What changed in this filing

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Item 9A. Controls and Procedures

2026-03-26 compared with 2025-03-27 · 193 added, 186 removed, 771 unchanged (33% of the section changed)

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Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

Directors, Executive Officers and Corporate Governance

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(b) Exhibits.

Third Amended and Restated Certificate of Incorporation of Journey Medical Corporation, filed on March 26, 2022 and incorporated herein by reference.

Amended and Restated Bylaws of Journey Medical Corporation, filed as Exhibit 3.2 to Form 10-K, filed on March 26, 2022 and incorporated herein by reference.

Fourth Amended and Restated Certificate of Incorporation of Journey Medical Corporation, filed as Exhibit 3.1 to Form 8-K, filed on June 26, 2025 and incorporated herein by reference.

Bylaws of Journey Medical Corporation, filed as Exhibit 3.2 to Form 10-K, filed on March 28, 2022 and incorporated herein by reference.

Form of Common Stock Certificate, filed as Exhibit 4.1 to Form S-1, filed on October 22, 2021 and incorporated herein by reference.

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Executive Employment Agreement with Claude Maraoui, dated September 22, 2014, filed as Exhibit 10.2 to Form S-1, filed on October 22, 2021 and incorporated herein by reference.#

Amended and Restated Employment Agreement with Ramsey Alloush, dated March 31, 2025, filed as Exhibit 10.1 to Form 10-Q, filed on May 15, 2025 and incorporated herein by reference.#

Second Amended and Restated Employment Agreement with Joseph Benesch, dated May 15, 2025, filed as Exhibit 10.2 to Form 10-Q, filed on May 15, 2025 and incorporated herein by reference.#

Non-Employee Director Compensation Plan, filed as Exhibit 10.4 to Form S-1, filed on October 22, 2021 and incorporated herein by reference.#

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Riley Securities, Inc., filed as Exhibit 1.2 to Form S-3, filed on December 30, 2022 and incorporated herein by reference.

At Market Issuance Sales Agreement, dated as of August 28, 2025, by and among Journey Medical Corporation, B.

Riley Securities, Inc.

and Lake Street Capital Markets, LLC, filed as Exhibit 10.1 to Form 8-K, filed on August 28, 2025 and incorporated herein by reference.

License Agreement, dated as of August 31, 2023, between Journey Medical Corporation and Maruho Co., Ltd.

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SWK Funding LLC, and the other financial institutions party thereto, filed as Exhibit 10.2 to Form 10-Q filed on November 12, 2024.**

Journey Medical Corporation Deferred Compensation Plan, adopted July 9, 2024.#*

Third Amendment to the Credit Agreement, dated September 25, 2025, by and among Journey Medical Corporation,

SWK Funding LLC, and the other financial institutions party thereto, filed as Exhibit 10.1 to Form 10-Q filed November 12, 2025.**

Journey Medical Corporation Deferred Compensation Plan, adopted July 9, 2024, filed as Exhibit 10.23 to Form 10-K filed on March 26, 2025.#*

Fortress Biotech, Inc.

and Subsidiaries Insider Trading Policy.*

and Subsidiaries Insider Trading Policy, filed as Exhibit 19.1 to Form 10-K filed on March 26, 2025.*

List of Subsidiaries of Journey Medical Corporation.*

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Journey Medical Corporation and subsidiary (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements).

We have audited the accompanying consolidated balance sheets of Journey Medical Corporation and subsidiary (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

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The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations, and as a result has concluded that raises substantial doubt about its ability to continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

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Term loan, net of discount

Installment payments – licenses, long-term

Operating lease liability, long-term

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Selling, general and administrative

Loss on impairment of intangible assets

Loss recovery

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Issuance of common stock for vested restricted stock units

Issuance of common stock under ESPP

Issuance of common stock, ATM offering, net of issuance costs of $ 245

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Share-based compensation

Exercise of stock options for cash

Exercise of stock options for cash, net of shares withheld

Issuance of common stock for vested restricted stock units

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Adjustments to reconcile net loss to net cash used in operating activities:

Bad debt expense

Bad debt (recovery) expense

Gain on extinguishment of debt

Non-cash interest expense

Amortization of debt discount

Amortization of acquired intangible assets

Non-cash lease expense

Amortization of operating lease right-of-use assets

Share-based compensation

Loss on impairment of intangible assets

Changes in operating assets and liabilities:

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Lease liabilities

Net cash (used in) provided by operating activities

Net cash (used in) operating activities

Cash flows from investing activities

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Payment of license installment note payable

Proceeds from line of credit

Repayment of line of credit

Repayment of EWB term-loan

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Net change in cash

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The Company acquires rights to products and product candidates by licensing or otherwise acquiring an ownership interest in, funding the research and development of, and eventually commercializing the products through its field sales organization.

As of December 31, 2024 and 2023, the Company is a majority-owned subsidiary of Fortress Biotech, Inc.

As of December 31, 2025 and 2024, the Company is a controlled subsidiary of Fortress Biotech, Inc.

(“Fortress” or “Parent”).

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The Company relies primarily on cash on hand generated from sales of its pharmaceutical products to customers to fund its core operations.

In addition, the Company has relied on the proceeds from its term loan Credit Facility (as defined below) with SWK Funding LLC (“SWK”), and it’s at-the-market sales program with B.

Riley to meet additional capital and liquidity needs, specifically to fund the research and development and commercialization of Emrosi, formerly referred to as DFD-29, which received marketing approval by the FDA on November 1, 2024.

The Company also actively pursues licensing opportunities to raise non-dilutive capital.

On August 31, 2023, the Company entered into the New License Agreement (as defined below) with Maruho (as defined below), whereby it granted an exclusive license to Maruho to develop and commercialize Qbrexza® for the treatment of primary axillary hyperhidrosis in South Korea, Taiwan, Hong Kong, Macau, Thailand, Indonesia, Malaysia, Philippines, Singapore, Vietnam, Brunei, Cambodia, Myanmar and Laos (the “Territory”).

Under the terms of the New License Agreement, in exchange for the exclusive rights to Qbrexza® in the Territory, Maruho paid the Company $ 19.0 million as a non-refundable upfront payment.

In December 2024, the Company received additional cash of $ 4.6 million as a result of the recovery of funds from the previously disclosed cybersecurity incident in September of 2021.

In addition, the Company has relied on the proceeds from its term loan (“Credit Facility”) with SWK Funding LLC (“SWK”), and its at-the-market sales program to meet additional capital and liquidity needs, specifically to fund the research and development and commercialization of Emrosi.

In August 2025, the Company executed a new At Market Issuance Sales Agreement (the “2025 Sales Agreement”) with B.

Riley Securities, Inc (“B.

Riley”) and Lake Street Capital Markets, LLC (“Lake Street”) (each, an “Agent” and together, the “Agents”), replacing the previous December 30, 2022 At Market Issuance Sales Agreement with B.

Riley (collectively with the 2025 Sales Agreement, the “ATM”).

Pursuant to the terms of the 2025 Sales Agreement, the Company may offer and sell up to 3,750,000 shares of common stock, from time to time through or to the Agents, each acting as sales agent or principal.

On September 25, 2025, the Company entered into a Third Amendment to its Credit Agreement (the “Credit Agreement”) with SWK (the “Third Amendment”).

The Third Amendment, among other things, extends the maturity date of the Company’s existing Credit Facility from December 27, 2027 to June 27, 2028.

The Third Amendment also modifies the Revenue-Based Payment provision, as defined in the Credit Agreement, by lowering the applicable revenue threshold, measured on a trailing twelve-month basis, from $ 70.0 million to $ 60.0 million.

Upon satisfaction of the revised revenue threshold, the interest-only period under the Credit Facility will be extended by one year, with scheduled principal repayments commencing in February 2027 rather than February 2026.

The Company satisfied the $ 60.0 million revenue threshold as of December 31, 2025.

Accordingly, principal payments under the Credit Facility will begin in February 2027.

On January 15, 2026, the Company filed a shelf registration statement on Form S-3 (File No.

333-292758) (the “2026 Shelf”), which was declared effective by the Securities and Exchange Commission on January 21, 2026.

This shelf registration statement covers the offering, issuance and sale by us of up to an aggregate of $ 150.0 million of our common stock, preferred stock, debt securities, warrants, and units.

The 2026 Shelf replaces the Company’s previous registration statement on Form S-3 filed in December 2022.

The Company regularly evaluates market conditions, its liquidity profile, and financing alternatives, including out-licensing arrangements for its products, to enhance its capital structure.

The Company may seek to raise capital through debt or equity financings to expand its product portfolio and for other strategic initiatives, which may include sales of securities under either the shelf registration statement on Form S-3 (File No.

333 - 269079), which was declared effective by the SEC on January 26, 2023 and covers the offering, issuance and sale by the Company of up to an aggregate of $ 150.0 million of the Company’s common stock, preferred stock, debt securities, warrants, and units (the “2022 Shelf”) or a new registration statement.

In addition, the Company expects to generate positive cash flows from the sale of Emrosi in 2025 and beyond.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

However, as a result of recurring losses, primarily a result of the research and development of Emrosi, substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.

However, as a result of recurring and historical losses, substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The Company’s consolidated financial statements include the accounts of the Company and

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

the accounts of the Company’s wholly-owned subsidiary, JG Pharma, Inc.

The Company’s consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly-owned subsidiary, JG Pharma, Inc.

(“JG” or “JG Pharma”).

All intercompany balances and transactions have been eliminated.

Reclassification

Certain prior period amounts have been reclassified to conform to the current period classification.

The Company has historically included amortization of acquired intangible assets within cost of goods sold on the consolidated statement of operations.

For the years ended December 31, 2024 and 2023, “Costs of goods sold – product revenue” as presented in the consolidated statement of operations was disaggregated into “Costs of goods sold – (excluding amortization of acquired intangible assets)” and “Amortization of acquired intangible assets”.

This presentation has been conformed for all previous periods presented and has no impact on previously reported financial results.

Emerging Growth Company

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The CODM uses net loss to monitor budget vs.

actual results, which are presented quarterly, as well as evaluate performance and income generated in deciding how to reinvest profits.

actual results, which are presented quarterly, as well as to evaluate performance and income generated in deciding how to reinvest profits.

The accounting policies of the segment are the same as those described in this Note 2.

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The Company has not experienced any losses on these deposits.

The Company’s accounts receivable primarily represent amounts due from drug wholesalers and specialty pharmacies in the United States.

The Company performs periodic credit evaluations of customers and does not require collateral.

An allowance for doubtful

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

accounts is maintained for potential credit losses based on the aging of accounts receivable, historical bad debts experience, and the customer’s current ability to pay its obligations to the Company.

The Company’s accounts receivable primarily represent amounts due from drug wholesalers and specialty pharmacies in the United States.

The Company performs periodic credit evaluations of customers and does not require collateral.

An allowance for doubtful accounts is maintained for potential credit losses based on the aging of accounts receivable, historical bad debts experience, and the customer’s current ability to pay its obligations to the Company.

Accounts receivables balances are written off against the allowance when it is probable that the receivable will not be collected.

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The Company periodically reviews the composition of inventory in order to identify excess, obsolete, slow-moving or otherwise non-saleable items taking into account anticipated future sales compared with quantities on hand, and the remaining shelf life of goods on hand.

If non-saleable items are observed and there are no alternate uses for the inventory, the Company records a write-down to net realizable value in the period that the decline in value is first recognized.

If non-saleable items are observed and there are no alternative uses for the inventory, the Company records a write-down to net realizable value in the period that the decline in value is first recognized.

The Company’s inventory reserves were $ 1.0 million and $ 0.5 million at December 31, 2025 and 2024, respectively.

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Research and development costs primarily consist of personnel related expenses, payments made to third parties for license and milestone costs related to in-licensed products and technology, and payments made to third party contract research organizations.

The Company’s research and development expense includes costs associated with the research and development of the Company’s EMROSI TM product prior to regulatory approval.

Prior to the regulatory approval of EMROSI TM , manufacturing costs associated with third-party contractors for validation and commercial batch production, process technology transfer, quality control and stability testing, raw material purchases, overhead expenses and facilities costs were recorded as research and development and expensed as incurred as future use could not be determined, and there is uncertainty surrounding regulatory approval.

Following regulatory approval of EMROSI TM by the FDA, the Company capitalizes certain manufacturing costs as inventory.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

Clinical trial costs for EMROSI TM have been a significant component of research and development expenses for the Company.

The Company’s research and development expense in 2024 includes costs associated with the research and development of the Company’s Emrosi TM product prior to regulatory approval.

Prior to the regulatory approval of Emrosi, manufacturing costs associated with third-party contractors for validation and commercial batch production, process technology transfer, quality control and stability testing, raw material purchases, overhead expenses and facilities costs were recorded as research and development and expensed as incurred as future use could not be determined, and there is uncertainty surrounding regulatory approval.

Following regulatory approval of Emrosi by the FDA, the Company capitalizes certain manufacturing costs as inventory.

Clinical trial costs for Emrosi have been a significant component of research and development expenses for the Company in 2024.

The Company’s clinical studies were performed by third-party contract research organizations (“CROs”).

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As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories:

The accounting guidance requires fair value measurements to be classified and disclosed in one of the following three categories:

Quoted prices in active markets for identical assets or liabilities.

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Amortization is calculated using the straight-line method.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

During the ordinary course of business, the Company has entered into certain licenses and asset purchase agreements.

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Royalty payments for approved products are recorded as cost of goods sold as sales are recognized.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

Impairment of Long-Lived Assets

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The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows.

During the year ended December 31, 2023, the Company recorded an impairment loss associated with its intangible asset balance.

See Note 4 for further details.

Share-based Compensation

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The share-based compensation plan and related compensation expense are discussed more fully in Note 15 to the Company’s consolidated financial statements.

Compensation expense for service-based stock options is charged against operations on a straight-line basis over the vesting period, which is generally four years.

Compensation expense for service-based stock options is charged against operations on a straight-line basis over the vesting period, which is generally three or four years.

Forfeitures are recorded as they occur.

Share-based compensation costs are recorded in both research and development and selling, general and administrative expense in the Company’s consolidated statements of operations.

Share-based compensation costs are recorded in both research and development and selling, general and administrative expenses in the Company’s consolidated statements of operations.

Options granted have a term of 10 years from the grant date.

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Expected term—The Company has elected to use the “simplified method” for estimating the expected term of options, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option (generally 10 years).

Expected volatility—As the Company has limited trading history for its common shares, the expected volatility was estimated based on the average volatility for comparable guideline publicly traded biotechnology companies over a period equal to the expected term of the stock option grants.

The comparable companies were chosen based on their similar size, stage in the life cycle or area of specialty.

Expected volatility—The Company calculated the volatility of the closing market price of its common stock as the expected volatility over a term equal to the expected life of the option being valued in the current year.

In the prior year, expected volatility was computed based on the implied volatility of comparable companies.

Risk-free interest rate— The risk-free interest rate is selected based upon yields of United States Treasury issues with a term equal to the expected life of the option being valued.

Expected dividend yield—The Company has not issued any dividends in our history and do not expect to issue dividends over the life of the options;

Expected dividend yield—The Company has not issued any dividends in its history and does not expect to issue dividends over the life of the options;

therefore, the Company has estimated the dividend yield to be zero.

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Compensation cost for service based RSU’s is based on the grant date fair value of the award, which is the closing market price of the Company’s common stock on the grant date multiplied by the number of shares awarded.

Net (Loss) Income Per Share

Basic net (loss) income per share of common stock is calculated by dividing net (loss) income by the weighted-average number of shares of common stock outstanding during the reporting period.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

common shares for stock options and restricted stock units, determined using the treasury stock method.

The Company has two classes of stock (Common Stock and Class A Common Stock), however, the terms of each class are substantially similar, and therefore the application of the two-class method does not impact the computation of the reported net (loss) income per share.

Net (Loss) Income Per Share

Basic net (loss) income per share of common stock is calculated by dividing net (loss) income by the weighted-average number of shares of common stock outstanding during the reporting period.

Diluted earnings per share is calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the reporting period after giving effect to dilutive potential common shares for stock options and restricted stock units, determined using the treasury stock method.

The Company has two classes of stock (Common Stock and Class A Common Stock);

however, the terms of each class are substantially similar, and therefore the application of the two-class method does not impact the computation of the reported net (loss) income per share.

See Note 19 below.

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The Company regularly reviews the information related to these estimates and adjusts the provision accordingly.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

Specialty Pharmacy Discounts — The Company has in place contractual arrangements with specialty pharmacies and provides for contractually agreed upon discounts.

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The Company estimates its managed care rebates based on the Company’s estimated payer mix and the applicable contractual rebate rate.

The Company’s accrual for managed care rebates is based on an estimate of future claims that the Company expects to

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

receive, which considers an estimate for inventory in the distribution channel.

The Company’s accrual for managed care rebates is based on an estimate of future claims that the Company expects to receive, which considers an estimate for inventory in the distribution channel.

The accrual is recognized at the time of sale, resulting in a reduction of gross product revenue.

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The Company estimates the amount of its product sales that may be returned by the Company’s customers and accrues this estimate as a reduction of revenue in the period the related product revenue is recognized.

The Company estimates products returns as a percentage of sales to its customers.

As of December 31, 2024, the Company was 44.51 % owned by Fortress Biotech, Inc.

(“Fortress”).

Upon the completion of the Company’s initial public offering on November 12, 2021, it deconsolidated from the Fortress consolidated group for federal income and state income tax purposes and has since filed all tax returns as a standalone taxpayer.

The Company estimates product returns as a percentage of sales to its customers.

The Company records income taxes using the asset and liability method.

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Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires that an entity report segment information in accordance with Topic 280, Segment Reporting.

The amendment in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted this ASU in the year ended December 31, 2024.

The Company’s adoption of this guidance resulted in increased disclosures in the notes to the financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S.

and foreign jurisdictions.

The update will be effective for annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact that this guidance will have on its consolidated financial statement disclosures.

In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires enhanced disclosures related to the rate reconciliation and income taxes paid, including greater disaggregation by jurisdiction and by significant categories of reconciling items.

The objective of the amendments is to provide financial statement users with more decision-useful information about the nature and magnitude of factors that cause the effective tax rate to differ from the applicable statutory tax rate and about the amount and timing of income tax payments.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

The Company adopted ASU 2023-09 on January 1, 2025, the beginning of its fiscal year ending December 31, 2025, on a prospective basis for annual periods, as permitted by the standard.

Adoption of ASU 2023-09 resulted in expanded income tax disclosures, including a more disaggregated reconciliation of the statutory U.S.

federal income tax rate to the Company’s effective tax rate.

The Company’s enhanced income tax disclosures required by ASU 2023-09 are presented in Note 18 to the consolidated financial statements.

Not yet adopted

In November 2024, the FASB issued ASU No.

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Disaggregation of Income Statement Expenses , which is intended to improve the disclosures about specified categories of expenses including purchases of inventory, employee compensation, depreciation and amortization, included in certain expense captions presented in the consolidated statement of operations.

This update will be effective for annual periods beginning

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

after December 15, 2026.

This update will be effective for annual periods beginning after December 15, 2026.

Early adoption is permitted.

The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and disclosures.

In July 2025, the FASB issued ASU No.

2025-05, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets .

The guidance provides a practical expedient that can be elected to be applied to accounts receivable and contract assets, which would allow entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets when estimating expected credit losses for such assets.

Entities are required to apply the guidance on a prospective basis.

This update will be effective for the interim and annual periods beginning after December 15, 2025.

Early adoption is permitted.

The Company is currently evaluating the update to determine the impact the adoption will have on its consolidated financial statements.

The Company’s inventory consisted of the following at December 31, 2025 and 2024:

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The Company’s finite-lived intangible assets consist of acquired intangible assets.

On November 1, 2024, the FDA approved the Company’s drug candidate for the treatment of inflammatory lesions of rosacea in adults, Emrosi TM .

On November 1, 2024, the FDA approved the Company’s drug candidate for the treatment of inflammatory lesions of rosacea in adults, Emrosi.

The approval triggered a $ 15.0 million milestone payment, which the Company capitalized as an acquired intangible asset.

During the year ended December 31, 2023, the Company experienced lower net product revenues and gross profit levels for its Ximino products.

Based on these results, the Company revised the financial outlook and plans for its Ximino products.

The Company assessed the revised forecast for Ximino and determined that this constituted a triggering event, and the results of the analysis indicated the carrying amount was not expected to be recovered.

The Company recorded an intangible asset impairment charge of $ 3.1 million during the year ended December 31, 2023.

This non-cash charge was recorded to loss on impairment of intangible assets in the consolidated statements of operations.

JOURNEY MEDICAL CORPORATION

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Assets and Licenses Acquired:

On June 29, 2021, the Company entered into a license, collaboration, and assignment agreement with Dr.

On June 29, 2021, the Company entered a license, collaboration, and assignment agreement with Dr.

Reddy’s Laboratories, Ltd.

(“DRL”) to obtain the global rights for the development and commercialization of Emrosi TM (“Emrosi”), a late-stage development modified release oral minocycline that is being evaluated for the treatment of inflammatory lesions of rosacea (the “Emrosi Agreement”).

(“DRL”) to obtain the global rights for the development and commercialization of Emrosi (“Emrosi”), formerly known as DFD-29, a late-stage development modified release oral minocycline that is being evaluated for the treatment of inflammatory lesions of rosacea (the “Emrosi Agreement”).

The Company acquired global rights to Emrosi, including in the U.S.

and Europe, except that DRL has retained certain rights to the program in select markets including Brazil, Russia, India, China and the Commonwealth of Independent States (“CIS”) countries.

Pursuant to the Emrosi Agreement, the Company agreed to make an upfront payment of $ 10.0 million, comprised of a $ 2.0 million payment upon execution and $ 8.0 million which was paid on September 29, 2021, 90 days following execution.

In addition, the Company paid two developmental milestones in 2024.

In April 2024 the Company paid a $ 3.0 milestone to DRL, based on FDA acceptance of the Company’s NDA application for Emrosi, and in December of 2024 the Company paid a $ 15.0 million milestone payment to DRL, which was triggered by the November 1, 2024 FDA marketing approval of Emrosi.

Upon the $ 15.0 million milestone payment, the assets related to Emrosi, including the NDA, regulatory documentation and intellectual property, transferred to the Company.

Pursuant to the Emrosi Agreement, the Company may be required to pay additional contingent regulatory, commercial, and corporate-based milestone payments, totaling up to $ 150.0 million.

and Europe, except that DRL has retained certain rights to the program in select markets, namely in Armenia, Azerbaijan, Belarus, Brazil, Georgia, India, Kazakhstan, Kyrgyzstan, Moldova, the People’s Republic of China, Russia, Taiwan, Tajikistan, Turkmenistan, Ukraine and Uzbekistan.

Pursuant to the Emrosi Agreement, the Company made an upfront payment of $ 10.0 million.

In April 2024, the Company made a $ 3.0 million milestone payment to DRL, based on FDA acceptance of the Company’s new drug application (“NDA”) for Emrosi, and in December of 2024, the Company made a $ 15.0 million milestone payment to DRL, which was triggered by the November 1, 2024 FDA marketing approval of Emrosi.

Upon the $ 15.0 million milestone payment, all assets related to Emrosi, including the NDA, regulatory documentation and intellectual property, transferred to the Company.

Pursuant to the Emrosi Agreement, the Company may be required to make additional contingent regulatory and commercial milestone payments to DRL, totaling up to $ 150.0 million.

Royalties ranging from ten percent to fourteen percent are payable on net sales of the product.

Royalties are payable in each country until the last-to-expire patent in such country expires.

Royalties are subject to a 50 % reduction in the event that a generic competitor launches in an applicable country where the Company markets and sells the product.

Amzeeq and Zilxi

In January 2022, the Company entered into an asset purchase agreement with VYNE Therapeutics, Inc.

(“VYNE”) to acquire two FDA approved products, Amzeeq® (minocycline) topical foam, 4%, and Zilxi® (minocycline) topical foam, 1.5%, for an upfront payment of $ 20.0 million and an additional $ 5.0 million payment on the one year anniversary of the closing (the “VYNE APA”).

The VYNE APA also provides for contingent net sales milestone payments.

In the first calendar year in which annual sales reach each of $ 100 million , $ 200 million , $ 300 million , $ 400 million and $ 500 million , a one-time payment of $ 10 million , $ 20 million , $ 30 million , $ 40 million and $ 50 million , respectively, will be paid in that year only, per product, totaling up to $ 450 million.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

In March 2021, the Company executed an Asset Purchase Agreement (the “Qbrexza APA”) with Dermira, Inc., a subsidiary of Eli Lilly and Company (“Dermira”).

Pursuant to the terms of the Qbrexza APA, the Company acquired the rights to Qbrexza® (glycopyrronium), a prescription cloth towelette to treat primary axillary hyperhidrosis in patients nine years of age or older.

The Company paid the upfront fee of $ 12.5 million to Dermira.

In addition, the Company is obligated to pay Dermira up to $ 144.0 million in the aggregate upon the achievement of certain sales milestones.

The royalty structure for the agreement is tiered with royalties for the first two years ranging from approximately 40 % to 30 %.

Thereafter for a period of eight years royalties are approximately 12.0 % to 19.0 %.

The Company paid an upfront fee of $ 12.5 million to Dermira.

In addition, the Company is obligated to pay Dermira up to $ 144.0 million in the aggregate and are contingent upon the achievement of certain net sales milestones.

The royalty structure for the Qbrexza APA is tiered with royalties for the first two years ranging from approximately 40 % to 30 %.

Thereafter, royalties are approximately 12.0 % to 19.0 %.

Royalty amounts are subject to certain reductions in the event there is a loss of exclusivity.

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The term of the Accutane Agreement is ten years and renewable upon mutual agreement.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

party may terminate the Accutane Agreement for an uncured material breach by the other party or for certain bankruptcy or insolvency related events.

Each party may terminate the Accutane Agreement for an uncured material breach by the other party or for certain bankruptcy or insolvency related events.

The Company may also terminate the Accutane Agreement without cause upon 180 days written notice to DRL.

1 unchanged sentence

Maruho License Agreement

On August 31, 2023, the Company entered into a license agreement (the “New License Agreement”) with Maruho Ltd., the Company’s exclusive licensing partner in Japan (“Maruho”).

Under the terms of the New License Agreement, the Company granted an exclusive license to develop and commercialize Qbrexza for the treatment of primary axillary hyperhidrosis in the Territory.

On August 31, 2023, the Company entered into a license agreement (the “New License Agreement”) with Maruho Co., Ltd., the Company’s exclusive licensing partner in Japan (“Maruho”).

Under the terms of the New License Agreement, the Company granted an exclusive license to develop and commercialize Qbrexza for the treatment of primary axillary hyperhidrosis in Korea and certain other Asian countries in exchange for an upfront payment of $ 19 million.

Prior to the date of the New License Agreement, the Company and Maruho were party to an existing exclusive amended and restated license agreement (the “First A&R License Agreement”), under which Maruho acquired exclusive license rights to Qbrexza in Japan.

In connection with Journey’s entry into the New License Agreement, Journey and Maruho also entered into the Second Amended and Restated Exclusive License Agreement (the “Second A&R License Agreement”), which supersedes the First A&R License Agreement.

Simultaneously, Journey and Maruho also entered into the Second Amended and Restated Exclusive License Agreement (the “Second A&R License Agreement”), which supersedes the First A&R License Agreement.

The Second A&R License Agreement contains modifications that remove Maruho’s obligation to pay Journey royalties on its net sales of Rapifort (the Japanese equivalent of Qbrexza) in Japan for sales occurring after October 1, 2023 and removes Maruho’s obligation to pay $ 10.0 million to Journey in the event that Maruho achieves net sales of at least ¥ 4 billion (yen) of Rapifort during a single fiscal year.

All other remaining potential milestone payment obligations, which aggregate to $ 45.0 million, remain in full force and effect.

Under the terms of the New License Agreement, in exchange for the exclusive rights to Qbrexza in the Territory, Maruho paid the Company a $ 19.0 million non-refundable upfront payment.

(“the payment”).

The Company accounted for the payment as “point-in-time” revenue as all performance obligations were satisfied at the time of the payment.

The payment is reflected as other revenue within the Company’s Consolidated Statements of Operations.

Maruho is also obligated to pay royalties to the Company related to sales of the product in the Territory equal to the corresponding rate payable by the Company to Dermira under the asset purchase agreement between Journey and Dermira.

The New License Agreement may be terminated by Maruho in its entirety or on a region-by-region basis for convenience upon 30 days ’ notice to the Company.

The Company does not have any obligation to assist in the regulatory approval efforts of Maruho under the New License Agreement in the Territory.

The arrangement with Maruho provides for the transfer of the following:

(i) an exclusive license of Qbrexza from Journey to Maruho, including all related patents and know-how, and (ii) a non-exclusive license from Journey to Maruho to manufacture or have manufactured drug substance and products outside of the Territory, but exclusively for the sale of products in the Territory.

Cutia License Agreement

In January 2022, as a part of the Vyne APA, the Company assumed a license agreement with Cutia Therapeutics (HK) Limited, a Hong Kong biopharmaceutical company with experience in developing pharmaceutical products in the greater China region (the “Cutia Agreement”).

In January 2022, as a part of the Vyne APA, the Company assumed a license agreement with Cutia Therapeutics (HK) Limited (“Cutia”), a Hong Kong biopharmaceutical company with experience in developing pharmaceutical products in the greater China region (the “Cutia Agreement”).

Pursuant to the agreement, Cutia was granted an exclusive license to obtain regulatory approval of and commercialize Amzeeq (topical 4 % minocycline foam) and Zilxi (topical 1.5 % minocycline foam) in mainland China, Taiwan, Hong Kong and Macau.

The Company has agreed to supply the finished licensed products to Cutia for clinical and commercial use at an agreed price.

On November 11, 2024, Cutia received marketing approval for topical 4% minocycline foam from the National Medical Products Administration (the “NMPA”) of the People’s Republic of China (the “PRC”).

The approval triggered a $ 1.0 million dollar milestone payment to the Company.

The $ 1.0 million dollar milestone payment was recorded as a component of other revenue in the Company’s December 31, 2024 Consolidated Statements of Operations on the approval date of November 11, 2024.

See Note 16 below.

The Company received the cash payment from Cutia of $ 1.0 million on January 2, 2025.

Additionally, the Company will earn a royalty in the low single digit percentages on net sales of the licensed products by Cutia.

On November 11, 2024, Cutia received marketing approval for Amzeeq from the National Medical Products Administration (the “NMPA”) of the People’s Republic of China (the “PRC”).

The approval triggered a $ 1.0 million milestone payment to the Company.

The $ 1.0 million milestone payment was recorded as a component of other revenue on the approval date of November 11, 2024.

In August 2025, the Company began supplying Cutia with finished licensed products for Cutia’s commercial use.

The Company recognized $ 0.6 million in Other revenue associated with royalties and the supply of Amzeeq to Cutia.

JOURNEY MEDICAL CORPORATION

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($’s in thousands)

Accrued expenses and other short-term liabilities:

Accrued coupons and rebates

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Accrued royalties payable

Accrued inventory in-transit and other costs

Accrued inventory

Accrued marketing and market access

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($’s in thousands)

Short-term portion of principal balance

Long-term portion of principal balance

Principal balance

Debt discount and fees

Net carry amount (Long-term)

Net carry amount

SWK Long-Term Debt

3 unchanged sentences

On June 26, 2024, the Company drew the remaining $ 5.0 million under the Credit Facility.

On July 9, 2024, the Company entered into an amendment (the “Amendment”) to the Credit Agreement with SWK.

The Amendment increased the original principal amount of the Credit Facility from $ 20.0 million to $ 25.0 million.

The $ 5.0 million of additional principal added in the Amendment was contractually required to be drawn upon FDA approval of Emrosi, subject to the Company receiving approval on or before June 30, 2025.

On July 9, 2024, the Company entered into an amendment (the “First Amendment”) to the Credit Agreement with SWK.

The First Amendment increased the original principal amount of the Credit Facility from $ 20.0 million to $ 25.0 million.

The $ 5.0 million of additional principal added in the First Amendment was contractually required to be drawn upon FDA approval of Emrosi, subject to the Company receiving approval on or before June 30, 2025.

The Company received FDA approval for Emrosi on November 1, 2024 and the Company drew on the remaining $ 5.0 million on November 25, 2024.

Term loans under the Credit Facility mature on December 27, 2027, accrue interest which is payable quarterly in arrears and bear interest at a rate per annum equal to the three-month term SOFR (subject to a SOFR floor of 5 %) plus 7.75 %.

Pursuant to the terms under the Credit Facility, repayments of principal commence in February 2026 in an amount equal to $ 1.9 million per quarter, or 7.5 %, of the principal amount of funded Term Loans, with any remaining principal balance due on the maturity date.

Term loans under the Credit Facility (“Term Loans”) accrue interest, which is payable quarterly in arrears, and bear interest at a rate per annum equal to the three-month term SOFR (subject to a SOFR floor of 5 %) plus 7.75 %.

The interest rate resets quarterly.

Beginning in February 2026, the Company is required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to 7.5 % of the principal amount of funded Term Loans, with any remaining principal balance due on the maturity date.

If the total revenue of the Company, measured on a trailing twelve-month basis, is greater than $ 70.0 million as of December 31, 2025, the principal repayment start date is extended from February 2026 to February 2027, at which point the Company is required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to 15 % of the principal amount of funded Term Loans, with any remaining principal balance due on the maturity date.

On September 25, 2025, the Company entered into the third amendment (“Third Amendment”).

The Third Amendment, among other things, extends the maturity date of the Company’s existing Credit Facility from December 27, 2027 to June 27, 2028.

The Third Amendment also modifies the Revenue-Based Payment provision, as defined in the Credit Agreement, by lowering the applicable revenue threshold, measured based on the twelve months ended December 31, 2025, from $ 70.0 million to $ 60.0 million.

The Company satisfied the $ 60.0 million Revenue-Based Payment provision as of December 31, 2025.

Accordingly, the interest-only period under the Credit Facility was extended by one year, with scheduled principal repayments commencing in February 2027 rather than February 2026.

Thereafter, the Company will make quarterly principal payments equal to $ 2.5 million per quarter, or 10.0 %, of the outstanding principal amount of the funded Term Loan, with any remaining principal balance due on the maturity date.

The Company may at any time prepay the outstanding principal balance of the Term Loans in whole or in part.

Prepayment of the Term Loans is subject to payment of a prepayment premium equal to (i) 2 % of the Term Loans prepaid plus the amount of interest that would have been due through the first anniversary of the Closing Date if the Term Loans are prepaid prior to the first anniversary of the Closing Date, (ii) 1 % of the Term Loans prepaid if the Term Loans are prepaid on or after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date, or (iii) 0 % if prepaid thereafter.

Upon repayment in full of the Term Loans, the Company will pay an exit fee equal to 5 % of the original principal amount of the Term Loans.

Additionally, the Company paid an origination fee of $ 0.2 million on the Closing Date and incurred issuance costs of $ 0.2 million, both of which have been recorded as a debt discount.

The Company is accreting the carrying value of the SWK Term Loan to the original principal balance plus the exit fee over the term of the loan using the effective interest method.

Additionally, the Company paid an origination fee of $ 0.2 million on the closing date of the Credit Facility and incurred issuance costs of $ 0.2 million, both of which have been recorded as a debt discount.

The Company is accreting the carrying value of the Term Loans to the original principal balance plus the exit fee over the term of the loan using the effective interest method.

The amortization of the discount is accounted for as interest expense.

The effective interest rate on the SWK Term Loan for the fiscal year ended December 31, 2024 was 14.8 %.

The effective interest rate on the Term Loans as of December 31, 2025 was 14.1 %.

The fair value of the debt approximates its carrying value.

The SWK Credit Facility also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by substantially all assets of the Company.

As of December 31, 2024, the Company was in compliance with the financial covenants under the SWK Credit Facility.

The Credit Facility also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by substantially all assets of the Company.

As of December 31, 2025, the Company was in compliance with the financial covenants under the Credit Facility.

JOURNEY MEDICAL CORPORATION

8 unchanged sentences

Year Ended December 31,

Interest payments on term loans and LOC

Amortization/accretion

Imputed interest on acquired intangible assets

Cash interest expense

Amortization of debt discount

Total interest expense and financing fees

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SHARE-BASED COMPENSATION

In 2015, the Company’s Board of Directors adopted, and stockholders approved, the Journey Medical Corporation 2015 Stock Plan (the “Plan”) authorizing the Company to grant shares of Common Stock to eligible employees, directors, and consultants in the form of restricted stock, restricted stock units (“RSUs”), stock options and other types of grants.

In 2015, the Company’s Board of Directors adopted, and stockholders approved, the Journey Medical 2015 Stock Plan (the “Plan”) authorizing the Company to grant shares of common stock to eligible employees, directors, and consultants in the form of restricted stock, restricted stock units (“RSUs”), stock options and other types of grants.

The amount, terms, and exercisability provisions of grants are determined by the Board of Directors.

At the Company’s 2024 Annual Meeting of Stockholders, held on June 25, 2024, the Company’s stockholders approved, among other matters, a second amendment to the Plan to increase the number of shares of Common Stock issuable under the Plan by 3,000,000 to 10,642,857 .

At December 31, 2024 there were 2,806,824 shares available for issuance under the Plan.

At the Company’s 2024 Annual Meeting of Stockholders, held on June 24, 2024, the Company’s stockholders approved, among other matters, an amendment to the Plan (the “Amended Plan”) to increase the number of shares of Common Stock issuable under the Plan by 3,000,000 to 10,642,857 .

At December 31, 2025 there were 1,895,803 shares available for issuance under the Amended Plan.

The Company grants stock options to employees, non-employees and Directors with exercise prices equal to the closing price of the underlying shares of the Company’s common stock on the Nasdaq Capital Market on the date that the options are granted.

Options granted have a term of ten years from the grant date.

Options granted generally vest over four-year period.

Options granted generally vest over a three or four -year period.

Compensation cost for stock options is charged against operations on a straight-line basis over the vesting period.

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Selling, general and administrative

Total non-cash compensation expense related to share-based compensation included in operating expense

Total non-cash share-based compensation expense

JOURNEY MEDICAL CORPORATION

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Expected volatility

Weighted average expected volatility

Expected term (years)

4 unchanged sentences

Outstanding options at December 31, 2024

( 1,420,297 )

Outstanding options at December 31, 2025

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The intrinsic value of the Company’s stock options changes based on the closing price of the Company’s common stock.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

Restricted Stock Units

1 unchanged sentence

Unvested balance at December 31, 2024

( 1,058,374 )

Unvested balance at December 31, 2025

For the years ended December 31, 2024 and 2023 the Company issued 1,058,374 and 727,249 shares of Common Stock, respectively, upon the vesting of RSU’s amounting to $ 5.4 million and $ 2.9 million, respectively, in total aggregate fair market value.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

For the years ended December 31, 2025 and 2024 the Company issued 944,946 and 1,058,374 shares of Common Stock, respectively, upon the vesting of RSU’s amounting to $ 4.1 million and $ 4.5 million, respectively, in total aggregate fair market value, and $ 6.7 million and $ 5.4 million, respectively, in total intrinsic value.

For the years ended December 31, 2025 and 2024, approximately $ 4.8 million and $ 5.6 million, respectively, of RSU compensation cost was charged against operations.

At December 31, 2024 approximately 2,339,961 of RSU’s remained unvested and there was approximately $ 5.6 million of unrecognized compensation cost related to RSUs, which the Company expects to recognize over a weighted-average period of approximately 1.7 years.

At December 31, 2025, 1,848,140 RSU’s remained unvested and there was approximately $ 4.0 million of unrecognized compensation cost related to RSUs, which the Company expects to recognize over a weighted-average period of approximately 1.8 years.

On July 9, 2024, the Board approved and adopted the Journey Medical Corporation Deferred Compensation Plan (the “Deferred Compensation Plan”), which is considered a non-qualified deferred compensation plan.

As part of the Deferred Compensation Plan, the Company offers certain non-employee members of the Board (“Director Participants”) and select executive-level employees (the “Executive Participants”) the ability to defer up to 100 % of the payment for services and annual bonuses, respectively, in the form of RSU’s.

As of December 31, 2024, the Company had no outstanding deferred RSU’s.

As of December 31, 2025, the executive participants deferred 485,629 shares of Journey Medical Inc.

common stock upon the vesting of RSU’s.

Employee Stock Purchase Plan

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The Company recorded $ 0.1 million of stock-based compensation under the 2023 ESPP for the year ended December 31, 2025.

As of December 31, 2024, there was unrecognized stock-based compensation expense of approximately $ 9,026 related to the current ESPP offering period, which ends January 31, 2025.

As of December 31, 2025, there was unrecognized stock-based compensation expense of $ 11,000 related to the current ESPP offering period, which ends January 31, 2026.

REVENUES FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Net Revenues

The Company has the following actively marketed products, Qbrexza®, Amzeeq®, Zilxi®, Accutane®, Exelderm®, Targadox®, and Luxamend®.

The Company has the following actively marketed products, Emrosi TM , Qbrexza®, Amzeeq®, Zilxi®, Accutane®, Exelderm®, Targadox®, and Luxamend®.

All of the Company’s product revenues are recorded in the U.S.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

Revenues by product are summarized as follows:

1 unchanged sentence

($ in thousands)

Foam franchise products (Amzeeq® & Zilxi®)

Other / legacy

Total product revenues

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

The Company recognized other revenue as follows:

2 unchanged sentences

Milestone payment from Cutia

Non-refundable upfront payment from Maruho

Royalties on sales of Rapifort® Wipes 2.5 %

Cutia supply agreement

Royalties on sales of Amzeeq by Cutia

Total other revenue

Other revenue for the year ended December 31, 2025 reflects the supply of Amzeeq to Cutia and sales-based royalties earned on the net sales of Amzeeq by Cutia.

In August 2025, the Company began supplying Cutia with Amzeeq for Cutia’s commercial use.

See Note 5 to the Consolidated financial statements for further details on the Cutia Agreement.

Other revenue for the year ended December 31, 2024 reflects a $ 1.0 million milestone payment from Cutia triggered by the November 11, 2024 marketing approval Cutia received for topical 4% minocycline foam from the NMPA of the PRC.

Other revenue for the year ended December 31, 2023 reflects a net $ 19.0 million payment from Maruho under the New License Agreement and $ 0.5 million in sales-based royalty payments based on the sales of Rapifort® Wipes 2.5 % in Japan, from Maruho.

Significant Customers

As of December 31, 2024, one of the Company’s customers accounted for more than 10.0% of its total accounts receivable balance at 10.3 %.

As of December 31, 2025, none of the Company’s customers accounted for more than 10.0% of its total accounts receivable balance.

As of December 31, 2024, one of the Company’s customers accounted for more than 10.0% of its total accounts receivable balance at 10.3 %.

7 unchanged sentences

The proceeds from the recovery were recorded and classified within the Company’s Consolidated Statements of Operations as a separate component of operating expenses, consistent with the initial recognition of the loss in 2021.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

The components of the income tax provision are as follows:

5 unchanged sentences

Total income tax expense

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.

16 unchanged sentences

Deferred tax assets, net

The Company adopted ASU 2023-09 on a prospective basis.

As a result, the 2025 rate reconciliation is presented in accordance with the new disclosure requirements, while the 2024 reconciliation continues to be presented under the disclosure requirements in effect for that period.

A reconciliation of income tax computed at the federal statutory rate to the provision for income taxes pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025, was as follows:

Years Ended December 31,

($’s in thousands)

federal statutory tax rate

State and local income taxes, net of federal income tax effect (1)

Change in valuation allowance

Non-deductible items:

Share-based compensation

Non-deductible compensation

Other adjustments

Provision for income taxes and effective income tax rate

During the year ended December 31, 2025, state taxes in Arizona, California, New York, New Jersey, Florida, and Texas comprised greater than 50% of the tax effect in this category.

JOURNEY MEDICAL CORPORATION

Notes to Financial Statements

A reconciliation of the statutory tax rates and the effective tax rates is as follows:

A reconciliation of the statutory tax rates and the effective tax rates for the year ended December 31, 2024, was as follows:

Years Ended December 31,

3 unchanged sentences

Non-deductible items

Provision to return

State tax adjustments

4 unchanged sentences

Based on the weight of available evidence, both positive and negative, the Company has determined that it is more likely than not that it will not realize the benefits of these assets.

Accordingly, the Company recorded a valuation allowance of $ 24.0 million at December 31, 2024.

The valuation allowance increased by $ 3.9 million during the year ended December 31, 2024, primarily as a result of the increase in NOL carryforwards generated in the current period.

Accordingly, the Company recorded a valuation allowance of $ 26.0 million at December 31, 2025, representing an increase of $ 2.2 million.

As of December 31, 2025, the Company had federal and state NOL carryforwards of approximately $ 30.9 million and $ 32.3 million, respectively.

4 unchanged sentences

The Company has performed calculations through December 31, 2023, to support that its NOL carryovers are subject to limitations under section 382 (“382 Limitations”).

Based on the analysis of the NOL carryovers subject to the 382 Limitations, the Company has concluded that the 382 Limitations would not prevent the Company from utilizing all of its NOL carryovers in 2023.

The Company is in the process of updating the study through December 31, 2024.

As such, going-forward utilization of the net operating loss and credit carryforwards may be subject to an additional annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986.

At December 31, 2024 and 2023, the Company did not have any significant uncertain tax positions.

Based on the analysis of the NOL carryovers subject to the 382 Limitations, the Company concluded that the 382 Limitations would not prevent the Company from utilizing all of its NOL carryovers in 2023.

The Company’s ability to use its remaining net operating loss and tax credit carryforwards may be further limited if the Company experiences another Section 382 ownership change due to future changes in its stock ownership.

Because of the valuation allowance, future changes in the Company’s unrecognized tax benefits will not have an impact on the Company’s effective tax rate.

At December 31, 2025 and December 31, 2024, the Company did no t have any significant uncertain tax positions.

The Company will recognize interest and penalties related to uncertain tax positions in income tax expense.

As of December 31, 2024 and 2023, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s consolidated statements of operations.

The Company does not anticipate a material change to unrecognized tax benefits in the next twelve months.

As of December 31, 2025 and 2024, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statement of operations.

The Company is subject to U.S.

federal and state taxes.

As of December 31, 2024, the earliest federal tax year open for the assessment of income taxes under the applicable statutes of limitations is its 2020 tax year.

Because of net operating losses, all federal tax years since inception remain open for the assessment of income taxes.

The expiration of the statute of limitations related to the various state income and franchise tax returns varies by state.

Income taxes paid (net of refunds received) by jurisdiction, pursuant to the disclosure requirements of ASU 2023-09, were as follows:

Years Ended December 31,

($’s in thousands)

Total net payments (refunds)

JOURNEY MEDICAL CORPORATION

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Segment expenses

Reconciliation of net loss:

Segment loss from operations

Reconciliation to net loss:

Adjustments and reconciling items

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(Principal Executive Officer)

March 26, 2025

/s/ Joseph Benesch

Joseph Benesch

Chief Financial Officer

(Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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Joseph Benesch

(Principal Financial Officer)

(Principal Financial Officer and Principal Accounting Officer)

/s/ Neil Herskowitz

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures