Oncotelic Therapeutics (OTLC) Risk Analysis

We intend to use the net proceeds from sales of our common stock to Mast Hill pursuant to the Equity Purchase Agreement for working capital and general corporate purposes. As of the date of this report, we cannot specify with certainty all of the particular uses of the proceeds from sales of common stock to Mast Hill pursuant to the Equity Purchase Agreement. Accordingly, we will have significant discretion in the use of the net proceeds of sales of common stock to Mast Hill pursuant to the Equity Purchase Agreement. It is possible that we may allocate the proceeds differently than investors in this offering desire or that we will fail to maximize our return on these proceeds. We may, subsequent to this offering, modify our intended use of the proceeds from sales of common stock to Mast Hill pursuant to the Equity Purchase Agreement to pursue strategic opportunities that may arise, such as potential acquisition opportunities. You will be relying on the judgment of our management with regard to the use of the net proceeds from the sales of common stock to Mast Hill pursuant to the Equity Purchase Agreement, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. Any failure to apply the proceeds from sales of common stock to Mast Hill pursuant to the Equity Purchase Agreement effectively could have a material adverse effect on our business and cause a decline in the market price of our common stock.

Under the Equity Purchase Agreement with Mast Hill and subject to other conditions, we may direct Mast Hill to purchase up to 100 million of our shares of common stock over a 24-month period. We registered an aggregate of approximately 115.6 million shares of our common stock (including 8,000,000 shares underlying the secured note, 5,350,000 shares underlying the warrants and 2,250,000 Commitment shares already issued) shares of common stock in the registration statement of which this prospectus is a part pursuant to the Registration Rights Agreement, representing shares which have been and may be issuable to Mast Hill under Note Purchase Agreement and the Equity Purchase Agreement. Notwithstanding Mast Hill's beneficial ownership limitation set forth in the Note Purchase Agreement and Equity Purchase Agreement, if all of the approximately 115.6 million shares offered under the Registration Statement were issued and outstanding as of December 31, 2025, such shares would represent approximately 20.7% of the total number of shares of our common stock outstanding, including the 115.6 million shares offered. The number of shares ultimately offered for sale by Mast Hill under this prospectus is dependent upon a number of factors, including the number of Shares we ultimately issue and sell to Mast Hill under the Equity Purchase Agreement. Because the actual purchase price for the Shares that we may sell to Mast Hill will fluctuate based on the market price of our common stock during the term of the Equity Purchase Agreement, we are not able to determine at this time the exact number of shares of our common stock that we will issue under the Equity Purchase Agreement and, therefore, the exact number of shares we will ultimately register for resale under the Securities Act. Specifically, because the price per share subject to a Put Notice will be equal to a 3% discount to certain trading prices of our common stock as set forth in the Equity Purchase Agreement, Mast Hill will pay less than the then-prevailing market price for our common stock, and the actual Equity Purchase price for the Shares that we may sell to Mast Hill will fluctuate based on the VWAPs and closing prices of our common stock during the term of the Equity Purchase Agreement. As a result of this discount, Mast Hill may have a financial incentive to sell our common stock immediately to realize the profit equal to the difference between the Equity Purchase price and the market price. If Mast Hill sells the common stock, the market price of our common stock could decrease. If the market price of our common stock decreases, Mast Hill may have a further incentive to sell the common stock that it holds. These sales may have a further impact on the market price of our common stock. Moreover, there is an inverse relationship between the market price of our common stock and the number of shares of our common stock that may be sold pursuant to the Equity Purchase Agreement. That is, the lower the market price, the more shares of our common stock that may be sold under the Equity Purchase Agreement. Accordingly, if the market price of our common stock decreases (whether such decrease is due to sales by Mast Hill in the market or otherwise) and, in turn, the Equity Purchase price of our common stock sold to Mast Hill under the Equity Purchase Agreement decreases, this could allow Mast Hill to receive greater numbers of shares of our common stock pursuant to put notices under the Equity Purchase Agreement. Although the number of shares of our common stock that our existing stockholders own will not decrease, the common stock owned by our existing stockholders will represent a smaller percentage of our total outstanding shares after any such sales to Mast Hill. Depending on market liquidity at the time, the sale of a substantial number of shares of our common stock to Mast Hill at a discount to the then-prevailing market price for our common stock under the Equity Purchase Agreement, and the resale of such shares by Mast Hill into the public market, or the perception that such sales may occur, could cause the trading price of our common stock to decline, result in substantial dilution to existing stockholders and make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

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

We are authorized to issue up to 750,000,000 shares of our common stock. As of December 31, 2025, we had approximately 444.2 million shares of common stock issued and outstanding, including approximately 1 million shares of common stock to be issued. As of December 31, 2025, we also had approximately 59.4 million warrants outstanding, approximately 24 million options and approximately 122.4 million shares of common stock issuable upon conversion of convertible notes. Additionally, the Company has authorized 15,000,000 shares of Convertible Preferred Stock. As of December 31, 2025, 24,388 shares of the Company's Preferred Stock were issued to our CEO, of which 4,065 were earned and vested and an additional 8,131 shares have been earned but not yet issued. Each share of Preferred Stock is convertible into 1,000 shares of the Company's Common Stock, and votes with the Common Stock on an as converted basis. To the extent that additional shares of common stock are issued, or options and warrants are exercised, holders of our common stock will experience dilution. In addition, in the event of any future issuances of equity securities or securities convertible into or exchangeable for common stock, holders of our common stock may experience dilution. Our Board of Directors is authorized to issue preferred stock without any action on the part of our stockholders. Our Board of Directors also has the power, without stockholder approval, to set the terms of any such preferred stock that may be issued, including voting rights, conversion rights, dividend rights, preferences over our common stock with respect to dividends or if we liquidate, dissolve, or wind up our business and other terms. If we issue preferred stock in the future that has preference over our common stock with respect to the payment of dividends or upon our liquidation, dissolution or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our common stock, the market price of our common stock could decrease. Any provision permitting the conversion of any such preferred stock into our common stock could result in significant dilution to the holders of our common stock. We also consider from time-to-time various strategic alternatives that could involve issuances of additional common or preferred stock, including but not limited to acquisitions and business combinations.

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

Our common stock is not currently eligible for trading on the Nasdaq Capital Market or on a national securities exchange. Therefore, our common stock is subject to the securities laws of the various states and jurisdictions of the United States in addition to federal securities law. While we may register our common stock or qualify for exemptions for our common stock in one of more states, if we fail to do so the investors in those states where we have not taken such steps may not be allowed to purchase our stock or those who presently hold our stock may not be able to resell their shares without substantial effort and expense. These restrictions and potential costs could be significant burdens on our stockholders.

As of December 31, 2025, while we had net assets of approximately $262.8 million, our common stock had a market price per share of less than $5.00. As a result, transactions in our common stock are subject to the SEC's "penny stock" rules. The designation of our common stock as a "penny stock" likely limits the liquidity of our common stock. Prices for penny stocks are often not available to buyers and sellers and the market may be very limited. Penny stocks are among the riskiest equity investments. Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk-disclosure document prepared by the SEC. The document provides information about penny stocks and the nature and level of risks involved in investing in the penny stock market. A broker must also provide purchasers with bid and offer quotations and information regarding broker and salesperson compensation and make a written determination that the penny stock is a suitable investment for the purchaser and obtain the purchaser's written agreement to the purchase. Many brokers choose not to participate in penny stock transactions. Because of the penny stock rules, there may be less trading activity in penny stocks. Because shares of our common stock are currently subject to these penny stock rules, your ability to trade or dispose of shares of our common stock may be adversely affected.

Our common stock is currently quoted on the OTCQB Market. The quotation of our common stock on the OTCQB Market does not assure that a meaningful, consistent, and liquid trading market currently exists, and in recent years such market has experienced extreme price and volume fluctuations that have particularly affected the market prices of many smaller companies like us. Our common stock is subject to this volatility. Substantially all of the shares of our common stock issuable upon exercise of outstanding options and warrants have been registered or are likely to be registered for resale or are available for sale pursuant to Rule 144 under the Securities Act and may be sold from time to time. As of December 31, 2025, we had approximately 205.6 million shares of common stock underlying currently outstanding convertible debt, warrants and options. Sales of any of these shares on the market, as well as future sales of our common stock by existing stockholders, or the perception that sales may occur at any time, could adversely affect the market price of our common stock. Sales of substantial amounts of common stock, or the perception that such sales might occur, could adversely affect prevailing market prices of our common stock and our stock price may decline substantially in a short time and our stockholders could suffer losses or be unable to liquidate their holdings.