel to prepare and report financial information in accordance with GAAP;

● Identify gaps in our skills base and the expertise of our staff required to meet the financial reporting requirements of a public company; and

● Continue to develop policies and procedures on internal control over financial reporting and monitor the effectiveness of operations on existing controls and procedures.

Changes in Internal Control over Financial Reporting

During the six months ended June 30, 2022, we continued to execute upon our planned remediation actions which are all intended to strengthen our overall control environment. While we have made progress in our planned remediation efforts and we expect the Company to complete its planned execution of internal controls over financial reporting during the year ended December 31, 2022, however, our ability to do so would greatly depend on our ability to obtain financial and other resources to complete the remediation.

We are committed to maintaining a strong internal control environment and believe that these remediation efforts will represent significant improvements in our control environment. Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

In addition to the risk factor described below, for information about the risks and uncertainties related to our business, please see the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2021 filed on April 15, 2022. The risks described below and in our Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Our business may suffer from the severity or longevity of the COVID-19 Global Outbreak.

The COVID-19 continues impacting countries, communities, supply chains and markets, as well as the global financial markets. To date, COVID-19 has not had a material impact on the Company, other than as set forth above. However, the Company cannot predict whether COVID-19 will have a material impact on our financial condition and results of operations due to understaffing, disruptions in government spending, among other factors. In addition, at this time we cannot predict the impact of COVID-19 on our ability to obtain financing necessary for the Company to fund its working capital requirements. In most respects, it is too early in the COVID-19 pandemic to be able to quantify or qualify the longer-term ramifications on our business, our customers and/or our potential investors.

50

Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds

In January 2022, three of the five investors from the November/December 2021 financing made a cashless exercise for their warrants. In connection with this exercise, the Company issued 3,041,958 shares of Common Stock in exchange of approximately 5,769,231 million warrants.

In May 2022, Blue Lake made a cashless exercise for their warrants. In connection with this exercise, the Company issued 1,403,326 shares of Common Stock in exchange of 1,923,077 warrants.

In June 2022, Mast Hill converted their debt of approximately $0.28 million. In connection with the Note conversion, the Company issued 4,025,000 shares of Common Stock to Mast Hill.

In June 2022, Company issued 500,000 shares of Common Stock to First Fire as a partial repayment of convertible debt of $35,000.

In June 2022, First Fire made a cashless exercise for their warrants. In connection with this exercise, the Company issued 1,183,400 shares of Common Stock in exchange for 1,923,077 warrants.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

In reviewing the agreements included as exhibits to this Quarterly Report, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

● should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

● have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

● may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

● were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Quarterly Report and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

51

The following exhibits are included as part of this Quarterly Report. A more complete list of previously filed Exhibits can be found with our Annual Report on Form 10K filed with the SEC on April 15, 2022:

		Incorporated by Reference
Exhibit Number	Description	Form	Filing Date	Exhibit Number	Filed Herewith
10.1	Amendment to the Oncotelic Therapeutics, Inc. 2015 Equity Incentive Plan	S-8	4/19/2021	10.1
10.2	Equity Purchase Agreement by and between Oncotelic Therapeutics, Inc., and Peak One Opportunity Fund, L.P., dated May 3, 2021	8-K	5/7/2021	10.2
10.3	Registration Rights Agreement, by and between Oncotelic Therapeutics, Inc., and Peak One Opportunity Fund, L.P., dated May 3, 2020	S-8	5/7/2021	10.1
10.4	Joint Venture Agreement relating to GMP Biotechnology Limited between Dragon Overseas Capital Limited, Oncotelic Therapeutics, Inc. and GMP Biotechnology Limited dated March 31, 2022	8-K	4/6/2022	10.1
10.5	License Agreement between Oncotelic Therapeutics, Inc. and GMP Biotechnology Limited dated March 31, 2022	8-K	4/6/2022	10.2
10.6	License Agreement between Oncotelic Therapeutics, Inc. and Sapu Holdings, LLC dated March 31, 2022	8-K	4/6/2022	10.3
10.7	Independent consulting agreement between Oncotelic Therapeutics, Inc. and Fatih Uckun, MD, Ph.D. dated May 1, 2022	8-K	5/6/2022	10.1
10.8	Independent consulting agreement between Oncotelic Therapeutics, Inc. and Seymour Fein, MD dated May 1, 2022	8-K	5/6/2022	10.2
10.9	Securities Purchase Agreement between Oncotelic Therapeutics Inc. and certain accredited investors dated May 27, 2022	8-K	6/3/2022	10.1
10.10	Securities Purchase Agreement between Oncotelic Therapeutics Inc. and certain accredited investors dated June 22, 2022	8-K	6/27/2022	10.1
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a).				x
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a).				x
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				x
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				x
101.1	Interactive Data Files for the fiscal years ended December 31, 2022 and December 31, 2021				x
101.INS	Inline XBRL Instance Document				x
101.SCH	Inline XBRL Taxonomy Extension Schema				x
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase				x
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase				x
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase				x
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase				x
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)				x

*	Confidential treatment has been granted for portions of this Exhibit. Redacted portions filed separately with the Securities and Exchange Commission.
+	Management contract or compensatory plan or arrangement.

52

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ONCOTELIC THERPAEUTICS INC.

By:	/s/ Vuong Trieu
	Vuong Trieu, Ph.D.
	Chief Executive Officer and Director (Principal Executive Officer)
Date:	August 22, 2022
By:	/s/ Amit Shah
	Amit Shah
	Chief Financial Officer (Principal Financial and Accounting Officer)
Date:	August 22, 2022

53

EX-31.1

Exhibit 31.1

ONCOTELIC THERAPEUTICS, INC.

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Vuong Trieu, Ph.D., certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Oncotelic Therapeutics, Inc. for the period ended June 30, 2022;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Vuong Trieu
	Vuong Trieu, Ph.D.
	Chief Executive Officer (Principal Executive Officer)
Date:	August 22, 2022

EX-31.2

Exhibit 31.2

ONCOTELIC THERAPEUTICS, INC.

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Amit Shah, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Oncotelic Therapeutics, Inc. for the period ended June 30, 2022;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Amit Shah
	Amit Shah
	Chief Financial Officer (Principal Financial and Accounting Officer)
Date:	August 22, 2022

EX-32.1

Exhibit 32.1

ONCOTELIC THERAPEUTICS, INC.

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q for the period ended June 30, 2022 of Oncotelic Therapeutics, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

By:	/s/ Vuong Trieu
	Vuong Trieu, Ph.D.
	Chief Executive Officer (Principal Executive Officer)
Date:	August 22, 2022

EX-32.2

Exhibit 32.2

ONCOTELIC THERAPEUTICS, INC.

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q for the period ended June 30, 2022 of Oncotelic Therapeutics, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

By:	/s/ Amit Shah
	Amit Shah
	Chief Financial Officer (Principal Financial and Accounting Officer)
Date:	August 22, 2022

XML

Cover - shares	6 Months Ended
	Jun. 30, 2022	Aug. 16, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2022
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--12-31
Entity File Number	000-21990
Entity Registrant Name	Oncotelic Therapeutics, Inc.
Entity Central Index Key	0000908259
Entity Tax Identification Number	13-3679168
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	29397 Agoura Road
Entity Address, Address Line Two	Suite 107
Entity Address, City or Town	Agoura Hills
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	91301
City Area Code	(650)
Local Phone Number	635-7000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		385,722,559

XML

Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash	$ 399,772	$ 568,769
Restricted cash	20,000	20,000
Accounts receivable	19,748	19,748
Prepaid & other current assets	23,710	18,778
Total current assets	463,230	627,295
Intangibles, net of accumulated amortization of $201,180 and $188,339 as of June 30, 2022 and December 31, 2021, respectively		821,841
In process R&D	1,101,760	1,101,760
Goodwill	16,182,457	21,062,455
Investment in GMP Bio at fair value	22,640,521
Total assets	40,387,968	23,613,351
Current liabilities:
Accounts payable and accrued liabilities	2,932,984	3,092,723
Accounts payable to related party	339,460	403,423
Contingent consideration	2,625,000	2,625,000
Derivative liability on notes	408,212	340,290
Convertible and short-term debt, net of costs	8,951,358	8,166,622
Convertible debt and short-term debt - related party, net of costs	850,844	826,862
Total current liabilities	16,107,858	15,454,920
Commitments and contingencies (Note 12)
Stockholders’ equity:
Convertible preferred stock, $0.01 par value, 15,000,000 shares authorized; 0 shares issued and outstanding
Common stock, $.01 par value; 750,000,000 shares authorized; 386,041,862 and 375,288,146 issued and outstanding, respectively	3,860,418	3,752,881
Additional paid-in capital	40,357,610	35,223,842
Accumulated deficit	(19,858,712)	(31,021,050)
Total Oncotelic Therapeutics, Inc. stockholders’ equity	24,359,316	7,955,673
Non-controlling interests	(79,206)	202,758
Total stockholders’ equity	24,280,110	8,158,431
Total liabilities and stockholders’ equity	$ 40,387,968	$ 23,613,351

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Amortization of intangible assets	$ 201,180	$ 188,339
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, shares authorized	15,000,000	15,000,000
Convertible preferred stock, shares issued	0	0
Convertible preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	750,000,000	750,000,000
Common stock, shares issued	386,041,862	375,288,146
Common stock, shares outstanding	386,041,862	375,288,146

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Operating expenses:
Research and development	$ 108,707	$ 956,814	$ 689,004	$ 2,513,486
General and administrative	147,608	2,807,398	3,911,518	3,288,607
Total operating expenses	256,315	3,764,212	4,600,522	5,802,093
Loss from operations	(256,315)	(3,764,212)	(4,600,522)	(5,802,093)
Other income (expense):
Reimbursement for expenses -related party	247,492		247,492
Interest expense, net of interest income	(1,094,878)	(433,979)	(1,392,341)	(954,886)
Gain on derecognition of non-financial asset	16,951,477		16,951,477
Change in fair value of derivative on debt	122,919	630,174	(67,922)	93,829
Loss on debt conversion			(257,810)	(27,504)
Total other income (expense)	16,227,010	196,195	15,480,896	(888,561)
Net income (loss) before non-controlling interests	15,970,695	(3,568,017)	10,880,374	(6,690,654)
Net income (loss) attributable to non-controlling interests	(41,424)	(336,737)	(281,964)	(656,294)
Net income (loss) attributable to Oncotelic Therapeutics, Inc.	$ 16,012,119	$ (3,231,280)	$ 11,162,338	$ (6,034,360)
Basic net income (loss) per share attributable to common stock	$ 0.04	$ (0.01)	$ 0.03	$ (0.03)
Basic weighted average common stock outstanding	379,203,841	369,547,235	378,588,600	232,700,641
Diluted net income (loss) per share attributable to common stock	$ 0.04	$ (0.01)	$ 0.03	$ (0.03)
Diluted weighted average common stock outstanding	418,758,755	369,547,235	418,040,372	232,700,641
Reconciliation for basic to diluted weighted average common stock outstanding
Add: Dilutive Common Stock Instruments	13,797,183		13,508,747
Shares issuable upon conversion of debt	25,757,731		25,943,025

XML

Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Noncontrolling Interest [Member]	Total
Beginning balance, value at Dec. 31, 2020	$ 2,782	$ 906,019	$ 32,493,086	$ (21,630,008)	$ 708,954	$ 12,480,833
Beginning balance, shares at Dec. 31, 2020	278,188	90,601,912
Warrants issued in connection with private placement			166,575			166,575
Net loss				(2,803,080)	(319,557)	(3,122,637)
Beneficial Conversion Feature on convertible debt			605,719			605,719
Common shares issued upon conversion of debt		$ 6,572	203,729			210,301
Common shares issued upon conversion of debt, shares		657,200
Common shares issued upon conversion of Preferred Stock	$ (2,782)	$ 2,781,878	(2,779,096)
Common shares issued upon conversion of Preferred Stock, shares	(278,188)	278,187,847
Increase in non-controlling interest from issuance of additional Edgepoint stock					620,052	620,052
Ending balance, value at Mar. 31, 2021		$ 3,694,469	30,690,013	(24,433,088)	1,009,449	10,960,843
Ending balance, shares at Mar. 31, 2021		369,446,959
Beginning balance, value at Dec. 31, 2020	$ 2,782	$ 906,019	32,493,086	(21,630,008)	708,954	12,480,833
Beginning balance, shares at Dec. 31, 2020	278,188	90,601,912
Net loss						(6,690,654)
Ending balance, value at Jun. 30, 2021		$ 3,700,969	32,876,120	(27,664,368)	672,712	9,585,433
Ending balance, shares at Jun. 30, 2021		370,096,959
Beginning balance, value at Mar. 31, 2021		$ 3,694,469	30,690,013	(24,433,088)	1,009,449	10,960,843
Beginning balance, shares at Mar. 31, 2021		369,446,959
Common shares issued for cash		$ 4,000	95,055			99,055
Common shares issued issued for cash, shares		400,000
Warrants issued in connection with private placement			2,023,552			2,023,552
Net loss				(3,231,280)	(336,737)	(3,568,017)
Common shares issued in lieu of services		$ 2,500	67,500			70,000
Common shares issued issued in lieu of services, shares		250,000
Ending balance, value at Jun. 30, 2021		$ 3,700,969	32,876,120	(27,664,368)	672,712	9,585,433
Ending balance, shares at Jun. 30, 2021		370,096,959
Beginning balance, value at Dec. 31, 2021		$ 3,752,881	35,223,842	(31,021,050)	202,758	8,158,431
Beginning balance, shares at Dec. 31, 2021		375,288,146
Common shares issued upon cashless exercise of warrants		$ 30,420	(30,420)
Common shares issued upon cashless exercise of warrants, shares		3,041,958
Common shares issued for cash		$ 3,000	48,805			51,805
Common shares issued issued for cash, shares		300,000
Stock compensation expense			297,360			297,360
Warrants issued in connection with private placement			2,905,316			2,905,316
Net loss				(4,849,781)	(240,540)	(5,090,321)
Ending balance, value at Mar. 31, 2022		$ 3,786,301	38,444,903	(35,870,831)	(37,782)	6,322,591
Ending balance, shares at Mar. 31, 2022		378,630,104
Beginning balance, value at Dec. 31, 2021		$ 3,752,881	35,223,842	(31,021,050)	202,758	8,158,431
Beginning balance, shares at Dec. 31, 2021		375,288,146
Net loss						10,880,374
Ending balance, value at Jun. 30, 2022		$ 3,860,418	40,357,610	(19,858,712)	(79,206)	24,280,110
Ending balance, shares at Jun. 30, 2022		386,041,862
Beginning balance, value at Mar. 31, 2022		$ 3,786,301	38,444,903	(35,870,831)	(37,782)	6,322,591
Beginning balance, shares at Mar. 31, 2022		378,630,104
Common shares issued upon cashless exercise of warrants		$ 25,867	(25,867)			(0)
Common shares issued upon cashless exercise of warrants, shares		2,586,758
Common shares issued for cash		$ 3,000	43,822			46,822
Common shares issued issued for cash, shares		300,000
Stock compensation expense			25,196			25,196
Net loss				16,012,119	(41,424)	15,970,695
Beneficial Conversion Feature on convertible debt			570,717			570,717
Warrants issued in connection with debt issuance			368,375			368,375
Common shares issued upon conversion of debt		$ 45,250	286,001			331,251
Common shares issued upon conversion of debt, shares		4,525,000
Contribution from shareholder for payment of liabilities			644,463			644,463
Ending balance, value at Jun. 30, 2022		$ 3,860,418	$ 40,357,610	$ (19,858,712)	$ (79,206)	$ 24,280,110
Ending balance, shares at Jun. 30, 2022		386,041,862

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Net income (loss)	$ 10,880,374	$ (6,690,654)
Adjustments to reconcile net profit to net cash provided by (used in) operating activities:
Gain on derecognition of non-financial asset	(16,951,477)
Amortization of debt discount and deferred finance costs	1,133,270	737,330
Amortization of intangible assets	12,841	25,683
Warrants issued in connection with private placement	2,905,316
Stock-based compensation	322,556	2,093,552
Depreciation on development equipment		5,074
Change in fair value of derivative	67,922	(93,829)
Loss on debt conversion	257,810	27,504
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(4,932)	(91,534)
Accounts payable and accrued expenses	276,704	1,589,592
Accounts payable to related party	(66,183)	(68,635)
Net cash provided by (used in) operating activities	(1,165,799)	(2,465,917)
Cash flows from financing activities:
Proceeds from / (repaid to) private placement	(25,000)	1,613,200
Proceeds from sales of common stock	98,627	70,108
Proceeds from convertible debt	983,175	200,000
Proceeds from short term loans, others	500,000	744,875
Repaid to note holders	(500,000)	(100,000)
Repaid to related party and others	(60,000)	(75,000)
Net cash provided by financing activities	996,802	2,453,183
Net increase (decrease) in cash	(168,997)	(12,734)
Cash and restricted cash - beginning of period	588,769	494,019
Cash and restricted cash - end of period	$ 419,772	$ 481,285
Supplemental cash flow information:
Cash paid for:
Interest paid	$ 328,181	$ 197,579
Non-cash investing and financing activities:
Warrants issued in connection with private placement	2,905,316	2,190,127
Contribution from shareholder for payment of liabilities	644,463
Common shares issued upon conversion of debt	650,001	210,301
Common shares issued in lieu of services		70,000
Non-cash cost upon sale of common stock		28,947
Beneficial Conversion Feature on convertible debt and restricted common shares	$ 570,717	$ 605,719

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DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2022

Description Of Business And Basis Of Presentation

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

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: and EdgePoint AI, Inc. (“Edgepoint”), a Delaware Corporation for which there are non-controlling interests, (Oncotelic, Oncotelic Inc., PointR 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 2020 Annual Report on Form 10-K filed with the SEC on April 15, 2021.

The Company is currently developing OT-101 for various cancers and COVID-19, Artemisinin for COVID-19 and AI technologies for clinical development and manufacturing. The Company has acquired apomorphine for Parkinson’s Disease, erectile dysfunction and female sexual dysfunction. In addition, the Company is evaluating the further development of its product candidates OXi4503 as a treatment for acute myeloid leukemia and myelodysplastic syndromes and CA4P in combination with a checkpoint inhibitor for the treatment of advanced metastatic melanoma.

The Company is primarily a cancer immunotherapy company dedicated to the development of first in class self-immunization protocol (“SIP™”) candidates for difficult to treat cancers. The Company’s proprietary SIP™ candidates are expected to offer advantages over other immunotherapies because they do not require extraction of the tumor or isolation of the antigens, and they have the potential for broad-spectrum applicability for multiple cancer types. 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 (“DMD”) and others. Oncotelic Inc.’s lead product candidate, OT-101, 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. Together, the Company plans to initiate phase 3 clinical trials for OT-101 in both high-grade glioma and pancreatic cancer, and any other indications that may evolve. The Company is evaluating the further development of its product candidates OXi4503 as a treatment for acute myeloid leukemia and myelodysplastic syndromes and CA4P in combination with a checkpoint inhibitor for the treatment of advanced metastatic melanoma. The Company is also developing OT-101 for the various epidemics and pandemics, similar to the current corona virus (“COVID-19”) pandemic. In this connection, the Company entered into an agreement and supplemental agreement with Golden Mountain Partners (“GMP”) for a total of $1.2 million to render services and was paid for the development of OT-101. In 2020 and 2021, the Company was developing Artemisinin as a potential therapy for COVID-19. Artemisinin, purified from a plant Artemisia annua. For more information on GMP and Artemisinin, refer to our 2021 Annual report on Form 10-K filed with the SEC on April 15, 2022.

Fundraising

J.H. Darbie Financing Notes & Issuance of Oncotelic Warrants

Between July 2020 and March 2021, the Company issued and sold a total of 100 units (“Units”), with each Unit consisting of (i) 25,000 shares of Edgepoint common stock, par value $0.01 per share (“Edgepoint Common Stock”), for a price of $1.00 per share of Edgepoint Common Stock; (ii) one convertible promissory note issued by the Company (the “Unit Note”), convertible into up to 25,000 shares of EdgePoint Common Stock at a conversion price of $1.00 per share, or up to 138,889 shares of the Company’s Common Stock, at a conversion price of $0.18 per share; and (iii) 100,000 warrants, consisting of (a) 50,000 warrants to purchase an equivalent number of shares of EdgePoint Common Stock at $1.00 per share (“Edgepoint Warrant”), and (b) 50,000 warrants to purchase an equivalent number of shares of Company Common Stock at $0.20 per share (“Oncotelic Warrant”) (collectively, the “JH Darbie Financing”).For more information on the JH Darbie Financing, refer to our Annual Report on Form 10-K filed with the SEC on April 15, 2022.

In February 2022, the Company and 99 out of 100 of the Investors agreed to extend the maturity date of the Notes from March 31, 2022, to March 31, 2023. In addition, the Company issued approximately 33 million Oncotelic Warrants to purchase $50,000 of shares of Common Stock in connection with agreeing to extend the maturity date by one year. The issuance of the additional warrants resulted in the Company recording an expense of approximately $2.9 million in the Company’s statement of operations during the six months ended June 30, 2022.

Equity Purchase Agreement

In May 2021, the Company entered into an Equity Purchase Agreement (the “EPL”) and Registration Rights Agreement (the “Registration Rights Agreement”) with Peak One Opportunity Fund, L.P. (“Peak One”), pursuant to which the Company shall have the right, but not the obligation, to direct Peak One to purchase up to $10.0 million (the “Maximum Commitment Amount”) in shares of the common stock, par value $0.01 per share (“Common Stock”) in multiple tranches. The Company has directed Peak One on multiple occasions, for an aggregate of 4.0 million shares of Common Stock for aggregate net cash proceeds of approximately $0.5 million.

The Company filed a post-effective amendment to reregister the EPL on April 26, 2022 and the post-effective amendment was found effective by the SEC on May 6, 2022.

August 2021 Notes

In August 2021, the Company issued Note Purchase Agreements with Autotelic Inc., the Company’s Chief Financial Officer (“CFO”), and certain other accredited investors. Under the terms of the Note Purchase Agreements, the Company issued an aggregate of $698,500 (the “Principal Amount”) in debt in the form of unsecured convertible promissory notes (collectively, the “Notes”). For further information on the Agreement, refer to our 2021 Annual report on Form 10-K filed with the SEC on April 15, 2022 and Note 5 to these Notes to the Consolidated Financial Statements.

Joint Venture with GMP Bio

On March 31, 2022, the Company formalized a joint venture (“JV”) with Dragon Overseas Capital Limited (“Dragon”) and GMP Biotechnology Limited (“GMP Bio”), both affiliates of GMP. For more information on the JV, refer to Note 6 of the Notes to these Financial Statements and our Current Report on Form 8-K filed with the SEC on April 6, 2022. Although no assurances can be given, the Company and GMP currently intend to conduct an initial public offering of the JV, at a future date, on either the Hong Kong Exchange or other stock exchange. For more information on the JV, refer to Note 6 of the Notes to Consolidated Financial Statement.

For information on the September 2021 Note, the October 2021 Note and the January 2022 Note, refer to our 2021 Annual Report on Form 10K filed with the SEC on April 15, 2022.

November/December 2021 and March 2022 Notes

In November and December 2021, the Company entered into various Securities Purchase Agreements with Talos Victory Fund, LLC (the (“Talos”), Mast Hill Fund, LP (“Mast”), FirstFire Global Opportunities Fund, LLC (“FirstFire”), Blue Lake Partners, LLC (“Blue Lake”) and Fourth Man, LLC (“Fourth Man”), pursuant to which the Company issued convertible promissory notes in the aggregate principal amount of $0.25 million each, aggregating gross $1.25 million (the “Notes”), which Notes are convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”).

The Purchase Agreements were entered into as part of a convertible note financing round with aggregate gross proceeds to the Company of up to $1.25 million (the “Financing”), undertaken by the Company pursuant to that certain Finder’s Fee Agreement between the Company and JH Darbie & Co., Inc. (“JH Darbie”), dated October 26, 2021 (the “Agreement”). All of the Purchase Agreements and the Note contain identical terms except with reference to the name of the holders, the use of proceeds, which include repayment of certain debt, general corporate expenses and payroll, as applicable and the jurisdictions.

In January 2022, three of the five note holders under the November and December 2021 Notes exercised their warrants to purchase shares of Common Stock of the Company on a cashless basis. As such, the Company issued the note holders 3,041,958 shares of Common Stock.

In March 2022, the Company entered into a Securities Purchase Agreement with Fourth Man, pursuant to which the pursuant to which the Company issued convertible promissory note in the aggregate principal amount of $0.25 million, which Note is convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”). This Note was undertaken by the Company pursuant to that certain Finder’s Fee Agreement between the Company and JH Darbie, dated October 26, 2021 (the “Agreement”).

For more information on the notes, refer to Note 6: November – December 2021 Financing of these Notes to the Unaudited Consolidated Financial Statements.

May 2022 Note

In May 2022, the Company entered into a Securities Purchase Agreements with Mast, pursuant to which the Company issued convertible promissory notes in the aggregate principal amount of $0.6 million, which Note is convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”). This note was used to fully repay November 2021 Talos note and the December 2021 First Fire note.

In May 2022, the November 2021 Talos Note and the December 2021 First Fire Note were fully repaid. $35,000 of the First Fire Note was repaid and converted into 500,000 shares of Common Stock and the balance was repaid in cash.

In June 2022, Mast fully converted their November 2021 Note, for which the company issued 4,025,000 shares of Common Stock.

June 2022 Note

In June 2022, the Company entered into a Securities Purchase Agreements with Blue Lake, pursuant to which the Company issued convertible promissory notes in the aggregate principal amount of $0.34 million, which Note is convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”). This note was utilized for corporate expenses.

Licensing Agreement with Autotelic Inc.

In September 2021, the Company entered into an exclusive License Agreement (the “Agreement”) with Autotelic, Inc. (“Autotelic”). For further information on the Agreement, refer to our 2021 Annual report on Form 10-K filed with the SEC on April 15, 2022.

Principles of Consolidation

The consolidated financial statements include the accounts of Oncotelic, its wholly owned subsidiaries, Oncotelic Inc. and PointR, and Edgepoint our non-controlled interest entity. Intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission including Form 10-Q and Regulation S-X. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly state the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been omitted pursuant to such rules and regulations.

Liquidity and Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred net accumulated losses of approximately $19.9 million, negative working capital of over $15.6 million and negative cash flow from operations of approximately $1.2 million at June 30, 2022. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of this filing. Management expects to incur significantly lower costs and losses in the foreseeable future and recognizes the need to raise capital to remain viable. The accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. For more information on Liquidity and Going Concern, refer to our 2021 Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The Company’s long-term plans include continued development of its current pipeline of products, in addition to continue the development of OT-101, which is exclusively out-licensed to the JV and the JV will be responsible for the cash required to support the development in entirety, to generate sufficient revenues, through either technology transfer or product sales, to cover its anticipated expenses. Until the Company is able to generate sufficient revenues from its current pipeline, the Company plans on funding its operations through the sale of equity and/or the issuance of debt, combined with or without warrants or other equity instruments.

Although no assurances can be given as to the Company’s ability to deliver on its revenue plans, or that unforeseen expenses may arise, management believes that the potential equity and debt financing or other potential financing will provide the necessary funding for the Company to continue as a going concern. Also, management cannot guarantee any potential debt or equity financing will be available on favorable terms or at all. As such, management does not believe the Company has sufficient cash for 12 months from the date of this report. If adequate funds are not available on acceptable terms, or at all, the Company will need to curtail operations, or cease operations completely.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity-based transactions and disclosure of contingent liabilities at the date of the financial statements and revenues and expense during the reporting period. Actual results could materially differ from those estimates.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the financial statements. Significant estimates include the valuation of goodwill and intangible assets for impairment, deferred tax asset and valuation allowance, and fair value of financial instruments.

Cash

As of June 30, 2022, and December 31, 2021 the Company held all its cash in banks. The Company considers investments in highly liquid instruments with a maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2022 and December 31, 2021, respectively. Restricted cash consists of certificates of deposits held at banks as collateral for various purposes.

Debt issuance Costs and Debt discount

Issuance costs are specific incremental costs that are (1) paid to third parties and (2) directly attributable to the issuance of a debt or equity instrument. The issuance costs attributable to the initial sale of the instrument are offset against the associated proceeds in the determination of the instrument’s initial net carrying amount.

Debt issuance costs and debt discounts are being amortized over the lives of the related financings on a basis that approximates the effective interest method. Costs and discounts are presented as a reduction of the related debt in the accompanying balance sheets if related to the issuance of debt or presented as a reduction of additional paid in capital if related to the issuance of an equity instrument. The Company applies the relative fair value to allocate the issuance costs among freestanding instruments that form part of the same transaction.

If the Company amends the terms of its convertible notes, the Company reviews and applies the guidance per ASC 470-60 Troubled debt restructurings and ASC 470-50 Debt-Modifications and Extinguishments, evaluates and concludes whether the terms of the agreements were or were not substantially different as of a particular reporting date and accounts the transaction as a debt modification or a troubled debt restructuring.

Fair Value of Financial Instruments

The carrying value of cash, accounts payable and accrued expense approximate their fair values based on the short-term maturity of these instruments. As defined in ASC 820, “Fair Value Measurements and Disclosures,” fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement.

The three levels of the fair value hierarchy defined by ASC 820 are as follows:

● Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

● Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

● Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Investment in equity securities

The following table summarizes the cumulative gross unrealized gains and losses and fair values for long-term investments accounted for at fair value under the fair value option, with the unrealized gains and losses reported within earnings on the Condensed Consolidated Statements of Operation as at June 30, 2022. No similar investments were held by the Company at December 31, 2021:

	Initial Book Value		Cumulative Gross Unrealized Gains		Cumulative Gross Unrealized Losses		Fair Value
June 30, 2022
Investment in GMP Bio (equity securities)	$	22,640,521	$	-	$	-	$	22,640,521
Total	$	22,640,521	$	-	$	-	$	22,640,521

The table below sets forth a summary of the changes in the fair value of the Company’s long-term investment in equity securities, based on a third-party valuation report, as a Level 3 fair value as of June 30, 2022. The Company did not own similar investments as at June 30, 2021:

	June 30, 2022 Fair Value
Balance at January 1, 2022	$	-
Contribution at cost basis		5,689,044
Gain on derecognition of non-financial asset		16,951,477
Change in fair value		-
Balance at June, 2022	$	22,640,521

Derivative Liability

The Company has derivative liabilities associated with its 2019 bridge financing Convertible Notes (see Note 5), consisted of conversion feature derivatives at June 30, 2022 and 2021, are Level 3 fair value measurements.

The table below sets forth a summary of the changes in the fair value of the Company’s derivative liabilities classified as Level 3 as of June 30, 2022 and 2021:

	June 30, 2022 Conversion Feature		June 30, 2021 Conversion Feature
Balance at January 1, 2022 and 2021	$	340,290	$	777,024
New derivative liability		-		-
Reclassification to additional paid in capital from conversion of debt to common stock		-		(144,585	)
Change in fair value		67,922		(93,829	)
Balance at June, 2022 and 2021	$	408,212	$	538,610

As of June 30, 2022, and December 31, 2021, the Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures based on assumptions used in the Black-Scholes valuation model. The key valuation assumptions used consists, in part, of the price of the Company’s Common Stock, a risk-free interest rate based on the yield of a Treasury note and expected volatility of the Company’s Common Stock all as of the measurement dates. The Company used the following assumptions to estimate fair value of the derivatives as of June 30, 2022:

	June 30, 2022 Key Assumptions for fair value of conversions
Risk free interest		0.17% -1.03%
Market price of share	$	0.17-0.23
Life of instrument in years		0.01 – 0.33
Volatility		107.50%-109.40%
Dividend yield		0%

When the Company changes its valuation inputs for measuring financial liabilities at fair value, either due to changes in current market conditions or other factors, it may need to transfer those liabilities to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur. For the periods ended June 30, 2022 and 2021, respectively, there were no transfers of financial assets or financial liabilities between the hierarchy levels.

The $2,625,000 of contingent consideration, of shares issuable to PointR shareholders which was recorded and associated with the PointR Merger, is also classified as Level 3 fair value measurements. The Company initially recorded the contingency based on a valuation conducted by a third-party valuation expert. The valuation was based on a probability of the completion of certain milestones by PointR for the shareholders to earn additional shares. The Company evaluated the probability of the earning of the milestones and concluded that the probability of achievement of the milestones had not changed, primarily due to the shifting of focus by the Company to develop AI technologies for the COVID-19 pandemic. As such, the Company did not record any change to the valuation during the six months ended June 30, 2022 or 2021, respectively.

Net Income (Loss) Per Share

Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share includes the effect of Common Stock equivalents (notes convertible into Common Stock, stock options and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. The Company has excluded from diluted loss per share the dilutive shares, since such inclusion would be anti-dilutive.

Stock-Based Compensation

The Company applies the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the statements of operations.

For stock options issued to employees and members of the Board of Directors (the “Board”) for their services, the Company estimates the grant date fair value of each option using the Black-Scholes option pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock. For awards subject to service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised.

For warrants issued in connection with fund raising activities, the Company estimates the grant date fair value of each warrant using the Black-Scholes pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the warrant, the expected volatility of the Common Stock consistent with the expected life of the warrant, risk-free interest rates and expected dividend yields of the Common Stock. If the warrants are issued upon termination or cancellation of prior issued warrants, then the Company estimates the grant date fair value of the new warrants using the Black-Scholes pricing model and evaluates whether the new warrants are deemed as equity instruments or liability instruments. If the warrants are deemed to be equity instruments, the Company records stock compensation expense and an addition to additional paid in capital. If, however, the warrants are deemed to be liability instruments, then the fair value is treated as a deemed dividend and credited to additional paid in capital.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. For the three and six months ended June 30, 2022 and the year ended December 31, 2021, there were no impairment losses recognized for long-lived 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. If the review indicates the impairment, an impairment loss would be recorded for the difference of the value recorded and the new value. For the three and six months ended June 30, 2022 and the year ended December 31, 2021, there were no impairment losses recognized for intangible assets. 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. For the three and six months ended June 30, 2022, we derecognized the intangibles of $0.8 million associated with OT-101upon the transfer of our non-financial asset as a capital contribution for our 45% ownership in the JV.

Goodwill

Goodwill represents the excess of the purchase price of acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least once annually, at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the reporting unit. If, on the basis of qualitative factors, it is considered not more likely than not that the fair value of the reporting unit is less than the carrying amount, further testing of goodwill for impairment would not be required. Otherwise, goodwill impairment is tested using a two-step approach.

The first step involves comparing the fair value of the reporting unit to its carrying amount. If the fair value of the reporting unit is determined to be greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount is determined to be greater than the fair value, the second step must be completed to measure the amount of impairment, if any. The second step involves calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit as determined in step one. The implied fair value of the goodwill in this step is compared to the carrying value of goodwill. If the implied fair value of the goodwill is less than the carrying value of the goodwill, an impairment loss equivalent to the difference is recorded. For the three and six months ended June 30, 2022 and the year ended December 31, 2021 there were no impairment losses recognized for Goodwill. 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. For the three and six months ended June 30, 2022, we derecognized the goodwill of $4.8 million associated with OT-101upon the transfer of our non-financial asset as a capital contribution for our 45% ownership in the JV.

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.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging”.

ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20 “Debt – Debt with Conversion and Other Options.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Original issue discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

ASC 815-40 “Derivatives and Hedging – Contracts in Entity’s Own Equity” provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

Variable Interest Entity (VIE) Accounting

The Company evaluates its ownership, contractual relationships and other interests in entities to determine the nature and extent of the interests, whether such interests are variable interests and whether the entities are VIEs in accordance with ASC 810, Consolidations. These evaluations can be complex and involve Management judgment as well as the use of estimates and assumptions based on available historical information, among other factors. Based on these evaluations, if the Company determines that it is the primary beneficiary of a VIE, the entity is consolidated into the financial statements. At June 30, 2022 and December 31, 2021, the Company identified EdgePoint to be the Company’s sole VIE. At June 30, 2022 and December 31, 2021, the Company’s ownership percentage of EdgePoint was 29% and 29%, respectively. The VIE’s net assets were $0.1 million and $0.1 million at June 30, 2022 and December 31, 2021, respectively.

The Company signed a joint venture agreement (“JVA”) with Dragon to form a joint venture called GMP Biotechnology, LLC, both affiliates of GMP, on March 31, 2022. The JVA prescribes certain requirements to be completed during the three months ended June 30, 2022 to make the JV fully functional and operational, including issuance of the shares issuable to the Company and Dragon.

Investments - Equity Method

The Company accounts for equity method investments at cost, adjusted for the Company’s share of the investee’s earnings or losses, which are reflected in the consolidated statements of operations. The Company periodically reviews the investments for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

The Investment in GMP Bio represents the investment into equity securities for which the Company elected the fair value option pursuant to ASC 825-10-15 and subsequent fair value changes in the GMP Bio shares shall be included in the result from other income. Refer to Note 6 to these Notes to the Consolidated Financial Statements.

Joint Venture agreement

We have equity interest in unconsolidated arrangement that is primarily engaged in the business of drug discovery, development, and commercialization, including but not limited to development and commercialization of TGF-beta therapeutics as well as establishing and operating contract development and manufacturing organization (“CDMO”) facilities and capabilities. The Company first reviews the arrangement to determine if it meets the definition of an accounting joint venture pursuant to ASC 323-10-20. In order to meet the definition of a joint venture, the arrangement must have all of the following characteristics, (i) the arrangement is organized within a separate legal entity, (ii) the entity is under the joint control of the venturers, (iii) the venturers must be able to exercise joint control through their equity investments, (iv) the qualitative characteristics of the entity, including its purpose and design must be consistent with the definition of a joint venture.

We consolidate arrangements that are considered to be VIEs where we are the primary beneficiary. We analyze our investments in joint ventures to determine if the joint venture is considered a VIE and would require consolidation. We (i) evaluate the sufficiency of the total equity investment at risk, (ii) review the voting rights and decision-making authority of the equity investment holders as a group and whether there are limited partners (or similar owning entities) that lack substantive participating or kick out rights, guaranteed returns, protection against losses, or capping of residual returns within the group and (iii) establish whether activities within the venture are on behalf of an investor with disproportionately few voting rights in making this VIE determination.

To the extent that we own interests in a VIE and we (i) have the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) have the obligation or rights to absorb losses or receive benefits that could potentially be significant to the VIE, then we would be determined to be the primary beneficiary and would consolidate the VIE. To the extent that we own interests in a VIE, then at each reporting period, we re-assess our conclusions as to which, if any, party within the VIE is considered the primary beneficiary.

To the extent that our arrangements do not qualify as VIEs, they are consolidated if we control them through majority ownership interests or if we are the managing entity (general partner or managing member) and our partner does not have substantive participating rights. Control is further demonstrated by our ability to unilaterally make significant operating decisions, refinance debt, and sell the assets of the joint venture without the consent of the non-managing entity and the inability of the non-managing entity to remove us from our role as the managing entity.

We use the equity method of accounting for those arrangements where we exercise significant influence but do not have control. Under the equity method of accounting, our investment in each arrangement is included on our consolidated balance sheet; however, the assets and liabilities of the joint ventures for which we use the equity method are not included on our consolidated balance sheet.

When we sell or contribute properties to unconsolidated arrangements and retain a non-controlling ownership interest in such assets, we recognize the difference between the consideration received and the carrying amount of the asset sold or contributed when its derecognition criteria are met. The equity method investment we retain in such partial sale transactions is noncash consideration and is measured at fair value. As a result, the accounting for a partial sale will result in the recognition of a full gain or loss.

When circumstances indicate there may have been a reduction in the value of an equity investment, we evaluate whether the loss in value is other than temporary. If we conclude it is other than temporary, we recognize an impairment charge to reflect the equity investment at fair value.

The Company elected the fair value option under the fair value option Subsection of Section 825-10-15 to account for its equity-method investment as the Company believes that the fair value option is most appropriate for a company in the biotechnology industry, The fair value option is more appropriate for companies that are involved in extensive and usually very expensive research and development efforts, which are not appropriately reflected in the market value or reflective of the true value of the development activities of the company

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (Topic 606).

Under Topic 606, the Company recognizes revenue when its customers obtain control of the promised good or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company applies the following five-step: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

At contract inception, once the contract is determined to be within the scope of Topic 606, the Company identifies the performance obligation(s) in the contract by assessing whether the goods or services promised within each contract are distinct. The Company then recognizes revenue for the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company anticipates generating revenues from rendering services to other third-party customers for the development of certain drug products and/or in connection with certain out-licensing agreements. In the case of services rendered for development of the drugs, revenue is recognized upon the achievement of the performance obligations or over time on a straight-line basis over the extended service period. In the case of out-licensing contracts, the Company records revenues either upon achievement of certain pre-defined milestones, when there is no obligation of the Company achieve any performance obligations in connection with the said pre-defined milestones, or upon achievement of the performance obligations if the milestones require the Company to provide the performance obligations.

The Company occasionally collects advance payments from customers toward commitments to provide services or performance obligations, in which case the advance payment is recorded as a liability until the obligations are fulfilled and revenue is recognized.

Research & Development Costs

In accordance with ASC 730-10-25 “Research and Development”, research and development costs are charged to expense as and when incurred.

Recent Accounting Pronouncements

In August 2020, the FASB issued “ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”) which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition was permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption was permitted no earlier than the fiscal year beginning after December 15, 2020. The is evaluating the impact of implementation on its financial statements, if any.

All other newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

Prior Period Reclassifications

Certain amounts in prior periods may have been reclassified to conform with current period presentation.

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INTANGIBLE ASSETS AND GOODWILL

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS AND GOODWILL

NOTE 3 - INTANGIBLE ASSETS AND GOODWILL

Goodwill from 2019 Reverse Merger with Oncotelic and PointR

The Company completed the merger with Oncotelic Inc. (“Merger”) in April 2019. The Company completed the merger with PointR Data Inc (“PointR Merger”) in November 2019. For more details, refer to our 2020 Annual Report on Form 10-K for the year ended December 31, 2020 filed by the Company on April 15, 2021.

The Oncotelic merger gave rise to Goodwill of $4,879,999. Further, we added goodwill of $16,182,456 upon the completion of the Merger with PointR. In general, the goodwill is tested on an annual impairment date of December 31. However, as of June 30, 2022, since both assets are currently being developed for various cancer and COVID-19 therapies, the Company does not believe the there are any factors or indications that the goodwill is impaired.

Upon the non-financial sale of our asset as contribution to our equity method investment we derecognized the balance of the carrying value of our goodwill of approximately $4.9 million from the Oncotelic Merger in accordance with our policy and authoritative accounting guidance.

Assignment and Assumption Agreement with Autotelic, Inc.

In April 2018, Oncotelic Inc. entered into an Assignment and Assumption Agreement (the “Assignment Agreement”) with Autotelic Inc., an affiliate company, and Autotelic LLC, an affiliate company, pursuant to which Oncotelic acquired the rights to all intellectual property (“IP”) related to a patented product. As consideration for the Assignment Agreement, Oncotelic Inc. issued 204,798 shares of its Common Stock for a value of $819,191. The Assignment Agreement also provides that Oncotelic Inc. shall be responsible for all costs related to the IP, including development and maintenance, going forward.

Intangible Asset Summary

The following table summarizes the balances as of June 30, 2022 and December 31, 2021, of the intangible assets acquired, their useful life, and annual amortization:

	June 30, 2022			Remaining Estimated Useful Life (Years)
Intangible asset – Intellectual property	$	819,191			16.50
Intangible asset – Capitalization of license cost		190,989			16.50
		1,010,180
Less Accumulated Amortization		(201,180	)
Less: Derecognition of carrying value upon transfer of non-financial asset		809,000
Total	$	-

	December 31, 2021			Remaining Estimated Useful Life (Years)
Intangible asset – Intellectual property	$	819,191			17.00
Intangible asset – Capitalization of license cost		190,989			17.00
		1,010,180
Less Accumulated Amortization		(188,339	)
Total	$	821,841

Amortization of identifiable intangible assets for the three months ended June 30, 2022 and 2021 was $0 and $12,841, respectively. Amortization of identifiable intangible assets for the six months ended June 30, 2022 and 2021 was $12,841 and $25,683, respectively. Upon the non-financial sale of our asset as contribution to our equity method investment of approximately $809,000, we derecognized the balance of the carrying value of our intangibles in accordance with our policy and authoritative accounting guidance.

There will be no future yearly amortization expense related to our intangibles.

In-Process Research & Development (“IPR&D”) Summary

The IPR&D assets were acquired in the PointR Merger during the year ended December 31, 2019. Since January 2021, the Company has determined that the IPR&D should be reported as an indefinitely lived asset and therefore will evaluate, on an annual basis, for any impairment on the IPR&D and will record an impairment if identified. The balance of IPR&D as of June 30, 2022 and December 31, 2021 was $1,101,760. The following table summarizes the balances as of June 30, 2022 and December 31, 2021 of the IPR&D assets. The Company evaluates, on an annual basis, for any impairment and records an impairment if identified. The Company identified no impairment to IPR&D assets during its evaluation.

	June 30, 2022
Intangible asset – Intellectual property	$	1,377,200
		1,377,200
Less Accumulated amortization		(275,440	)
Total	$	1,101,760

	December 31, 2021
Intangible asset – Intellectual property	$	1,377,200
		1,377,200
Less Accumulated amortization		(275,440	)
Total	$	1,101,760

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expense consists of the following amounts:

	June 30, 2022		December 31, 2021
Accounts payable	$	1,870,809	$	1,927,749
Accrued expense		1,062,175		1,164,974
	$	2,932,984	$	3,092,723

	June 30, 2022		December 31, 2021
Accounts payable – related party	$	339,460	$	403,423

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CONVERTIBLE DEBENTURES, NOTES AND OTHER DEBT

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

CONVERTIBLE DEBENTURES, NOTES AND OTHER DEBT

NOTE 5 – CONVERTIBLE DEBENTURES, NOTES AND OTHER DEBT

As of June 30, 2022 special purchase agreements (SPAs) with convertible debentures and notes, net of debt discount and including accrued interest, if any, consist of the following amounts:

	June 30, 2022
Convertible debentures
10% Convertible note payable, due April 23, 2022 – Bridge Investor	$	35,556
10% Convertible note payable, due April 23, 2022 – Related Party		164,444
10% Convertible note payable, due August 6, 2022 – Bridge Investor		198,332
		398,331
Fall 2019 Notes
5% Convertible note payable – Stephen Boesch		121,458
5% Convertible note payable – Related Party		282,483
5% Convertible note payable – Dr. Sanjay Jha (Through his family trust)		282,003
5% Convertible note payable – CEO, CTO* & CFO– Related Parties		92,407
5% Convertible note payable – Bridge Investors		189,322
		967,674
August 2021 Convertible Notes
5% Convertible note – Autotelic Inc– Related Party		261,301
5% Convertible note – Bridge investors		390,385
5% Convertible note – CFO – Related Party		78,390
		730,076
JH Darbie PPM Debt
16% Convertible Notes - Non-related parties		2,305,370
16% Convertible Notes – CEO – Related Party		122,616
		2,427,986
November/December 2021 & March 2022 Notes
12% Convertible Notes – Accredited Investors		333,262
Debt for Clinical Trials – GMP
2% Convertible Notes - GMP		4,614,411
May and June 2022 Note
12% Convertible Notes – Accredited Investors		62,290
Other Debt
Short term debt – Bridge investors		223,122
Short term debt from CFO – Related Party		25,050
Short term debt – Autotelic Inc– Related Party		20,000
		268,172
Total of convertible debentures & notes and other debt	$	9,802,202

For information on the special purchase agreements (SPAs) with convertible debentures and notes, net of debt discount and including accrued interest, if any, as of December 31, 2022, refer to our Annual Report on Form 10-K for the year ended December 31, 2021.

* The CTO was a related party till July 2021, when he resigned as the CTO due to health reasons.

Convertible Debentures

As of June 30, 2022, the Company had a derivative liability of approximately $408,000 and a change in fair value of approximately $68,000 on the Convertible Debentures issued in 2019 to our CEO and a bridge investor.

Bridge Financing

Notes with Officer and Bridge Investor

In April 2019, the Company entered into a Securities Purchase Agreement (the “Bridge SPA”) with our CEO and the Bridge Investor with a commitment to purchase convertible notes in the aggregate of $400,000. For more information on the Bridge SPA, refer to our Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The issuance of the Trieu Note resulted in a discount from the beneficial conversion feature totaling $131,555 related to the conversion feature. Total amortization of the OID and the discount totaled $19,493 and $2,743 for the six months ended June 30, 2022, and 2021. Total unamortized discount on this note was approximately $0 and $19,000 as of June 30, 2022, and December 31, 2021, respectively.

In April 2019, pursuant to the Bridge SPA the Company entered into Convertible Note Tranche #1 (“Tranche #1”) with the Bridge Investor. For more information on Tranche #1, refer to our Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The issuance of the note resulted in a discount from the beneficial conversion feature totaling $28,445. Total amortization of the OID and discount totaled approximately $4,400 and $8,130 for the six months June 30, 2022, and 2021, respectively. Total unamortized discount on this note was approximately $0 and $4,400 as of June 30, 2022, and December 31, 2021.

On August 6, 2019, pursuant to the Bridge SPA the Company entered into Convertible Note Tranche #2 (“Tranche #2”) with the Bridge Investor. For more information on Tranche #2, refer to our Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The issuance of the note resulted in a discount from the beneficial conversion feature totaling $175,000. Total amortization of the OID and discount totaled approximately $10,000 and $4,943 for the six months ended June 30, 2022, and 2021, respectively. Total unamortized discount on this note was $1,700 and $12,000 as of June 30, 2022, and December 31, 2021.

Fall 2019 Debt Financing

In December 2019, the Company closed its Fall 2019 Debt Financing, raising an additional $500,000 bringing the gross proceeds of all debt financings under the Fall 2019 Debt Financing to $1,000,000. For more information on the Fall 2019 Debt Financing, refer to our Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The Company repaid $0 and $50,000 of principal in the six months ended June 30, 2022, and 2021, respectively. The total unamortized principal amount of the Fall 2019 Notes was $850,000 as of June 30, 2022, and December 31, 2021, respectively.

The Company recorded interest expense of $10,625 and $21,250 for the three and six months ended June 30, 2022. The total amount outstanding under the Fall 2019 note, including accrued interest was $967,674 and $946,424 as of June 30, 2022 and December 31, 2021, respectively. The Company repaid $0 of principal during the three and six months ended June 30, 2022. The total unamortized principal amount was $850,000 as of June 30, 2022, and December 31, 2021.

GMP Notes

In June 2020, the Company secured $2 million in debt financing, evidenced by a one-year convertible note (the “GMP Note”) from GMP, to conduct a clinical trial evaluating OT-101 against COVID-19 bearing 2% annual interest, and is personally guaranteed by Dr. Vuong Trieu, the Chief Executive Officer of the Company. The GMP Note is convertible into the Company’s Common Stock upon the GMP Note’s maturity of the GMP Note, at the Company’s Common Stock price on the date of conversion with no discount. GMP has waived the default in the maturity of the GMP Note and as such there is no event of default and also agreed to extend the date of maturity of the GMP Note to June 30, 2022. GMP does not have the option to convert prior to the GMP Note’s maturity. Such financing will be utilized solely to fund the clinical trial. The Company’s liability under GMP Note commenced to accrue when GMP first began to pay for services related to the clinical trial to our third-party clinical research organization, up to a maximum of $2 million. GMP has been invoiced by the clinical research organization for the full $2 million as of March 31, 2022, and as such the Company has recognized the liability as a convertible debt.

In September 2021, the Company secured a further $1.5 million in debt financing, evidenced by a one-year convertible note (the “GMP Note 2”) from GMP, to fund the same clinical trial evaluating OT-101 against COVID-19 bearing 2% annual interest. The GMP Note is convertible into the Company’s Common Stock upon the GMP Note 2’s maturity one year from the date of the GMP Note 2, at the Company’s Common Stock price on the date of conversion with no discount. GMP does not have the option to convert prior to the GMP Note 2’s maturity at the end of one year. Such financing was to be utilized solely to fund the clinical trial. As of March 31, 2022, GMP was invoiced by the clinical research organization for $0.5 million. GMP paid the clinical trial organization the first tranche of $0.5 million in October 2021.

In October 2021, the Company entered into an Unsecured Convertible Note Purchase Agreement (the “October Purchase Agreement”) with GMP, pursuant to which the Company issued a convertible promissory note in the aggregate principal amount of $0.5 million (the “October 2021 Note”), which October 2021 Note is convertible into shares of the Company’s Common Stock.

In January 2022, the Company entered into an Unsecured Convertible Note Purchase Agreement (the “January Purchase Agreement”) with GMP, pursuant to which the Company issued a convertible promissory note in the aggregate principal amount of $0.5 million (the “January 2022 Note”), which January 2022 Note is convertible into shares of the Company’s Common Stock.

The GMP Note 2, the October 2021 Note and the January 2022 Note carries an interest rate of 2% per annum and matures on the earlier of (a) the one-year anniversary of the date of the Purchase Agreement, or (b) the acceleration of the maturity by GMP upon occurrence of an Event of Default (as defined below). The GMP Note 2, the October 2021 Note and the January 2022 Note contains a voluntary conversion mechanism whereby GMP may convert the outstanding principal and accrued interest under the terms of the GMP Note 2, the October 2021 Note and the January 2022 Note into shares of Common Stock (the “Conversion Shares”), at the consolidated closing bid price of the Company’s Common Stock on the applicable OTC Market as of the date the Company receives a Notice of Conversion from GMP. Prepayment of the GMP Note 2, the October 2021 Note and the January 2022 Note may be made at any time by payment of the outstanding principal amount plus accrued and unpaid interest. The October Note contains customary events of default (each an “Event of Default”). If an Event of Default occurs, at GMP’s election, the outstanding principal amount of the GMP Note 2, the October 2021 Note and the January 2022 Note, plus accrued but unpaid interest, will become immediately due and payable in cash. The October Purchase Agreement and the January Purchase Agreement requires the Company to use of the proceeds received under the October 2021 Note and January 2022 Note to support the clinical development of OT-101, including payroll and has been made in continuation of the relationship between the Company and GMP.

The total principal outstanding on all the GMP notes, inclusive of accrued interest, was $4,614,411 and $4,069,781 as of June 30, 2022, and December 31, 2021, respectively.

August 2021 Notes

In August 2021, the Company entered into Note Purchase Agreements with Autotelic - a related party, our CFO - a related party, and certain accredited investors (the “August 2021 investors”), whereby the Company issued four convertible notes in the aggregate principal amount of $698,500 convertible into shares of common stock of the Company for net proceeds of $690,825. The convertible notes carry a five (5%) percent coupon and mature one year from issuance. The majority of the August 2021 investors have the right, but not the obligation, not more than five days following the maturity date, to convert all, but not less than all, the outstanding and unpaid principal plus accrued interest into the Company’s common stock, at a conversion price of $0.18. The Company determined that the economic characteristics and risks of the embedded conversion option are not clearly and closely related to the economic characteristics and risks of the debt host instrument. Further, the Company determined that the embedded conversion feature meets the definition of a derivative but met the scope exception to the derivative accounting required under ASC 815 for certain contracts involving a reporting entity’s own equity.

As of June 30, 2022, and December 31, 2021, the August 2021 convertible notes, inclusive of accrued interest, consist of the following amounts:

	June 30, 2022		December 31, 2021
Autotelic Related party convertible note, 5% coupon August 2022	$	261,301	$	256,634
CFO Related party convertible note, 5% coupon August 2022		78,390		76,531
Accredited investors convertible note, 5% coupon August 2022		390,385		381,123
	$	730,076	$	714,288

During the three months ended June 30, 2022, and 2021, the Company recognized approximately $12,000 and $0 of interest, respectively. At June 30, 2022, and December 31, 2021, accrued interests on these convertible notes totaled approximately $32,000 and $14,000, respectively.

November – December 2021 and March 2022 Financing

In November and December 2021, the Company entered into securities purchase agreement with five institutional investors, whereby the Company issued five convertible notes in the aggregate principal amount of $1,250,000 convertible into shares of common stock of the Company. The convertible notes carry a twelve (12%) percent coupon and a default coupon of 16% and mature at the earliest of one year from issuance or upon event of default. Investors has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.07. The Company granted a total number of 9,615,385 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.13 up to five years after issuance. The Placement agent was also granted a total amount of 961,540 as part of a finder’s fee agreement.

In March 2022, the Company entered into a Securities Purchase Agreement with Fourth Man, pursuant to which the Company issued convertible promissory note in the aggregate principal amount of $0.25 million, convertible into shares of common stock of the Company. The convertible notes carry a twelve (12%) percent coupon and a default coupon of 16% and mature at the earliest of one year from issuance or upon event of default. Investors has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.10. The Company granted a total number of 1,250,000 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.20 up to five years after issuance. The Placement agent was also granted a total amount of 125,000 as part of a finder’s fee agreement.

During the six months ended June 30, 2022, the Company converted the Mast Hill convertible note into 4,025,000 shares of the Company’s common stock, which fully retired the convertible note as of June 30, 2022. Such conversion resulted in a loss from debt conversion of approximately $0.1 million, which was recorded in other expense in the Company’s consolidated statements of operations.

During the six months ended June 30, 2022, the Company repaid the Talos Victory and First Fire convertible notes with the proceeds from the May 2022 Mast Hill convertible note. Such repayment resulted in a loss from debt extinguishment of approximately $258,100, which was recorded in other expense in the Company’s consolidated statements of operations.

As of June 30, 2022, and December 31, 2021, convertible notes under the November-December 2021 Financing, net of debt discount, consist of the following amounts:

	June 30, 2022			December 31, 2021
Mast Hill Convertible note, 12% coupon November 21	$	-		$	250,000
Talos Victory Convertible note, 12% coupon November 2021		-			250,000
First Fire Global Opportunities LLC Convertible note, 12% coupon, December 2021		-			250,000
Blue Lake Partners LLC Convertible note, 12% coupon, December 2021		250,000			250,000
Fourth Man LLC Convertible note, 12% coupon December 2021		250,000			250,000
Convertible notes, gross	$	500,000		$	1,250,000
Less Debt discount recorded		(500,000	)		(1,250,000	)
Amortization debt discount		269,563			76,994
Convertible notes, net	$	269,563		$	76,994

The Company recognized approximately $112,600 and $0 of interest during the six months ended June 30, 2022, and 2021, respectively. The balance of Accrued interest was approximately $33,000 and $10,300 as of June 30, 2022, and December 31, 2021, respectively.

The Company recognized approximately $657,400 and $0 of interest expense attributable to the amortization of the debt discount from the original debt discount, deferred financing costs, fair value allocated to the warrants and the beneficial conversion feature during the six months ended June 30, 2022, and 2021, respectively.

The Company recorded an initial debt discount of approximately $0.4 million representing the intrinsic value of the conversion option embedded in the convertible debt instrument based upon the difference 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. The Company recognized amortization expense related to the debt discount and debt issuance costs of approximately $0.5 million for the three months ended June 30, 2022, which is included in interest expense in the consolidated statements of operations.

March 2022 Financing

In March 2022, the Company entered into a securities purchase agreement with an accredited investor, whereby the Company issued a promissory note in the aggregate principal amount of $250,000 convertible into shares of common stock of the Company. The convertible note carries a twelve (12%) percent coupon and a default coupon of 16% and mature one year from issuance. The investor has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.10. The Company also granted a total number of 1,250,000 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.20 up to five years after issuance.

As of June 30, 2022, and December 31, 2021, Fourth Man convertible note, net of debt discount, consist of the following amounts:

	June 30, 2022			December 31, 2021
Fourth Man Convertible note, 12% coupon March 2023	$	250,000		$	-
Debt Discount		(186,301	)		-
Convertible notes, net	$	63,699		$	-

The Company recognized approximately $7,644 and $0 of accrued interest during the three months ended June 30, 2022, and 2021, respectively. The Company recognized approximately $63,700 and $0 of interest expense attributable to the amortization of the debt discount from the original deferred financing costs, fair value allocated to the warrants and the beneficial conversion feature during the three months ended June 30, 2022, and 2021, respectively.

May 2022 Mast Financing

In May 2022, the Company entered into a securities purchase agreement with one institutional investor, whereby the Company issued one convertible note in the aggregate principal amount of $605,000 convertible into shares of common stock of the Company (“May 2022 Mast Note”). The convertible notes carry a twelve (12%) percent coupon and a default coupon of 16% and mature at the earliest of one year from issuance or upon event of default. Investor has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.10. The Company granted a total number of 3,025,000 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.20 up to five years after issuance. The Placement agent was also granted a total amount of 302,500 as part of a finder’s fee agreement. Portion of the proceeds will be used to retire some of the November/December 2021 notes. The extinguishment of existing notes resulted in the recognition of approximately $258,100 in loss on extinguishment of debt in the consolidated statement of operations in the six months ended June 30, 2022.

As of June 30, 2022, and December 31, 2021, convertible note under the May 2022 Mast Financing, net of debt discount, consist of the following amounts:

	June 30, 2022			December 31, 2021
Mast Hill Convertible note, 12% coupon May 2023	$	605,000		$	-
Convertible notes, gross	$	605,000		$	-
Less Debt discount recorded		(605,000	)		-
Amortization debt discount		53,257			-
Convertible notes, net	$	53,257		$	-

The Company recognized approximately $72,600 and $0 of accrued interest during the six months ended June 30, 2022, and 2021, respectively, which is the guaranteed twelve-month coupon and earned in full at issuance date. The Company recognized approximately $53,257 and $0 of interest expense attributable to the amortization of the debt discount from the original debt discount, deferred financing costs, fair value allocated to the warrants and the beneficial conversion feature during the six months ended June 30, 2022, and 2021, respectively.

June 2022 Financing

In June 2022, the Company entered into a securities purchase agreement with one institutional investor, whereby the Company issued one convertible note in the aggregate principal amount of $335,000 convertible into shares of common stock of the Company (“June 2022 Blue Lake Note”). The convertible notes carry a twelve (12%) percent coupon and a default coupon of 16% and mature at the earliest of one year from issuance or upon event of default. Investor has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.10. The Company granted a total number of 837,500 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.20 up to five years after issuance. The Placement agent was also granted a total amount of 83,750 warrants as part of a finder’s fee agreement. Portion of the proceeds will be used to retire some of the November/December 2021 notes.

As of June 30, 2022, and December 31, 2021, convertible note under the June 2022 Blue Lake Financing, net of debt discount, consist of the following amounts:

	June 30, 2022			December 31, 2021
Blue Lake Convertible note, 12% coupon June 2023	$	335,000		$	-
Convertible notes, gross	$	335,000		$	-
Less Debt discount recorded		(335,000	)		-
Amortization debt discount		9,034			-
Convertible notes, net	$	9,034		$	-

The Company recognized approximately $40,200 and $0 of accrued interest during the six months ended June 30, 2022, and 2021, respectively, which is the guaranteed twelve-month coupon and earned in full at issuance date. The Company recognized approximately $7,300 and $0 of interest expense attributable to the amortization of the debt discount from the original debt discount, deferred financing costs, fair value allocated to the warrants and the beneficial conversion feature during the six months ended June 30, 2022, and 2021, respectively.

Other short-term advances

As of June 30, 2022 compared to December 31, 2021, other short-term advances consist of the following amounts obtained from various employees and related parties:

Other Advances	June 30, 2022		December 31, 2021
Short term advance from CEO – Related Party	$	-	$	20,000
Short term advances – bridge investors		223,122		265,000
Short term advances from CFO – Related Party		25,050		45,050
Short term advance – Autotelic Inc. – Related Party		20,000		20,000
Accrued interest on advances		-		9,212
	$	268,172	$	359,262

During the year ended December 31, 2020, the Company’s CEO provided additional funding of $70,000 to the Company, of which $50,000 was repaid before December 31, 2020. Further, during the six months ended June 30, 2022, $20,000 repaid to the Company’s CEO. As such, $0 and $20,000 was outstanding at June 30, 2022 and December 31, 2021, respectively.

During the year ended December 31, 2021, Autotelic Inc. provided a short-term funding of $120,000 to the Company, which was repaid in 2021. In May 2021, Autotelic provided an additional short-term funding of $250,000 to the Company, which was converted into the August 2021 Notes. Autotelic provided an additional $20,000 short-term loan to the Company, and as such, $20,000 was outstanding and payable to Autotelic at June 30, 2022 and December 31, 2021, respectively.

During the year ended December 31, 2021, the Company’s CFO, a related Party, provided short term advances of approximately $45,000. During the year ended December 31, 2020, the Company’s CFO had provided a short-term advance of $25,000, which was repaid during the year ended December 31, 2021. $20,000 was repaid to the CFO in January 2022. As such approximately $25,000 and $45,000 was outstanding at June 30, 2022 and December 31, 2021, respectively.

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JOINT VENTURE WITH GMP BIO AND AFFILIATES, EQUITY METHOD INVESTMENT

6 Months Ended

Jun. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

JOINT VENTURE WITH GMP BIO AND AFFILIATES, EQUITY METHOD INVESTMENT

NOTE 6 - JOINT VENTURE WITH GMP BIO AND AFFILIATES, EQUITY METHOD INVESTMENT

On March 31, 2022, the Company entered into (i) a joint venture (the “JV”) agreement with Dragon and GMP Bio, both affiliates of GMP, (and the Company, Dragon and GMP Bio are collectively called the “Parties”) (the “JVA”), (ii) a license agreement for rights to OT-101 (the “US License Agreement”) for the territory within the United States of America (the “US”) with Sapu Holdings, LLC, a subsidiary of GMP Bio and (iii) a license agreement for rights to OT-101 for the rest of the world with GMP Bio (the “Ex-US Rights Agreement”, and the US License Agreement and the Ex-US License Agreement are collectively called the “Agreements”).

Dragon and the Company entered into the JVA to regulate their relationship and the operation and management of the JV. The JVA contains provisions for the licensed products and licensed technologies related to OT-101 (the “Licensed products and technologies”). Pursuant to the JVA the Company is required to transfer to GMP Bio all of the Company’s rights and obligations under the research and development agreement dated 3 February 2020 between the Company and Golden Mountain Partners, LLC (“GMP”), an affiliate of Dragon, as amended, varied and/or supplemented by a supplement to research and Services Agreement dated 23 March 2020 between the Company, Mateon Therapeutics, Inc. (subsequently renamed the Company) and GMP (the “R&D Agreement”). The JVA permits GMP to seek conversion of certain convertible promissory notes entered into between the Company and GMP (see reference to Purchase Agreements and Notes below) into shares of the Common Stock of the Company within 15 business days of the execution of the JVA at a price of $0.2242 per Common Share, the closing price of the Common Share as traded on the OTCQB the day prior to the execution of the JVA, or the closing price of the Common Stock prior to the date of conversion if not within 15 business days of the JVA. Upon the execution of the JVA, Dragon will pay for and hold 55 shares of GMP Bio and the Company will pay for and hold 45 shares of GMP Bio, both to be acquired at $1.00 per share of GMP Bio. Such shares of GMP Bio were issued shortly after the date of the JVA. The JVA required the entering into of the Agreements on or before the execution of the JVA. The JVA defines the valuation of the Agreements (taking into account the transfer of the Company’s rights and obligations under the R&D Agreement) each at approximately $11.3 million, for an aggregate of approximately $22.7 million. The Parties also agreed that if a Rare Pediatric Disease (“RPD”) Priority Review Voucher, upon clinical approval of OT-101 Technologies for treatment of diffuse intrinsic pontine glioma (the “DIPG Voucher”), is issued to GMP Bio and GMP Bio, or a subsidiary thereof, sells the DIPG Voucher to a non-GMP subsidiary, then the Company shall be eligible to receive up to 50% of the net sales proceeds or $50 million, whichever is less. Dragon shall fund the JVA, for a total of approximately $27.7 million, based on the conditions contained in the JVA, and the Company will input the licenses under the Agreements into the JV. The Company is obligated to (i) (A) rectify the chain of legal title such that the Company is the sole legal owner of such rights, (B) complete registration as the sole owner of all the Company’s Patent Rights and (C) provide evidence of such registration that is satisfactory to Dragon; (ii) provide Dragon with copies of official documents issued by the relevant patent offices in the relevant countries evidencing the Company’s legal ownership of all the Company’s Patents Rights; and (iii) reflect the Company’s legal ownership of all the Company’s Patent Rights in the relevant online registers of the relevant patent offices in the relevant countries. The JVA intends to raise funding for the JVA through a Series A round of financing of not less than $20 million. Dragon can suspend funding the JVA if the Series A round of financing is not successfully completed by August 31, 2022, in which case Dragon’s funding obligation would be restricted to $250,000 per month to GMP Bio. If Dragon decides to terminate the JVA, the licenses granted under the Agreements shall be terminated and the OT-101 assets licensed by the Company will revert back to the Company. The rest of the JVA deals with the conduct of the JV, the board of directors of GMP Bio and other administrative matters. Dragon shall nominate up to three directors of their choosing to the board of directors of GMP Bio, two of whom are already nominated as “A” Directors and the Company shall nominate up to two directors of their choosing to the board of directors of GMP Bio, one of whom is already nominated as a “B” Director. The JVA defines how the board of directors will operate as well as the general management and operations of the JV. Other standard terms on shareholder rights, indemnification etc. are also defined in the JVA. Also included are the other terms with relation to insurance, indemnification, jurisdiction and other customary terms and conditions.

The Agreements include terms of an exclusive, irrevocable, perpetual, royalty-free, sublicensable license under the Licensed Technology to manufacture, have manufactured, use, import, sell, offer for sale or otherwise exploit the Licensed Products, which is OT-101, in the Field, which is all therapeutic uses in humans, and in the Territories, which is the US and the rest of the world. In addition, the Company grants a non-exclusive, irrevocable, perpetual, royalty-free, non-sublicensable license for its sole use of the Company’s Vision Grid system for monitoring process, man flow, equipment flow, and material flow in contract development and manufacturing organization operations. These have been granted to GMP Bio and Sapu Holdings, LLC as the capital contribution by the Company to GMP Bio. The Agreements include the contributions by the key employees, as defined and included in the Agreements, standard representations and warranties, intellectual property protection, insurance, indemnification, jurisdiction and other customary terms and conditions.

The Company determined that the arrangement does not meet the accounting definition of a joint venture. Subsequently, we analyzed our investment and determined that such investment was not considered a VIE, which would require consolidation because the Company does not have the power to direct the activities that most significantly impact the economic performance of the JV. The Company does not control the JV through majority ownership interest or Board participation. As such, the Company followed the guidance in ASC 610-20 regarding the sale of nonfinancial assets to noncustomers when retaining a non-controlling ownership interest in such assets. The Company is deemed to have substantially transferred the actual intellectual property related to OT-101 as the investee can benefit from the risk and rewards of ownership of such intellectual property. This resulted in the derecognition of the carrying amount of our intangible assets for approximately $0.8 million and goodwill for $4.9 million for an aggregate amount of approximately $5.7 million , recorded its initial investment at its fair value for approximately $22.6 million and which resulted in a non-cash gain on non-financial asset disposal of approximately $17 million, which was reported in other income in the condensed consolidated statements of operations in the three and six months ended June 30, 2022. As of June 30, 2022, the JV had approximately $0.8 million in assets, recorded approximately $0.2 million in liabilities and incurred approximately $2.1 million in operational expenses. The Company elected the fair value option under subsection of Section 825-10-15 to account for its equity-method investment as the Company believes that it the most appropriate method to properly value the Company and record a change in value as and when an event occurs that requires a fair value assessment.

For information on the various notes from GMP, refer to Note 5 – GMP Notes of the Notes to the Consolidated Financial Statements above.

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PRIVATE PLACEMENT AND JH DARBIE FINANCING

6 Months Ended

Jun. 30, 2022

Private Placement And Jh Darbie Financing

PRIVATE PLACEMENT AND JH DARBIE FINANCING

NOTE 7 - PRIVATE PLACEMENT AND JH DARBIE FINANCING

During the period from July 2020 to March 31, 2021, the Company entered into various subscription agreements with certain accredited investors, including the CEO, pursuant to the JH Darbie Financing, whereby the Company issued and sold a total of 100 Units, for total gross proceeds of approximately $5 million, pursuant to the JH Darbie Placement Agreement, with each Unit consisting of:

■ 25,000 shares of Edge Point Common stock for a price of $1.00 per share of Edge Point Common stock.

■ One convertible promissory note, convertible up to 25,000 shares of Edge Point Common stock, at a conversion price of $1.00 per share or up to 138,889 shares of the Company’s common stock, at a conversion price of $0.18 per share.

■ 50,000 warrants to purchase an equivalent number of shares of Edge Point Common stock at $1.00 per share and an equivalent number of shares of the Company’s common stock at $0.20 per share with a three-year expiration date. Either the Edgepoint or the Company’s warrants would be exercised.

As June 30, 2022 and December 31, 2021 funds received under the JH Darbie Financing, net of debt discount, consist of the following amounts:

	June 30, 2022		December 31, 2021
Convertible promissory notes
Subscription agreements - accredited investors	$	2,305,370	$	2,353,253
Subscription agreements – related party		122,616		109,046
Total convertible promissory notes	$	2,427,986	$	2,462,299

The Company incurred approximately $0.64 million of issuance costs, including legal costs of approximately $39,000, that are incremental costs directly related to the issuance of the various instruments bundled in the offering.

Concurrently with the sale of the Units, JH Darbie was granted a warrant, exercisable over a five-year period, to purchase 10% of the number of Units sold in the JH Darbie Financing. As such, the Company granted 10 Units to JH Darbie pursuant to the JH Darbie Placement Agreement.

The terms of convertible notes are summarized as follows:

■ Term: Through March 31, 2022, extended further to March 31, 2023

■ Coupon: 16%.

■ Convertible at the option of the holder at any time in the Company’s Common Stock or Edgepoint Common Stock.

■ The conversion price is initially set at $0.18 per share for the Company’s Common Stock or $1.00 for Edgepoint Common Stock, subject to adjustment.

The Company allocated the proceeds among the freestanding financial instruments that were issued in the single transaction using the relative fair value method, which affects the determination of each financial instrument initial carrying amount. The Company utilized the relative fair value method as none of the freestanding financial instruments issued as part of the single transaction are measured at fair value. Under the relative fair value method, the Company made separate estimates of the fair value of each freestanding financial instrument and then allocated the proceeds in proportion to those fair value amounts. The Company recorded non-controlling interests of approximately $1 million in Edgepoint. Non-controlling interests represent the portion of net assets in consolidated entities that are not owned by the Company and are reported as a component of equity in the consolidated balance sheets.

As of the multiple closings of the Company during the six months ended June 30, 2021, under the private placement memorandum with JH Darbie, the estimated volume weighted grant date fair value of approximately $0.21 per share associated with the warrants to purchase up to 2,035,000 shares of common stock issued in this offering, or a total of approximately $ 0.7 million, was recorded to additional paid-in capital on a relative fair value basis. All warrants sold in this offering had an exercise price of $0.20 per share of the Company stock or $1.00 per share of Edge Point, subject to adjustment, are exercisable immediately and expire three years from the date of issuance. The fair value of the warrants was estimated using a Black Scholes valuation models using the following input values:

Expected Term	1.5 years
Expected volatility		152.3%-164.8	%
Risk-free interest rates		0.09%-0.11	%
Dividend yields		0.00	%

In February 2022, the Company and all except one of the Investors agreed to extend the maturity date of the Notes from March 31, 2022, to March 31, 2023. In consideration for the extension of the Notes, the Company issued to the Investors an aggregate of 33,000,066 Oncotelic Warrants at a price of $0.15 per share of Company’s Common Stock. Each Investor will be entitled to receive 333,334 Oncotelic Warrants for each Unit purchased. Upon the amendment of the terms of the convertible notes under the private placement memorandum. As incentive to extend the maturity date, approximately 33 million warrants were issued to the Unit Holders who participated in the amendment, The Company repaid the 1-unit holder who did not participate in the amendment shortly after March 31, 2022.

The Company reviewed the guidance per ASC 470-60 Troubled debt restructurings and ASC 470-50 Debt-Modifications and Extinguishments and concluded that the terms of the agreements were substantially different as of June 30, 2022, and, accounted for the transaction as a debt extinguishment. The loss is recognized equal to the difference between the net carrying amount of the original debt and the fair value of the modified debt instrument.

At March 31, 2022, the Company estimated the fair value of the warrants issued in conjunction with the amendment of the private placement under the JH Darbie financing based on assumptions used in the Black-Scholes valuation model. The key valuation assumptions used consists, in part, of the price of the Company’s Common Stock, a risk-free interest rate based on the yield of a Treasury note and expected volatility of the Company’s Common Stock all as of the measurement date. The Company used the following assumptions to estimate fair value of the warrants:

Strike price	$	0.15
Expected Term	1 year
Expected volatility		115.1	%
Risk-free interest rates		1.36	%
Dividend yields		0.00	%

All the warrants issued in conjunction with the amendment #5 had an exercise price of $0.15 per share and are immediately exercisable and expire two years from the date of issuance or February 9, 2024. The warrants resulted in an aggregate fair value of approximately $2.9 million.

The Company recognized amortization expense related to the debt discount and debt issuance costs of $52,111 and $659,854 for the six months ended June 30, 2022 and June 30, 2021 respectively, which is included in interest expense in the statements of operations.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2022

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 8 - RELATED PARTY TRANSACTIONS

Master Service Agreement with Autotelic Inc.

In October 2015, Oncotelic entered into a Master Service Agreement (the “MSA”) with Autotelic Inc., a related party that is partly-owned by the Company’s CEO Vuong Trieu, Ph.D. Dr. Trieu, a related party, is a control person in Autotelic Inc. Autotelic Inc. currently owns less than 10% of the Company. The MSA stated that Autotelic Inc. will provide business functions and services to the Company and allowed Autotelic Inc. to charge the Company for these expenses paid on its behalf. The MSA includes personnel costs allocated based on amount of time incurred and other services such as consultant fees, clinical studies, conferences and other operating expenses incurred on behalf of the Company. The MSA requires a 90-day written termination notice in the event either party requires to terminate such services.

Expenses related to the MSA were approximately $1,000 for the three months ended June 30, 2022 as compared to approximately $120,000 for the same period of 2021. Expenses related to the MSA were approximately $67,000 for the six months ended June 30, 2022 as compared to approximately $482,000 for the same period of 2021. During the six months ended June 30, 2022, Autotelic, Inc. paid expenses and accrued liabilities in the aggregate amount of approximately $0.6 million on behalf of the Company. This payment, on the Company’s behalf, was recognized as a capital contribution from Autotelic, Inc.

In September 2021, the Company entered into an exclusive License Agreement (the “Agreement”) with Autotelic. For more information on this Agreement, refer to our 2021 Annual Report on Form 10-K filed with the SEC on April 15, 2022.

Note Payable and Short-Term Loan – Related Parties

In April 2019, the Company issued a convertible note to Dr. Trieu totaling $164,444, including OID of $16,444, receiving net proceeds of $148,000, which was used by the Company for working capital and general corporate purposes. The Company issued a Fall 2019 Note to Dr. Trieu in the principal amount of $250,000. Dr. Trieu also offset certain amounts due to him in the amount of $35,000 and was converted into the Fall 2019 debt. During the year ended December 31, 2020, Dr. Trieu provided additional short-term funding of $70,000 to the Company, of which the Company repaid $50,000 prior to December 31, 2020. During the year ended December 31, 2020, Dr. Trieu purchased a total of 5 Units under the private placement for a gross total of $250,000.

During the year ended December 2021, Autotelic Inc provided a short-term loan of $270,000, of which $250,000 was converted into the August 2021 loan and the balance of $20,000 continues to be a short-term loan. During the six months ended June 30, 2021, Autotelic Inc, provided a short-term loan of $120,000 to the Company. Such loan was repaid in April 2021. No loans or repayments were made to Autotelic Inc. during the same period in 2022.

Artius Consulting Agreement

On March 9, 2020, the Company and Artius Bioconsulting, LLC (“Artius”), for which Mr. King is the Managing Member, entered into an amendment to the Consulting Agreement dated December 1, 2018, under which Artius agreed to serve as a consultant to the Company for services related to the Company’s business from time to time, effective December 1, 2019 (the “Effective Date”) (the “Artius Agreement”). For more information on this Agreement, refer to our 2021 Annual Report on Form 10-K filed with the SEC on April 15, 2022.

No expense was recorded during the three and six months ended June 30, 2021 or 2020, respectively, related to this Agreement.

Maida Consulting Agreement

Effective May 5, 2020, the Company and Dr. Maida entered into an independent consulting agreement, commencing April 1, 2020 (the “Maida Agreement”), under which Dr. Maida will assist the Company in providing medical expertise and advice from time to time in the design, conduct and oversight of the Company’s existing and future clinical trials. For more information on this Agreement, refer to our 2021 Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The Company recorded an expense of $0 during the three months ended June 30, 2022 related to this Agreement as compared to $45,000 during the same period in 2021. The Company recorded an expense of $75,000 during the six months ended June 30, 2022 related to this Agreement as compared to $90,000 during the same period in 2021. Effective April 1, 2022, Dr Maida’s compensation shall be borne by the JVA with GMP Bio.

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EQUITY PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT

6 Months Ended

Jun. 30, 2022

Equity Purchase Agreement And Registration Rights Agreement

EQUITY PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT

NOTE 9 - EQUITY PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT

On May 3, 2021, the Company entered into an Equity Purchase Agreement (“EPL”) and Registration Rights Agreement with Peak One Opportunity Fund LP (“Peak One” or the “Investor”). For further information on EPL, refer to our 2021 Annual Report on Form 10-K filed with the SEC on April 15, 2022.

The Company filed a post-effective amendment Registration Statement on Form S-1 with the Commission on April 26, 2022, and the Form S-1 was declared effective on May 6, 2022. The Company filed the prospectus in this connection on May 11, 2022.

During the six months ended June 30, 2022, the Company sold a total of 600,000 shares of Common Stock at price ranging from $0.16 and $0.22 for total gross proceeds of approximately $114,930 and approximately $98,627, net of issuance costs.

During the six months ended June 30, 2021, the Company sold a total of 1,300,000 shares of Common Stock at prices ranging from $0.11 and $0.23 for total gross proceeds of approximately $172,775, and approximately $168,752, net of issuance costs.

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STOCKHOLDERS’ EQUITY

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 10 - STOCKHOLDERS’ EQUITY

The following transactions affected the Company’s Stockholders’ Equity:

Issuance of Common Stock during the six months ended June 30, 2022

In January 2022, three of the five investors from the November/December 2021 financing made a cashless exercise for their warrants. In connection with this exercise, the Company issued 3,041,958 shares of Common Stock in exchange of approximately 5,769,231 million warrants.

In March 2022, the Company sold 300,000 shares of its Common Stock to Peak One under the EPL for net proceeds of approximately $52 thousand.

In May 2022, Blue Lake made a cashless exercise for their warrants. In connection with this exercise, the Company issued 1,403,326 shares of Common Stock in exchange of 1,923,077 warrants.

In June 2022, the Company sold 300,000 shares of its Common Stock to Peak One under the EPL for net proceeds of approximately $47 thousand.

In June 2022, Mast Hill converted their debt of approximately $0.28 million. In connection with the Note conversion, the Company issued 4,025,000 shares of Common Stock to Mast Hill.

In June 2022, Company issued 500,000 shares of Common Stock to First Fire under partial repayment of convertible debt of $35,000.

In June 2022, First Fire made a cashless exercise for their warrants. In connection with this exercise, the Company issued 1,183,400 shares of Common Stock in exchange for 1,923,077 warrants.

For further information on Common Stock issuance, refer to our 2021 Annual Report on Form 10-K filed with the SEC on April 15, 2022.

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STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2022

Compensation Related Costs [Abstract]

STOCK-BASED COMPENSATION

NOTE 11 – STOCK-BASED COMPENSATION

Options

Pursuant to the Merger, the Company’s Common Stock and corresponding outstanding options survived. The below information details the Company’s associated option activity.

As of June 30, 2022, options to purchase Common Stock were outstanding under three stock option plans – the 2017 Equity Incentive Plan (the “2017 Plan”), the 2015 Equity Incentive Plan (the “2015 Plan”) and the 2005 Stock Plan (the “2005 Plan”). Under the 2017 Plan, up to 2,000,000 shares of the Company’s Common Stock may be issued pursuant to awards granted in the form of nonqualified stock options, restricted and unrestricted stock awards, and other stock-based awards. Under the 2015 and 2005 Plans, taken together, up to 7,250,000 shares of the Company’s Common Stock may be issued pursuant to awards granted in the form of incentive stock options, nonqualified stock options, restricted and unrestricted stock awards, and other stock-based awards.

Employees, consultants, and directors are eligible for awards granted under the 2017 and 2015 Plans. The Company registered an additional total of 20,000,000 shares of its Common Stock, which may be issued pursuant to the Registrant’s Amended and Restated 2015 Equity Incentive Plan (the “Plan”). Such additional shares were approved by the shareholders of the Company on August 10, 2020 and as reported to the Securities and Exchange Commission (the “SEC”) vide a Current Report on Form 8-K on August 14, 2020. As such, the total number of shares of the Company’s Common Stock available for issuance under the 2015 plan is 27,250,000. Since the adoption of the 2015 Plan, no further awards may be granted under the 2005 Plan, although options previously granted remain outstanding in accordance with their terms.

Compensation based stock option activity for qualified and unqualified stock options are summarized as follows:

				Weighted
For the six months ended June 30, 2022				Average
	Shares			Exercise Price
Outstanding at January 1, 2022		16,592,620		$	0.30
Expired or cancelled		(2,359	)		11.88
Outstanding at June 30, 2022		16,590,261		$	0.30

Information on compensation-based stock option activity for qualified and unqualified stock options for the year ended December 31, 2021 can be found in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 15, 2022.

The following table summarizes information about options to purchase shares of the Company’s Common Stock outstanding and exercisable at June 30, 2022:

				Weighted-		Weighted-
				Average		Average
		Outstanding		Remaining Life		Exercise		Number
Exercise prices		Options		In Years		Price		Exercisable
$	0.14		7,150,000		9.17	$	0.14		3,972,500
	0.16		5,502,761		9.01		0.16		5,502,761
	0.22		1,750,000		3.84		0.22		1,750,000
	0.38		900,000		3.16		0.38		900,000
	0.73		762,500		2.78		0.73		762,500
	1.37		150,000		0.99		1.37		150,000
	1.43		300,000		2.91		1.43		300,000
	15.00		75,000		2.91		15.00		75,000
			16,590,261		7.38	$	0.30		13,412,761

The compensation expense attributed to the issuance of the options is recognized as they are vested.

The employee stock option plan stock options are generally exercisable for ten years from the grant date and vest over various terms from the grant date to three years.

The aggregate intrinsic value totaled approximately $0.26 million and was based on the Company’s closing stock price of $0.17 as of June 30, 2022, which would have been received by the option holders had all option holders exercised their options as of that date. Information on the aggregate intrinsic value for the year ended December 31, 2021 can be found in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 15, 2022.

The Company amortized approximately $25,000 and $50,000 of stock compensation expense during the three and the six months ended June 30, 2022 on the grants of certain milestone driven options that were granted during the year ended December 31, 2021. No similar expense was recorded during the same period of 2021.

In August 2019, the Company entered into Employment Agreements and incentive compensation arrangements with each of its executive officers, including Dr. Vuong Trieu, the Chief Executive Officer; Dr. Fatih Uckun, the Chief Medical Officer; Dr. Chulho Park, its Chief Technology Officer; and Mr. Amit Shah, the Chief Financial Officer. Details of the agreements and the incentive compensation is described in detail in Note 11 – Commitments & Contingencies under “Employment Agreements”. The incentive stock options or the restricted stock awards granted to the Company’s executive officers have not been granted as of the date of this filing.

Warrants

Pursuant to the Merger, the Company’s Common Stock and corresponding outstanding warrants survived. The below information represents the Company’s associated warrant activity.

In February 2022, the Company and all except one of the Investors agreed to extend the maturity date of the Notes from March 31, 2022, to March 31, 2023. In consideration for the extension of the Notes, the Company issued to the Investors an aggregate of approximately 33 million Oncotelic Warrants at a price of $0.15 per share of Company’s Common Stock. At June 30, 2022, the Company estimated the fair value of the warrants issued in conjunction with the amendment of the private placement under the JH Darbie financing based on assumptions used in the Black-Scholes valuation model. The key valuation assumptions used consists, in part, of the price of the Company’s Common Stock, a risk-free interest rate based on the yield of a Treasury note and expected volatility of the Company’s Common Stock all as of the measurement date. The Company used the following assumptions to estimate fair value of the warrants as of June 30, 2022:

Expected Term		1 year
Strike price	$	0.15
Expected volatility		115.1	%
Risk-free interest rates		1.36	%
Dividend yields		0.00	%

All the warrants issued in conjunction with the amendment #5 had an exercise price of $0.15 per share and are immediately exercisable and expire two years from the date of issuance or February 9, 2024. The warrants resulted in an aggregate fair value of approximately $2.9 million.

The issuance of warrants to purchase shares of the Company’s Common Stock, including those attributed to debt issuances, as of June 30, 2022 are summarized as follows:

	Shares			Average Exercise Price
Outstanding at January 1, 2022		53,314,424		$	0.20
Issued during the six months ended June 30, 2022		34,375,066			0.15-0.20
Exercised / cancelled during the six months ended June 30, 2022		(9,615,385	)		0.13
Outstanding at June 30, 2022		82,322,855		$	0.18

The following table summarizes information about warrants outstanding and exercisable at June 30, 2022:

		Outstanding and exercisable
				Weighted-		Weighted-
				Average		Average
		Number		Remaining Life		Exercise		Number
Exercise Price		Outstanding		in Years		Price		Exercisable
$	0.20		42,737,500		0.75	$	0.20		4,237,500
	0.13		961,539		4.46		0.13		4,807,693
	0.15		33,000,066		1.75		0.15		33,000,066
	0.20		5,623,750		4.75-4.98		0.20		5,623,750
			82,322,855		2.0	$	0.18		81,920,259

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INCOME TAXES

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 12 – INCOME TAXES

The Company had gross deferred tax assets, which primarily relate to net operating loss carryforwards. As of December 31, 2021, the Company had gross federal and state net operating loss carryforwards of approximately $236.1 million and $76.3 million, respectively, which are available to offset future taxable income, if any. A portion of the gain on the sale of the non-financial asset may give rise to some taxable income, but such income is likely to be offset against the available net operating losses. The Company recorded a valuation allowance in the full amount of its net deferred tax assets since realization of such tax benefits has been determined by our management to be less likely than not. Information on our deferred tax assets and liabilities can be found in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 15, 2022.

Portions of these carryforwards will expire through 2038, if not otherwise utilized. The Company’s utilization of net operating loss carryforwards could be subject to an annual limitation. as a result of certain past or future events, such as stock sales or other equity events constituting a “change in ownership” under the provisions of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitations could result in the expiration of net operating loss carryforwards and tax credits before they can be utilized. We have not performed a formal analysis, but we believe our ability to use such net operating losses and tax credit carryforwards will be subject to annual limitations, due to change of ownership control provisions under Section 382 and 383 of the Internal Revenue Code, which would significantly impact our ability to realize these deferred tax assets.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Leases

Currently, the Company is leasing the office located at 29397 Agoura Road, Suite 107, Agoura Hills, CA 91301 on a month-to-month basis until such time a new office is identified. The Company believes the office is sufficient for its current operations.

Legal Claims

From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. The Company is not presently a party to any legal proceedings that it currently believes, if determined adversely to the Company, would individually or taken together have a material adverse effect on the Company’s business, operating results, financial condition or cash flows.

PointR Merger Contingent Consideration

The total purchase price of $17,831,427 represented the consideration transferred from the Company in the PointR Merger and was calculated based on the number of shares of Common Stock plus the preferred shares outstanding but convertible into Common Stock outstanding at the date of the PointR Merger and included $2,625,000 of contingent consideration of shares issuable to PointR shareholders, which can increase to $15 million of contingent consideration, upon achievement of certain milestones. The $2,625,000 of contingent consideration of shares issuable to PointR shareholders was recorded and associated with the PointR Merger is also classified as Level 3 fair value measurements. The Company initially recorded the contingency based on a valuation conducted by a third-party valuation expert. The valuation was based on a probability of the completion of certain milestones by PointR for the shareholders to earn additional shares. The Company evaluated the probability of the earning of the milestones and concluded that the probability of achievement of the milestones had not changed, primarily due to the shifting of focus by the Company to develop AI technologies for the COVID-19 pandemic. As such, the Company did not record any change to the valuation during the years ended and as of June 30, 2022 or December 31, 2021, respectively.

Other claims

From time to time, the Company may become involved in certain claims arising in the ordinary course of business. One of the Company’s ex-employees has made a claim against the Company. The Company is evaluating the validity of the claim, as the Company believes that such claim has limited merits and is hopeful to attain a positive outcome for such claim. Since the Company is still evaluating the claim, we are unable to quantify the amount such claim would be settled at, if at all settled.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 14 – SUBSEQUENT EVENTS

None

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity-based transactions and disclosure of contingent liabilities at the date of the financial statements and revenues and expense during the reporting period. Actual results could materially differ from those estimates.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the financial statements. Significant estimates include the valuation of goodwill and intangible assets for impairment, deferred tax asset and valuation allowance, and fair value of financial instruments.

Cash

Cash

As of June 30, 2022, and December 31, 2021 the Company held all its cash in banks. The Company considers investments in highly liquid instruments with a maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2022 and December 31, 2021, respectively. Restricted cash consists of certificates of deposits held at banks as collateral for various purposes.

Debt issuance Costs and Debt discount

Debt issuance Costs and Debt discount

Issuance costs are specific incremental costs that are (1) paid to third parties and (2) directly attributable to the issuance of a debt or equity instrument. The issuance costs attributable to the initial sale of the instrument are offset against the associated proceeds in the determination of the instrument’s initial net carrying amount.

Debt issuance costs and debt discounts are being amortized over the lives of the related financings on a basis that approximates the effective interest method. Costs and discounts are presented as a reduction of the related debt in the accompanying balance sheets if related to the issuance of debt or presented as a reduction of additional paid in capital if related to the issuance of an equity instrument. The Company applies the relative fair value to allocate the issuance costs among freestanding instruments that form part of the same transaction.

If the Company amends the terms of its convertible notes, the Company reviews and applies the guidance per ASC 470-60 Troubled debt restructurings and ASC 470-50 Debt-Modifications and Extinguishments, evaluates and concludes whether the terms of the agreements were or were not substantially different as of a particular reporting date and accounts the transaction as a debt modification or a troubled debt restructuring.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying value of cash, accounts payable and accrued expense approximate their fair values based on the short-term maturity of these instruments. As defined in ASC 820, “Fair Value Measurements and Disclosures,” fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement.

The three levels of the fair value hierarchy defined by ASC 820 are as follows:

● Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

● Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

● Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Investment in equity securities

Investment in equity securities

The following table summarizes the cumulative gross unrealized gains and losses and fair values for long-term investments accounted for at fair value under the fair value option, with the unrealized gains and losses reported within earnings on the Condensed Consolidated Statements of Operation as at June 30, 2022. No similar investments were held by the Company at December 31, 2021:

	Initial Book Value		Cumulative Gross Unrealized Gains		Cumulative Gross Unrealized Losses		Fair Value
June 30, 2022
Investment in GMP Bio (equity securities)	$	22,640,521	$	-	$	-	$	22,640,521
Total	$	22,640,521	$	-	$	-	$	22,640,521

The table below sets forth a summary of the changes in the fair value of the Company’s long-term investment in equity securities, based on a third-party valuation report, as a Level 3 fair value as of June 30, 2022. The Company did not own similar investments as at June 30, 2021:

	June 30, 2022 Fair Value
Balance at January 1, 2022	$	-
Contribution at cost basis		5,689,044
Gain on derecognition of non-financial asset		16,951,477
Change in fair value		-
Balance at June, 2022	$	22,640,521

Derivative Liability

Derivative Liability

The Company has derivative liabilities associated with its 2019 bridge financing Convertible Notes (see Note 5), consisted of conversion feature derivatives at June 30, 2022 and 2021, are Level 3 fair value measurements.

The table below sets forth a summary of the changes in the fair value of the Company’s derivative liabilities classified as Level 3 as of June 30, 2022 and 2021:

	June 30, 2022 Conversion Feature		June 30, 2021 Conversion Feature
Balance at January 1, 2022 and 2021	$	340,290	$	777,024
New derivative liability		-		-
Reclassification to additional paid in capital from conversion of debt to common stock		-		(144,585	)
Change in fair value		67,922		(93,829	)
Balance at June, 2022 and 2021	$	408,212	$	538,610

As of June 30, 2022, and December 31, 2021, the Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures based on assumptions used in the Black-Scholes valuation model. The key valuation assumptions used consists, in part, of the price of the Company’s Common Stock, a risk-free interest rate based on the yield of a Treasury note and expected volatility of the Company’s Common Stock all as of the measurement dates. The Company used the following assumptions to estimate fair value of the derivatives as of June 30, 2022:

	June 30, 2022 Key Assumptions for fair value of conversions
Risk free interest		0.17% -1.03%
Market price of share	$	0.17-0.23
Life of instrument in years		0.01 – 0.33
Volatility		107.50%-109.40%
Dividend yield		0%

When the Company changes its valuation inputs for measuring financial liabilities at fair value, either due to changes in current market conditions or other factors, it may need to transfer those liabilities to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur. For the periods ended June 30, 2022 and 2021, respectively, there were no transfers of financial assets or financial liabilities between the hierarchy levels.

The $2,625,000 of contingent consideration, of shares issuable to PointR shareholders which was recorded and associated with the PointR Merger, is also classified as Level 3 fair value measurements. The Company initially recorded the contingency based on a valuation conducted by a third-party valuation expert. The valuation was based on a probability of the completion of certain milestones by PointR for the shareholders to earn additional shares. The Company evaluated the probability of the earning of the milestones and concluded that the probability of achievement of the milestones had not changed, primarily due to the shifting of focus by the Company to develop AI technologies for the COVID-19 pandemic. As such, the Company did not record any change to the valuation during the six months ended June 30, 2022 or 2021, respectively.

Net Income (Loss) Per Share

Net Income (Loss) Per Share

Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share includes the effect of Common Stock equivalents (notes convertible into Common Stock, stock options and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. The Company has excluded from diluted loss per share the dilutive shares, since such inclusion would be anti-dilutive.

Stock-Based Compensation

Stock-Based Compensation

The Company applies the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the statements of operations.

For stock options issued to employees and members of the Board of Directors (the “Board”) for their services, the Company estimates the grant date fair value of each option using the Black-Scholes option pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock. For awards subject to service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised.

For warrants issued in connection with fund raising activities, the Company estimates the grant date fair value of each warrant using the Black-Scholes pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the warrant, the expected volatility of the Common Stock consistent with the expected life of the warrant, risk-free interest rates and expected dividend yields of the Common Stock. If the warrants are issued upon termination or cancellation of prior issued warrants, then the Company estimates the grant date fair value of the new warrants using the Black-Scholes pricing model and evaluates whether the new warrants are deemed as equity instruments or liability instruments. If the warrants are deemed to be equity instruments, the Company records stock compensation expense and an addition to additional paid in capital. If, however, the warrants are deemed to be liability instruments, then the fair value is treated as a deemed dividend and credited to additional paid in capital.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. For the three and six months ended June 30, 2022 and the year ended December 31, 2021, there were no impairment losses recognized for long-lived assets.

Intangible 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. If the review indicates the impairment, an impairment loss would be recorded for the difference of the value recorded and the new value. For the three and six months ended June 30, 2022 and the year ended December 31, 2021, there were no impairment losses recognized for intangible assets. 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. For the three and six months ended June 30, 2022, we derecognized the intangibles of $0.8 million associated with OT-101upon the transfer of our non-financial asset as a capital contribution for our 45% ownership in the JV.

Goodwill

Goodwill

Goodwill represents the excess of the purchase price of acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least once annually, at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the reporting unit. If, on the basis of qualitative factors, it is considered not more likely than not that the fair value of the reporting unit is less than the carrying amount, further testing of goodwill for impairment would not be required. Otherwise, goodwill impairment is tested using a two-step approach.

The first step involves comparing the fair value of the reporting unit to its carrying amount. If the fair value of the reporting unit is determined to be greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount is determined to be greater than the fair value, the second step must be completed to measure the amount of impairment, if any. The second step involves calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit as determined in step one. The implied fair value of the goodwill in this step is compared to the carrying value of goodwill. If the implied fair value of the goodwill is less than the carrying value of the goodwill, an impairment loss equivalent to the difference is recorded. For the three and six months ended June 30, 2022 and the year ended December 31, 2021 there were no impairment losses recognized for Goodwill. 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. For the three and six months ended June 30, 2022, we derecognized the goodwill of $4.8 million associated with OT-101upon the transfer of our non-financial asset as a capital contribution for our 45% ownership in the JV.

Derivative Financial Instruments Indexed to the Company’s Common Stock

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.

Convertible Instruments

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging”.

ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20 “Debt – Debt with Conversion and Other Options.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Original issue discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

ASC 815-40 “Derivatives and Hedging – Contracts in Entity’s Own Equity” provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

Variable Interest Entity (VIE) Accounting

Variable Interest Entity (VIE) Accounting

The Company evaluates its ownership, contractual relationships and other interests in entities to determine the nature and extent of the interests, whether such interests are variable interests and whether the entities are VIEs in accordance with ASC 810, Consolidations. These evaluations can be complex and involve Management judgment as well as the use of estimates and assumptions based on available historical information, among other factors. Based on these evaluations, if the Company determines that it is the primary beneficiary of a VIE, the entity is consolidated into the financial statements. At June 30, 2022 and December 31, 2021, the Company identified EdgePoint to be the Company’s sole VIE. At June 30, 2022 and December 31, 2021, the Company’s ownership percentage of EdgePoint was 29% and 29%, respectively. The VIE’s net assets were $0.1 million and $0.1 million at June 30, 2022 and December 31, 2021, respectively.

The Company signed a joint venture agreement (“JVA”) with Dragon to form a joint venture called GMP Biotechnology, LLC, both affiliates of GMP, on March 31, 2022. The JVA prescribes certain requirements to be completed during the three months ended June 30, 2022 to make the JV fully functional and operational, including issuance of the shares issuable to the Company and Dragon.

Investments - Equity Method

Investments - Equity Method

The Company accounts for equity method investments at cost, adjusted for the Company’s share of the investee’s earnings or losses, which are reflected in the consolidated statements of operations. The Company periodically reviews the investments for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

The Investment in GMP Bio represents the investment into equity securities for which the Company elected the fair value option pursuant to ASC 825-10-15 and subsequent fair value changes in the GMP Bio shares shall be included in the result from other income. Refer to Note 6 to these Notes to the Consolidated Financial Statements.

Joint Venture agreement

Joint Venture agreement

We have equity interest in unconsolidated arrangement that is primarily engaged in the business of drug discovery, development, and commercialization, including but not limited to development and commercialization of TGF-beta therapeutics as well as establishing and operating contract development and manufacturing organization (“CDMO”) facilities and capabilities. The Company first reviews the arrangement to determine if it meets the definition of an accounting joint venture pursuant to ASC 323-10-20. In order to meet the definition of a joint venture, the arrangement must have all of the following characteristics, (i) the arrangement is organized within a separate legal entity, (ii) the entity is under the joint control of the venturers, (iii) the venturers must be able to exercise joint control through their equity investments, (iv) the qualitative characteristics of the entity, including its purpose and design must be consistent with the definition of a joint venture.

We consolidate arrangements that are considered to be VIEs where we are the primary beneficiary. We analyze our investments in joint ventures to determine if the joint venture is considered a VIE and would require consolidation. We (i) evaluate the sufficiency of the total equity investment at risk, (ii) review the voting rights and decision-making authority of the equity investment holders as a group and whether there are limited partners (or similar owning entities) that lack substantive participating or kick out rights, guaranteed returns, protection against losses, or capping of residual returns within the group and (iii) establish whether activities within the venture are on behalf of an investor with disproportionately few voting rights in making this VIE determination.

To the extent that we own interests in a VIE and we (i) have the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) have the obligation or rights to absorb losses or receive benefits that could potentially be significant to the VIE, then we would be determined to be the primary beneficiary and would consolidate the VIE. To the extent that we own interests in a VIE, then at each reporting period, we re-assess our conclusions as to which, if any, party within the VIE is considered the primary beneficiary.

To the extent that our arrangements do not qualify as VIEs, they are consolidated if we control them through majority ownership interests or if we are the managing entity (general partner or managing member) and our partner does not have substantive participating rights. Control is further demonstrated by our ability to unilaterally make significant operating decisions, refinance debt, and sell the assets of the joint venture without the consent of the non-managing entity and the inability of the non-managing entity to remove us from our role as the managing entity.

We use the equity method of accounting for those arrangements where we exercise significant influence but do not have control. Under the equity method of accounting, our investment in each arrangement is included on our consolidated balance sheet; however, the assets and liabilities of the joint ventures for which we use the equity method are not included on our consolidated balance sheet.

When we sell or contribute properties to unconsolidated arrangements and retain a non-controlling ownership interest in such assets, we recognize the difference between the consideration received and the carrying amount of the asset sold or contributed when its derecognition criteria are met. The equity method investment we retain in such partial sale transactions is noncash consideration and is measured at fair value. As a result, the accounting for a partial sale will result in the recognition of a full gain or loss.

When circumstances indicate there may have been a reduction in the value of an equity investment, we evaluate whether the loss in value is other than temporary. If we conclude it is other than temporary, we recognize an impairment charge to reflect the equity investment at fair value.

The Company elected the fair value option under the fair value option Subsection of Section 825-10-15 to account for its equity-method investment as the Company believes that the fair value option is most appropriate for a company in the biotechnology industry, The fair value option is more appropriate for companies that are involved in extensive and usually very expensive research and development efforts, which are not appropriately reflected in the market value or reflective of the true value of the development activities of the company

Revenue Recognition

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (Topic 606).

Under Topic 606, the Company recognizes revenue when its customers obtain control of the promised good or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company applies the following five-step: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

At contract inception, once the contract is determined to be within the scope of Topic 606, the Company identifies the performance obligation(s) in the contract by assessing whether the goods or services promised within each contract are distinct. The Company then recognizes revenue for the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company anticipates generating revenues from rendering services to other third-party customers for the development of certain drug products and/or in connection with certain out-licensing agreements. In the case of services rendered for development of the drugs, revenue is recognized upon the achievement of the performance obligations or over time on a straight-line basis over the extended service period. In the case of out-licensing contracts, the Company records revenues either upon achievement of certain pre-defined milestones, when there is no obligation of the Company achieve any performance obligations in connection with the said pre-defined milestones, or upon achievement of the performance obligations if the milestones require the Company to provide the performance obligations.

The Company occasionally collects advance payments from customers toward commitments to provide services or performance obligations, in which case the advance payment is recorded as a liability until the obligations are fulfilled and revenue is recognized.

Research & Development Costs

Research & Development Costs

In accordance with ASC 730-10-25 “Research and Development”, research and development costs are charged to expense as and when incurred.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In August 2020, the FASB issued “ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”) which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition was permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption was permitted no earlier than the fiscal year beginning after December 15, 2020. The is evaluating the impact of implementation on its financial statements, if any.

All other newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

Prior Period Reclassifications

Prior Period Reclassifications

Certain amounts in prior periods may have been reclassified to conform with current period presentation.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

SCHEDULE OF UNREALIZED GAINS AND LOSSES

	Initial Book Value		Cumulative Gross Unrealized Gains		Cumulative Gross Unrealized Losses		Fair Value
June 30, 2022
Investment in GMP Bio (equity securities)	$	22,640,521	$	-	$	-	$	22,640,521
Total	$	22,640,521	$	-	$	-	$	22,640,521

SUMMARY OF CHANGES IN FAIR VALUE OF LONG-TERM INVESTMENT IN EQUITY SECURITIES

	June 30, 2022 Fair Value
Balance at January 1, 2022	$	-
Contribution at cost basis		5,689,044
Gain on derecognition of non-financial asset		16,951,477
Change in fair value		-
Balance at June, 2022	$	22,640,521

SUMMARY OF CHANGES IN FAIR VALUE OF DERIVATIVE LIABILITIES

The table below sets forth a summary of the changes in the fair value of the Company’s derivative liabilities classified as Level 3 as of June 30, 2022 and 2021:

	June 30, 2022 Conversion Feature		June 30, 2021 Conversion Feature
Balance at January 1, 2022 and 2021	$	340,290	$	777,024
New derivative liability		-		-
Reclassification to additional paid in capital from conversion of debt to common stock		-		(144,585	)
Change in fair value		67,922		(93,829	)
Balance at June, 2022 and 2021	$	408,212	$	538,610

SUMMARY OF ESTIMATE FAIR VALUE OF DERIVATIVE LIABILITIES

	June 30, 2022 Key Assumptions for fair value of conversions
Risk free interest		0.17% -1.03%
Market price of share	$	0.17-0.23
Life of instrument in years		0.01 – 0.33
Volatility		107.50%-109.40%
Dividend yield		0%

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INTANGIBLE ASSETS AND GOODWILL (Tables)

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

SCHEDULE OF INTANGIBLE ASSETS

The following table summarizes the balances as of June 30, 2022 and December 31, 2021, of the intangible assets acquired, their useful life, and annual amortization:

	June 30, 2022			Remaining Estimated Useful Life (Years)
Intangible asset – Intellectual property	$	819,191			16.50
Intangible asset – Capitalization of license cost		190,989			16.50
		1,010,180
Less Accumulated Amortization		(201,180	)
Less: Derecognition of carrying value upon transfer of non-financial asset		809,000
Total	$	-

	December 31, 2021			Remaining Estimated Useful Life (Years)
Intangible asset – Intellectual property	$	819,191			17.00
Intangible asset – Capitalization of license cost		190,989			17.00
		1,010,180
Less Accumulated Amortization		(188,339	)
Total	$	821,841

	June 30, 2022
Intangible asset – Intellectual property	$	1,377,200
		1,377,200
Less Accumulated amortization		(275,440	)
Total	$	1,101,760

	December 31, 2021
Intangible asset – Intellectual property	$	1,377,200
		1,377,200
Less Accumulated amortization		(275,440	)
Total	$	1,101,760

 

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables)

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expense consists of the following amounts:

	June 30, 2022		December 31, 2021
Accounts payable	$	1,870,809	$	1,927,749
Accrued expense		1,062,175		1,164,974
	$	2,932,984	$	3,092,723

	June 30, 2022		December 31, 2021
Accounts payable – related party	$	339,460	$	403,423

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CONVERTIBLE DEBENTURES, NOTES AND OTHER DEBT (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

SCHEDULE OF CONVERTIBLE DEBENTURES AND NOTES, NET OF DISCOUNT

As of June 30, 2022 special purchase agreements (SPAs) with convertible debentures and notes, net of debt discount and including accrued interest, if any, consist of the following amounts:

	June 30, 2022
Convertible debentures
10% Convertible note payable, due April 23, 2022 – Bridge Investor	$	35,556
10% Convertible note payable, due April 23, 2022 – Related Party		164,444
10% Convertible note payable, due August 6, 2022 – Bridge Investor		198,332
		398,331
Fall 2019 Notes
5% Convertible note payable – Stephen Boesch		121,458
5% Convertible note payable – Related Party		282,483
5% Convertible note payable – Dr. Sanjay Jha (Through his family trust)		282,003
5% Convertible note payable – CEO, CTO* & CFO– Related Parties		92,407
5% Convertible note payable – Bridge Investors		189,322
		967,674
August 2021 Convertible Notes
5% Convertible note – Autotelic Inc– Related Party		261,301
5% Convertible note – Bridge investors		390,385
5% Convertible note – CFO – Related Party		78,390
		730,076
JH Darbie PPM Debt
16% Convertible Notes - Non-related parties		2,305,370
16% Convertible Notes – CEO – Related Party		122,616
		2,427,986
November/December 2021 & March 2022 Notes
12% Convertible Notes – Accredited Investors		333,262
Debt for Clinical Trials – GMP
2% Convertible Notes - GMP		4,614,411
May and June 2022 Note
12% Convertible Notes – Accredited Investors		62,290
Other Debt
Short term debt – Bridge investors		223,122
Short term debt from CFO – Related Party		25,050
Short term debt – Autotelic Inc– Related Party		20,000
		268,172
Total of convertible debentures & notes and other debt	$	9,802,202

For information on the special purchase agreements (SPAs) with convertible debentures and notes, net of debt discount and including accrued interest, if any, as of December 31, 2022, refer to our Annual Report on Form 10-K for the year ended December 31, 2021.

* The CTO was a related party till July 2021, when he resigned as the CTO due to health reasons.

SCHEDULE OF CONVERTIBLE NOTES, NET OF DISCOUNT

As of June 30, 2022, and December 31, 2021, the August 2021 convertible notes, inclusive of accrued interest, consist of the following amounts:

	June 30, 2022		December 31, 2021
Autotelic Related party convertible note, 5% coupon August 2022	$	261,301	$	256,634
CFO Related party convertible note, 5% coupon August 2022		78,390		76,531
Accredited investors convertible note, 5% coupon August 2022		390,385		381,123
	$	730,076	$	714,288

As of June 30, 2022, and December 31, 2021, convertible notes under the November-December 2021 Financing, net of debt discount, consist of the following amounts:

	June 30, 2022			December 31, 2021
Mast Hill Convertible note, 12% coupon November 21	$	-		$	250,000
Talos Victory Convertible note, 12% coupon November 2021		-			250,000
First Fire Global Opportunities LLC Convertible note, 12% coupon, December 2021		-			250,000
Blue Lake Partners LLC Convertible note, 12% coupon, December 2021		250,000			250,000
Fourth Man LLC Convertible note, 12% coupon December 2021		250,000			250,000
Convertible notes, gross	$	500,000		$	1,250,000
Less Debt discount recorded		(500,000	)		(1,250,000	)
Amortization debt discount		269,563			76,994
Convertible notes, net	$	269,563		$	76,994

 As of June 30, 2022, and December 31, 2021, Fourth Man convertible note, net of debt discount, consist of the following amounts:

	June 30, 2022			December 31, 2021
Fourth Man Convertible note, 12% coupon March 2023	$	250,000		$	-
Debt Discount		(186,301	)		-
Convertible notes, net	$	63,699		$	-

 As of June 30, 2022, and December 31, 2021, convertible note under the May 2022 Mast Financing, net of debt discount, consist of the following amounts:

	June 30, 2022			December 31, 2021
Mast Hill Convertible note, 12% coupon May 2023	$	605,000		$	-
Convertible notes, gross	$	605,000		$	-
Less Debt discount recorded		(605,000	)		-
Amortization debt discount		53,257			-
Convertible notes, net	$	53,257		$	-

 As of June 30, 2022, and December 31, 2021, convertible note under the June 2022 Blue Lake Financing, net of debt discount, consist of the following amounts:

	June 30, 2022			December 31, 2021
Blue Lake Convertible note, 12% coupon June 2023	$	335,000		$	-
Convertible notes, gross	$	335,000		$	-
Less Debt discount recorded		(335,000	)		-
Amortization debt discount		9,034			-
Convertible notes, net	$	9,034		$	-

 

SCHEDULE OF SHORT-TERM LOANS

As of June 30, 2022 compared to December 31, 2021, other short-term advances consist of the following amounts obtained from various employees and related parties:

Other Advances	June 30, 2022		December 31, 2021
Short term advance from CEO – Related Party	$	-	$	20,000
Short term advances – bridge investors		223,122		265,000
Short term advances from CFO – Related Party		25,050		45,050
Short term advance – Autotelic Inc. – Related Party		20,000		20,000
Accrued interest on advances		-		9,212
	$	268,172	$	359,262

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PRIVATE PLACEMENT AND JH DARBIE FINANCING (Tables)

6 Months Ended

Jun. 30, 2022

Private Placement And Jh Darbie Financing

SCHEDULE OF FUNDS RECEIVED UNDER THE SUBSCRIPTION AGREEMENT

As June 30, 2022 and December 31, 2021 funds received under the JH Darbie Financing, net of debt discount, consist of the following amounts:

	June 30, 2022		December 31, 2021
Convertible promissory notes
Subscription agreements - accredited investors	$	2,305,370	$	2,353,253
Subscription agreements – related party		122,616		109,046
Total convertible promissory notes	$	2,427,986	$	2,462,299

SCHEDULE OF FAIR VALUE WARRANTS ESTIMATED USING BLACK SCHOLES VALUATION MODEL

Expected Term	1.5 years
Expected volatility		152.3%-164.8	%
Risk-free interest rates		0.09%-0.11	%
Dividend yields		0.00	%

 

Strike price	$	0.15
Expected Term	1 year
Expected volatility		115.1	%
Risk-free interest rates		1.36	%
Dividend yields		0.00	%

 

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STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2022

Compensation Related Costs [Abstract]

SCHEDULE OF COMPENSATION BASED STOCK OPTION ACTIVITY

Compensation based stock option activity for qualified and unqualified stock options are summarized as follows:

				Weighted
For the six months ended June 30, 2022				Average
	Shares			Exercise Price
Outstanding at January 1, 2022		16,592,620		$	0.30
Expired or cancelled		(2,359	)		11.88
Outstanding at June 30, 2022		16,590,261		$	0.30

SCHEDULE OF OPTIONS TO PURCHASE SHARES OF COMMON STOCK OUTSTANDING AND EXERCISABLE

The following table summarizes information about options to purchase shares of the Company’s Common Stock outstanding and exercisable at June 30, 2022:

				Weighted-		Weighted-
				Average		Average
		Outstanding		Remaining Life		Exercise		Number
Exercise prices		Options		In Years		Price		Exercisable
$	0.14		7,150,000		9.17	$	0.14		3,972,500
	0.16		5,502,761		9.01		0.16		5,502,761
	0.22		1,750,000		3.84		0.22		1,750,000
	0.38		900,000		3.16		0.38		900,000
	0.73		762,500		2.78		0.73		762,500
	1.37		150,000		0.99		1.37		150,000
	1.43		300,000		2.91		1.43		300,000
	15.00		75,000		2.91		15.00		75,000
			16,590,261		7.38	$	0.30		13,412,761

SCHEDULE OF BLACK SCHOLES VALUATION ALLOWANCE MODEL

Expected Term		1 year
Strike price	$	0.15
Expected volatility		115.1	%
Risk-free interest rates		1.36	%
Dividend yields		0.00	%

SCHEDULE OF WARRANTS ACTIVITY

The issuance of warrants to purchase shares of the Company’s Common Stock, including those attributed to debt issuances, as of June 30, 2022 are summarized as follows:

	Shares			Average Exercise Price
Outstanding at January 1, 2022		53,314,424		$	0.20
Issued during the six months ended June 30, 2022		34,375,066			0.15-0.20
Exercised / cancelled during the six months ended June 30, 2022		(9,615,385	)		0.13
Outstanding at June 30, 2022		82,322,855		$	0.18

SCHEDULE OF WARRANTS OUTSTANDING AND EXERCISABLE

The following table summarizes information about warrants outstanding and exercisable at June 30, 2022:

		Outstanding and exercisable
				Weighted-		Weighted-
				Average		Average
		Number		Remaining Life		Exercise		Number
Exercise Price		Outstanding		in Years		Price		Exercisable
$	0.20		42,737,500		0.75	$	0.20		4,237,500
	0.13		961,539		4.46		0.13		4,807,693
	0.15		33,000,066		1.75		0.15		33,000,066
	0.20		5,623,750		4.75-4.98		0.20		5,623,750
			82,322,855		2.0	$	0.18		81,920,259

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DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details Narrative) - USD ($)		1 Months Ended							3 Months Ended			6 Months Ended		9 Months Ended
	May 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Feb. 28, 2022	Jan. 31, 2022	Nov. 30, 2021	May 31, 2021	Mar. 31, 2021	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2021	Aug. 31, 2021
Sale of Stock, Number of Shares Issued in Transaction			300,000
Debt Conversion, Converted Instrument, Shares Issued		4,025,000			3,041,958
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right		81,920,259							81,920,259			81,920,259
Warrants issuance cost												$ 2,900,000
Stock Issued During Period, Value, New Issues									$ 46,822	$ 51,805	$ 99,055
Common Stock, Par or Stated Value Per Share		$ 0.01							$ 0.01			$ 0.01			$ 0.01
Proceeds from Issuance of Common Stock												$ 98,627	$ 70,108
Proceeds from Convertible Debt												$ 983,175	200,000
Preferred Stock, Par or Stated Value Per Share		$ 0.01							$ 0.01			$ 0.01			$ 0.01
Net accumulated losses		$ 19,858,712							$ 19,858,712			$ 19,858,712			$ 31,021,050
Working Capital Deficit		$ 15,000,000							$ 15,000,000			15,000,000
Cash Flows Operating Activities												$ 1,165,799	$ 2,465,917
Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.15							$ 0.15			$ 0.15
Oncotelic Warrant [Member]
Stock Issued During Period, Shares, New Issues				33,000,000
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right				50,000
Edgepoint Common Stock [Member] | Warrant [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right								50,000						50,000
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 1.00						$ 1.00
Edgepoint Common Stock [Member] | Oncotelic Warrant [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right								50,000						50,000
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.20						$ 0.20
Convertible Promissory Note [Member]
Debt Instrument, Convertible, Conversion Price								$ 0.18						$ 0.18
Convertible Promissory Note [Member] | Warrant [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right								100,000						100,000
Convertible Promissory Note [Member] | Edgepoint Common Stock [Member]
Debt Instrument, Convertible, Conversion Price								$ 1.00						$ 1.00
Convertible Promissory Note [Member] | Edgepoint Common Stock [Member] | Maximum [Member]
Debt Conversion, Converted Instrument, Shares Issued								25,000
One Convertible Promissory Note [Member] | Maximum [Member]
Debt Conversion, Converted Instrument, Shares Issued								138,889
One Convertible Promissory Note [Member] | Edgepoint Common Stock [Member]
Debt Instrument, Convertible, Conversion Price								$ 0.18						$ 0.18
One Convertible Promissory Note [Member] | Edgepoint Common Stock [Member] | Maximum [Member]
Debt Conversion, Converted Instrument, Shares Issued														138,889
First Fire Note [Member]
Repaid and converted amount	$ 35,000
Repaid and converted shares	500,000
Supplemental Agreement [Member] | Golden Mountain Partners LLC [Member]
Investment Company, General Partner Advisory Service												$ 1,200,000
Subscription Agreements [Member] | Edgepoint AI, Inc [Member]
Sale of Stock, Number of Shares Issued in Transaction								100
Stock Issued During Period, Shares, New Issues								25,000						25,000
Sale of Stock, Price Per Share								$ 1.00						$ 1.00
Equity Purchase Agreement [Member]
Stock Issued During Period, Value, New Issues							$ 4,000,000.0
Proceeds from Issuance of Common Stock							500,000
Equity Purchase Agreement [Member] | Peak One Opportunity Fund, L.P [Member]
Stock Issued During Period, Value, New Issues							$ 10,000,000.0
Common Stock, Par or Stated Value Per Share							$ 0.01
Note Purchase Agreements [Member] | Autotelic Inc [Member]
Debt Instrument, Face Amount																$ 698,500
Securities Purchase Agreements [Member]
Debt Instrument, Face Amount	$ 600,000	$ 340,000	$ 250,000						$ 340,000	$ 250,000		$ 340,000			$ 250,000
Proceeds from Convertible Debt						$ 1,250,000
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01	$ 0.01						$ 0.01	$ 0.01		$ 0.01			$ 0.01
Securities Purchase Agreements [Member] | JH Darbie & Co Inc [Member]
Proceeds from Convertible Debt												$ 1,250,000

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SCHEDULE OF UNREALIZED GAINS AND LOSSES (Details) - USD ($)	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Investment in equity securities, initial book value	$ 22,640,521
Investment in equity securities, unrealized gains
Investment in equity securities, unrealized losses
Investment in equity securities, fair value	22,640,521
GMP Bio [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Investment in equity securities, initial book value	22,640,521
Investment in equity securities, unrealized gains
Investment in equity securities, unrealized losses
Investment in equity securities, fair value	$ 22,640,521

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SUMMARY OF CHANGES IN FAIR VALUE OF LONG-TERM INVESTMENT IN EQUITY SECURITIES (Details)	6 Months Ended
	Jun. 30, 2022 USD ($)
Accounting Policies [Abstract]
Balance at January 1, 2022
Contribution at cost basis	5,689,044
Gain on derecognition of non-financial asset	16,951,477
Change in fair value
Balance at June, 2022	$ 22,640,521

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SUMMARY OF CHANGES IN FAIR VALUE OF DERIVATIVE LIABILITIES (Details) - USD ($)	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Accounting Policies [Abstract]
Balance at January 1, 2022 and 2021	$ 340,290	$ 777,024
New derivative liability
Reclassification to additional paid in capital from conversion of debt to common stock		(144,585)
Change in fair value	67,922	(93,829)
Balance at June, 2022 and 2021	$ 408,212	$ 538,610

XML

SUMMARY OF ESTIMATE FAIR VALUE OF DERIVATIVE LIABILITIES (Details)	6 Months Ended
	Jun. 30, 2022 $ / shares
Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Derivative Liability, Measurement Input	0.17
Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Derivative Liability, Measurement Input	1.03
Measurement Input, Share Price [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Derivative Liability, Measurement Input	0.17
Measurement Input, Share Price [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Derivative Liability, Measurement Input	0.23
Measurement Input, Expected Term [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Derivative liability, measurement input term	3 days
Measurement Input, Expected Term [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Derivative liability, measurement input term	3 months 29 days
Measurement Input, Price Volatility [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Derivative Liability, Measurement Input	107.50
Measurement Input, Price Volatility [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Derivative Liability, Measurement Input	109.40
Measurement Input, Expected Dividend Rate [Member]
Property, Plant and Equipment [Line Items]
Derivative Liability, Measurement Input	0

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Impairment, Long-Lived Asset, Held-for-Use	$ 0
Impairment of Intangible Assets (Excluding Goodwill)	0
Gain loss on intangible assets	800,000	$ 800,000
Goodwill impairment loss	4,800,000	$ 4,800,000	$ 0
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage		29.00%	29.00%
Assets	40,387,968	$ 40,387,968	$ 23,613,351
Consolidated Entity, Excluding Consolidated VIE [Member]
Assets	$ 100,000	$ 100,000	$ 100,000
OT-101 [Member]
Ownership percentage	45.00%	45.00%
PointR [Member]
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable		$ 2,625,000
Fair Value, Inputs, Level 3 [Member] | PointR [Member]
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable		$ 2,625,000

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SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Intangible asset, gross	$ 1,010,180	$ 1,010,180
Less Accumulated Amortization	(201,180)	(188,339)
Less: Derecognition of carrying value upon sale of asset	809,000
Intangible asset, net		821,841
Research and Development Expense [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible asset, gross	1,377,200	1,377,200
Less Accumulated Amortization	(275,440)	(275,440)
Intangible asset, net	1,101,760	1,101,760
Intellectual Property [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible asset, gross	$ 819,191	$ 819,191
Finite-Lived Intangible Asset, Useful Life	16 years 6 months	17 years
Intellectual Property [Member] | Research and Development Expense [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible asset, gross	$ 1,377,200	$ 1,377,200
License [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible asset, gross	$ 190,989	$ 190,989
Finite-Lived Intangible Asset, Useful Life	16 years 6 months	17 years

XML

INTANGIBLE ASSETS AND GOODWILL (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 30, 2018	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Goodwill [Line Items]
Goodwill		$ 16,182,457		$ 16,182,457		$ 21,062,455
Goodwill, Impairment Loss		4,800,000		4,800,000		0
Amortization of identifiable intangible assets		0	$ 12,841	12,841	$ 25,683
Derecognition of carrying value upon sale of asset		809,000		809,000
Intangible asset, net						821,841
Research and Development Expense [Member]
Goodwill [Line Items]
Intangible asset, net		1,101,760		1,101,760		$ 1,101,760
Merger Agreement [Member] | PointR [Member]
Goodwill [Line Items]
Goodwill		16,182,456		16,182,456
Merger Agreement [Member] | Oncotelic [Member]
Goodwill [Line Items]
Goodwill		$ 4,879,999		4,879,999
Goodwill, Impairment Loss				$ 4,900,000
Assignment And Assumption Agreement [Member] | Autotelic Inc [Member]
Goodwill [Line Items]
Stock Issued During Period, Shares, Acquisitions	204,798
Stock Issued During Period, Value, Acquisitions	$ 819,191

XML

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Accounts payable	$ 1,870,809	$ 1,927,749
Accrued expense	1,062,175	1,164,974
Accounts Payable and Accrued Liabilities, Current	2,932,984	3,092,723
Accounts payable – related party	$ 339,460	$ 403,423

XML

SCHEDULE OF CONVERTIBLE DEBENTURES AND NOTES, NET OF DISCOUNT (Details)	Jun. 30, 2022 USD ($)
Short-Term Debt [Line Items]
Other debt	$ 268,172
Total of debentures, notes and other debt	9,802,202
Bridge Investor [Member]
Short-Term Debt [Line Items]
Other debt	223,122
5% Convertible Note Payable - Stephen Boesch [Member]
Short-Term Debt [Line Items]
Convertible note payable	121,458
5% Convertible Note Payable Related Party [Member]
Short-Term Debt [Line Items]
Convertible note payable	282,483
5% Convertible Note Payable - Sanjay Jha [Member]
Short-Term Debt [Line Items]
Convertible note payable	282,003
5% Convertible Note Payable - CEO, CTO and CFO [Member]
Short-Term Debt [Line Items]
Convertible note payable	92,407
5% Convertible note payable - Bridge Investors [Member]
Short-Term Debt [Line Items]
Convertible note payable	189,322
5% Convertible Note Payable [Member]
Short-Term Debt [Line Items]
Convertible note payable	967,674
5% Convertible Note Autotelic Inc [Member]
Short-Term Debt [Line Items]
Convertible note payable	261,301
5% Convertible Note Bridge Investors [Member]
Short-Term Debt [Line Items]
Convertible note payable	390,385
5% Convertible Notes Chief Financial Officer [Member]
Short-Term Debt [Line Items]
Convertible note payable	78,390
5% Convertible Note [Member]
Short-Term Debt [Line Items]
Convertible note payable	730,076
Chief Financial Officer [Member]
Short-Term Debt [Line Items]
Other debt	25,050
12% Convertible Note [Member]
Short-Term Debt [Line Items]
Convertible note payable	333,262
Debt Clinical Trials GMP Convertible Note [Member]
Short-Term Debt [Line Items]
Convertible note payable	4,614,411
12% Convertible Note Accredited Investors [Member]
Short-Term Debt [Line Items]
Convertible note payable	62,290
Autotelic [Member]
Short-Term Debt [Line Items]
Other debt	20,000
10% Convertible Note Payable Due April 23, 2022 [Member] | Related Party [Member]
Short-Term Debt [Line Items]
Convertible note payable	164,444
10% Convertible Note Payable Due April 23, 2022 [Member] | Bridge Investor [Member]
Short-Term Debt [Line Items]
Convertible note payable	35,556
10% Convertible Note Payable Due August 6, 2022 [Member] | Bridge Investor [Member]
Short-Term Debt [Line Items]
Convertible note payable	198,332
10% Convertible Note Payable [Member]
Short-Term Debt [Line Items]
Convertible note payable	398,331
16% Convertible Notes [Member] | JH Darbie PPM Debt [Member]
Short-Term Debt [Line Items]
Convertible note payable	2,427,986
16% Convertible Notes [Member] | Non-related Parties [Member] | JH Darbie PPM Debt [Member]
Short-Term Debt [Line Items]
Convertible note payable	2,305,370
16% Convertible Notes [Member] | Chief Financial Officer [Member] | JH Darbie PPM Debt [Member]
Short-Term Debt [Line Items]
Convertible note payable	$ 122,616

XML

SCHEDULE OF CONVERTIBLE NOTES, NET OF DISCOUNT (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
August 2021 [Member]
Short-Term Debt [Line Items]
Convertible notes, net	$ 730,076	$ 714,288
August 2021 [Member] | Autotelic Convertible Note 5% Coupon August 2022 [Member]
Short-Term Debt [Line Items]
Convertible notes, net	261,301	256,634
August 2021 [Member] | CFO Convertible Note 5% Coupon August 2022 [Member]
Short-Term Debt [Line Items]
Convertible notes, net	78,390	76,531
August 2021 [Member] | Accredited Investors Convertible Note, 5% Coupon August 2022 [Member]
Short-Term Debt [Line Items]
Convertible notes, net	390,385	381,123
November December 2021 [Member]
Short-Term Debt [Line Items]
Convertible notes, net	269,563	76,994
Convertible notes, gross	500,000	1,250,000
Less Debt discount recorded	(500,000)	(1,250,000)
Amortization debt discount	269,563	76,994
November December 2021 [Member] | Mast Hill [Member]
Short-Term Debt [Line Items]
Convertible notes, net		250,000
November December 2021 [Member] | Talos Victory [Member]
Short-Term Debt [Line Items]
Convertible notes, net		250,000
November December 2021 [Member] | First Fire Global Opportunities LLC [Member]
Short-Term Debt [Line Items]
Convertible notes, net		250,000
November December 2021 [Member] | Blue Lake Partners LLC [Member]
Short-Term Debt [Line Items]
Convertible notes, net	250,000	250,000
November December 2021 [Member] | Fourth Man LLC [Member]
Short-Term Debt [Line Items]
Convertible notes, net	250,000	250,000
Fourth Man Convertible Note [Member]
Short-Term Debt [Line Items]
Convertible notes, net	63,699
Less Debt discount recorded	(186,301)
Fourth Man Convertible Note [Member] | 12% Coupon March 2023 [Member]
Short-Term Debt [Line Items]
Convertible notes, net	250,000
May 2022 [Member]
Short-Term Debt [Line Items]
Convertible notes, net	53,257
Convertible notes, gross	605,000
Less Debt discount recorded	(605,000)
Amortization debt discount	53,257
May 2022 [Member] | Mast Hill [Member]
Short-Term Debt [Line Items]
Convertible notes, net	605,000
June 2022 [Member]
Short-Term Debt [Line Items]
Convertible notes, net	9,034
Convertible notes, gross	335,000
Less Debt discount recorded	(335,000)
Amortization debt discount	9,034
June 2022 [Member] | Blue Lake Partners LLC [Member]
Short-Term Debt [Line Items]
Convertible notes, net	$ 335,000

XML

SCHEDULE OF SHORT-TERM LOANS (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Short term advance – Autotelic Inc. – Related Party	$ 268,172	$ 359,262
Accrued interest on advances		9,212
Chief Executive Officer [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Short term advance – Autotelic Inc. – Related Party		20,000
Bridge Investor [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Short term advance – Autotelic Inc. – Related Party	223,122	265,000
Chief Financial Officer [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Short term advance – Autotelic Inc. – Related Party	25,050	45,050
Autotelic [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Short term advance – Autotelic Inc. – Related Party	$ 20,000	$ 20,000

XML

CONVERTIBLE DEBENTURES, NOTES AND OTHER DEBT (Details Narrative) - USD ($)			1 Months Ended									3 Months Ended			6 Months Ended		12 Months Ended
	Dec. 31, 2020	Aug. 06, 2019	Jun. 30, 2022	May 31, 2022	Mar. 31, 2022	Jan. 31, 2022	Dec. 31, 2021	Oct. 31, 2021	Aug. 31, 2021	Dec. 31, 2019	Apr. 30, 2019	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Dec. 31, 2020	Sep. 30, 2021	May 31, 2021	Mar. 31, 2021	Jun. 30, 2020
Short-Term Debt [Line Items]
Debt Instrument, Convertible, Beneficial Conversion Feature															$ 570,717	$ 605,719
Amortization of Debt Issuance Costs and Discounts															1,133,270	737,330
Proceeds from Convertible Debt															983,175	200,000
Repayments of Debt															500,000	100,000
Interest Expense, Debt															657,400	0
Debt Instrument, Increase, Accrued Interest															967,674		$ 946,424
Interest Payable, Current							$ 9,212										9,212
Proceeds from Issuance of Common Stock															98,627	70,108
Proceeds from issuance of debt															112,600	0
Accrued intrest															$ 33,000		10,300
Share Price			$ 0.15									$ 0.15			$ 0.15
Convertible notes into common stock, shares			4,025,000			3,041,958
Gain (Loss) on Extinguishment of Debt															$ (257,810)	(27,504)
Golden Mountain Partners LLC [Member]
Short-Term Debt [Line Items]
Interest Payable, Current			$ 4,614,411				4,069,781					4,614,411			4,614,411		4,069,781
Autotelic [Member]
Short-Term Debt [Line Items]
Additional funding to related party							20,000										20,000
Repayment of related party																	20,000
Debt Financing [Member] | Golden Mountain Partners LLC [Member]
Short-Term Debt [Line Items]
Proceeds from Lines of Credit													$ 500,000
Note Purchase Agreement [Member]
Short-Term Debt [Line Items]
Convertible Notes Payable									$ 698,500
Proceeds from Issuance of Common Stock									$ 690,825
Debt Instrument, Description									The convertible notes carry a five (5%) percent coupon and mature one year from issuance. The majority of the August 2021 investors have the right, but not the obligation, not more than five days following the maturity date, to convert all, but not less than all, the outstanding and unpaid principal plus accrued interest into the Company’s common stock, at a conversion price of $
Debt Instrument, Convertible, Conversion Price									$ 0.18
Proceeds from issuance of debt												12,000		0
Accrued intrest															32,000		14,000
Fall 2019 Debt Financing [Member]
Short-Term Debt [Line Items]
Gross proceeds from convertible debt										$ 500,000
Debt financing										$ 1,000,000
Fall 2019 Notes [Member]
Short-Term Debt [Line Items]
Debt financing							850,000										850,000
Repayments of Debt															0	50,000
Fall 2019 Notes [Member] | Note Purchase Agreements [Member]
Short-Term Debt [Line Items]
Interest Expense, Debt												10,625			21,250
GMP Note [Member]
Short-Term Debt [Line Items]
Debt financing																						$ 2,000,000
Debt Instrument, Interest Rate, Stated Percentage																						2.00%
GMP Note Two [Member]
Short-Term Debt [Line Items]
Debt financing																			$ 1,500,000
Debt Instrument, Interest Rate, Stated Percentage																			2.00%
First Tranche [Member] | Debt Financing [Member] | Golden Mountain Partners LLC [Member]
Short-Term Debt [Line Items]
Line of Credit Facility, Periodic Payment								$ 500,000
Convertible Promissory Note [Member]
Short-Term Debt [Line Items]
Debt Instrument, Convertible, Conversion Price																					$ 0.18
Convertible Promissory Note [Member] | October 2021 Note [Member]
Short-Term Debt [Line Items]
Convertible Debt								$ 500,000
Convertible Promissory Note [Member] | January 2021 Note [Member]
Short-Term Debt [Line Items]
Debt Instrument, Interest Rate, Stated Percentage						2.00%
Convertible Debt						$ 500,000
Mast Hill Convertible Note [Member]
Short-Term Debt [Line Items]
Debt Instrument, Unamortized Discount			53,257									53,257		0	53,257	0
Accrued Liabilities			72,600									72,600		0	72,600	0
Blue Lake Convertible Note [Member]
Short-Term Debt [Line Items]
Debt Instrument, Unamortized Discount			7,300									7,300		0	7,300	0
Accrued Liabilities			40,200									40,200		0	40,200	0
Convertible Debt [Member]
Short-Term Debt [Line Items]
Amortization of Debt Issuance Costs and Discounts															500,000
Long-Term Debt, Gross			400,000									400,000			400,000
March 2022 [Member] | Note Purchase Agreement [Member]
Short-Term Debt [Line Items]
Proceeds from issuance of debt												7,644		0
Accrued intrest												63,700		$ 0
Bridge Investor [Member] | Convertible Debt [Member]
Short-Term Debt [Line Items]
Debt Instrument, Convertible, Beneficial Conversion Feature											$ 28,445
Debt Instrument, Unamortized Discount			0				4,400					0			0		4,400
Proceeds from Convertible Debt															4,400	8,130
Bridge Investor [Member] | Convertible Debt [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Short-Term Debt [Line Items]
Debt Instrument, Convertible, Beneficial Conversion Feature		$ 175,000
Debt Instrument, Unamortized Discount			1,700				12,000					1,700			1,700		12,000
Amortization of Debt Discount (Premium)															10,000	4,943
Bridge Investor [Member] | Convertible Debt [Member] | Securities Purchase Agreement [Member]
Short-Term Debt [Line Items]
Debt Instrument, Face Amount											400,000
Bridge Investor [Member] | Convertible Debt [Member] | Peak One and TFK Financing [Member]
Short-Term Debt [Line Items]
Derivative Liability			408,000									408,000			408,000
Credit Risk Derivative Liabilities, at Fair Value			68,000									68,000			68,000
Vyoung Trieu [Member]
Short-Term Debt [Line Items]
Repayment of related party																		$ 50,000
Vyoung Trieu [Member] | Convertible Debt [Member]
Short-Term Debt [Line Items]
Debt Instrument, Face Amount											164,444
Debt Instrument, Convertible, Beneficial Conversion Feature											131,555
Amortization of Debt Issuance Costs and Discounts															19,493	$ 2,743
Debt Instrument, Unamortized Discount			$ 0				19,000				16,444	$ 0			$ 0		19,000
Proceeds from Convertible Debt											$ 148,000
Third Party [Member] | GMP Note [Member]
Short-Term Debt [Line Items]
Debt financing					$ 2,000,000								2,000,000
Third Party [Member] | GMP Note [Member] | Maximum [Member]
Short-Term Debt [Line Items]
Debt financing					$ 2,000,000								2,000,000
Five Institutional Investors [Member] | Securities Purchase Agreement [Member]
Short-Term Debt [Line Items]
Debt Instrument, Face Amount							$ 1,250,000										$ 1,250,000
Debt Instrument, Interest Rate, Stated Percentage							12.00%										12.00%
Debt Instrument, Convertible, Conversion Price							$ 0.07										$ 0.07
Debt Instrument, Interest Rate, Effective Percentage							16.00%										16.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights							9,615,385										9,615,385
Share Price							$ 0.13										$ 0.13
Placement Agent [Member]
Short-Term Debt [Line Items]
Debt Instrument, Convertible, Conversion Price			$ 0.18									$ 0.18			$ 0.18
Placement Agent [Member] | Securities Purchase Agreement [Member]
Short-Term Debt [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross			83,750	302,500	125,000		961,540
Fourth Man LLC [Member] | Securities Purchase Agreement [Member]
Short-Term Debt [Line Items]
Debt Instrument, Face Amount					$ 250,000								$ 250,000
Debt Instrument, Interest Rate, Stated Percentage					12.00%								12.00%
Debt Instrument, Convertible, Conversion Price					$ 0.10								$ 0.10
Debt Instrument, Interest Rate, Effective Percentage					16.00%								16.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					1,250,000								1,250,000
Share Price					$ 0.20								$ 0.20
Mast Hill [Member]
Short-Term Debt [Line Items]
Convertible notes into common stock, shares			4,025,000												4,025,000
Debt conversion, value			$ 280,000												$ 100,000
Extinguishment of Debt, Amount															258,100
Accredited Investor [Member] | Securities Purchase Agreement [Member]
Short-Term Debt [Line Items]
Debt Instrument, Face Amount					$ 250,000								$ 250,000
Debt Instrument, Interest Rate, Stated Percentage					12.00%								12.00%
Debt Instrument, Convertible, Conversion Price					$ 0.10								$ 0.10
Debt Instrument, Interest Rate, Effective Percentage					16.00%								16.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					1,250,000								1,250,000
Share Price					$ 0.20								$ 0.20
One Institutional Investors [Member] | Securities Purchase Agreement [Member]
Short-Term Debt [Line Items]
Debt Instrument, Face Amount			$ 335,000	$ 605,000								$ 335,000			$ 335,000
Debt Instrument, Interest Rate, Stated Percentage			12.00%	12.00%								12.00%			12.00%
Debt Instrument, Convertible, Conversion Price			$ 0.10	$ 0.10								$ 0.10			$ 0.10
Debt Instrument, Interest Rate, Effective Percentage			16.00%	16.00%								16.00%			16.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			837,500	3,025,000								837,500			837,500
Share Price			$ 0.20	$ 0.20								$ 0.20			$ 0.20
Gain (Loss) on Extinguishment of Debt															$ 258,100
Chief Executive Officer [Member]
Short-Term Debt [Line Items]
Debt Instrument, Face Amount			$ 0				$ 20,000					$ 0			0		$ 20,000
Repayments of Debt															20,000
Additional funding to related party	$ 70,000						$ 120,000										120,000	70,000		$ 250,000
Repayment of related party	$ 50,000
CFO [Member]
Short-Term Debt [Line Items]
Repayment of related party																	45,000
Repayments of Short-Term Debt						$ 20,000												$ 25,000
Short-Term Debt, Average Outstanding Amount															$ 25,000		$ 45,000

XML

JOINT VENTURE WITH GMP BIO AND AFFILIATES, EQUITY METHOD INVESTMENT (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Aug. 31, 2022	Dec. 31, 2021
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Conversion description			The JVA permits GMP to seek conversion of certain convertible promissory notes entered into between the Company and GMP (see reference to Purchase Agreements and Notes below) into shares of the Common Stock of the Company within 15 business days of the execution of the JVA at a price of $0.2242 per Common Share, the closing price of the Common Share as traded on the OTCQB the day prior to the execution of the JVA, or the closing price of the Common Stock prior to the date of conversion if not within 15 business days of the JVA. Upon the execution of the JVA, Dragon will pay for and hold 55 shares of GMP Bio and the Company will pay for and hold 45 shares of GMP Bio, both to be acquired at $1.00 per share of GMP Bio. Such shares of GMP Bio were issued shortly after the date of the JVA
Right obligations JVA	$ 11.3		$ 11.3
License agreement description			The Parties also agreed that if a Rare Pediatric Disease (“RPD”) Priority Review Voucher, upon clinical approval of OT-101 Technologies for treatment of diffuse intrinsic pontine glioma (the “DIPG Voucher”), is issued to GMP Bio and GMP Bio, or a subsidiary thereof, sells the DIPG Voucher to a non-GMP subsidiary, then the Company shall be eligible to receive up to 50% of the net sales proceeds or $50 million, whichever is less. Dragon shall fund the JVA, for a total of approximately $27.7 million, based on the conditions contained in the JVA, and the Company will input the licenses under the Agreements into the JV. The Company is obligated to (i) (A) rectify the chain of legal title such that the Company is the sole legal owner of such rights, (B) complete registration as the sole owner of all the Company’s Patent Rights and (C) provide evidence of such registration that is satisfactory to Dragon; (ii) provide Dragon with copies of official documents issued by the relevant patent offices in the relevant countries evidencing the Company’s legal ownership of all the Company’s Patents Rights; and (iii) reflect the Company’s legal ownership of all the Company’s Patent Rights in the relevant online registers of the relevant patent offices in the relevant countries. The JVA intends to raise funding for the JVA through a Series A round of financing of not less than $20 million.
Funding obligation					$ 250,000
Goodwill	16,182,457		$ 16,182,457			$ 21,062,455
Gain on sale of nonfinancial asset	16,951,477		16,951,477
Assets	40,387,968		40,387,968			$ 23,613,351
Operating Expenses	256,315	$ 3,764,212	4,600,522	$ 5,802,093
R And D Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Right obligations JVA	22.7		22.7
License Agreement [Member] | GMP Note [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Intangible assets current	800,000		800,000
Goodwill	4,900,000		4,900,000
Intangible Assets, Net (Excluding Goodwill)	5,700,000		5,700,000
Investment Owned, at Fair Value	22,600,000		22,600,000
Gain on sale of nonfinancial asset			17,000,000
Assets	800,000		800,000
Liabilities	$ 200,000		200,000
Operating Expenses			$ 2,100,000

XML

SCHEDULE OF FUNDS RECEIVED UNDER THE SUBSCRIPTION AGREEMENT (Details) - Subscription Agreements [Member] - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Total convertible promissory notes	$ 2,427,986	$ 2,462,299
Accredited Investors [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Total convertible promissory notes	2,305,370	2,353,253
Related Party [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Total convertible promissory notes	$ 122,616	$ 109,046

XML

SCHEDULE OF FAIR VALUE WARRANTS ESTIMATED USING BLACK SCHOLES VALUATION MODEL (Details)	Jun. 30, 2022 $ / shares	Jun. 30, 2021
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Expected Term	2 years
Strike price	$ 0.15
Measurement Input, Expected Term [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Expected Term	1 year	1 year 6 months
Measurement Input, Price Volatility [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of warrant measurement percentage	115.1
Measurement Input, Price Volatility [Member] | Minimum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of warrant measurement percentage		152.3
Measurement Input, Price Volatility [Member] | Maximum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of warrant measurement percentage		164.8
Measurement Input, Risk Free Interest Rate [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of warrant measurement percentage	1.36
Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of warrant measurement percentage		0.09
Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of warrant measurement percentage		0.11
Measurement Input, Expected Dividend Rate [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of warrant measurement percentage	0.00	0.00

XML

PRIVATE PLACEMENT AND JH DARBIE FINANCING (Details Narrative) - USD ($)	1 Months Ended					6 Months Ended		9 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Feb. 28, 2022	Jan. 31, 2022	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2021
Sale of Stock, Number of Shares Issued in Transaction		300,000
Proceeds from Issuance of Private Placement						$ (25,000)	$ 1,613,200
Debt Conversion, Converted Instrument, Shares Issued	4,025,000			3,041,958
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	81,920,259					81,920,259
Warrants and Rights Outstanding, Term	2 years					2 years
Additional Paid in Capital	$ 40,357,610					$ 40,357,610			$ 35,223,842
Share Price	$ 0.15					$ 0.15
Interest Expense [Member]
Amortization of debt discount and debt issuance costs						$ 52,111	$ 659,854
IPO [Member]
Debt Issuance Costs, Net	$ 640,000					640,000
Legal Fees						$ 39,000
Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.15					$ 0.15
Edgepoint Common Stock [Member] | Warrant [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right					50,000			50,000
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 1.00			$ 1.00
Mateon Common Stock [Member] | Warrant [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.20			$ 0.20
Warrants and Rights Outstanding, Term					3 years			3 years
One Convertible Promissory Note [Member] | Maximum [Member]
Debt Conversion, Converted Instrument, Shares Issued					138,889
One Convertible Promissory Note [Member] | Edgepoint Common Stock [Member]
Debt Instrument, Convertible, Conversion Price					$ 0.18			$ 0.18
One Convertible Promissory Note [Member] | Edgepoint Common Stock [Member] | Maximum [Member]
Debt Conversion, Converted Instrument, Shares Issued								138,889
Edgepoint AI, Inc [Member] | Warrant [Member] | Private Placement [Member]
Share Price							$ 1.00
JH Darbie & Co Inc [Member] | Warrant [Member] | Private Placement [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right							2,035,000
Class of Warrant or Right, Exercise Price of Warrants or Rights							$ 0.21
Additional Paid in Capital							$ 700,000
Share Price							$ 0.20
Stock expiration							3 years
Placement Agent [Member]
Sale of Stock, Number of Shares Issued in Transaction						10
Debt Instrument, Convertible, Conversion Price	0.18					$ 0.18
Percentage of units granted						10.00%
Debt Instrument, Interest Rate During Period						16.00%
Debt Conversion, Description						Convertible at the option of the holder at any time in the Company’s Common Stock or Edgepoint Common Stock
Placement Agent [Member] | Edgepoint Common Stock [Member]
Debt Instrument, Convertible, Conversion Price	1.00					$ 1.00
Investor [Member]
Stock Issued During Period, Shares, New Issues			33,000,000
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right			333,334
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.15		$ 0.15			$ 0.15
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			33,000,066
Fair value adjustment of warrants						$ 2,900,000
Subscription Agreements [Member] | Edgepoint AI, Inc [Member]
Sale of Stock, Number of Shares Issued in Transaction					100
Stock Issued During Period, Shares, New Issues					25,000			25,000
Sale of Stock, Price Per Share					$ 1.00			$ 1.00
Subscription Agreements [Member] | Accredited Investors [Member]
Sale of Stock, Number of Shares Issued in Transaction								100
Proceeds from Issuance of Private Placement								$ 5,000,000
Noncontrolling Interest, Period Increase (Decrease)						$ 1,000,000

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended			6 Months Ended		12 Months Ended
	Dec. 31, 2020	Apr. 30, 2019	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Dec. 31, 2020	Oct. 31, 2015
Captial contribution						$ 644,463
Proceeds from Convertible Debt						983,175	200,000
Stock Issued During Period, Value, New Issues			$ 46,822	$ 51,805	$ 99,055
Short-Term Debt			268,172			268,172		$ 359,262
Chief Executive Officer [Member]
Debt Instrument, Face Amount			0			0		20,000
Repayments of Related Party Debt	$ 50,000
Short-Term Debt								20,000
Vyoung Trieu [Member]
Proceeds from Related Party Debt									$ 70,000
Repayments of Related Party Debt									50,000
Stock Issued During Period, Value, New Issues									$ 250,000
Vyoung Trieu [Member] | Fall 2019 Note [Member]
Debt Instrument, Face Amount		$ 250,000
Debt Conversion, Converted Instrument, Amount		35,000
Vyoung Trieu [Member] | Convertible Debt [Member]
Debt Instrument, Face Amount		164,444
Debt Instrument, Unamortized Discount		16,444	0			0		19,000
Proceeds from Convertible Debt		$ 148,000
Autotelic Inc [Member]
Short-Term Debt					120,000		120,000
Autotelic Inc [Member] | August Two Thousand And Twenty One Note [Member]
Debt Conversion, Converted Instrument, Amount								250,000
Proceeds from Short-Term Debt								270,000
Repayments of Short-Term Debt								$ 20,000
Master Service Agreement [Member] | Autotelic Inc [Member]
Related Party Transaction, Expenses from Transactions with Related Party			1,000		120,000	67,000	482,000
Master Service Agreement [Member] | Autotelic Inc [Member] | Chief Executive Officer [Member]
Captial contribution						600,000
Master Service Agreement [Member] | Autotelic Inc [Member] | Vyoung Trieu [Member] | Maximum [Member]
Equity Method Investment, Ownership Percentage										10.00%
Maida Consulting Agreement [Member] | Dr. Maida [Member]
Related Party Transaction, Expenses from Transactions with Related Party			$ 0		$ 45,000	$ 75,000	$ 90,000

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EQUITY PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended
	Mar. 31, 2022	Jun. 30, 2022	Jun. 30, 2021
Sale of Stock, Number of Shares Issued in Transaction	300,000
Sale of Stock, Consideration Received on Transaction	$ 52,000
Common Stock [Member]
Sale of Stock, Number of Shares Issued in Transaction		600,000	1,300,000
Sale of Stock, Consideration Received on Transaction		$ 114,930	$ 172,775
Payments of Debt Issuance Costs		$ 98,627	$ 168,752
Common Stock [Member] | Minimum [Member]
Shares Issued, Price Per Share		$ 0.16	$ 0.11
Common Stock [Member] | Maximum [Member]
Shares Issued, Price Per Share		$ 0.22	$ 0.23

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STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)	1 Months Ended				6 Months Ended
	Jun. 30, 2022	May 31, 2022	Mar. 31, 2022	Jan. 31, 2022	Jun. 30, 2022
Accumulated Other Comprehensive Income (Loss) [Line Items]
Sale of Stock, Number of Shares Issued in Transaction			300,000
Sale of Stock, Consideration Received on Transaction			$ 52,000
Debt Conversion, Converted Instrument, Shares Issued	4,025,000			3,041,958
Convertible Debt [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares of common stock	500,000
Repayments of Convertible Debt	$ 35,000
EPL [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Sale of Stock, Number of Shares Issued in Transaction	300,000
Sale of Stock, Consideration Received on Transaction	$ 47,000
First Fire [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares of common stock	1,183,400
Number of exchange of warrants shares	1,923,077
Warrant [Member] | Blue Lake [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares of common stock		1,403,326
Number of exchange of warrants shares		1,923,077
Five Investors [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares of common stock				3,041,958
Number of exchange of warrants shares				5,769,231
Mast Hill [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Debt Conversion, Converted Instrument, Amount	$ 280,000				$ 100,000
Debt Conversion, Converted Instrument, Shares Issued	4,025,000				4,025,000

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SCHEDULE OF COMPENSATION BASED STOCK OPTION ACTIVITY (Details)	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Compensation Related Costs [Abstract]
Options outstanding, beginning balance | shares	16,592,620
Weighted average exercise price outstanding, beginning balance | $ / shares	$ 0.30
Options outstanding, expired or cancelled | shares	(2,359)
Weighted average exercise price outstanding,expired or cancelled | $ / shares	$ 11.88
Options outstanding, ending balance | shares	16,590,261
Weighted average exercise price outstanding,ending balance | $ / shares	$ 0.30

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SCHEDULE OF OPTIONS TO PURCHASE SHARES OF COMMON STOCK OUTSTANDING AND EXERCISABLE (Details)	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Number of outstanding options	16,590,261
Weighted average remaining life In years	7 years 4 months 17 days
Weighted-average exercise price | $ / shares	$ 0.30
Number exercisable	13,412,761
Exercise Price 1 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Prices | $ / shares	$ 0.14
Number of outstanding options	7,150,000
Weighted average remaining life In years	9 years 2 months 1 day
Weighted-average exercise price | $ / shares	$ 0.14
Number exercisable	3,972,500
Exercise Price 2 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Prices | $ / shares	$ 0.16
Number of outstanding options	5,502,761
Weighted average remaining life In years	9 years 3 days
Weighted-average exercise price | $ / shares	$ 0.16
Number exercisable	5,502,761
Exercise Price 3 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Prices | $ / shares	$ 0.22
Number of outstanding options	1,750,000
Weighted average remaining life In years	3 years 10 months 2 days
Weighted-average exercise price | $ / shares	$ 0.22
Number exercisable	1,750,000
Exercise Price 4 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Prices | $ / shares	$ 0.38
Number of outstanding options	900,000
Weighted average remaining life In years	3 years 1 month 28 days
Weighted-average exercise price | $ / shares	$ 0.38
Number exercisable	900,000
Exercise Price 5 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Prices | $ / shares	$ 0.73
Number of outstanding options	762,500
Weighted average remaining life In years	2 years 9 months 10 days
Weighted-average exercise price | $ / shares	$ 0.73
Number exercisable	762,500
Exercise Price 6 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Prices | $ / shares	$ 1.37
Number of outstanding options	150,000
Weighted average remaining life In years	11 months 26 days
Weighted-average exercise price | $ / shares	$ 1.37
Number exercisable	150,000
Exercise Price 7 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Prices | $ / shares	$ 1.43
Number of outstanding options	300,000
Weighted average remaining life In years	2 years 10 months 28 days
Weighted-average exercise price | $ / shares	$ 1.43
Number exercisable	300,000
Exercise Price 8 [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Prices | $ / shares	$ 15.00
Number of outstanding options	75,000
Weighted average remaining life In years	2 years 10 months 28 days
Weighted-average exercise price | $ / shares	$ 15.00
Number exercisable	75,000

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SCHEDULE OF BLACK SCHOLES VALUATION ALLOWANCE MODEL (Details) - Warrant [Member] - JH Darbie Financing [Member]	6 Months Ended
	Jun. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term	1 year
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Strike Price	0.15%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate	115.10%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	1.36%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate	0.00%

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SCHEDULE OF WARRANTS ACTIVITY (Details)	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Number of Stock Options Outstanding, beginning balance | shares	53,314,424
Weighted-Average Exercise Price, Outstanding, beginning balance	$ 0.20
Number of Stock Options, Issued | shares	34,375,066
Number of Stock Options, Expired or cancelled | shares	(9,615,385)
Weighted-Average Exercise Price, Expired or cancelled	$ 0.13
Number of Stock Options Outstanding, ending balance | shares	82,322,855
Weighted-Average Exercise Price, Outstanding, ending balance	$ 0.18
Minimum [Member]
Weighted-Average Exercise Price, Issued	0.15
Maximum [Member]
Weighted-Average Exercise Price, Issued	$ 0.20

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SCHEDULE OF WARRANTS OUTSTANDING AND EXERCISABLE (Details) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Warrants Outstanding, Number of Warrants	82,322,855
Warrants Weighted- Average Exercise Price	$ 0.18
Warrants Exercisable, Exercisable Number of Warrants	81,920,259
Weighted-Average Remaining Life in Years	2 years
Warrant [Member]
Warrants Outstanding, Exercise Price	$ 0.15
Exercise Price 1 [Member] | Warrant [Member]
Warrants Outstanding, Exercise Price	$ 0.20
Warrants Outstanding, Number of Warrants	42,737,500
Warrants Weighted- Average Exercise Price	$ 0.20
Warrants Exercisable, Exercisable Number of Warrants	4,237,500
Weighted-Average Remaining Life in Years		9 months
Exercise Price 2 [Member] | Warrant [Member]
Warrants Outstanding, Exercise Price	$ 0.13
Warrants Outstanding, Number of Warrants	961,539
Warrants Weighted- Average Exercise Price	$ 0.13
Warrants Exercisable, Exercisable Number of Warrants	4,807,693
Weighted-Average Remaining Life in Years	4 years 5 months 15 days
Exercise Price 3 [Member] | Warrant [Member]
Warrants Outstanding, Exercise Price	$ 0.15
Warrants Outstanding, Number of Warrants	33,000,066
Warrants Weighted- Average Exercise Price	$ 0.15
Warrants Exercisable, Exercisable Number of Warrants	33,000,066
Weighted-Average Remaining Life in Years	1 year 9 months
Exercise Price 4 [Member] | Warrant [Member]
Warrants Outstanding, Exercise Price	$ 0.20
Warrants Outstanding, Number of Warrants	5,623,750
Warrants Weighted- Average Exercise Price	$ 0.20
Warrants Exercisable, Exercisable Number of Warrants	5,623,750
Exercise Price 4 [Member] | Warrant [Member] | Minimum [Member]
Weighted-Average Remaining Life in Years	4 years 9 months
Exercise Price 4 [Member] | Warrant [Member] | Maximum [Member]
Weighted-Average Remaining Life in Years	4 years 11 months 23 days

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STOCK-BASED COMPENSATION (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended	6 Months Ended
	Feb. 28, 2022	Jun. 30, 2022	Jun. 30, 2022
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Exercisable, Aggregate Intrinsic Value		$ 260,000	$ 260,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value			$ 0.17
Share based compensation		$ 25,000	$ 50,000
Warrant [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.15	$ 0.15
Fair value of warrant			$ 2,900,000
Investor [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Debt Instrument, Maturity Date, Description	the Company and all except one of the Investors agreed to extend the maturity date of the Notes from March 31, 2022, to March 31, 2023
Stock Issued During Period, Shares, New Issues	33,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.15	$ 0.15	$ 0.15
2017 Equity Incentive Plan [Member] | Maximum [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Shares Issued in Period			2,000,000
2015 and 2005 Equity Incentive Plan [Member] | Maximum [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Shares Issued in Period			7,250,000
2015 Equity Incentive Plan [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Shares Issued in Period			20,000,000
Common Stock, Capital Shares Reserved for Future Issuance		27,250,000	27,250,000

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INCOME TAXES (Details Narrative) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Operating Loss Carryforwards [Line Items]
Net operating loss expiration year	Portions of these carryforwards will expire through 2038
Domestic Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards		$ 236.1
State and Local Jurisdiction [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards		$ 76.3

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COMMITMENTS AND CONTINGENCIES (Details Narrative)	6 Months Ended
	Jun. 30, 2022 USD ($)
PointR [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	$ 2,625,000
Merger Agreement [Member] | Point R Merger [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payments to Acquire Businesses, Gross	17,831,427
Business Combination, Contingent Consideration, Liability	2,625,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	$ 15,000,000