Dermata Therapeutics, Inc.

Previous wording

We are a scientific leader in skincare, dedicated to the development and commercialization of products that address common and underserved skin conditions. Dermata initially was founded with a focus on researching and developing prescription products subject to the FDA approval process. In September 2025, after an extensive review of current trends in dermatology, changing consumer preferences, additional non-clinical and clinical development costs, and go-to market costs for an Rx acne product, management, with approval from our board of directors, determined that a strategic shift to developing and distributing DTC and B2B skincare products, that are backed by science, would be a better path to commercialization for the Company with potentially greater financial upside and faster time to market. We believe we can leverage our history and knowledge of Rx dermatology to create skincare products that are effective and safe, and available to consumers without the nuisance of obtaining a prescription. We believe this strategic repositioning will accelerate our path to commercialization, reduce our regulatory burden, and decrease development expenses, all while enabling us to address broad consumer segments in the skincare market.

Current wording

We are a scientific leader in skincare, dedicated to the development and commercialization of products that address common and underserved skin conditions. Dermata initially was founded with a focus on researching and developing prescription products subject to the FDA approval process. In September 2025, after an extensive review of current trends in dermatology, changing consumer preferences, additional non-clinical and clinical development costs, and go-to market costs for a prescription, or Rx, acne product, management, with approval from our board of directors, determined that a strategic shift to developing and distributing DTC and B2B skincare products, that are backed by science, would be a better path to commercialization for the Company with potentially greater financial upside and faster time to market. We believe we can leverage our history and knowledge of Rx dermatology to create skincare products that are effective and safe, and available to consumers without the nuisance of obtaining a prescription. We believe this strategic repositioning will accelerate our path to commercialization, reduce our regulatory burden, and decrease development expenses, all while enabling us to address broad consumer segments in the skincare market.

Previous wording

We believe the skincare market, from a cosmetic, and over-the-counter (“OTC”), and Rx perspective, has seen a substantial shift towards consumers first relying upon multifaceted cosmetics and OTC products that simplify routines. Consumer preferences are changing to favor natural products that do more for their skin. There appears to be a resurgence of interest in traditional remedies to help with skin renewal and general cosmetic appearance. With consumers searching for multifunctional products to simplify their routines while valuing brand loyalty and sustainable practices. We believe there remains a gap in the skincare market for in-office level treatments that are available for home use and believe we have a product to fill this void. We believe that if we can provide consumers with a unique topical skincare product, we have an opportunity to capture a large segment of consumers seeking to simplify their skincare routine without needing to schedule an in-office visit. While this is a major shift in strategy for our company, we believe pursuing the commercial sale of unique cosmetic skincare products is the best path forward to meet our mission of providing consumers with efficacious and safe skincare treatment options.

Current wording

We believe the skincare market, from a cosmetic, and over-the-counter (“OTC”), and Rx perspective, has seen a substantial shift towards consumers first relying upon multifaceted cosmetics and OTC products that simplify routines. Consumer preferences are changing to favor natural products that do more for their skin. There appears to be a resurgence of interest in traditional remedies to help with skin renewal and general cosmetic appearance. With consumers searching for multifunctional products to simplify their routines while valuing brand loyalty and sustainable practices. We believe there remains a gap in the skincare market for in-office level treatments that are available for home use and believe we have a product to fill this void. We believe that if we can provide consumers with a unique topical skincare product, we have an opportunity to capture a large segment of consumers seeking to simplify their skincare routine without needing to schedule an in-office visit with an aesthetician or a dermatologist. While this is a major shift in strategy for our company, we believe pursuing the commercial sale of unique cosmetic skincare products is the best path forward to meet our mission of providing consumers with efficacious and safe skincare treatment options.

Previous wording

We view this shift in consumer preferences as a significant benefit for our strategic repositioning. We have gained substantial clinical knowledge of various dermatology diseases and skin conditions. We plan to leverage this knowledge to create a whole product line of skincare treatments that consumers can access directly for each of their skincare needs. While our background is in clinical products, we plan to leverage the unique attributes of our hero ingredient,Spongilla lacustris, to develop skincare treatments. We plan to launch our first cosmetic product, the Foundational Treatment, in the middle of 2026. In the future, we plan to offer additional products that target specific needs of consumers. For example, for consumers who have more sensitive skin, we may plan to commercialize a milder version of our Foundational Treatment that could be used more often.

Current wording

We view this shift in consumer preferences as a significant benefit for our strategic repositioning. We have gained substantial clinical knowledge of various dermatology diseases and skin conditions or our years of developing prescription products. We plan to leverage this knowledge to create a diversified product line of skincare treatments that consumers can access directly for each of their skincare needs. While our background is in prescription products, we plan to leverage the unique attributes of our hero ingredient,Spongilla lacustris, to develop multiple skincare treatments for a variety of consumer and professional needs. We expect to launch our first cosmetic product, our Tome Foundational Treatment, on August 25, 2026, with those on our waitlist being able to preorder early. In the future, we plan to offer additional products that target specific needs of consumers. For example, for consumers who have more sensitive skin, we may plan to commercialize a milder version of our Foundational Treatment that could be used more often.

Previous wording

Our core products, like our Foundational Treatment, will utilize our Bioneedle, which is 100%Spongilla lacustris powder, to provide a once weekly skin renewal routine that is simple addition to skincare routines. This once weekly routine will contain our Bioneedle which will be combined with a fluidizing agent for easy application. Our Bioneedle is derived from a wildly grown freshwater sponge,Spongilla lacustrisorSpongilla, which is processed into a fine, purified powder and packaged with no additives.Spongillais a unique freshwater sponge that only grows in commercial quantities in select regions of the world, which gives our Bioneedle its distinctive properties. The combination of a proprietary harvesting protocol, developed by our exclusive supplier, and the post-harvest processing procedures, produces a cosmetic ingredient that we believe optimizes the Bioneedle for a unique and simple skin renewal routine, unlike most skincare on the market.

Current wording

Our core products, like our Foundational Treatment, will utilize our Bioneedle, which is 100%Spongilla lacustris powder, to provide a once-weekly, skin renewal routine that is a simple addition to skincare routines. This once weekly routine will contain our Bioneedle which will be combined with a fluidizing agent for easy application. Our Bioneedle is derived from a wild harvested freshwater sponge,Spongilla lacustrisorSpongilla, which is processed into a fine, purified powder and packaged with no additives.Spongillais a unique freshwater sponge that only grows in commercial quantities in select regions of the world, which gives our Bioneedle its distinctive properties. The combination of a proprietary harvesting protocol, developed by our exclusive supplier over 20 plus years of harvesting, and the post-harvest processing procedures we developed, produces a cosmetic ingredient that we believe optimizes the Bioneedle for a unique and simple skin renewal routine, unlike most skincare on the market.

Previous wording

In addition to the DTC channel for our products, we believe there is a market for our technology to aid in the intradermal delivery of macromolecules for various aesthetic conditions. Typically, for facial aesthetics, botulinum toxins are injected into facial muscles to reduce forehead, lateral canthal, and glabella deep lines. However, this is limited to the use of intradermal delivery of botulinum toxin for a variety of skin diseases and conditions. Botox is currently the only approved botulinum toxin for the treatment of axillary hyperhidrosis via intradermal injections. While effective, intradermal injections, including 10-15 per axilla, of Botox can be painful for patients and very time consuming for dermatologists. Therefore, we believe developing a less painful, less time-consuming topical delivery of botulinum toxin into the dermis for various aesthetic and medical skin diseases and conditions, would provide physicians with an attractive alternative to intradermal injections of botulinum toxins.

Current wording

In addition to in-office application for skin renewal, based on the mechanism of Bioneedle, we also believe there is a market for our technology to aid in the intradermal delivery of macromolecules, like botulinum toxin, that must be applied by certified professionals. Currently botulinum toxins are only approved for intramuscular injections of the face to reduce forehead, lateral canthal, and glabella deep lines. However, we believe there is an untapped aesthetic market seeking needle free, topical applications of botulinum toxin for superficial aesthetic conditions, like reducing fine lines, pore size, and sebum product or improving luminosity, brightness and overall aesthetic appearance. Therefore, we believe developing a less painful, less time-consuming topical delivery of botulinum toxin into the dermis for various aesthetic conditions, would provide physicians with an attractive alternative to intradermal injections of botulinum toxins. While we have no current timeline for the launch of this program we plan to continue to explore additional uses for this platform and look forward to getting our technology in the hands of aestheticians and dermatologists so they may better serve the medical and aesthetic needs of their patients.

Previous wording

We have taken steps to secure inventory ofSpongilla raw material in advance of the planned launch of our Tome skincare products. We believe we have sufficient quantities of processedSpongilla raw material inventory on hand to support the anticipated mid-2026 commercial launch and initial commercialization activities thereafter, based on our current operating plans, expected production volumes and internal assumptions. We continue to evaluate additional inventory procurement opportunities and manufacturing planning activities to support future commercial demand.

Current wording

We have taken steps to secure inventory ofSpongilla raw material in advance of the planned launch of our Tome skincare products. We believe we have sufficient quantities of processedSpongilla raw material inventory on hand to support the expected August 25, 2026, commercial launch and initial commercialization activities thereafter, based on our current operating plans, expected production volumes and internal assumptions. We continue to evaluate additional inventory procurement opportunities and manufacturing planning activities to support future commercial demand.

Previous wording

Our results of operations have fluctuated significantly from period to period in the past and are likely to continue to do so in the future. We anticipate that our quarterly and annual results of operations will be impacted for the foreseeable future by several factors, including the marketing expenses associated with the launch of our first Tome skincare products and resulting revenues, if any, in mid-2026. Due to these fluctuations, we believe that the period-to-period comparisons of our operating results are not a good indication of our future performance.

Current wording

Our results of operations have fluctuated significantly from period to period in the past and are likely to continue to do so in the future. We anticipate that our quarterly and annual results of operations will be impacted for the foreseeable future by several factors, including the marketing expenses associated with the launch of our first Tome skincare products and resulting revenues, if any, in the second half of 2026. Due to these fluctuations, we believe that the period-to-period comparisons of our operating results are not a good indication of our future performance.

Previous wording

Research and development expenses decreased by $0.9 million from $1.3 million for the three months ended March 31, 2025, to $0.4 million for the three months ended March 31, 2026. The decrease in research and development expenses resulted from $0.7 million of decreased clinical expenses from the XYNGARI™ STAR-1 acne study, which was completed during the second quarter of 2025, $0.1 million of decreased chemistry, manufacturing and controls, or CMC, and non-clinical expenses period over period as result of the Company’s pivot to focus on DTC product sales, and $0.1 million of decreased personnel expenses, which resulted from the receipt of proceeds of the Employee Retention Tax Credit refund which partially offset payroll taxes for research and development employees during the first quarter of 2026. While we continue to focus on designing, packaging, and manufacturing of our first commercial products, as well as product development, we anticipate that research and development expenses will continue to decrease as we prepare for launching our first product sales in mid-2026.

Current wording

Research and development expenses decreased by $0.4 million from $0.6 million for the three months ended June 30, 2025, to $0.2 million for the three months ended June 30, 2026. The decrease in research and development expenses resulted primarily from the Company’s decision to prioritize the commercial launch of its first product, resulting in a decrease in research and development efforts during the three months ended June 30, 2026. While we continue to focus on designing, packaging, and manufacturing of our first commercial products, as well as product development, we anticipate that research and development expenses will continue to decrease as we prepare for launching our first commercial product, expected on August 25, 2026.

Previous wording

Selling, general and administrative expenses increased by approximately $0.5 million from $1.1 million for the three months ended March 31, 2025, to $1.5 million for the three months ended March 31, 2026. The increase in selling, general and administrative expenses was primarily attributable to $0.2 million of marketing expenses incurred, $0.2 million of increased audit fees and $0.1 million of increased legal fees. We anticipate that selling, general and administrative expenses will continue to increase related to marketing, branding, advertising, and personnel expenses as we continue to prepare for our first product launches and sales in mid-2026.

Current wording

Selling, general and administrative expenses increased by approximately $1.6 million from $1.2 million for the three months ended June 30, 2025, to $2.8 million for the three months ended June 30, 2026. The increase in selling, general and administrative expenses was primarily attributable to the Company’s decision to prioritize the commercial launch of its first product, resulting in significant pre-launch commercialization activities during the three months ended June 30, 2026. This resulted in an increase of $0.6 million of marketing and other commercialization expenses and an increase of $0.3 million of compensation expense primarily due to a reallocation of employee duties from research and development to selling, general and administrative expense, as a result of the shift in business focus towards commercialization. In addition, legal fees increased by $0.7 million during the three months ended June 30, 2026, due to ongoing litigation and other legal matters. We anticipate that selling, general and administrative expenses will continue to increase related to marketing, branding, advertising, and personnel expenses as we continue to prepare for our first product launch in the third quarter of 2026.

Previous wording

We earn interest income via overnight deposits on our cash and cash equivalents. Interest income was $78,676 for the first quarter of 2026 compared to $36,216 for the first quarter of 2025. The increase of $42,460 in interest income resulted from increased cash balances due to financing proceeds related to the December 2025 PIPE and recent ATM sales during the fourth quarter of 2025 and first quarter of 2026, respectively, as well as interest received related to the Employee Retention Tax Credit payments received during the first quarter of 2026.

Current wording

We earn interest income via overnight deposits on our cash and cash equivalents. Interest income was $125,000 for the six months ended June 30, 2026 compared to $108,000 for the six months June 30, 2025. The increase of $17,000 in interest income resulted primarily from interest received related to the Employee Retention Tax Credit payments received during the first quarter of 2026.

Previous wording

Cash used in operations of approximately $2.5 million for the three months ended March 31, 2026, was the result of the net loss of $1.8 million as well as increases in prepaid and other current assets of $0.1 million and increased inventory of $0.1 million, as well as decreases in accounts payable and accrued and other current liabilities of approximately $0.5 million.

Current wording

Cash used in operations of approximately $4.9 million for the six months ended June 30, 2026, was the result of the net loss of $4.8 million as well as increases in prepaid and other current assets of $0.3 million and increased inventories of $0.1 million, as well as a decrease accrued and other current liabilities of approximately $0.5 million, partially offset by an increase in accounts payable of $0.7 million and non-cash stock-based compensation of $0.1 million.

Previous wording

Cash used in operations of $1.9 million for the three months ended March 31, 2025, was the result of the net loss of $2.3 million, offset by increases in accounts payable and accrued and other current liabilities of approximately $0.3 million, as well as the decrease of prepaid expenses and other current assets of approximately $0.1 million.

Current wording

Cash used in operations of $4.6 million for the six months ended June 30, 2025, was the result of the net loss of $4.0 million and decreases in accounts payable and accrued and other current liabilities of approximately $0.9 million, partially offset by the decrease of prepaid expenses and other current assets of approximately $0.2 million and non-cash stock-based compensation of $0.1 million.

Previous wording

Cash provided by financing activities of $1.9 million for the three months ended March 31, 2026, was the result of approximately $2.0 million in net proceeds from ATM sales during the first quarter of 2026, partially offset by approximately $0.1 million of payments for issuance-related costs from the December 2025 PIPE financing.

Current wording

Cash provided by financing activities of $1.9 million for the six months ended June 30, 2026, was the result of approximately $2.0 million in net proceeds from ATM sales during the first quarter of 2026, partially offset by approximately $0.1 million of payments for issuance-related costs from the December 2025 PIPE financing.

Previous wording

Cash provided by financing activities of $8.5 million for the three months ended March 31, 2025, was the result of the January 2025 PIPE financing which raised net proceeds of $2.3 million, and the March 2025 Inducement financing which raised net proceeds of $6.2 million.

Current wording

Cash provided by financing activities of $7.9 million for the six months ended June 30, 2025, was the result of the January 2025 PIPE financing which raised net proceeds of $2.2 million, and the March 2025 Inducement financing which raised net proceeds of $5.7 million.

Previous wording

Since our inception, we have not generated any revenue or commercialized any products. As of March 31, 2026, our cash and cash equivalents totaled $6.9 million, and we had an accumulated deficit of $75.1 million. For the three months ended March 31, 2026, and the year ended December 31, 2025, we used cash of $2.5 million and approximately $7.8 million, respectively, in operations. We expect our current cash resources to fund operations into the first quarter of 2027.

Current wording

Since our inception, we have not generated any revenue or commercialized any products. As of June 30, 2026, our cash and cash equivalents totaled $4.4 million, and we had an accumulated deficit of $78.0 million. For the six months ended June 30, 2026, and the year ended December 31, 2025, we used cash of $4.9 million and approximately $7.8 million, respectively, in operations. We expect our current cash resources to fund operations into the fourth quarter of 2026.

Previous wording

We anticipate that we will continue to incur net losses for at least the next twelve months from the date of this filing. While we plan to launch our first DTC product in mid-2026, it is uncertain when we will generate operating income to sustain operations, if ever. These factors raise substantial doubt about our ability to continue as a going concern for the one-year period following the date that these financial statements were issued.

Current wording

We anticipate that we will continue to incur net losses for at least the next twelve months from the date of this filing. While we plan to launch our first DTC product, expected on August 25, 2026, it is uncertain when we will generate operating income to sustain operations, if ever. These factors raise substantial doubt about our ability to continue as a going concern for the one-year period following the date that these financial statements were issued.

Previous wording

We believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into the first quarter of 2027. We have based this estimate of cash runway on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We may require additional capital to continue to commercialize our Tome skincare products, and to pursue in-licenses or acquisitions of other drug candidates.

Current wording

We believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2026. We have based this estimate of cash runway on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We may require additional capital to continue to commercialize our Tome skincare products, and to pursue in-licenses or acquisitions of other drug candidates. Accordingly, beyond our current cash and any proceeds from the sales of our common stock pursuant to the ATM Agreement, if any, we will require substantial additional financing to support our operations. We expect our expenses and capital requirements to increase in connection with our ongoing activities, including the commercial launch of our first Tome skincare products.

Previous wording

Since inception, we have devoted substantially all of our resources to research and development activities. In September 2025, we made a strategic pivot from research and developing prescription products to becoming a science-driven leader in dermatologic solutions, anticipating our first DTC product launch from our Tome skincare brand in mid-2026. We have not generated revenues and have not yet achieved profitable operations, nor have we ever generated positive cash flow from operations. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. In addition, we operate in an environment of rapid technological change, and we are largely dependent on the services of our employees and consultants. Further, our future operations are dependent on the success of our efforts to raise additional capital. These uncertainties raise substantial doubt about our ability to continue as a going concern for 12 months after the issuance date of our financial statements. The accompanying financial statements have been prepared on a going concern basis. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the company to continue as a going concern, which contemplates the continuation of operations, realization of assets and liquidation of liabilities in the ordinary course of business. We incurred a net loss of $1.8 million for the quarter ended March 31, 2026, and had an accumulated deficit of $75.1 million as of March 31, 2026. We anticipate incurring additional losses until such time, if ever, we can generate sufficient revenue from our products currently in development, or products we are in the process commercializing. Our primary source of capital has been the issuance of equity and equity-linked securities.

Current wording

Since inception, we have devoted substantially all of our resources to research and development activities, and during 2026, on marketing and other pre-launch commercial activities in preparation of its first product launch. In September 2025, we made a strategic pivot from research and developing prescription products to becoming a science-driven leader in dermatologic solutions, anticipating our first DTC product launch from our Tome skincare brand, expected on August 25, 2026. We have not generated revenues and have not yet achieved profitable operations, nor have we ever generated positive cash flow from operations. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. In addition, we operate in an environment of rapid technological change, and we are largely dependent on the services of our employees and consultants. Further, our future operations are dependent on the success of our efforts to raise additional capital. These uncertainties raise substantial doubt about our ability to continue as a going concern for 12 months after the issuance date of our financial statements. The accompanying financial statements have been prepared on a going concern basis. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the company to continue as a going concern, which contemplates the continuation of operations, realization of assets and liquidation of liabilities in the ordinary course of business. We incurred a net loss of $4.8 million for the six months ended June 30, 2026, and had an accumulated deficit of $78.0 million as of June 30, 2026. We anticipate incurring additional losses until such time, if ever, we can generate sufficient revenue from our products currently in development, or products we are in the process commercializing. Our primary source of capital has been the issuance of equity and equity-linked securities.