Dermata Therapeutics, Inc.

Previous wording

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in such forward-looking statements. Please see “Part I—Item 1A—Risk Factors” for additional risks which could adversely impact our business and financial performance.

Current wording

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in such forward-looking statements. Please refer to the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 2025, filed with the SEC on March 26, 2026, for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements.

Previous wording

On August 5, 2026, we announced the planned commercial launch date of our first direct-to-consumer skincare product, Foundational Treatment. We expect to start selling the Foundational Treatment on August 25, 2026, with people on the waitlist getting early access to preorder. The Foundational Treatment will contain 4 weekly treatments and will be priced at $178.00 USD retail, or about $45 per treatment.

Current wording

On August 5, 2026, we announced the planned commercial launch date of our first direct-to-consumer skincare product, Tome Foundational Treatment. We started selling the Tome Foundational Treatment on August 25, 2026, with those on the waitlist getting early access to preorder. The Tome Foundational Treatment contains 4 weekly treatments and is priced at $178.00 USD retail, or about $45 per treatment, or a discounted price through subscription.

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 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.

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 commenced sales of our first commercial product, Tome Foundational Treatment, on August 25, 2026. Revenues generated from sales during the third quarter were limited, primarily due to the timing of the product’s commercial launch late in the quarter. We anticipate that net sales and cost of sales will increase in the fourth quarter of 2026, reflecting a full quarter of sales. Over time, we expect cost of sales as a percentage of net sales to decrease, potentially improving the gross margin for Tome Foundational Treatment. Initial inventory shipments incurred higher shipping costs to meet the product launch timeline, and we expect subsequent shipments to have lower per-unit costs. Because inventory costs are recognized on a first-in, first-out basis, the timing of any improvement in gross margin will depend on how quickly the initial, higher-cost inventory is sold. We expect research and development expenses to remain relatively low and selling, general and administrative expenses to increase as we incur additional marketing, branding, advertising and personnel expenses to support our first commercial products, including the planned launch of Tome Clearing Treatment in the first half of 2027. 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. Looking ahead, we expect that the majority of our future revenues will be derived from sales of our Tome skincare products as we continue to expand our commercial activities and market presence.

Previous 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.

Current wording

Research and development expenses decreased by $0.4 million from $0.5 million for the three months ended September 30, 2025, to $0.1 million for the three months ended September 30, 2026. The decrease in research and development expenses resulted primarily from reallocation of employee duties to focus on the commercial launch of our first product, Tome Foundational Treatment.

Previous wording

Selling, general and administrative expenses increased by $2.1 million from $2.2 million for the six months ended June 30, 2025, to $4.3 million for the six 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 six months ended June 30, 2026. This resulted in an increase of $0.9 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 $0.8 million during the six months ended June 30, 2026, due to ongoing litigation and other legal matters, and audit fees increased by $0.1 million.

Current wording

Selling, general and administrative expenses increased by approximately $1.5 million from $1.3 million for the three months ended September 30, 2025, to $2.8 million for the three months ended September 30, 2026. The increase in selling, general and administrative expenses was primarily attributable to our decision to prioritize the commercial launch of our first product, resulting in significant commercialization activities during the three months ended September 30, 2026. This resulted in an increase of $0.2 million of marketing and other commercialization expenses and an increase of $0.5 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 $0.8 million during the three months ended September 30, 2026, due to ongoing litigation and new trademarks.

Previous wording

We earn interest income via overnight deposits on our cash and cash equivalents. Interest income was $47,000 for the second quarter of 2026 compared to $72,000 for the second quarter of 2025. The decrease in interest income resulted from decreased cash balances.

Current wording

We earn interest income via overnight deposits on our cash and cash equivalents. Interest income was $37,000 for the third quarter of 2026 compared to $69,000 for the third quarter of 2025. The decrease in interest income resulted from decreased cash balances.

Previous wording

Research and development expenses decreased by $1.3 million from $1.9 million for the six months ended June 30, 2025, to $0.6 million for the six months ended June 30, 2026. The decrease in research and development expenses resulted from $0.6 million of decreased clinical expenses from the XYNGARI™ STAR-1 acne study, which was completed during the second quarter of 2025. Additionally, research and development expenses decreased another $0.7 million, as a result of the Company’s decision to prioritize the commercial launch of its first product, resulting in a decrease in research and development efforts during the six months ended June 30, 2026.

Current wording

Research and development expenses decreased by $1.7 million from $2.4 million for the nine months ended September 30, 2025, to $0.7 million for the nine months ended September 30, 2026. The decrease in research and development expenses resulted from $0.6 million of decreased clinical expenses related to prior pharmaceutical development of XYNGARI™ with the STAR-1 acne study, which was completed during the second quarter of 2025. Additionally, research and development expenses decreased another $1.0 million, primarily from reallocation of employee duties to focus on the commercial launch of our first product, Tome Foundational Treatment.

Previous 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.

Current wording

Selling, general and administrative expenses increased by $3.6 million from $3.5 million for the nine months ended September 30, 2025, to $7.1 million for the nine months ended September 30, 2026. The increase in selling, general and administrative expenses was primarily attributable to our decision to prioritize the commercial launch of our first product, Tome Foundational Treatment, of which sales commenced August 25, 2026, resulting in significant commercialization activities during the nine months ended September 30, 2026. This resulted in an increase of $1.3 million of marketing and other commercialization expenses and an increase of $0.8 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 $1.6 million during the nine months ended September 30, 2026, due to ongoing litigation and new trademarks.

Previous 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.

Current wording

We earn interest income via overnight deposits on our cash and cash equivalents. Interest income was $162,000 for the nine months ended September 30, 2026 compared to $177,000 for the nine months ended September 30, 2025.

Previous 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.

Current wording

Cash used in operations of approximately $7.6 million for the nine months ended September 30, 2026, was the result of the net loss of $7.6 million as well as increases in prepaid and other current assets of $0.3 million, increased inventories of $0.8 million and increased other assets of $0.1 million, as well as a decrease in accrued and other current liabilities of approximately $0.1 million, offset by an increase in accounts payable of $1.2 million and non-cash stock-based compensation of $0.1 million.

Previous 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.

Current wording

Cash used in operations of $6.4 million for the nine months ended September 30, 2025, was the result of the net loss of $5.7 million and decreases in accounts payable and accrued and other current liabilities of $0.8 million, partially offset by non-cash stock-based compensation of $0.1 million.

Previous wording

Cash used in investing activities of $0.1 million for the six months ended June 30, 2026 consisted of the purchases of property and equipment.

Current wording

Cash used in investing activities of $0.2 million for the nine months ended September 30, 2026, consisted of the purchases of property and equipment.

Previous 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.

Current wording

Cash provided by financing activities of $5.2 million for the nine months ended September 30, 2026, was the result of $2.0 million in net proceeds from ATM sales during the first quarter of 2026 and $3.3 million in net proceeds from the August 2026 PIPE financing, 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 $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.

Current wording

Cash provided by financing activities of $7.9 million for the nine months ended September 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 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.

Current wording

Since our inception, we have not generated significant revenues from our commercialized product. As of September 30, 2026, our cash and cash equivalents totaled $4.8 million, and we had an accumulated deficit of $80.9 million. For the nine months ended September 30, 2026, and the year ended December 31, 2025, we used cash of $7.6 million and approximately $7.8 million, respectively, in operations. We expect our current cash resources to fund operations into the first quarter of 2027.

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, 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.

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 launched our first DTC product on August 25, 2026, it is uncertain when we will generate sufficient 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

Historically, our principal sources of cash have included proceeds from the issuance of equity securities. Our principal uses of cash have been for operations, and we expect that the principal uses of cash in the future will be for continuing operations, including various marketing expenditures, including, but not limited to, branding, paid media, marketing use studies, advertising, software subscriptions, and launch events and tradeshows, as well as non-marketing expenses including funding of research and development, and general working capital requirements. We expect that as marketing expenses continue to grow, we may need to raise additional capital to sustain operations.

Current wording

Historically, our principal sources of cash have included proceeds from the issuance of equity securities. Going forward, as we launch our products, we anticipate that sales of our products will also contribute to our sources of cash. Our principal uses of cash have been for operations, and we expect that the principal uses of cash in the future will be for continuing operations, including but not limited to, branding, paid media, marketing use studies, advertising, software subscriptions, and launch events and tradeshows, as well as non-marketing expenses including funding of research and development, and general working capital requirements. We expect that as marketing expenses continue to grow, we may need to raise additional capital to sustain operations.

Previous wording

We plan to focus our efforts in the near term on the development and commercialization of our Tome skincare product, our Foundational Treatment. We anticipate we will continue to incur net losses for the foreseeable future as we complete the launch of our Tome Foundational Treatment and ramp up marketing activities. We also plan to invest in developing additional skincare products to add to our portfolio that complement our Foundational Treatment. In addition, we plan to seek opportunities to identify, acquire or in license and develop additional skincare candidates, potentially expand commercial capabilities, and expand our corporate infrastructure. We may not be able to complete the development and initiate commercialization of these programs without raising additional capital.

Current wording

We plan to focus our efforts in the near term on the development and commercialization of our Tome skincare product, the Foundational Treatment, which we launched on August 25, 2026. While we expect future revenues from product sales to partially offset our operating expenses, we anticipate we will continue to incur net losses for the foreseeable future as we ramp up marketing activities and build up our inventory. We also plan to invest in developing additional skincare products to add to our portfolio that complement our Tome Foundational Treatment, including the Tome Clearing Treatment with a planned launch in the first half of 2027. In addition, we plan to seek opportunities to identify, acquire or in license and develop additional skincare candidates, potentially expand commercial capabilities, and expand our corporate infrastructure. We may not be able to complete the development and initiate commercialization of these programs without raising additional capital.

Previous wording

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, marketing and advertising expenses, external research, development and manufacturing costs, legal and other regulatory expenses, and administrative and overhead costs. Our future funding requirements will be heavily dependent upon any product revenues generated from our first product launch, of which we cannot estimate at this time, as well as the resources needed to support additional development of future products.

Current wording

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, marketing and advertising expenses, inventory purchases, legal and other regulatory expenses, and administrative and overhead costs. Our future funding requirements will be heavily dependent upon any product revenues generated from our first product launch, of which we cannot estimate at this time, as well as the resources needed to support additional development of future products.

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 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.

Current wording

We believe that our existing cash and cash equivalents along with cash generated from operations, 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. Accordingly, beyond our current cash, revenue from product sales and any proceeds from the sales of our common stock, 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 continued commercialization of our Tome skincare products.

Previous 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.

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 our 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, and launched our first product from our Tome skincare brand, Tome Foundational Treatment, on August 25, 2026. We have not generated significant revenues from our product sales, we 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 $7.6 million for the nine months ended September 30, 2026, and had an accumulated deficit of $80.9 million as of September 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.

Previous wording

Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. These exemptions will apply until the fifth anniversary of the completion of our initial public offering, which would be August 2026, or until we no longer meet the requirements for being an “emerging growth company,” whichever occurs first.

Current wording

Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. These exemptions will apply until the December 31, 2026, the last day of the fiscal year following the fifth anniversary of the completion of our initial public offering, or until we no longer meet the requirements for being an “emerging growth company,” whichever occurs first.