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~~2023.

☐	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 001-40023

GT BIOPHARMA, INC.

(Exact name of registrant as specified in its charter)

Delaware

94-1620407

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

8000 Marina Blvd, Suite 100
Brisbane, CA 94005
(Address of principal executive offices and zip code)

415-919-4040

(Registrant’s telephone number, including area code)

~~N/A~~

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

Title of Each Class		Trading Symbol		Name of exchange on which registered
Common Stock, $0.001 par value per share		GTBP		Nasdaq Capital Market

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 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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “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 ~~15, 2022,~~7, 2023, the ~~issuer~~registrant had ~~31,092,498~~40,639,688 shares of common stock outstanding.

GT ~~Biopharma, Inc. and Subsidiaries~~BIOPHARMA, INC. AND SUBSIDIARIES

FORM 10-Q

For the Six Months Ended June 30, 2023

Table of Contents

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, ~~2022~~2023 (Unaudited) and December 31, ~~2021~~2022	3
	Condensed Consolidated Statements of Operations for the ~~three months~~Three Months and ~~six months~~Six Months ended June 30, ~~2022~~2023 and ~~2021~~2022 (Unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Equity ~~(Deficit)~~for the three Months and Six Months ended June 30, 2023 and 2022 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the ~~three months~~Three Months and ~~six months~~Six Months ended June 30, ~~2022~~2023 and ~~2021~~2022 (Unaudited)	7
	Condensed Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1921
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	2125
Item 4.	Controls and Procedures	2125

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	2227
Item 6.	Exhibits	2227

SIGNATURES		2328

GT BIOPHARMA, ~~INC~~INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except shares and par value)


	June 30,			December 31,			June 30,			December 31,
	2022			2021			2023			2022
		(Unaudited)					(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	5,358		$	8,968		$	2,767		$	5,672
Short-term investments		18,367			23,011			15,206			10,836
Prepaid expenses and other current assets		222			190			48			54
Total current assets		23,947			32,169
Total Current Assets								18,021			16,562

Operating lease right-of-use asset		214			-			114			165
Deposits		9			-			9			9
TOTAL ASSETS	$	24,170		$	32,169		$	18,144		$	16,736

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	7,263		$	8,220		$	3,501		$	3,140
Accrued expenses		1,129			1,901			1,222			1,669
Current operating lease liability		103			-			120			110
Derivative liability		115			138
Total current liabilities		8,610			10,259
Total Current Liabilities								4,843			4,919

Non-current operating lease liability		120			-			-			64
Total liabilities		8,730			10,259
Warrant liability								1,538			19
Total Liabilities							$	6,381		$	5,002

Stockholders’ equity
Convertible Preferred stock, par value $0.01, 15,000,000 shares authorized
Series C – 96,230 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		1			1
Convertible Preferred stock		-			-
Common stock, par value $0.001, 750,000,000 shares authorized, 30,693,558 shares and 32,061,989 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		31			32
Common stock issuable 0 shares and 327,298 shares at June 30, 2022 and December 31, 2021, respectively		-			1,113
Stockholders’ Equity
Convertible Preferred stock, par value $0.01, 15,000,000 shares authorized Series C - 96,230 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively								1			1
Common stock, par value $0.001, 250,000,000 shares authorized, 40,639,688 shares and 32,722,452 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively								41			33
Additional paid in capital		677,411			674,348			688,408			686,168
Accumulated deficit		(662,003	)		(653,584	)		(676,687	)		(674,468	)
Total stockholders’ equity		15,440			21,910
Total Stockholders’ Equity								11,763			11,734
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	24,170		$	32,169		$	18,144		$	16,736

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

GT BIOPHARMA, ~~INC~~INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)


	For the three months ended						For the six months ended
	June 30,						June 30,						2023			2022			2023			2022
	2022			2021			2022			2021			For The Three Months Ended June 30,						For the Six Months Ended June 30,
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			2023			2022			2023			2022
													(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

Operating Expenses:
Research and development		1,139			639			3,226			2,279			2,095			1,139			3,745			3,226
Selling, general and administrative (including $463 and $577 expense from stock compensation granted to officers and directors during the three months ended June 30, 2022 and 2021, and $910 and $14,873 for the six months ended June 30, 2022 and 2021, respectively)		1,875			3,742			5,230			31,104

Selling, general and administrative (including $398 and $463 from stock compensation granted to officers, directors and employees for the three months ended June 30, 2023 and 2022, respectively, and $905 and $910 for the six months ended June 30, 2023 and 2022, respectively)														1,526			1,875			3,541			5,230

Loss from Operations		3,014			4,381			8,456			33,383			3,621			3,014			7,286			8,456

Other (Income) Expense
Interest income		(36	)		-			(44	)		-			(220	)		(36	)		(384	)		(44	)
Interest expense		-			-			-			696			1			-			213			-
Change in fair value of derivative liability		(5	)		480			(23	)		459
Unrealized loss on marketable securities		6			-			30			-
Total Other (Income) Expense		(35	)		480			(37	)		1,155
Change in fair value of warrant liability														(1,387	)		(5	)		(4,311	)		(23	)
Gain on extinguishment of debt														(14	)		-			(547	)		-
Unrealized (gain) loss on marketable securities														(9	)		6			(38	)		30
Total Other (Income), net														(1,629	)		(35	)		(5,067	)		(37	)

Net Loss	$	(2,979	)	$	(4,861	)	$	(8,419	)	$	(34,538	)	$	(1,992	)	$	(2,979	)	$	(2,219	)	$	(8,419	)

Net loss per share - basic and diluted	$	(0.10	)	$	(0.15	)	$	(0.26	)	$	(1.39	)
Net Loss Per Share - Basic and Diluted													$	(0.05	)	$	(0.10	)	$	(0.06	)	$	(0.26	)

Weighted average common shares outstanding - basic and diluted		31,237,560			33,516,428			31,865,425			24,925,908
Weighted Average Common Shares Outstanding - Basic and Diluted														40,172,599			31,237,560			39,632,060			31,865,425

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

GT BIOPHARMA, ~~INC~~INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

Shares Amount Shares Amount Capital Deficit Total
For The Three Months Ended June 30, 2023 (Unaudited)
Preferred Shares Common Shares Additional Paid in Accumulated
Shares Amount Shares Amount Capital Deficit Total

Balance, March 31, 2023 96 $ 1 36,883 $ 37 - $ 687,710 $ (674,695 ) $ 13,053
Cancellation of common stock upon settlement with former officer -
Cancellation of common stock -
Equity compensation to officers, employees, and board of directors -

Fair value of vested stock options - - - - 398 - 398

Issuance of common shares for services -
Issuance of common stock for exercise of Prefunded Warrants - - 2,900 3 - (3 ) - -

Issuance of common shares in settlement of vendors payable - - 857 1 303 - 304

Net loss - - - - - (1,992 ) (1,992 )

Balance, June 30, 2023 96 $ 1 40,640 $ 41 - $ 688,408 $ (676,687 ) $ 11,763
~~For the three months ended June 30, 2022~~ ~~(Unaudited)~~

Preferred Shares Common Shares Common Shares Issuable Additional Paid in Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit Total

Balance, March 31, 2022 96 $ 1 32,346 $ 32 - $ - $ 676,780 $ (659,024 ) $ 17,789

Cancellation of common stock upon settlement with former officer - - (1,845 ) (1 ) - - (222 ) - (223 )

Equity compensation to officers, employees, and board of directors - - 79 - - - 463 - 463

Issuance of common shares for services - - 114 - - - 390 - 390

Net loss - - - - - - - (2,979 ) (2,979 )

Balance, June 30, 2022 96 $ 1 30,694 $ 31 - $ - $ 677,411 $ (662,003 ) $ 15,440

For the six months ended June 30, 2022 (Unaudited)

Preferred Shares Common Shares Common Shares Issuable Additional Paid in Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit Total

Balance, December 31, 2021 96 $ 1 32,062 $ 32 327 $ 1,113 $ 674,348 $ (653,584 ) $ 21,910

Cancellation of common stock upon settlement with former officer
-

-

(1,845
)

(1
)

-

-

(222
)

-

(223
)

Cancellation of common stock - - (291 ) - - -
-
- -

Common shares issued- conversion of notes payable - - 327 - (327 ) (1,113 ) 1,113 - -

Equity compensation to officers, employees, and board of directors - - 164 - - - 910 - 910

Issuance of common shares for services - - 277 - - - 1,262 - 1,262

Net loss - - - - - - - (8,419 ) (8,419 )

Balance, June 30, 2022 96 $ 1 30,694 $ 31 - $ - $ 677,411 $ (662,003 ) $ 15,440
For The Six Months Ended June 30, 2023 (Unaudited)
Preferred Shares Common Shares Additional Paid in Accumulated
Shares Amount Shares Amount Capital Deficit Total

Balance, December 31, 2022 96 $ 1 32,723 $ 33 - $ 686,168 $ (674,468 ) $ 11,734

Private placement of common stock - - 3,600 4 6,264 - 6,268

Initial recognition of fair value of warrant liability - - - - (5,831 ) - (5,831 )

Fair value of vested stock options - - - 905 - 905

Issuance of common shares for services - - 73 - - 315 - 315

Issuance of common stock for exercise of Prefunded Warrants - - 2,900 3 (3 ) - -

Issuance of common shares in settlement of vendors payable - - 1,344 1 590 - 591

Net loss - - - - - (2,219 ) (2,219 )

Balance, June 30, 2023 96 $ 1 40,640 $ 41 - $ 688,408 $ (676,687 ) $ 11,763
5
Shares Amount Shares Amount Shares Amount Capital Deficit Total
For The Three Months Ended June 30, 2022 (Unaudited)
Preferred Shares Common Shares Common Shares Issuable Additional Paid in Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit Total

Balance, March 31, 2022 96 $ 1 32,346 $ 32 - $ - $ 676,780 $ (659,024 ) $ 17,789

Cancellation of common stock upon settlement with former officer - - (1,845 ) (1 ) - - (222 ) - (223 )

Equity compensation to officers, employees, and board of directors - - 79 - - - 463 - 463

Issuance of common shares for services - - 114 - - - 390 - 390

Net loss - - - - - - - (2,979 ) (2,979 )

Balance, June 30, 2022 96 $ 1 30,694 $ 31 - $ - $ 677,411 $ (662,003 ) $ 15,440
For The Six Months Ended June 30, 2022 (Unaudited)
Preferred Shares Common Shares Common Shares Issuable Additional Paid in Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit Total

Balance, December 31, 2021 96 $ 1 32,062 $ 32 327 $ 1,113 $ 674,348 $ (653,584 ) $ 21,910

Cancellation of common stock upon settlement with former officer - - (1,845 ) (1 ) - - (222 ) - (223 )

Cancellation of common stock - - (291 ) - - - - - -

Common shares issued upon conversion of notes payable - - 327 (327 ) (1,113 ) 1,113 - -

Equity compensation to officers, employees, and board of directors - - 164 - - - 910 - 910

Issuance of common shares for services - - 277 - - - 1,262 - 1,262

Net loss - - - - - - - (8,419 ) (8,419 )

Balance, June 30, 2022 96 $ 1 30,694 $ 31 - $ - $ 677,411 $ (662,003 ) $ 15,440
~~For the three months ended June 30, 2021 (Unaudited)~~
Preferred Shares Common Shares Common Shares Issuable Additional Paid in Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit Total

Balance, March 31, 2021 96 $ 1 20,517 $ 21 7,634 $ 25,956 $ 623,287 $ (625,248 ) $ 24,017

Common shares issued upon mandatory conversion of notes payable and accrued interest - - 4,482 4 (4,482 ) (15,240 ) 15,232 - (4 )

Common shares issued upon exercise of warrants - - 2,954 3 - - 16,232 - 16,235

Issuance of common stock for services - - 92 - - - 327 - 327

Equity compensation to officers and board of directors - - 99 - - - 577 - 577

Net loss - - - - - - - (4,861 ) (4,861 )

Balance, June 30, 2021 96 $ 1 28,144 $ 28 3,152 $ 10,716 $ 655,655 $ (630,109 ) $ 36,291
~~For the six months ended June 30, 2021 (Unaudited)~~
Preferred Shares Common Shares Common Shares Issuable Additional Paid in Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit Total

Balance, December 31, 2020 2,450 3 5,218 5 - - 566,356 (595,797 ) (29,433 )

Extinguishment of debt discount upon adoption of ASU 2020-06 - - - - - - (4,745 ) 226 (4,519 )

Conversion of Preferred Series J-1 to common stock (2,354 ) (2 ) 692 1 - - 1 - -

Common shares issued upon mandatory conversion of notes payable and accrued interest - - 8,261 8 3,152 10,716 28,075 - 38,799

Common shares issued upon exercise of warrants - - 3,049 3 - - 16,293 - 16,296

Issuance of common stock in public offering, net of cost - - 4,945 5 - - 24,674 - 24,679

Issuance of common stock for research and development agreement - - 190 - - - 1,355 - 1,355

Issuance of common stock for services - - 2,050 2 - -
8,777
-
8,779

Equity compensation to officers and board of directors - - 3,739 4 - - 14,869 - 14,873
Equity compensation to officers, employees, and board of directors - - 3,739 4 - - 14,869 - 14,873

Net loss - - - - - - - (34,538 ) (34,538 )

Balance, June 30, 2021 96 $ 1 28,144 $ 28 3,152 $ 10,716 $ 655,655 $ (630,109 ) $ 36,291
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6
GT BIOPHARMA, ~~INC~~INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

For the six months ended
June 30,
2022 2021
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (8,419 ) $ (34,538 )
Adjustments to reconcile net loss to net cash (used in) operating activities:
Stock based compensation – consultants and research and development 1,262 10,134
Stock based compensation - officers, employees and board of directors 910 14,873
Convertible notes payable issued for consulting services - 720
Change in fair value of derivative liability (23 ) 459
Change in operating lease right-of-use assets 46 -
Unrealized loss on marketable securities 30 -
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses (32 ) 302
(Increase) in deposits (9 ) -
(Decrease) in accounts payable and accrued expenses (1,729 ) (611 )
(Decrease) in operating lease liability (37 ) -
Increase in accrued interest - 689
Net Cash (Used in) Operating Activities (8,001 ) (7,972 )

CASH FLOWS FROM INVESTING ACTIVITIES
Sales of short term investments 4,614 -
Net Cash Provided By Investing Activities 4,614 -

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock - 24,679
Cancellation of common stock upon settlement with former officer (223 ) -
Proceeds from exercise of warrants - 16,296
Proceeds from issuance of notes payable - 1,205
Net Cash (Used in) Provided by Financing Activities (223 ) 42,180

Net (Decrease) Increase in Cash (3,610 ) 34,208
Cash at Beginning of Period 8,968 5,297
Cash at End of Period $ 5,358 $ 39,505

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ - $ -
Income taxes $ - $ -

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Recognition of operating lease right-of-use assets and related lease liabilities $ 260 $ -
Extinguishment of unamortized debt discount and adjustment to accumulated deficit upon adoption of ASU 2020-06 $ - $ 4,745
Common stock issued upon conversion of notes payable and accrued interest $ - $ 38,799
Convertible notes payable issued for accrued expenses $ - $ 1,525
2023 2022
For The Six Months Ended June 30,
2023 2022
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,219 ) $ (8,419 )
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation - services 315 1,262
Stock based compensation - officers, employees and board of directors 905 910
Change in fair value of warrant liability (4,311 ) (23 )
Gain on extinguishment in settlement of vendor payable (547 ) -
Change in operating lease right-of-use assets 51 46
Unrealized (gain) loss on marketable securities (38 ) 30
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses 5 (32 )
Increase in deposits - (9 )
Increase (decrease) in accounts payable and accrued expenses 1,052 (1,729 )
(Decrease) in operating lease liability (54 ) (37 )
Net Cash Used in Operating Activities (4,841 ) (8,001 )

CASH FLOWS FROM INVESTING ACTIVITIES
Sale (purchase) of investments (4,332 ) 4,614
Net Cash Provided by (Used in) Investing Activities (4,332 ) 4,614

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock and prefunded warrants 6,268 -
Cancellation of common stock upon settlement with former officer - (223 )
Net Cash Provided by (Used in) Financing Activities 6,268 (223 )

Net Decrease in Cash (2,905 ) (3,610 )
Cash at Beginning of Period 5,672 8,968
Cash at End of Period $ 2,767 $ 5,358

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ -
Income taxes paid $ - $ -

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Right-of-use assets exchanged for lease liabilities $ - $ 260
Initial recognition of fair value of warrant liability $ 5,831 $ -
Fair value of common stock issued to a vendor to settle accounts payable $ 591 $ -

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

7
GT BIOPHARMA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, ~~2022~~2023 and ~~2021~~2022
~~(Unaudited)~~(Unaudited, in thousands, except shares data)

Note 1 – Organization and Operations

In 1965, the corporate predecessor of GT Biopharma, Inc. (Company), Diagnostic Data, Inc. was incorporated in the State of California. Diagnostic Data changed its incorporation to the State of Delaware in 1972 and changed its name to DDI Pharmaceuticals, Inc. in 1985. In 1994, DDI Pharmaceuticals merged with International BioClinical, Inc. and Bioxytech S.A. and changed its name to OXIS International, Inc. In July 2017, the Company changed its name to GT Biopharma, Inc.

The Company is a clinical stage biopharmaceutical company focused on the development and commercialization of novel ~~immuno-oncology~~immune-oncology products based on our proprietary Tri-specific Killer Engager ~~(TriKE~~^®(TriKE®), and Tetra-specific Killer Engager (Dual Targeting TriKE®) ~~fusion protein immune cell engager technology platform.~~platforms. The Company’s ~~TriKE~~^® ~~platform generates~~TriKE® and Dual Targeting TriKE® platforms generate proprietary therapeutics designed to harness and enhance the cancer killing abilities of a patient’s own natural killer cells or NK cells. Once bound to an NK cell, our moieties are designed to enhance the NK cell, and precisely direct it to one or more specifically targeted proteins expressed on a specific type of cancer cell or virus infected cell, resulting in the targeted cell’s death. TriKE^®~~s can be designed to target any number of tumor antigens on hematologic malignancies or solid tumors and do not require patient-specific customization.~~(NK cells).

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The consolidated condensed financial statements include the accounts of the Company and its wholly-owned subsidiaries, Oxis Biotech, Inc. and Georgetown Translational Pharmaceuticals, Inc. All intercompany transactions and balances have been eliminated in consolidation.

The accompanying condensed consolidated financial statements are unaudited. These ~~unaudited~~ interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022, filed with the SEC on March ~~28, 2022~~30, 2023 (the ~~“2021~~“2022 Annual Report”). The consolidated balance sheets as of December 31, ~~2021~~2022 included herein, ~~were~~was derived from the audited consolidated financial statements as of that date.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company’s financial position and its results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results.

Liquidity

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. Such ~~assumption contemplates~~assumptions contemplate the realization of assets and satisfaction of liabilities in the normal course of business. For the six months ended June 30, ~~2022,~~2023, the Company recorded a net loss of $~~8.4~~2.2 million and used cash in operations of $~~8.0~~4.8 million. As of June 30, ~~2022,~~2023, the Company had a cash and short-term investments balance of $~~23.7~~18.0 million, working capital of $~~15.3~~13.2 million, and stockholders’ equity of $~~15.4~~11.8 million. Management anticipates that the $~~23.7~~18.0 million of cash and cash equivalents, and short-term investments are adequate to satisfy the liquidity needs of the Company for at least one year from the date the Company’s condensed consolidated financial statements for the ~~quarter~~six-month period ended June 30, ~~2022~~2023 were issued.

Historically, the Company has financed its operations through public and private sales of common stock, issuance of preferred and common stock, issuance of convertible debt instruments, and strategic collaborations. There can be no assurances that the Company will be able to secure additional financing on acceptable terms. In the event the Company does not generate sufficient cash flows from investing and financing activities, the Company will be forced to delay, reduce, or eliminate some or all of its discretionary spending, which could adversely affect the Company’s business prospects, ability to meet long-term liquidity needs or ability to continue its operations.

8
COVID-19

~~In March 2020,~~The global COVID-19 pandemic continues to present uncertainty and unforeseeable risks to our operations and business plans. The Company has closely monitored recent developments, including the ~~World Health Organization declared~~lifting of COVID-19 safety measures, the spread of new strains or variants of the coronavirus ~~COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, has adversely affected workforces, customers, economies,~~(such as the Delta and ~~financial markets globally. It has also disrupted~~Omicron variants), and supply chain, raw materials and labor shortages. Thus, the ~~normal operations~~full impact of ~~many businesses. This outbreak could adversely affect the Company’s operations.~~
~~While the pandemic has impacted the Company’s operations, during the six months ended June 30, 2022, the Company believes~~ the COVID-19 pandemic ~~had limited~~on the business and operations remains uncertain and will vary depending on the pandemic’s future impact on ~~its operating results. The Company has not observed any impairments of its assets or a significant change in~~ the ~~fair value of its assets due to the COVID-19 pandemic. At this time, it is not possible for~~third parties with whom the Company ~~to predict the duration~~does business, as well as any legal or ~~magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations, financial condition, or liquidity.~~
regulatory consequences resulting therefrom. The Company has been following the recommendations of health authorities to minimize exposure risk for its team members and may take further actions that alter our operations, including ~~having team members work remotely. Most vendors have transitioned to electronic submission~~any required by federal, state or local authorities, or that it determines are in the best interests of ~~invoices~~its employees and ~~payments.~~other third parties with whom GT Biopharma does business.

Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include accruals for potential liabilities, assumptions used in deriving the fair value of ~~derivative~~warrant liabilities, valuation of equity instruments issued for services and realization of deferred tax assets. Actual results could differ from those estimates.

Cash Equivalents and Short-Term Investments

The Company considers highly liquid investments with maturities of three months or less at the date of acquisition as cash equivalents in the accompanying condensed consolidated financial statements. ~~As of June 30, 2022 total cash and~~Total cash equivalents, which consist of ~~cash and~~ money market funds, ~~amounted to~~totaled approximately $~~5.4~~2.4 ~~million.~~million and $5.5 million at June 30, 2023 and December 31, 2022, respectively.

The Company also invested its excess cash in commercial paper and corporate notes and bonds. Management generally determines the appropriate classification of its investments at the time of purchase. We classify these investments as short-term investments as part of current assets, based upon our ability and intent to use any and all of these investments as necessary to satisfy liquidity requirements that may arise from our ~~businesses.~~business. Investments are carried at fair value with the unrealized holding gains and losses reported in the accompanying condensed consolidated statements of operations. ~~As of~~Total short-term investments totaled approximately $15.2 million and $10.8 million at June 30, 2023 and December 31, 2022, ~~total short-term investments amounted to approximately $18.4~~ ~~million.~~respectively.

Fair Value of Financial Instruments

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820-10 requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet for which it is practicable to estimate fair value. ASC 820-10 defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties.

The three levels of the fair value hierarchy are as follows:

Level 1 Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

Level 2 Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

Level 3 Valuations based on inputs that are unobservable, supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amount of the Company’s ~~derivative~~warrant liability of $~~115,000~~1.5 million and $19 at June 30, ~~2022~~2023 and $~~138,000~~ at December 31, ~~2021~~2022, respectively, was based on Level 23 measurements.

The carrying amounts of the Company’s other financial assets and liabilities such as cash, ~~prepaid expense,~~other current assets, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.

~~Derivative Financial~~Derivatives and Liability-Classified Instruments

The Company ~~evaluates its~~accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and the guidance provided by the FASB in ASC 480, Distinguishing Liabilities from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815). The assessment considers whether the warrants are freestanding financial instruments pursuant to ~~determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted~~ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. Theequity classification ~~of derivative instruments,~~under ASC 815, including whether ~~such instruments should be recorded as liabilities or as~~the warrants are indexed to the Company’s own stock and whether the holders of the warrants could potentially require net cash settlement in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is ~~evaluated~~conducted at the ~~end~~time of warrant issuance and as of each ~~reporting period. Derivative instrument liabilities~~subsequent quarterly period end date while the warrants are ~~classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.~~outstanding. The fair value of the ~~embedded derivatives~~warrant liability is determined using a Binomial valuation method at inception and on subsequent valuation dates.

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Stock-Based Compensation

The Company accounts for share-based awards to employees, nonemployees, and consultants in accordance with the provisions of ASC 718, Compensation-Stock Compensation. Stock-based compensation cost is measured at fair value on the grant date and that fair value is recognized as expense over the requisite service or vesting period.

The Company values its equity awards using the Black-Scholes option pricing model, and accounts for forfeitures when they occur. Use of the Black-Scholes option pricing model requires the input of subjective assumptions including expected volatility, expected term, and a risk-free interest rate. The Company estimates volatility using its own historical stock price volatility. The expected term of the instrument is estimated by using the simplified method to estimate expected term. The risk-free interest rate is estimated using comparable published federal funds rates.

Research and Development Costs

Costs incurred for research and development are expensed as incurred. The salaries, benefits, and overhead costs of personnel conducting research and development of the Company’s products are included in research and development ~~expenses.~~costs. Purchased materials that do not have an alternative future use are also expensed.

Leases

The Company accounts for its leases in accordance with ~~Accounting Standards Update (“ASU”) No. 2016-02,~~ ~~Leases~~ ~~(Topic 842) (“ASC 842”).~~the guidance of ASC 842, ~~requires lessees to (i) recognize~~Leases. The Company determines whether a ~~right of use asset (“ROU asset”) and~~contract is, or contains, a lease ~~liability that is measured~~ at inception. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of ~~the remaining~~unpaid lease payments on the consolidated balance sheets, (ii) recognize a single lease cost, calculated over the lease term on a straight-line basis, and (iii) classify lease related cash payments within operating and financing activities. The Company has made an accounting policy election to not recognize short-term leases on the consolidated balance sheets and all non-lease components, such as common area maintenance, were excluded. At any given time during the lease term, the lease liability represents the present value of the remaining lease payments, and the ROU asset is measured as the amount of the lease liability, adjusted(see Note 8 – Operating Leases for ~~pre-paid rent, unamortized initial direct costs, and the remaining balance of lease incentives received. Both the lease ROU asset and liability are reduced to zero at the end of the lease term.~~
~~The Company leases office space and equipment. At the lease inception date, the Company determines if an arrangement is, or contains a lease. Some of~~ the Company’s leases include options to renew at similar terms. The Company assesses these options to determine if the Company is reasonably certain of exercising these options based on relevant economic and financial factors. Options that meet these criteria are included in the lease ~~term at the lease commencement date.~~
During the period ended June 30, 2022, the Company executed lease agreements for its office space and equipment and as a result, recorded operating lease right-of-use assets and the related lease liabilities of $~~260,000~~ ~~pursuant to ASC 842,~~ ~~Leases~~ ~~(see Note 8)~~disclosures).

Net ~~Earnings (Loss)~~Loss Per Share

Basic ~~earnings (loss)~~loss per share is computed using the weighted-average number of common shares outstanding during the period. Common stock issuable is included in our calculation as of the date of the underlying agreement. Diluted ~~earnings (loss)~~loss per share is computed using the weighted-average number of common shares and the dilutive effect of contingent shares outstanding during the period. Potentially dilutive contingent shares, which primarily consist of ~~convertible notes,~~ stock issuable for the exercise of stock options and warrants, have been excluded from the diluted loss per share calculation because their effect is anti-dilutive.

These following common stock equivalents were excluded in the computation of the net loss per share because their effect is anti-dilutive:
Schedule of Anti-dilutive Securities

June 30,
2023

June 30,
2022

June 30,
2022
(Unaudited)

June 30,
2021
(Unaudited)
(Unaudited) (Unaudited)
Options to purchase common stock 302,500 - 3,737,952 302,500
Warrants to purchase common stock 2,337,274 2,365,473 9,148,880 2,337,274
Unvested restricted common stock
488,429
- - 488,429
Convertible Series C Preferred Stock
-

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Total anti-dilutive securities
3,128,203
2,365,480 12,886,832 3,128,203

Concentration

Cash is deposited in one financial institution. The balances held at this financial institution at times may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits of up to $~~250,000~~250. From time to time, however, the Company may be exposed to risk for the amounts of funds held in bank accounts in excess of the FDIC limit. To minimize the risk, the Company’s policy is to maintain cash balances with high quality financial institutions.

The Company has a significant concentration of expenses incurred and accounts payable from a single ~~vendor. Please see~~vendor (see Note 4 – Accounts Payable for further ~~information.~~information).

Segments

The Company determined its reporting units in accordance with ASC 280, ~~“Segment~~“Segment Reporting” (“ASC 280”). Management evaluates a reporting unit by first identifying its’ operating segments under ASC 280. The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated.

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Management has determined that the Company has one consolidated operating segment. The Company’s reporting segment reflects the manner in which its chief operating decision maker reviews results and allocates resources. The Company’s reporting segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments.

Recent Accounting Pronouncements
In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Credit Losses – Measurement of Credit Losses on Financial Instruments (“ASC 326”). ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 is effective for the Company beginning January 1, 2023, and early adoption is permitted. The Company adopted this standard effective January 1, 2023 and there was no material impact of adopting this standard on the Company’s financial statements and related disclosures.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. ASU 2021-04 provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. An issuer measures the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange. ASU 2021-04 introduces a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 iswas effective ~~for all entities~~ for fiscal years beginning after December 15, 2021, including interim periods within those fiscal ~~years. An entity should apply the guidance provided in ASU 2021-04~~years, applied prospectively to modifications or exchanges occurring on or after the effective date. ~~Early adoption is permitted for all entities, including adoption in an interim period.~~ Effective January 1, 2022, we adopted ASU 2021-04 using a prospective approach. It did not have a material impact on the Company’s financial statements or disclosures.

~~In November 2021, the FASB issued ASU 2021-10,~~ ~~Government Assistance (Topic 832)—Disclosures by Business Entities about Government Assistance~~. ASU 2021-10 increases the transparency of government assistance including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. The ASU is effective for fiscal years beginning after December 15, 2021. The Company adopted this ASU as of January 1, 2022 on a prospective basis. The adoption of this standard did not have any material impact on the Company’s financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the ~~Securities and Exchange Commission (the “SEC”)~~SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

Note 3 – Fair Value of Financial Instruments

The estimated fair values of financial instruments outstanding were ~~(in thousands):~~as follow:
Schedule of Estimated Fair Value of Financial Instrument
June 30, 2022 (Unaudited) June 30, 2023 (Unaudited)
Unrealized Unrealized Fair Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
Short-term investments $ 18,397 $ —
$
(30 ) $ 18,367 $ 15,168 $ 38 $ — $ 15,206
Total $ 18,397 $ — $ (30 ) $ 18,367 $ 15,168 $ 38 $ — $ 15,206
December 31, 2021 December 31, 2022
Unrealized Unrealized Fair Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
Short-term investments $ 23,040 $ — $ (29 ) $ 23,011 $ 10,866 $ — $ (30 ) $ 10,836
Total $ 23,040 $ — $ (29 ) $ 23,011 $ 10,866 $ — $ (30 ) $ 10,836

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The following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) ~~(in thousands)~~:
Schedule of Fair Value Hierarchy Financial Assets
Fair Value Level 1 Level 2 Level 3
June 30, 2022 (Unaudited) June 30, 2023 (Unaudited)
Fair Value Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3
Money market funds $ 5,339 $ 5,339 $ — $ — $ 2,364 $ 2,364 $ — $ —
Corporate notes and commercial paper 18,367 — 18,367 — 15,206 15,206 — —
Total financial assets $ 23,706 $ 5,339 $ 18,367 $ — $ 17,570 $ 17,570 $ — $ —
Fair Value Level 1 Level 2 Level 3
December 31, 2021 December 31, 2022
Fair Value Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3
Money market funds $ 5,484 $ 5,484 $ — $ — $ 5,505 $ 5,505 $ — $ —
Corporate notes and commercial paper 23,011 — 23,011 — 10,836 10,836 — —
Total financial assets $ 28,495 $ 5,484 $ 23,011 $ — $ 16,341 $ 16,341 $ — $ —

As of June 30, ~~2022,~~2023, the fair value of the ~~derivative~~warrant liability amounted to $~~115,000~~1,492. The details of ~~derivative~~warrant liability transactions for the three and six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, are as follows:
Schedule of Derivative Liability Transactions

Three Months Ending Six Months Ending
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Beginning Balance $ 120,000 $ 362,000 $ 138,000 $ 383,000
Fair value upon issuance of warrants — — — —
Change in fair value $ (5,000 ) $ 480,000 $ (23,000 ) $ 459,000
Extinguishment — — — —
Ending Balance $ 115,000 $ 842,000 $ 115,000 $ 842,000
June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
Three Months Ending Six Months Ending
June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Beginning balance $ 2,925 $ 120 $ 19 $ 138
Fair value upon issuance of warrants — — 5,830 —
Change in fair value $ (1,433 ) $ (5 ) $ (4,357 ) $ (23 )
Ending balance $ 1,492 $ 115 $ 1,492 $ 115

Note 4 – Accounts Payable

Accounts payable consisted of the ~~following (in thousands):~~following:
Schedule of Accounts Payable

June 30,
2022 December 31,
2021 June 30, 2023 December 31, 2022
(Unaudited) (Unaudited)
Accounts payable to a third-party manufacturer $ 6,440 $ 5,056 $ 2,910 $ 2,283
Other accounts payable 823 3,164 591 857
Total accounts payable $ 7,263 $ 8,220 $ 3,501 $ 3,140

The Company relies on a third-party contract manufacturing operation to produce and/or test our compounds used in our potential product candidates. ~~The Company’s accounts payable to this vendor were $6.4~~ ~~million as of June 30, 2022 and $5.1~~ ~~million as of December 31, 2021.~~
~~Note 5 –~~ ~~Convertible Notes Payable~~
~~Notes Payable Issued for Cash~~
~~As part of the Company’s financing activities, the Company issued convertible notes payable totaling $25.3~~ million between August 1, 2018 and January 26, 2021. On February 16, 2021, in accordance with the terms of the note agreements upon completion of the equity offering, these notes were mandatorily converted at a conversion rate of $~~3.40~~ ~~per share into~~ ~~7,438,235~~ ~~shares of the Company’s common stock.~~
~~Notes Pa~~y~~able Issued for Settlement Agreements~~

In ~~fiscal 2019 and 2020, the Company issued its convertible notes payable in the amount of $2.5~~ million to resolve claims and disputes pertaining to certain debt and equity instruments issued by the Company in prior years. On February 16, 2021 in accordance with the note agreements upon completion of the equity offering, these notes were mandatorily converted at a conversion rate of $~~3.40~~ ~~per share into~~ ~~743,529~~ ~~shares of the Company’s common stock.~~
~~Notes Pa~~y~~able Issued for Forbearance Agreements~~
~~On June 23,~~October 2020, the Company entered into ~~Standstill~~a Master Services Agreement with a third-party product manufacturer to perform biologic development and ~~Forbearance Agreements (collectively, the “Forbearance Agreements”) with the holders of $13.2~~ ~~million aggregate principal amount~~manufacturing services on behalf of the Convertible Notes (the “Default Notes”), which were in default. Pursuant to the Forbearance Agreements, the holders of the Default Notes agreed to forbear from exercising their rights and remedies under the Default Notes (including declaring such Default Notes (togetherCompany. Associated with ~~any default amounts and accrued and unpaid interest) immediately due and payable) until the earlier of (i) the date that~~this, the Company ~~completes~~has subsequently executed a ~~future financing~~number of Statements of Work for the research and development of products for use in ~~the amount of $~~15 ~~million and, in connection therewith, commences listing on NASDAQ (collectively, the “New Financing”) or (ii) January 31, 2021 (the “Termination Date”).~~
~~On February 16, 2021 in accordance with the note agreements upon completion of the equity offering, these notes, in the amount of $3.8~~ ~~million, were mandatorily converted at a conversion rate of $3.40~~ ~~per share into~~ ~~1,132,059~~ ~~shares of the Company’s common stock.~~clinical trials.

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~~Notes Pa~~y~~able issued for Consulting Agreements~~
~~In prior years, the Company issued its convertible notes payable in exchange for consulting services in the amount of $1.6~~ ~~million.~~

On ~~February 16, 2021 in accordance~~August 24, 2022, existing agreements with the ~~note agreements upon completion~~third-party product manufacturer were amended. As part of the ~~equity offering, these notes~~amendment, the third-party manufacturer agreed that services to be rendered in ~~the aggregate amount of $1.6~~ ~~million were mandatorily converted~~future periods, will be paid or settled at ~~a conversion rate of $3.40~~ ~~per share into~~ ~~472,059~~ ~~shares of~~ the Company’s ~~common stock.~~
~~Notes Payable issued for Accrued Interest~~
~~In prior years, the Company recorded accrued interest~~discretion, in a combination of $~~5.6~~ million related to all notes payable. On February 16, 2021, in accordance with the note agreements upon completion of the equity offering, the accrued interest was mandatorily converted at a conversion rate of $~~3.40~~ ~~per share into~~ ~~1,627,440~~ ~~shares~~cash and issuance of the Company’s common stock. The amendment also eliminated future financial commitments of the Company.
The outstanding balance payable to the third-party product manufacturer totaled $2.9 million and $2.3 million at June 30, 2023 and December 31, 2022, respectively.
The Company ~~did not incur interest expense~~recorded $2.1 million and $3.7 million in research and development expenses to account for services rendered by the third-party product manufacturer for the three months and six months ended June 30, ~~2022,~~2023, as compared to $1.1 million and $0 ~~and $0.7~~3.2 million for the ~~three months~~same comparable periods in 2022. In addition, the Company paid cash of $1.1 million and issued 1.3 million shares of its common stock with a fair value of $591 in settlement of accounts payable of $1.1 million, which resulted in a gain of on settlement of $547, during the six months ended June 30, ~~2021.~~2023.

The outstanding accounts payable balance due to the third-party product manufacturer totaled $~~Adoption~~2.9 million and $2.3 million as of ~~ASU 2020-06~~June 30, 2023 and December 31, 2022, respectively.
Note 5 – Warrant Liability

~~In fiscal 2020, the Company recorded a note/debt discount of $~~~~4.7~~2023 Warrants million to account for the beneficial conversion feature that existed on the date of issuance for the above convertible notes payable. The debt discount was being amortized to interest expense over the term of the corresponding convertible notes payable.

On January ~~1, 2021~~4, 2023, as part of the private placement offering, the Company ~~chose~~issued common stock, warrants to adopt ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts inpurchase up to an ~~Entity’s Own Equity. As a result~~aggregate of 6,500,000 shares of the ~~adoption of ASU 2020-06, the Company extinguished the previously recorded debt discount of $~~Company’s common stock (the “Common Warrants”), and placement agent warrants to purchase up to ~~4.7~~390,000 ~~million by charging the opening additional paid in capital at January 1, 2021. In addition, the Company also adjusted accumulated deficit to account for the derecognition~~shares of the $~~0.2~~ ~~million interest expense due to the amortization of the debt discount that was recorded in fiscal 2020. As a result of these adjustments, the unamortized debt discount of $4.5~~ ~~million was extinguished.~~Company’s common stock (the “Placement Agents Warrants”) see Note 6 – Stockholders’ Equity.

~~Note 6 –~~The Purchase Warrant provides for a value calculation for the Purchase Warrant using the Black Scholes model in the event of certain fundamental transactions. The fair value calculation provides for a floor on the volatility amount utilized in the value calculation at 100% or greater. The Company has determined this provision introduces leverage to the holders of the Purchase Warrant that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares. Therefore, pursuant to ASC 815, the Company has classified the Purchase Warrant as a liability in its consolidated balance sheet. The classification of the Purchase Warrant, including whether the Purchase Warrant should be recorded as liability or as equity, is evaluated at the end of each reporting period with changes in the fair value reported in other income (expense) in the consolidated statements of operations and comprehensive loss. The Purchase Warrant was initially recorded at a fair value at $5.8 million at the grant date and is re-valued at each reporting date. Upon the closing of placement, the fair value of the Purchase Warrant liability was recorded as a cost of capital.
As of June 30, 2023, the fair value of the warrant liability was $1.5 million.
All changes in the fair value of the warrant liabilities are recognized as a change in fair value of warrant liability in the Company’s condensed consolidated statements of operations until they are either exercised or expire.
The warrant liabilities for the Common Warrants and the Placement Agents Warrants were valued using a Binomial pricing model with the following weighted average assumptions:
Schedule of Derivative ~~Liability~~Liabilities Assumptions
  Common Warrants and Placement
Agents Warrants
  June 30, 2023 At Inception
(Unaudited) (Unaudited)
Stock price $ 0.31 $ 1.20
Risk-free interest rate 4.13 % 3.60 %
Expected volatility 119.7 % 121.5 %
Expected life (in years) 5.0 – 4.5 5.0
Expected dividend yield - -
Fair value of warrants (in thousands) $ 1,535 $ 5,831
2020 Warrants

~~During~~The Company issued certain warrants during the year ended December 31, 2020 ~~the Company issued certain warrants~~ that contained a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder upon occurrence of certain change in control type events. In accordance with ASC 480, the fair value of these warrants is classified as a liability in the Condensed Consolidated Balance Sheets and will be ~~re- measured~~re-measured at the end of every reporting period with the change in value reported in the ~~statement~~Condensed Consolidated Statements of ~~operations.~~Operations.
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The ~~derivative~~warrant liabilities for the 2020 Warrants were valued using a Binomial pricing model with the following ~~average~~ assumptions:
Schedule of Derivative Liabilities Assumptions
June 30, December 31, June 30, December 31,
2022 2021 2023 2022
(Unaudited) (Unaudited)
Stock Price $ 2.99 $ 3.05
Stock price $ 0.31 $ 0.89
Risk-free interest rate 2.99 % 1.26 % 4.87 % 4.22 %
Expected volatility 118 % 129 % 91 % 109 %
Expected life (in years) 3.1 3.6 2.1 2.6
Expected dividend yield - - - -
Derivative liability, measurement input - -

Fair Value of Warrants $ 115,000 $ 138,000
Fair value of warrants $ 3 $ 19
During the three months and six months ended June 30, 2023, the Company recognized a gain of $1.4 million and $4.4 million to account for the change in fair value of the warrant liability between the reporting periods in accordance with ASC 842. During the three months and six months ended June 30, 2022, the Company recognized a gain of $5 and $23 to account for the change in the fair value of the warrant liability.

The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the ~~derivative~~warrant securities was determined by the remaining contractual life of the warrant instrument. For derivative ~~instrument.~~instruments that already matured, the Company used the estimated life. The expected dividend yield was based on the fact that the Company has not paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future.
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~~The Company recognized a gain of $5,000~~ ~~and $23,000~~ ~~to account for the change in fair value of the derivative liability between the reporting periods for the three months and six months ended June 30, 2022.~~
~~The Company recognized an expense of $480,000~~ ~~and $459,000~~ ~~to account for the change in the fair value of the derivative liability between the reporting periods for the three months and six months ended June 30, 2021.~~

Note 76 – Stockholders’ Equity

The Company’s authorized capital as of June 30, ~~2022~~2023 was~~750,000,000~~ 250,000,000 shares of common stock, par value $0.001 per share, and 15,000,000 shares of preferred stock, par value $0.01 per share.

Common Stock

Private Placement of Common Stock
On January 4, 2023, GT Biopharma received gross proceeds of $6.5 million, before deducting placement agent fees and other offering expenses of $232 in relation to a purchase agreement (the “Purchase Agreement”) signed on December 30, 2022, between the Company and an institutional investor (the “Purchaser”) for the issuance and sale, in a registered direct offering (the “Offering”), of 3,600,000 shares of the Company’s common stock, par value $0.001 per share (the “Shares”), pre-funded warrants to purchase up to 2,900,000 shares of the Company’s common stock (the “Pre-Funded Warrants”), warrants to purchase up to an aggregate of 6,500,000 shares of the Company’s common stock (the “Common Warrants”) and placement agent warrants to purchase up to 390,000 of the Company’s common stock (the “Placement Agents Warrants”). The Common Warrants have an exercise price equal to $1.00, will be exercisable commencing six months following issuance, and will have a term of exercise equal to five years following the initial exercise date. The Pre-Funded Warrants have an exercise price of $0.0001 per Share, are immediately exercisable and can be exercised at any time after their original issuance until such Pre-Funded Warrants are exercised in full. The Placement Agents Warrants have an exercise price equal to $1.25, will be exercisable commencing six months following issuance, and will have a term of exercise equal to five years following the initial exercise date. The Shares and Common Warrants were sold at an offering price of $1.00 per Share and accompanying Common Warrant and the Pre-Funded Warrants and Common Warrants were sold at an offering price of $0.9999 per Pre-Funded Warrant and accompanying Common Warrant.
The Common Warrants and the Placement Agents Warrants contained a clause not considered to be within the Company’s control. The Company determined that the provision represented a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under ASC 815-40, and thus the Common Warrants and the Placement Agent Warrants are not considered indexed to the Company’s own stock and not eligible for an exception from derivative accounting. Accordingly, the Common Warrants and the Placement Agent Warrants were classified as a warrant liability, and $5.8 million of the initial common stock offering was classified as a warrant liability (see Note 5 – Warrant Liability).
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During the three months ended June 30, 2023, the 2,900,000 Pre-Funded Warrants were exercised. The Company received cash consideration of $0.290 and issued 2,900,000 shares of common stock in exchange for the exercise price of $0.0001 per share.
Common Stock Issuable

On February 16, 2021, ~~as a result~~because of the mandatory conversion of the notes payable and accrued interest in the aggregate amount of $38.8 million, the Company issued a total of 11,413,322 shares of common stock to the respective noteholders, of which 11,086,024 were already issued as of December 31, 2021. The remaining 327,298 common shares issuable at December 31, 2021 valued at $1.1 million, were issued during the ~~six~~three months ~~period~~ ended ~~June 30,~~March 31, 2022.

Cancellation of Common Stock
The Company cancelled 290,999 previously issued shares of common stock during the three months ended March 31, 2022.
Common Stock Issued for Services

During the three and six months ended June 30, ~~2022,~~2023, and pursuant to the vesting term of a 2021 agreement, the Company ~~cancelled~~issued 0 and ~~returned to authorized capital~~ ~~290,999~~73,454 ~~previously issued shares of common stock.~~
~~Equity compensation to officers, employees and directors~~
~~As part of employment agreements with its former CEO and its former CFO (“Officers”), the Officers received a fully vested stock grant equal to an aggregate of~~ 10~~% and~~ ~~1.5% of the fully diluted~~ shares of common stock ~~of the Company (calculated~~ with the inclusion of the current stock holdings of the CEO) upon conversion of options, warrants and Convertible Notes in association with a national markets qualified financing as consideration for entering into the Agreement (with such stock to vest and be delivered within 30 days after the national markets qualified financing). In addition, the Company also granted similar equity compensation to members of the Company’s directors wherein these directors received stock grants equal to 1~~% and~~ ~~1.25% of the fully diluted shares of common stock of the Company.~~ ~~Pursuant to the agreement, approximately 33% of the common stock to be issued vested immediately while the remaining~~ ~~67% vests over a period of~~ ~~two years~~.
~~On February 16, 2021, the Company completed its equity offering and listed its shares of common stock on the Nasdaq Capital Market. As such,~~ ~~4,379,407~~ ~~shares of its common stock were granted to these Officers, employees and directors, which had~~ a fair value of $~~18.6~~0 and $315, respectively to members of the Board of Directors, employees and consultants. The shares were valued at the respective date of the agreements.
Common Stock Issued for Vendor Payable
During the six months ended June 30, 2023, the Company issued a total of 1,343,783 shares of common stock with a fair value of $591 to settle a vendor payable of $1.1 million. ~~Since the grant of the common stock is subject to milestone or performance conditions,~~As a result, the Company ~~measured~~recorded a gain of $577 to account the difference between the fair value of the common stock onissued and the account payable settled. The common stock issued were valued at the respective date of ~~the agreement, and such awards were recorded as compensation expense as the milestone or performance condition is met and in accordance with its vesting terms.~~
~~During the period ended June 30, 2022, the Company recognized $783,000~~ ~~of stock compensation expense related to vesting of shares to officers and directors. The fair value of the remaining~~ ~~213,268~~ ~~unvested shares of common stock to officers, employees and directors at June 30, 2022 was $1.0~~ ~~million and will be recognized as stock compensation expense in future periods pursuant to its vesting term.~~
~~During the period ended June 30, 2021, the Company recognized $14.9~~ ~~million of stock compensation expense related to vesting of shares to officers and directors.~~their issuance.

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~~Issuance of common shares for services~~
~~As part of consulting agreements with certain consultants, the Company agreed to grant these consultants common stock equal to~~ 1~~% and~~ 3% of the fully diluted shares of common stock of the Company upon conversion of options, warrants and Convertible Notes in association with a national markets qualified financing as consideration for entering into the Agreement (with such stock to vest and be delivered within 30 days after the national markets qualified financing).
On February 16, 2021, the Company completed its equity offering and listed its shares of common stock on the Nasdaq Capital Market. As a result of this offering, the Company agreed to issue to these consultants ~~2,850,090~~ ~~shares of common stock with a grant date fair value of $10.7~~ ~~million, of which~~ ~~1,934,817~~ ~~shares of common stock vested immediately while the remaining~~ ~~915,273, shares of common stock vests over~~ ~~two years~~. Pursuant to current accounting guidelines, as the grant of the common stock is subject to milestone or performance conditions, the Company measured the fair value of the common stock on the respective date of the agreement, and then such award is being recorded as compensation expense based upon the vesting term of the grant.
~~During the three months and six months ended June 30, 2021, the Company recognized stock compensation expense of~~ $~~327,000~~ ~~and $8.5~~ ~~million related to the issuance and vesting of~~ ~~2,050,060~~ ~~shares of common stock issued to consultants for services.~~
~~During the three months and six months ended June 30, 2022, the Company recognized $390,000~~ ~~and $1.3~~ ~~million of stock compensation expense related to the issuance and vesting of~~ ~~277,156~~ ~~shares of common stock issued to consultants for services in fiscal 2022.~~
~~As of June 30, 2022, there are a total of~~ ~~275,161~~ ~~unvested shares of common stock to consultants with a fair value of $941,000~~ ~~that will be recognized as stock compensation expense in future periods based upon its vesting term.~~
~~Settlement of common stock with a former Officer~~
~~On April 29, 2022, the Company entered into a settlement agreement with its former Chief Executive Officer (“Officer”) and received~~ ~~1,845,000~~ shares of its previously issued common stock in full and final settlement of all its claims against the Officer. The common stock was subsequently cancelled. In addition, the Company incurred legal and professional expenses of $~~223,000~~. Pursuant to current accounting guidelines, this amount was accounted as costs of the acquisition of the common stock and recorded as a reduction to additional paid in capital. Both the Company and the Officer released each other from claims under the settlement agreement.

Preferred Stock

Series C Preferred Stock

At June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, there were 96,230 shares of series C preferred stock, par value $0.01 per share (the “Series C Preferred Stock”) issued and outstanding.

As a result of reverse stock splits in previous years and the agreement terms for adjusting the rights of the related shares, the 96,230 shares of Series C Preferred Stock are not currently convertible, have no voting rights, and in the event of liquidation, the holders of the Series C Preferred Stock would not participate in any distribution of the assets or surplus funds of the Company. The holders of Series C Preferred Stock also are not currently entitled to any dividends if and when declared by the Company’s board of directors (the “Board”). No dividends to holders of the Series C Preferred Stock were issued or unpaid through June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.
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Series K Preferred Stock

On February 16, 2021, the Board designated 115,000 shares of Series K preferred stock, par value $.01. (the “Series K Preferred Stock”).

Shares of the Series K Preferred Stock are convertible at any time, at the option of the holders, into shares of the Company’s common stock at an effective conversion rate of 100 shares of common stock for each share of Series K Preferred. Shares of the Series K Preferred Stock have the same voting rights as the shares of the Company’s common stock, with the holders of the Series K Preferred Stock entitled to vote on an as-converted-to-common stock basis, subject to the beneficial ownership limitation, together with the holders of the Company’s common stock on all matters presented to the Company’s stockholders. The Series K Preferred Stock are not entitled to any dividends (unless specifically declared by the Board) but will participate on an as-converted-to-common-stock basis in any dividends to the holders of the Company’s common stock. In the event of the Company’s dissolution, liquidation or winding up, the holders of the Series K Preferred Stock will be on parity with the holders of the Company’s common stock and will participate, on ~~a on~~ an as-converted-to-common stock basis, in any distribution to holders of the Company’s common stock.

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, there were 0no shares of Series K Preferred stock issued and outstanding.

Warrants and Options

Common Stock Warrants

~~Stock~~Common stock warrant transactions for the six months ended June 30, ~~2022:~~2023 were as follows:
Schedule of Warrant Activity
Number of Weighted Average Number of Weighted Average
Warrants Exercise Price Warrants Exercise Price
Outstanding at December 31, 2021: 2,337,274 $ 5.30
Warrant outstanding at December 31, 2022: 2,337,274 $ 5.30
Granted - - 9,790,000 0.71
Forfeited/canceled - - (78,394 ) 3.40
Exercised - - (2,900,000 ) 0.0001
Warrants outstanding at June 30, 2022 2,337,274 $ 5.30
Warrants exercisable at June 30, 2022 2,337,274 $ 5.30

Warrants outstanding at June 30, 2023 9,148,880 $ 2.11
Warrants exercisable at June 30, 2023 2,258,880 $ 5.45
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~~As of June 30, 2022, all issued and outstanding~~The warrants ~~are fully vested, and have no intrinsic value as the~~had an exercise price ~~of these warrants was~~ greater than the market ~~price.~~price, which resulted in no intrinsic value.
Warrants outstanding as of June 30, 2023 are exercisable as follows:
Schedule of Warrants Outstanding
Warrants Outstanding Warrants Exercisable
Range of Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Exercisable
Weighted Average
Exercise Price

$1.00 – 1.25 6,890,000 5.0 $ 1.01 - $ -
3.40 – 5.50 2,258,880 2.6 5.45 2,258,880 5.45
9,148,880 2,258,880

Common Stock Options

~~Stock~~Common stock option transactions for the six months ended June 30, ~~2022:~~2023 were as follows:
Schedule of Options Activity
Number of Weighted Average
Options Exercise Price
Options outstanding at December 31, 2022 1,630,452 $ 2.57
Granted 2,500,000 0.75
Forfeited/canceled (392,500 ) 2.81
Exercised - -
Options outstanding at June 30, 2023 3,737,952 $ 1.32
Options vested and exercisable at June 30, 2023 2,177,891 $ 1.71
The Company recognized the corresponding stock compensation expense for options granted to certain consultants, employees, officers and directors based upon their vesting term.
On January 27, 2023, the Company granted stock options to employees and members of its board of directors to purchase an aggregate of 2.0 millionshares of common stock at an exercise price of $0.85 per share. The stock options expire in 10 years, vest over twelve months and had a fair value of $1.4 million at the date of grant determined using the Black-Scholes Option Pricing model with the following weighted average assumptions.
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On May 15, 2023, the Company granted stock options to a member of its board of directors to purchase 500,000 shares of common stock at an exercise price of $0.35 per share. The stock options expire in 10 years, vest over twelve months and had a fair value of $150 on at the date of grant determined using the Black-Scholes Option Pricing model.
The Company used the following weighted average assumptions in the Black-Scholes Option Pricing model to compute the fair value of the stock options granted during the period ended June 30 ,2023.
Schedule of Stock Granted Assumptions
Stock price $ $0.35 - $0.85
Risk-free interest rate 3.62% - 3.99 %
Expected volatility 120.81% - 123.61 %
Expected life (in years) 5.3
Expected dividend yield -
For the three months and six months ended June 30, 2023, the Company recognized stock compensation expense relating to the vesting of options granted in 2023 and prior years of $398 and $905, respectively.
Options outstanding as of June 30, 2023 are exercisable as follows:
Schedule of Options ~~Activity~~Outstanding
Number of Weighted Average
Options Exercise Price
Options outstanding at December 31, 2021: 302,500 $ 3.05
Granted - -
Forfeited/canceled - -
Exercised - -
Options outstanding at June 30, 2022 302,500 $ 3.05
Options exercisable at June 30, 2022 141,306 $ 3.05

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Options Outstanding Options Exercisable
Range of Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (Years)
Weighted Average
Exercise Price
Number Exercisable
Weighted Average
Exercise Price

$ 2.48 1,237,952 9.0 $ 2.48 1,154,081 $ 2.48
0.85 2,000,000 9.6 0.85 1,000,000 0.85
0.35 500,000 9.9 0.35 23,810 0.35
3,737,952 2,177,891

~~During the period ended~~At June 30, ~~2022, the Company recorded stock compensation of $127,000~~ ~~to account for the~~2023, fair value of ~~stock options that vested. At June 30, 2022, there were~~ ~~161,194~~unvested options ~~with a grant date fair value of~~totaled $~~430,710~~1.1 million, which will be recognized as stock compensation expense in future periods based upon the remaining vesting term of the applicable grants.

There was 0no intrinsic value of the outstanding options as of June 30, ~~2022~~2023 as the exercise price of these options was greater than the market price.

Note 87 – Commitments and Contingencies

Litigation

The Company is involved in certain legal proceedings that arise from time to time in the ordinary course of our business. Except for income tax contingencies, we record accruals for contingencies to the extent that our management concludes that the occurrence is probable and that the related amounts of loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. There is no current or pending litigation of any significance with the exception of the matters that have arisen under, and are being handled in, the normal course of business.

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On ~~August 28, 2019,~~May 11, 2023, our former interim Chief Executive Officer, Dr. Greg Berk, filed a complaint ~~was filed~~with the Occupational Safety and Health Administration alleging retaliation against him during his tenure at the Company for raising concerns related to the public disclosure of certain product timelines. The Company is vigorously defending this matter and believe it to be without merit. At this early stage in the proceedings, the Company is not able to determine the probability of the outcome of this matter or a range of reasonably expected losses, if any.
On May 13, 2022, the Company made a claim against Michael Handelman, its former Chief Financial Officer, asserting that he misappropriated Company funds and shares of common stock, and failed to file the required SEC reports on Form 3 and Form 4 regarding each acquisition and disposition of the Company’s common stock. The Company seeks monetary damages estimated at $370; the return of shares of our common stock received without authorization and the disgorgement of any profits earned from the sale of those shares; a full accounting for all sums charged on the Company’s debit card, with payment to the Company for any charges that cannot be demonstrated to have a corporate purpose; an order directing Mr. Handelman to make all filings required by Section 16(a) of the 1934 Act; an award of all sums and shares improperly issued to members of Mr. Handelman’s family; and an award of the Company’s attorneys’ fees and any forum and arbitration fees. As a component of Mr. Handelman’s contract with the Company, disputes shall be fully addressed and finally resolved by binding arbitration conducted by the American Arbitration Association (AAA) in New York City, New York, in accordance with its National Employment Dispute Resolution rules. In connection with any such arbitration, the Company shall bear all costs not otherwise borne by a plaintiff in a court proceeding. The Company agrees that any decisions of the arbitration panel will be binding and enforceable in any state in which the Company conducts the operation of its business. In accordance with California Labor Laws, the Company has designated Los Angeles, California as the venue for this arbitration. The claims are pending before an arbitrator in Los Angeles and the hearing is scheduled to begin on October 26, 2023. Mr. Handelman has not asserted counterclaims against the Company.
On May 24, 2023, TWF Global, LLC (“TWF”) filed a Complaint in the California Superior Court ~~of California,~~for the County of Los Angeles ~~West Judicial District, Santa Monica Courthouse, Unlimited Civil Division by Jeffrey Lion, an individual (“Lion”),~~naming the Company as defendant. The Complaint alleges that TWF is the holder of two convertible notes and ~~by Daniel Vallera, an individual (“Vallera”). Lion and Vallera are referred to jointly as~~that the ~~“Plaintiffs.” The complaint was filed against GT Biopharma, Inc. and its subsidiary Oxis Biotech, Inc. (either~~Company did not deliver shares of ~~them or jointly,~~common stock due on conversion in February 2021. TWF is seeking per diem liquidated damages based on the ~~“Company”)~~terms of alleged convertible notes. The ~~Plaintiffs alleged breach of~~Company filed a ~~license agreement between~~motion to dismiss for improper forum on July 14, 2023 because the ~~Plaintiffs~~convertible notes require disputes to be filed in New York state and ~~the~~federal courts. The Company ~~entered into on or about September 3, 2015. A settlement of the case was reached on February 7, 2022 in the amount of $~~believes that TWF’s claims are without merit and will continue to defend vigorously against these claims.
~~425,000. This amount was fully accrued at December 31, 2021. The settlement amount was subsequently paid on March 4, 2022.~~
Significant Agreements

~~Significant~~Research and Development Agreements

~~Research~~In June 2017, we entered into a co-development partnership agreement with Altor BioScience Corporation in which we will collaborate exclusively in the clinical development of a novel 161533 (GTB-3550) TriKE^® fusion protein for cancer therapies using our TriKE^®technology. The GTB-3550 Phase 1 clinical trial for treatment of patients with CD33-expressing, high risk myelodysplastic syndromes and ~~Development Agreements~~
a. The Company is a party to a scientific research agreement with the Regents of the University of Minnesota, effective June 16, 2021. This scientific research agreement aims to work with the Company with three major goals in mind: (1) support the Company’s TriKE^®~~product development and GMP manufacturing efforts; (2) TriKE~~^® pharmacokinetics optimization in humans; and (3) investigation of the patient’s native NK cell population based on insights obtained from the analysis of the human data generated during our GTB-3550 clinical trial. The major deliverables proposed here are: (1) creation of IND enabling data for TriKE^® ~~constructs in support of our product development and GMP manufacturing efforts; (2) TriKE~~^® platform drug delivery changes to allow transition to alternative drug delivery means and extended PK in humans; and (3) gain an increased understanding of changes in the patient’s native NK cell population as a result of TriKE^®~~therapy. Most studies will use TriKE~~^® ~~DNA/amino acid sequences created by us under current UMN/GTB licensing terms. The term of this agreement shall expire on June 30, 2023.~~
~~The University of Minnesota shall use reasonable efforts to complete the project for a fixed sum of $2.1million. For the three months and six months ended June 30, 2022, the Company recorded an expense of $192,000~~ ~~and $383,000, respectively, relating to scientific research agreement.~~
b.
On October 5, 2020, GT Biopharma entered into a Master Services Agreement with a third-party product manufacturer to perform biologic development and manufacturing services on behalf of the Company. Associated with this, the Company has subsequently signed five Statements of Work for the research and development of products for use in clinical trials. At June 30, 2022, the Company’s commitments in relation to these Statements of Work and any related Change Orders totaled approximately $~~13.0~~ ~~million, of which $9.8~~ ~~million was incurred at that date and an additional $3.2~~ ~~million is in process during fiscal year 2022.~~
~~For the three months and six months ended June 30, 2022, the Company recorded an expense of $92,000~~ ~~and $1,180,000, respectively, relating to the Master Service Agreement.~~
~~Patent~~refractory/relapsed acute myeloid leukemia opened for patient enrollment September 2019 and ~~License Agreements~~completed enrollment in September 2021. The results of our first generation GTB-3550 Phase 1 clinical trial support our plans to advance the next generation camelid nanobody into the clinic, and as such, no further clinical development will ensue with GTB-3550.

The Company is a party to a scientific research agreement with the Regents of the University of Minnesota, effective June 16, 2021. This scientific research agreement aims to work with the Company with three major goals in mind: (1) support the Company’s TriKE^®product development and GMP manufacturing efforts; (2) TriKE^® pharmacokinetics optimization in humans; and (3) investigation of the patient’s native NK cell population based on insights obtained from the analysis of the human data generated during our GTB-3550 clinical trial. The major deliverables proposed here are: (1) creation of IND enabling data for TriKE^® constructs in support of our product development and GMP manufacturing efforts; (2) TriKE^® platform drug delivery changes to allow transition to alternative drug delivery means and extended PK in humans; and (3) gain an increased understanding of changes in the patient’s native NK cell population as a result of TriKE^®therapy. Most studies will use TriKE^® DNA/amino acid sequences created by us under current UMN/GTB licensing terms. This agreement expired on June 30, 2023. The University of Minnesota shall use reasonable efforts to complete the project for a fixed sum of $2.1 million.
For the three months and six months ended June 30, 2023 and June 30, 2022, the Company recorded an expense of $192and $383, respectively, for each respective period. The Company has recorded expense in the aggregate of $2.1 million as of June 30, 2023 pursuant to this agreement.
Patent and License Agreements
2016 Exclusive Patent License Agreement

The Company is party to an exclusive worldwide license agreement with the Regents of the University of Minnesota, (“UofMN”), to further develop and commercialize cancer therapies using TriKE^® technology developed by researchers at the UofMN to target NK cells to cancer. Under the terms of the 2016 agreement, the Company receives exclusive rights to conduct research and to develop, make, use, sell, and import TriKE^® technology worldwide for the treatment of any disease, state, or condition in humans. The Company is responsible for obtaining all permits, licenses, authorizations, registrations, and regulatory approvals required or granted by any governmental authority anywhere in the world that is responsible for the regulation of products such as the TriKE^® technology, including without limitation the FDA and the European Agency for the Evaluation of Medicinal Products in the European Union. Under the agreement, the UofMN received an upfront payment of $~~0.2~~200 ~~million,~~, and an annual License Maintenance fee of $~~0.1~~100 ~~million~~ beginning in 2021. The agreement also includes 4% royalty fees, ~~(not~~not to exceed ~~6%)~~6% under ~~subsequent~~subsequence license agreements or amendments to this agreement or minimum annual royalty payments ranging from $~~0.25~~250 ~~million~~ to $5.0 million. The agreement also includes certain performance milestone payments totaling $3.1 million, and one-time sales milestone payments of $1.0 million upon reaching $250 million in gross sales, and $5.0million upon reaching $500million dollars in cumulative gross sales of Licensed Products.

~~For the three months and six months ended June 30, 2022, the~~The Company did 0not incur any research and development expense relating to the 2016 Exclusive Patent License ~~Agreement.~~Agreement for the three months and six months ended June 30, 2023.

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2021 Patent License Agreement

On March 26, 2021, the Company signed an agreement specific to the B7H3 targeted TriKE^®. Under the agreement, the UofMN received an upfront license fee of $20,000 and will receive an annual License Maintenance fee of $~~5,000~~5 beginning in 2022, 2.5% to 5% royalty fees, or minimum annual royalty payments of $~~0.25~~250 ~~million~~ beginning in the year after the first commercial sales of Licensed Product, and $2.0 million beginning in the fifth year after the first commercial sale of such Licensed Product. The agreement also includes certain performance milestone payments totaling $3.1 million, and one-time sales milestone payments of $1.0 million upon reaching $250 million in gross sales, and $5.0 million upon reaching $500 million dollars in cumulative gross sales of Licensed Products. There is no double payment intended; if one of the milestone payments has been paid under the 2016 agreement no further payment is due for the corresponding milestone above.

~~For~~The Company did not incur any research and development expense relating to the 2021 Patent License Agreement for the three months and six months ended June 30, ~~2022, the Company did~~ 0~~t incur any research and development expense relating to 2021 Patent License Agreement.~~2023.

~~Lease Agreements~~Note 8 – Operating Leases

On November 19, 2021, the Company entered into a sublease with ~~Aimmune Therapeutics, Inc.~~a third party for 4,500 square feet of office space located in Brisbane, California, ~~having~~with a commencement date of January 1, 2022 and maturing on June 30, 2024. ~~Additionally,~~Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Rent expense is recognized on a straight-line basis over the lease term. As a result of this agreement, the Company recognized right-of-use (“ROU”) asset and liability of $247 pursuant to ASC 842, Leases. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical collateralized borrowing rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.
On February 8, 2022, the Company entered into a copier lease ~~of a photocopier,~~ which ~~matures~~will end on February 7, 2025. As a result, the Company recognized additional ROU asset and liability of $13.
As a result of these lease agreements, the Company recognized ROU asset and liability in the aggregate of $260.

Rent expense related to these leases reflected on the Company’s Condensed Consolidated Statements of Operations totaled $~~29,000~~29 and $~~58,000~~58 for the three months and six months ended June ~~30 2022, respectively.~~2023. Rent expense totaled $29 and $58 for the three months and six months ended June 2022.

Other information related to leases and future minimum lease payments under non-cancellable operating leases were as follows:
Schedule of Other Information Related Leases Under Non-Cancellable

June 30, 2023

June 30, 2022

June 30, 2022
(Unaudited)
(Unaudited) (Unaudited)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 49,000 $ 30 $ 49
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases $ 260,000 $
114
$ 165
Weighted-average remaining lease term (in years):
Operating leases 2.25 1.25 2.25
Weighted-average discount rate:
Operating leases 10 % 10 % 10 %

Future minimum lease payments under non-cancellable operating leases were as follows:
Schedule of Future Minimum Lease Payments

Operating leases
(Unaudited)

June 30, 2023

(Unaudited)
2022 (6 months) $ 59,000
2023 121,000
2024 66,000
Within one year $ 153
After one year and within two years 3
Thereafter -
Total future minimum lease payments $ 246,000 $ 156
Less – discount (29,000 ) (36 )
Lease liability $ 217,000 $ 120

~~Note 9 -~~ ~~Subsequent Events~~
On July 15, 2022, the Compensation Committee of the Board (the “Committee”) authorized the grant of stock awards or stock options, as applicable, to acquire shares of common stock under the Company’s 2022 Omnibus Incentive Plan. As a result, the Company granted stock options to consultants, employees, officers and directors to purchase an aggregate of ~~1,532,952~~ ~~shares of common stock. The stock options are exercisable at $2.48 per share, vest over a~~ ~~four-year~~ ~~period, will expire in~~ ~~ten years~~ ~~from the grant date and have an estimated fair value of $3.4 million. In addition, the Company also granted an aggregate of~~ ~~398,940~~ ~~fully vested shares of common stock to consultants and certain officers with a fair value of $989,000~~ ~~for services.~~

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding our current beliefs, goals and expectations about matters such as our expected financial position and operating results, our business strategy and our financing plans. The forward-looking statements in this report are not based on historical facts, but rather reflect the current expectations of our management concerning future results and events. The forward-looking statements generally can be identified by the use of terms such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “guidance,” “estimate,” “potential,” “outlook,” “target,” “forecast,” “likely” or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals are, or may be, forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be different from any future results, performance and achievements expressed or implied by these statements. We cannot guarantee that our forward-looking statements will turn out to be correct or that our beliefs and goals will not change. Our actual results could be very different from and worse than our expectations for various reasons. You should review carefully all information, including the discussion of risk factors under “Part I. Item 1A: Risk Factors” and “Part II. Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Form 10-K for the year ended December 31, ~~2021.~~2022. Any forward-looking statements in the Form 10-Q are made only as of the date hereof and, except as may be required by law, we do not have any obligation to publicly update any forward-looking statements contained in this Form 10-Q to reflect subsequent events or circumstances.

Throughout this Quarterly Report on Form 10-Q, the terms “GTBP,” “we,” “us,” “our,” “the ~~company”~~Company” and “our ~~company”~~Company” refer to GT Biopharma, Inc., a Delaware corporation, formerly known as Oxis International, Inc., DDI Pharmaceuticals, Inc. and Diagnostic Data, ~~Inc,~~Inc., together with our subsidiaries.

Overview

We are a clinical stage biopharmaceutical company focused on the development and commercialization of novel immuno-oncology products based ~~off~~on our proprietary Tri-specific Killer Engager ~~(TriKE~~(“TriKE^®”) fusion protein immune cell engager technology platform. Our TriKE^®platform generates proprietary therapeutics designed to harness and enhance the cancer killing abilities of a patient’s own natural killer cells or (“NK ~~cells.~~cells”). Once bound to an NK cell, our moieties are designed to enhance the NK cell, through induction of NK cell expansion and priming via the cytokine portion, and precisely direct it to one or more specifically targeted proteins expressed on a specific type of cancer cell or virus infected cell, ultimately resulting in the targeted cell’s death. TriKE^® can be designed to target any number of tumor antigens on hematologic malignancies ~~sarcomas~~ or solid tumors and do not require patient-specific customization.

We are using our TriKE^® platform with the intent to bring to market immuno-oncology products that can treat a range of hematologic malignancies ~~sarcoma~~ and solid tumors. The platform is scalable, and we are putting processes in place to be able to produce ~~IND-ready~~investigational new drug (IND) ready moieties in a timely manner after a specific TriKE^® conceptual design. ~~After conducting market and competitive research, specific moieties~~Specific drug candidates can then be advanced into the clinic on our own or through potential collaborations with ~~larger~~partnering companies. ~~We are also evaluating, in conjunction with our Scientific Advisory Board, additional moieties designed to target different tumor antigens.~~ We believe our TriKE^®may have the ability, if approved for marketing, to be used as both a monotherapy ~~augment the current monoclonal antibody therapeutics, be used~~and in ~~conjunction~~combination with ~~more traditional cancer therapy and potentially overcome certain limitations of current chimeric antigen receptor, or CAR-T, therapy.~~
~~We are also using our TriKE~~^® platform to develop therapeutics useful for the treatment of infectious disease such as for the treatment of patients infected by the human immunodeficiency virus (HIV). While the use of anti-retroviral drugs has substantially improved the health and increased the longevity of individuals infectedother standard-of-care therapies including combinations with HIV, these drugs are designed to suppress virus replication to help modulate progression to AIDS and to limit further transmission of the virus. Despite the use of anti-retroviral drugs, infected individuals retain reservoirs of latent HIV-infected cells that, upon cessation of anti-retroviral drug therapy, can reactivate and re-establish an active HIV infection. For a curative therapy, destruction of these latent HIV infected cells must take place. The HIV- TriKE^®~~contains the antigen binding fragment (Fab) from a broadly neutralizing antibody targeting the HIV-Env protein. The HIV- TriKE~~^®~~is designed to target HIV while redirecting~~off-the-shelf NK cell ~~killing specifically to actively replicating HIV infected cells. The HIV- TriKE~~^®~~induced NK cell proliferation, and demonstrated the ability in vitro to reactivate and kill HIV-infected T-cells. These findings indicate a potential role for the HIV- TriKE~~^® ~~in the reactivation and elimination of the latently infected HIV reservoir cells by harnessing the NK cell’s ability to mediate the antibody-directed cellular cytotoxicity (ADCC).~~infusions.

Our initial work has been conducted in collaboration with the Masonic Cancer Center at the University of Minnesota under a program led by Dr. Jeffrey Miller, the Deputy Director. Dr. Miller is a recognized key opinion leader in the field of NK cell and IL-15 biology and their therapeutic potential. We have exclusive rights to the TriKE^® platform and are generating additional intellectual ~~property.~~property for specific moieties.
GTB-3550
GTB-3550 was our first TriKE® product candidate. It reflected our first-generation TriKE® platform. It is a single-chain, tri-specific scFv recombinant fusion protein conjugate composed of the variable regions of the heavy and light chains of anti-CD16 and anti-CD33 antibodies and a modified form of IL-15. We studied this anti-CD16-IL-15-anti-CD33 TriKE® in CD33 positive leukemias, a marker expressed on tumor cells in acute myelogenous leukemia, or AML, and myelodysplastic syndrome, or MDS. CD33 is primarily a myeloid differentiation antigen with endocytic properties broadly expressed on AML blasts and, possibly, some leukemic stem cells. CD33 or Siglec-3 (sialic acid binding immunoglobulig-like lectin 3) is a transmembrane receptor expressed on cells of myeloid lineage. It is usually considered myeloid-specific, but it can also be found on some lymphoid cells. The anti-CD33 antibody fragment used for these studies was derived from the M195 humanized anti-CD33 scFv and has been used in multiple human clinical studies. It has been exploited as a target for therapeutic antibodies for many years. The approval of the CD33 antibody-drug conjugate gemtuzumab validates this targeted approach.
GTB-3550 is being replaced by a more potent next-generation camelid nanobody TriKE®, GTB-3650, targeting relapsed/refractory Acute Myeloid Leukemia (AML) and high-risk Myelodysplastic Syndromes (MDS).

1921
GTB-3650
GTB-3650 is a CD33 targeted TriKE® which targets CD33 on the surface of myeloid leukemias and an agonistic camelid engager to the potent activating receptor on NK cells, CD16. Use of this engager enhances the activity of wild type IL-15 included in GTB-3650, no longer needing the mutant IL-15 included in GTB-3550. We are advancing GTB-3650 through preclinical studies and anticipate filing an Investigational New Drug (IND) application in the 2^nd half of 2023. The only curative therapy for AML and MDS is transplant, and relapse still occurs in many patients that undergo transplants so novel immunotherapeutic approaches that can be leveraged in this setting are highly desirable. It is also important to note that elderly frail patients cannot receive transplants and thus alternative approaches are needed. The TriKE® approach provides a novel way to specifically target these tumors by leveraging NK cells, which have been shown to mediate relapse protection in this setting, in an anti-CD33-targeted fashion. We are moving GTB-3650 clinically based on pre-clinical data showing a marked increase in potency compared to GTB-3550, which we anticipate could lead to an enhanced efficacy signal in these diseases.
GTB-5550
GTB-5550 is a B7-H3 targeted TriKE® which targets B7-H3 on the surface of advanced solid tumors. We are advancing GTB-5550 through preclinical studies and have initiated a GMP manufacturing campaign in anticipation of filing an IND and starting a study targeting patients with B7-H3 positive solid tumors thereafter. B7-H3 expression is expressed in a number of solid tumor settings as well as in multiple myeloma and is not expressed on normal tissues, making it an exciting pan-cancer tumor target. Expression of B7-H3 is also associated with disease progression and bad outcomes in many cancers. Due to these characteristics several clinical trials are ongoing leveraging targeting of B7-H3 in solid tumor. GTB-5550 would be the first modality to target B7-H3 through NK cell immunotherapy and a unique single domain camelid B7-H3. The initial study will be designed as a basket trial, targeting solid tumor malignancies with high expression of B7-H3, including prostate cancer, ovarian cancer, head and neck cancer, lung cancer, and breast cancer.
Economic Disruption

While we make our strategic planning decisions based on the assumption that the markets we are targeting will grow in the long term, our business is dependent, in large part on, and directly affected by, business cycles and other factors affecting the economy generally. Our industry depends on general economic conditions and other factors, including consumer spending and preferences, changes in inflation rates, supply chain issues and impediments should they arise for us, as the U.S. and various other major economies are now experiencing, consumer confidence, fuel costs, fuel availability, environmental impact, governmental incentives and regulatory requirements, and political volatility, especially in cybersecurity growth markets.

In addition, the outbreak of hostilities between Russia and Ukraine and global reactions thereto have increased U.S. domestic and global energy prices. Oil supply disruptions related to the Russia-Ukraine conflict, and sanctions and other measures taken by the U.S. and its allies, could lead to higher costs for gas, food, and goods in the U.S. and other geographies and exacerbate the inflationary pressures on the worldwide economy, with potentially adverse impacts on our business, results of operations and financial condition.
22
Results of Operations

Comparison of the Three Months and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022

Research and Development Expenses (“R&D”)

We recorded ~~$1.1~~$2.1 million and ~~$0.6~~$1.1 million in research and development expense (“R&D”) for the three months ended June 30, 2023 and 2022, an increase of $1.0 million over the prior year comparable period. We recorded $3.7 million and ~~2021,~~$3.2 million in R&D for the six months ended June 30, 2023 and 2022, an increase of $0.5 million over the prior year comparable period. ~~We recorded $3.2 million and $2.3 million in~~ R&D ~~for the six months ended June 30, 2022 and 2021, an increase of $0.9 million over the prior year comparable period. The increase in R&D resulted primarily resulted due~~expenses relate to ~~hiring of additional employees and professionals in 2022 and costs associated with the~~our continued development and ~~manufacturing~~production of our most advanced TriKE® product candidates GTB-3650 and ~~GTB-5550.~~GTB-5550 along with the progression on other promising candidates.

Selling, ~~general~~General and ~~administrative expenses~~Administrative Expenses (“S,G&A”)

We recorded ~~$1.9~~$1.5 million and ~~$3.7~~$1.9 million in selling, general and administrative expense (“SG&A”) for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, a decrease of ~~$1.8~~$0.4 million over the prior year comparable period. We recorded ~~$5.2~~$3.5 million and ~~$31.1~~$5.2 million in SG&A for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, a decrease of ~~$25.9~~$1.7 million over the prior year comparable period. The decrease in ~~S,G~~SG&A ~~resulted~~is primarily ~~due~~attributable to ~~a decrease~~decreases in ~~stock-based compensation to consultants, officers and directors. We recorded additional expenses during the three months and six months ended June 30, 2021 that consisted of~~advisory board fees, investor relations expense, legal ~~finance, consulting~~ and professional fees, ~~in support of our planned growth~~ and ~~new public company compliance initiatives.~~
payroll expense.

Interest Income

We recorded interest income of ~~$0.04 million~~$220 and $0$36 for the three months ended June 30, 2023 and 2022, and ~~2021,~~$384 and ~~$0.04 million and $0~~$44 for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The increase in interest income is due to ~~the~~higher interest ~~earned on short-term investments~~rates offered by financial institutions in the three months and six months ended June 30, ~~2022~~2023 as compared to the same comparable periods of ~~2021.~~2022.

Interest Expense

We recorded no interest expense of $1 and $0 for the three months ended June 30, 2023 and 2022, and ~~2021,~~$213 and $0 ~~and $0.7 million~~ for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The ~~decrease~~increase in interest expense is due to the ~~conversion of convertible notes payable to common shares during 2021. The Company did not have any outstanding convertible notes payable~~financing costs incurred associated with warrants accounted as ~~of and~~warrant liability sold during the ~~three months and six months periods ended June 30, 2022.~~current year, with no comparable costs in the prior year.

Change in ~~fair value~~Fair Value of ~~derivative liability~~Warrant Liability

~~The change in fair value of derivative liability due to fair value remeasurement resulted in~~We recorded a gain of ~~$0.01~~$1.4 million and ~~a loss of $0.5 million~~$5 for the three months ended June 30, 2023 and 2022, and $4.4 million and $23 for the six months ended June 30, 2023 and 2022, respectively. The gain was recorded as a result of a change in fair value of warrant liability for the three months and six months ended June 30, 2023 as compared to ~~a gain of $0.02 million and a loss of $0.5 million for~~ the same comparable periods ~~ending~~of 2022.
Gain on Extinguishment of Debt
We recorded $14 and $0 gain on extinguishment of debt for the three months ended June 30, ~~2021.~~2023 and 2022, respectively, and a gain of $547 and $0 for the six months ended June 30, 2023 and 2022, respectively. The gain in the six months ended June 30, 2023 was as a result of share settlement of a greater amount of vendor accounts payable than the fair value of the shares on the date of settlement.
23
Unrealized Gain or Loss on Marketable Securities
We recorded unrealized gains on marketable securities of $9 and $38 for the three months and six months ended June 30, 2023, respectively, compared to unrealized losses of $6 and $30 for the three and six months ended June 30, 2022, respectively. This resulted from an improved mix of investments combined with higher interest rates for the three months and six months ended June 30, 2023 as compared to prior year comparable periods of 2022.

~~Unrealized~~As a result of the above increases to other income, the Company recorded a net loss ~~on marketable securities~~
~~The unrealized loss on marketable securities was $0.01~~of $2.0 million and ~~$0.03~~$2.2 million for the three months and six months ended June 30, ~~2022,~~2023, as compared to $0a net loss of $3.0 million and $0$8.4 million for the ~~three months and six months ended June 30, 2021.~~same comparable periods in 2022.
Liquidity and Capital Resources

The Company’s current operations have focused on business planning, raising capital, establishing an intellectual property portfolio, hiring, and conducting preclinical studies. On January 4, 2023, the Company raised $6.5 million from an institutional investor by selling 3.6 million shares of common stock, and pre-funded warrants to purchase up to 2.9 million shares of common stock. The Company does not have any product candidates approved for sale and has not generated any revenue from its product sales. The Company has sustained operating losses since inception and expects such losses to continue ~~over~~into the foreseeable future. We anticipate that cash utilized in the twelve months following this filing date for selling, general and administrative expenses will range between $5$3.0 million and $6$4.0 million, and research and development expenses will range between ~~$14~~$10.0 million and ~~$16~~$12.0 million.

The Company reported cash and cash equivalents of ~~$5.4~~$2.8 million and short-term investments of ~~$18.4~~$15.2 million as of June 30, ~~2022.~~2023. Management believes that the Company has sufficient cash and cash equivalents, and short-term investments to funds its operations for more than twelve months from the date of this filing.

Management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may include but are not limited to: public offerings of equity and/or debt securities, payments from potential strategic research and development, ~~grants,~~ licensing and/or marketing arrangements with ~~other~~ pharmaceutical companies.

Critical Accounting Policies

We consider the following accounting policies to be critical given they involve estimates and judgments made by management and are important for our investors’ understanding of our operating results and financial condition.

2024
Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of ~~America.~~America (“GAAP”). These condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Oxis Biotech, Inc. and Georgetown Translational Pharmaceuticals, Inc. Intercompany transactions and balances have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with ~~Generally Accepted Accounting Principles~~GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include accruals for potential liabilities, assumptions used in deriving the fair value of ~~derivative~~warrant liabilities, valuation of equity instruments issued for services, and valuation of deferred tax assets. Actual results could differ from those estimates.

Stock-Based Compensation

The Company accounts for share-based awards to employees, nonemployees, and consultants in accordance with the provisions of ASC 718, Compensation-Stock Compensation. Stock-based compensation cost is measured at fair value on the grant date and that fair value is recognized as expense over the requisite service, or vesting, period. The Company values its equity awards using the Black-Scholes option pricing model, and accounts for forfeitures when they occur. Use of the Black-Scholes option pricing model requires the input of subjective assumptions including expected volatility, expected term, and a risk-free interest rate. The Company estimates volatility using its own historical stock price volatility. The expected term of the instrument is estimated by using the simplified method to estimate expected term. The risk-free interest rate is estimated using comparable published federal funds rates.

Inflation

We believe that inflation has not had a material adverse impact on our business or operating results during the periods presented other than the impact of inflation on the general economy. However, there is a risk that the Company’s operating costs could become subject to inflationary pressures in the future, which would have the effect of increasing the Company’s operating costs, and which would put additional stress on the Company’s working capital resources.

Off-balance Sheet Arrangements

We have no off-balance sheet arrangements as of June 30, ~~2022.~~2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~This company~~Our Company qualifies as a smaller reporting company, as defined in 17 C.F.R. §229.10(f)(1) and is not required to provide information for this ~~Item~~Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer evaluated the effectiveness of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the United States Securities Exchange Act of 1934, as amended), as of June 30, ~~2022.~~2023. Based on that evaluation, we have concluded that our disclosure controls and procedures were ~~not~~ effective as of June 30, ~~2022 as a result of material weaknesses in~~2023.
25
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting ~~due~~is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, a company’s principal executive and principal accounting officers and effected by a company’s board of directors, management and other personnel, to ~~(i) inadequate segregation~~provide reasonable assurance regarding the reliability of ~~duties, (ii) risks~~financial reporting and the preparation of ~~executive override~~consolidated financial statements for external purposes in accordance with generally accepted accounting principles and ~~(iii) insufficient written~~includes those policies and procedures ~~for~~that:
● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company
● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the consolidated financial statements.
All internal control systems, no matter how well designed, have inherent limitations and ~~financial reporting~~can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to ~~the requirements~~financial statement preparation and ~~application of both U.S. GAAP and SEC regulation, in each case, as described in “Item 9A. Controls and Procedures” in the Company’s Form 10-K for the year ended December 31, 2021.~~presentation.

~~The Company has begun to take measures to mitigate~~As of June 30, 2023, our management, including our interim Chief Executive Officer and Chief Financial Officer conducted an assessment of the ~~issues identified and implement a functional system~~effectiveness of the Company’s internal control over financial reporting. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in internal control integrated framework. Based upon our evaluation, we concluded that our internal controls over financial ~~reporting. Specifically, the Company has brought on board an experienced Chief Financial Officer, and retained the services~~reporting were operating effectively with a significant level of outside consultants to review the Company’s bank records, transactions with affiliates and/or related parties, expense reimbursement practices and vendor payment practices. In addition, the Company’s boardprecision as of directors previously designated a Special Committee in August 2021 charged with, among other duties, evaluating the current compliance, compensation, operations and personnel of the Company, and determining actions appropriate to address any deficiencies or inefficiencies identified through such evaluation. The Special Committee completed its assigned directives on April 29, 2022. The directives included measures that included or will include, but not be limited to, hiring of additional employees in the Company’s accounting department; preparation of risk-control matrices to identify key risks and develop and document policies to mitigate those risks; and identification and documentation of standard operating procedures for key financial activities, with additional oversight by the Company’s board of directors.June 30, 2023.

Changes in Internal Control ~~over~~Over Financial Reporting

Except for the ongoing remediation of ~~the~~previously disclosed material weaknesses in internal controls over financial reporting, ~~noted above,~~ no changes in our internal control over financial reporting were made during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

2126
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On ~~April 29,~~May 11, 2023, our former interim Chief Executive Officer, Dr. Greg Berk, filed a complaint with the Occupational Safety and Health Administration alleging retaliation against him during his tenure at the Company for raising concerns related to the public disclosure of certain product timelines. The Company is vigorously defending this matter and believe it to be without merit. At this early stage in the proceedings, the Company is not able to determine the probability of the outcome of this matter or a range of reasonably expected losses, if any.
On May 13, 2022, the Company ~~entered into~~made a ~~settlement agreement with~~claim against Michael Handelman, its former Chief ~~Executive~~Financial Officer, ~~(“Officer”)~~asserting that he misappropriated Company funds and ~~received 1,845,000~~ shares of ~~its previously issued~~ common stock, inand failed to file the required SEC reports on Form 3 and Form 4 regarding each acquisition and disposition of the Company’s common stock. The Company seeks monetary damages estimated at $370; the return of shares of our common stock received without authorization and the disgorgement of any profits earned from the sale of those shares; a full ~~and final settlement~~accounting for all sums charged on the Company’s debit card, with payment to the Company for any charges that cannot be demonstrated to have a corporate purpose; an order directing Mr. Handelman to make all filings required by Section 16(a) of the 1934 Act; an award of all sums and shares improperly issued to members of Mr. Handelman’s family; and an award of the Company’s attorneys’ fees and any forum and arbitration fees. As a component of Mr. Handelman’s contract with the Company, disputes shall be fully addressed and finally resolved by binding arbitration conducted by the American Arbitration Association (AAA) in New York City, New York, in accordance with its National Employment Dispute Resolution rules. In connection with any such arbitration, the Company shall bear all costs not otherwise borne by a plaintiff in a court proceeding. The Company agrees that any decisions of the arbitration panel will be binding and enforceable in any state in which the Company conducts the operation of its business. In accordance with California Labor Laws, the Company has designated Los Angeles, California as the venue for this arbitration. The claims are pending before an arbitrator in Los Angeles and the hearing is scheduled to begin on October 26, 2023. Mr. Handelman has not asserted counterclaims against the ~~Officer.~~Company.
On May 24, 2023, TWF Global, LLC (“TWF”) filed a Complaint in the California Superior Court for the County of Los Angeles naming the Company as defendant. The Complaint alleges that TWF is the holder of two convertible notes and that the Company did not deliver shares of common stock ~~was subsequently cancelled. Both~~due on conversion in February 2021. TWF is seeking per diem liquidated damages based on the terms of alleged convertible notes. The Company filed a motion to dismiss for improper forum on July 14, 2023 because the convertible notes require disputes to be filed in New York state and ~~the Officer released each other from~~federal courts.��The Company believes that TWF’s claims ~~under the settlement agreement.~~are without merit and will continue to defend vigorously against these claims.

Item 6. Exhibits
Exhibit Description Filed Herewith Form Number SEC File No. Filing Date Description Filed Herewith Form Number SEC File No. Filing Date

3.1 Restated Certificate of Incorporation as filed in Delaware September 10, 1996 and as thereafter amended through March 1, 2002 10-KSB 3.A 000-08092 4/1/2002 Restated Certificate of Incorporation as filed in Delaware September 10, 1996 and as thereafter amended through March 1, 2002 10-KSB 3.A 000-08092 4/1/2002
3.2 Certificate of Amendment to the Restated Certificate of Incorporation of GT Biopharma, Inc., dated February 9, 2011 10-K 3.2 000-08092 3/31/2011 Certificate of Amendment to the Restated Certificate of Incorporation of GT Biopharma, Inc., dated February 9, 2011 10-K 3.2 000-08092 3/31/2011
3.3 Certificate of Amendment to the Restated Certificate of Incorporation of GT Biopharma, Inc., effective as of July 19, 2017 8-K/A 3.1 000-08092 3/15/2018 Certificate of Amendment to the Restated Certificate of Incorporation of GT Biopharma, Inc., effective as of July 19, 2017 8-K/A 3.1 000-08092 3/15/2018
3.4 Certificate of Amendment to the Restated Certificate of Incorporation of GT Biopharma, Inc., effective as of February 10, 2021 8-K 3.1 001-40023 2/11/2021 Certificate of Amendment to the Restated Certificate of Incorporation of GT Biopharma, Inc., effective as of February 10, 2021 8-K 3.1 001-40023 2/11/2021
3.5
Certificate of Amendment to Restated Certificate of Incorporation of the Registrant effective June 13, 2022

DEF 14A

001-40023

4/29/2022
Certificate of Amendment to Restated Certificate of Incorporation of the Registrant effective June 13, 2022
10-K

3.5
001-40023 3/30/2023
3.6
Bylaws, as restated effective September 7, 1994 and as amended through April 29, 2003 10-QSB 3 000-08092 8/14/2003 Amended and Restated Bylaws of GT Biopharma, Inc. effective November 3, 2022. 8-K 3.1 01-40023 11/09/2022
4.1 Certificate of Designation of Preferences, Rights and Limitations of Series K Preferred Stock of GT Biopharma, Inc., dated April 3, 2019 10-K 4.2 001-40023 4/16/2021 Certificate of Designation of Preferences, Rights and Limitations of Series J-1 Preferred Stock of GT Biopharma, Inc. dated April 3, 2019 8-K 3.1 000-08092 04/04/2019
4.2 Certificate of Designation of Preferences, Rights and Limitations of Series K Preferred Stock of GT Biopharma, Inc., dated April 3, 2019 10-K 4.2 001-40023 4/16/2021
31.1 Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended. X Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended. X
31.2 Certification of Principal Financial Officer and Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended. X Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended. X
32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 X Certification of Principal 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 Principal Financial Officer and 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 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. X
101.INS Inline XBRL Instance Document. X Inline XBRL Instance Document. X
101.SCH Inline XBRL Taxonomy Extension Schema Document. X Inline XBRL Taxonomy Extension Schema Document. X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase X Inline XBRL Taxonomy Extension Calculation Linkbase X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase X Inline XBRL Taxonomy Extension Definition Linkbase X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. X Inline XBRL Taxonomy Extension Label Linkbase Document. X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase X Inline XBRL Taxonomy Extension Presentation Linkbase X
104 Cover Page Interactive Data File (embedded within the Inline XBRL document) X Cover Page Interactive Data File (embedded within the Inline XBRL document) X
* This certification shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that Section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

2227
SIGNATURES

Pursuant to the requirements 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.

GT Biopharma, Inc.

Dated: August ~~15, 2022~~7, 2023 By: /s/ Manu Ohri
Manu Ohri

Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)

2328

	Shares		Amount		Shares		Amount			Capital			Deficit			Total
For The Three Months Ended June 30, 2023 (Unaudited)
	Preferred Shares				Common Shares					Additional Paid in			Accumulated
	Shares		Amount		Shares		Amount			Capital			Deficit			Total

Balance, March 31, 2023		96	$	1		36,883	$	37	-	$	687,710		$	(674,695	)	$	13,053
Cancellation of common stock upon settlement with former officer						-
Cancellation of common stock						-
Equity compensation to officers, employees, and board of directors						-

Fair value of vested stock options		-		-		-		-			398			-			398

Issuance of common shares for services						-
Issuance of common stock for exercise of Prefunded Warrants		-		-		2,900		3	-		(3	)		-			-

Issuance of common shares in settlement of vendors payable		-		-		857		1			303			-			304

Net loss		-		-		-		-			-			(1,992	)		(1,992	)

Balance, June 30, 2023		96	$	1		40,640	$	41	-	$	688,408		$	(676,687	)	$	11,763


	Preferred Shares				Common Shares						Common Shares Issuable						Additional Paid in			Accumulated
	Shares		Amount		Shares			Amount			Shares			Amount			Capital			Deficit			Total

Balance, March 31, 2022		96	$	1		32,346		$	32			-		$	-		$	676,780		$	(659,024	)	$	17,789

Cancellation of common stock upon settlement with former officer		-		-		(1,845	)		(1	)		-			-			(222	)		-			(223	)

Equity compensation to officers, employees, and board of directors		-		-		79			-			-			-			463			-			463

Issuance of common shares for services		-		-		114			-			-			-			390			-			390

Net loss		-		-		-			-			-			-			-			(2,979	)		(2,979	)

Balance, June 30, 2022		96	$	1		30,694		$	31			-		$	-		$	677,411		$	(662,003	)	$	15,440

For the six months ended June 30, 2022 (Unaudited)

	Preferred Shares				Common Shares						Common Shares Issuable						Additional Paid in			Accumulated
	Shares		Amount		Shares			Amount			Shares			Amount			Capital			Deficit			Total

Balance, December 31, 2021		96	$	1		32,062		$	32			327		$	1,113		$	674,348		$	(653,584	)	$	21,910

Cancellation of common stock upon settlement with former officer		-		-		(1,845	)		(1	)		-			-			(222	)		-			(223	)

Cancellation of common stock		-		-		(291	)		-			-			-			-			-			-

Common shares issued- conversion of notes payable		-		-		327			-			(327	)		(1,113	)		1,113			-			-

Equity compensation to officers, employees, and board of directors		-		-		164			-			-			-			910			-			910

Issuance of common shares for services		-		-		277			-			-			-			1,262			-			1,262

Net loss		-		-		-			-			-			-			-			(8,419	)		(8,419	)

Balance, June 30, 2022		96	$	1		30,694		$	31			-		$	-		$	677,411		$	(662,003	)	$	15,440

For The Six Months Ended June 30, 2023 (Unaudited)
	Preferred Shares				Common Shares					Additional Paid in			Accumulated
	Shares		Amount		Shares		Amount			Capital			Deficit			Total

Balance, December 31, 2022		96	$	1		32,723	$	33	-	$	686,168		$	(674,468	)	$	11,734

Private placement of common stock		-		-		3,600		4			6,264			-			6,268

Initial recognition of fair value of warrant liability		-		-		-		-			(5,831	)		-			(5,831	)

Fair value of vested stock options		-		-		-					905			-			905

Issuance of common shares for services		-		-		73		-	-		315			-			315

Issuance of common stock for exercise of Prefunded Warrants		-		-		2,900		3			(3	)		-			-

Issuance of common shares in settlement of vendors payable		-		-		1,344		1			590			-			591

Net loss		-		-		-		-			-			(2,219	)		(2,219	)

Balance, June 30, 2023		96	$	1		40,640	$	41	-	$	688,408		$	(676,687	)	$	11,763

For The Six Months Ended June 30, 2022 (Unaudited)
	Preferred Shares				Common Shares						Common Shares Issuable						Additional Paid in			Accumulated
	Shares		Amount		Shares			Amount			Shares			Amount			Capital			Deficit			Total

Balance, December 31, 2021		96	$	1		32,062		$	32			327		$	1,113		$	674,348		$	(653,584	)	$	21,910

Cancellation of common stock upon settlement with former officer		-		-		(1,845	)		(1	)		-			-			(222	)		-			(223	)

Cancellation of common stock		-		-		(291	)		-			-			-			-			-			-

Common shares issued upon conversion of notes payable		-		-		327						(327	)		(1,113	)		1,113			-			-

Equity compensation to officers, employees, and board of directors		-		-		164			-			-			-			910			-			910

Issuance of common shares for services		-		-		277			-			-			-			1,262			-			1,262

Net loss		-		-		-			-			-			-			-			(8,419	)		(8,419	)

Balance, June 30, 2022		96	$	1		30,694		$	31			-		$	-		$	677,411		$	(662,003	)	$	15,440

	2023			2022
	For The Six Months Ended June 30,
	2023			2022
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,219	)	$	(8,419	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation - services		315			1,262
Stock based compensation - officers, employees and board of directors		905			910
Change in fair value of warrant liability		(4,311	)		(23	)
Gain on extinguishment in settlement of vendor payable		(547	)		-
Change in operating lease right-of-use assets		51			46
Unrealized (gain) loss on marketable securities		(38	)		30
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses		5			(32	)
Increase in deposits		-			(9	)
Increase (decrease) in accounts payable and accrued expenses		1,052			(1,729	)
(Decrease) in operating lease liability		(54	)		(37	)
Net Cash Used in Operating Activities		(4,841	)		(8,001	)

CASH FLOWS FROM INVESTING ACTIVITIES
Sale (purchase) of investments		(4,332	)		4,614
Net Cash Provided by (Used in) Investing Activities		(4,332	)		4,614

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock and prefunded warrants		6,268			-
Cancellation of common stock upon settlement with former officer		-			(223	)
Net Cash Provided by (Used in) Financing Activities		6,268			(223	)

Net Decrease in Cash		(2,905	)		(3,610	)
Cash at Beginning of Period		5,672			8,968
Cash at End of Period	$	2,767		$	5,358

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	$	-		$	-
Income taxes paid	$	-		$	-

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Right-of-use assets exchanged for lease liabilities	$	-		$	260
Initial recognition of fair value of warrant liability	$	5,831		$	-
Fair value of common stock issued to a vendor to settle accounts payable	$	591		$	-

	Level 1	Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

	Level 2	Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

	Level 3	Valuations based on inputs that are unobservable, supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

					June 30, 2023		June 30, 2022
	June 30, 2022 (Unaudited)		June 30, 2021 (Unaudited)		(Unaudited)		(Unaudited)
Options to purchase common stock		302,500		-		3,737,952		302,500
Warrants to purchase common stock		2,337,274		2,365,473		9,148,880		2,337,274
Unvested restricted common stock		488,429		-		-		488,429
Convertible Series C Preferred Stock		-		7
Total anti-dilutive securities		3,128,203		2,365,480		12,886,832		3,128,203

	June 30, 2022 (Unaudited)									June 30, 2023 (Unaudited)
			Unrealized		Unrealized			Fair				Unrealized		Unrealized		Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses		Value
Short-term investments	$	18,397	$	—	$	(30	)	$	18,367	$	15,168	$	38	$	—	$	15,206
Total	$	18,397	$	—	$	(30	)	$	18,367	$	15,168	$	38	$	—	$	15,206

	December 31, 2021									December 31, 2022
			Unrealized		Unrealized			Fair				Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Short-term investments	$	23,040	$	—	$	(29	)	$	23,011	$	10,866	$	—	$	(30	)	$	10,836
Total	$	23,040	$	—	$	(29	)	$	23,011	$	10,866	$	—	$	(30	)	$	10,836

									Fair Value		Level 1		Level 2		Level 3
	June 30, 2022 (Unaudited)								June 30, 2023 (Unaudited)
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Money market funds	$	5,339	$	5,339	$	—	$	—	$	2,364	$	2,364	$	—	$	—
Corporate notes and commercial paper		18,367		—		18,367		—		15,206		15,206		—		—
Total financial assets	$	23,706	$	5,339	$	18,367	$	—	$	17,570	$	17,570	$	—	$	—


	Three Months Ending					Six Months Ending
	June 30, 2022			June 30, 2021		June 30, 2022			June 30, 2021
	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)
Beginning Balance	$	120,000		$	362,000	$	138,000		$	383,000
Fair value upon issuance of warrants		—			—		—			—
Change in fair value	$	(5,000	)	$	480,000	$	(23,000	)	$	459,000
Extinguishment		—			—		—			—
Ending Balance	$	115,000		$	842,000	$	115,000		$	842,000

	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
	Three Months Ending						Six Months Ending
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Beginning balance	$	2,925		$	120		$	19		$	138
Fair value upon issuance of warrants		—			—			5,830			—
Change in fair value	$	(1,433	)	$	(5	)	$	(4,357	)	$	(23	)
Ending balance	$	1,492		$	115		$	1,492		$	115


	June 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
		(Unaudited)			(Unaudited)
Accounts payable to a third-party manufacturer	$	6,440	$	5,056	$	2,910	$	2,283
Other accounts payable		823		3,164		591		857
Total accounts payable	$	7,263	$	8,220	$	3,501	$	3,140

	Common Warrants and Placement Agents Warrants
	June 30, 2023			At Inception
	(Unaudited)			(Unaudited)
Stock price	$	0.31		$	1.20
Risk-free interest rate		4.13	%		3.60	%
Expected volatility		119.7	%		121.5	%
Expected life (in years)		5.0 – 4.5			5.0
Expected dividend yield		-			-
Fair value of warrants (in thousands)	$	1,535		$	5,831

	Number of		Weighted Average		Number of			Weighted Average
	Warrants		Exercise Price		Warrants			Exercise Price
Outstanding at December 31, 2021:		2,337,274	$	5.30
Warrant outstanding at December 31, 2022:						2,337,274		$	5.30
Granted		-		-		9,790,000			0.71
Forfeited/canceled		-		-		(78,394	)		3.40
Exercised		-		-		(2,900,000	)		0.0001
Warrants outstanding at June 30, 2022		2,337,274	$	5.30
Warrants exercisable at June 30, 2022		2,337,274	$	5.30

Warrants outstanding at June 30, 2023						9,148,880		$	2.11
Warrants exercisable at June 30, 2023						2,258,880		$	5.45

	Warrants Outstanding				Warrants Exercisable
Range of Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price	Number Exercisable		Weighted Average Exercise Price
$1.00 – 1.25	6,890,000	5.0	$	1.01	-	$	-
3.40 – 5.50	2,258,880	2.6		5.45	2,258,880		5.45
	9,148,880				2,258,880

	Number of			Weighted Average
	Options			Exercise Price
Options outstanding at December 31, 2022		1,630,452		$	2.57
Granted		2,500,000			0.75
Forfeited/canceled		(392,500	)		2.81
Exercised		-			-
Options outstanding at June 30, 2023		3,737,952		$	1.32
Options vested and exercisable at June 30, 2023		2,177,891		$	1.71

Stock price	$	$0.35 - $0.85
Risk-free interest rate		3.62% - 3.99	%
Expected volatility		120.81% - 123.61	%
Expected life (in years)		5.3
Expected dividend yield		-

	Number of		Weighted Average
	Options		Exercise Price
Options outstanding at December 31, 2021:		302,500	$	3.05
Granted		-		-
Forfeited/canceled		-		-
Exercised		-		-
Options outstanding at June 30, 2022		302,500	$	3.05
Options exercisable at June 30, 2022		141,306	$	3.05

		Options Outstanding				Options Exercisable
	Range of Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price	Number Exercisable		Weighted Average Exercise Price
$	2.48	1,237,952	9.0	$	2.48	1,154,081	$	2.48
	0.85	2,000,000	9.6		0.85	1,000,000		0.85
	0.35	500,000	9.9		0.35	23,810		0.35
		3,737,952				2,177,891

	a.	The Company is a party to a scientific research agreement with the Regents of the University of Minnesota, effective June 16, 2021. This scientific research agreement aims to work with the Company with three major goals in mind: (1) support the Company’s TriKE^®~~product development and GMP manufacturing efforts; (2) TriKE~~^® pharmacokinetics optimization in humans; and (3) investigation of the patient’s native NK cell population based on insights obtained from the analysis of the human data generated during our GTB-3550 clinical trial. The major deliverables proposed here are: (1) creation of IND enabling data for TriKE^® ~~constructs in support of our product development and GMP manufacturing efforts; (2) TriKE~~^® platform drug delivery changes to allow transition to alternative drug delivery means and extended PK in humans; and (3) gain an increased understanding of changes in the patient’s native NK cell population as a result of TriKE^®~~therapy. Most studies will use TriKE~~^® ~~DNA/amino acid sequences created by us under current UMN/GTB licensing terms. The term of this agreement shall expire on June 30, 2023.~~

		~~The University of Minnesota shall use reasonable efforts to complete the project for a fixed sum of $2.1million. For the three months and six months ended June 30, 2022, the Company recorded an expense of $192,000~~ ~~and $383,000, respectively, relating to scientific research agreement.~~

	b.	On October 5, 2020, GT Biopharma entered into a Master Services Agreement with a third-party product manufacturer to perform biologic development and manufacturing services on behalf of the Company. Associated with this, the Company has subsequently signed five Statements of Work for the research and development of products for use in clinical trials. At June 30, 2022, the Company’s commitments in relation to these Statements of Work and any related Change Orders totaled approximately $~~13.0~~ ~~million, of which $9.8~~ ~~million was incurred at that date and an additional $3.2~~ ~~million is in process during fiscal year 2022.~~

		~~For the three months and six months ended June 30, 2022, the Company recorded an expense of $92,000~~ ~~and $1,180,000, respectively, relating to the Master Service Agreement.~~

				June 30, 2023			June 30, 2022
	June 30, 2022 (Unaudited)			(Unaudited)			(Unaudited)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	49,000		$	30		$	49
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	260,000		$	114		$	165
Weighted-average remaining lease term (in years):
Operating leases		2.25			1.25			2.25
Weighted-average discount rate:
Operating leases		10	%		10	%		10	%

	Operating leases (Unaudited)			June 30, 2023
				(Unaudited)
2022 (6 months)	$	59,000
2023		121,000
2024		66,000
Within one year				$	153
After one year and within two years					3
Thereafter					-
Total future minimum lease payments	$	246,000		$	156
Less – discount		(29,000	)		(36	)
Lease liability	$	217,000		$	120

	●	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company

	●	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

	●	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the consolidated financial statements.

	GT Biopharma, Inc.

Dated: August ~~15, 2022~~7, 2023	By:	/s/ Manu Ohri
		Manu Ohri
		Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)