Dermata Therapeutics, Inc. 10-Q

ITEM 1: FINANCIAL STATEMENTS DERMATA THERAPEUTICS, INC. Balance Sheets June 30, 2025 December 31, 2024 (unaudited) Assets: Cash and cash equivalents $ 6,480,930 $ 3,161,570 Prepaid expenses and other current assets 159,586 372,318 Total assets $ 6,640,516 $ 3,533,888 Liabilities and Stockholders’ Equity: Liabilities: Accounts payable $ 413,687 $ 808,011 Accrued and other current liabilities 612,578 1,164,783 Total liabilities 1,026,265 1,972,794 Commitments and Contingencies (see Note 6) - - Stockholders’ Equity: Common Stock, par value $ 0.0001 per share, 250,000,000 shares authorized; 637,757 shares issued and outstanding as of June 30, 2025; 251,725 shares issued and outstanding as of December 31, 2024 64 25 Additional paid-in capital 75,294,206 67,236,408 Accumulated deficit ( 69,680,019 ) ( 65,675,339 ) Total stockholders’ equity 5,614,251 1,561,094 Total liabilities and stockholders’ equity $ 6,640,516 $ 3,533,888 The accompanying notes are an integral part of these financial statements. 3 DERMATA THERAPEUTICS, INC. Statements of Operations (unaudited) 2025 2024 2025 2024 For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Operating expenses: Research and development $ 617,835 $ 2,009,102 $ 1,898,976 $ 3,609,843 General and administrative 1,154,896 874,640 2,213,559 2,477,459 Total operating expenses 1,772,731 2,883,742 4,112,535 6,087,302 Loss from operations ( 1,772,731 ) ( 2,883,742 ) ( 4,112,535 ) ( 6,087,302 ) Other income and expenses: Interest income 71,638 54,636 107,855 123,934 Net loss $ ( 1,701,093 ) $ ( 2,829,106 ) $ ( 4,004,680 ) $ ( 5,963,368 ) Net loss per share of Common Stock, basic and diluted $ ( 1.66 ) $ ( 41.82 ) $ ( 5.18 ) $ ( 106.44 ) Weighted-average basic and diluted Common Stock 1,026,506 67,654 772,397 56,025 The accompanying notes are an integral part of these financial statements. 4 DERMATA THERAPEUTICS, INC. Statements of Stockholders’ Equity (unaudited) Shares Par Value Capital Deficit Equity Common Stock Additional Paid-in Accumulated Total Stockholders’ Shares Par Value Capital Deficit Equity Balance at December 31, 2024 251,725 $ 25 $ 67,236,408 $ ( 65,675,339 ) $ 1,561,094 Stock-based compensation - - 37,189 - 37,189 Issuance of Common Stock and warrants from January 2025 PIPE, net of issuance costs 193,539 19 2,254,702 - 2,254,721 Issuance of Common Stock upon exercise of pre-funded warrants 97,746 10 967 - 977 Issuance of Common Stock and warrants from March 2025 Warrant Inducement, net of issuance costs 60,200 6 5,750,822 - 5,750,828 Net loss - - - ( 2,303,587 ) ( 2,303,587 ) Balance at March 31, 2025 603,210 $ 60 $ 75,280,088 $ ( 67,978,926 ) $ 7,301,222 Stock-based compensation - - 39,234 - 39,234 Issuance of abeyance shares 34,547 4 ( 4 ) - - Issuance costs related to the March 2025 Warrant Inducement - - ( 25,112 ) - ( 25,112 ) Net loss - - - ( 1,701,093 ) ( 1,701,093 ) Balance at June 30, 2025 637,757 $ 64 $ 75,294,206 $ ( 69,680,019 ) $ 5,614,251 The accompanying notes are an integral part of these financial statements. 5 DERMATA THERAPEUTICS, INC. Statements of Stockholders’ Equity (unaudited) Common Stock Additional Paid-in Accumulated Total Stockholders’ Shares Par Value Capital Deficit Equity Balance at December 31, 2023 26,150 $ 3 $ 59,742,893 $ ( 53,387,878 ) $ 6,355,018 Stock-based compensation - - 587,234 - 587,234 Issuance of abeyance shares 18,200 2 ( 2 ) - - Net loss - - - ( 3,134,262 ) ( 3,134,262 ) Balance at March 31, 2024 44,350 $ 5 $ 60,330,125 $ ( 56,522,140 ) $ 3,807,990 Balance 44,350 $ 5 $ 60,330,125 $ ( 56,522,140 ) $ 3,807,990 Stock-based compensation - - 19,608 - 19,608 Issuance of Common Stock upon exercise of warrants, net of issuance costs 24,933 2 2,320,461 - 2,320,463 Settlement of fractional shares paid in cash ( 15 ) - ( 828 ) - ( 828 ) Net loss - - - ( 2,829,106 ) ( 2,829,106 ) Balance at June 30, 2024 69,268 $ 7 $ 62,669,366 $ ( 59,351,246 ) $ 3,318,127 Balance 69,268 $ 7 $ 62,669,366 $ ( 59,351,246 ) $ 3,318,127 The accompanying notes are an integral part of these financial statements. 6 DERMATA THERAPEUTICS, INC. Statements of Cash Flows (unaudited) 2025 2024 For the six months ended June 30, 2025 2024 Cash flows from operating activities: Net loss $ ( 4,004,680 ) $ ( 5,963,368 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 76,422 606,842 Increase (decrease) in cash resulting from changes in: Prepaid expenses and other current assets 212,732 367,802 Accounts payable ( 356,816 ) 360,253 Accrued and other current liabilities ( 552,205 ) ( 201,936 ) Total adjustments to reconcile net loss to net cash used in operations ( 619,867 ) 1,132,961 Net cash used in operating activities ( 4,624,547 ) ( 4,830,407 ) Cash flows from financing activities: Proceeds from issuance of Common Stock and warrants, net of issuance costs 7,993,425 2,410,200 Payment of prior period issuance costs ( 50,495 ) - Issuance costs paid setting up ATM agreement - ( 70,000 ) Proceeds from exercise of pre-funded warrants 977 - Payment for fractional shares in reverse stock split - ( 828 ) Net cash provided by financing activities 7,943,907 2,339,372 Net increase (decrease) in cash and cash equivalents 3,319,360 ( 2,491,035 ) Cash and cash equivalents at beginning of period 3,161,570 7,438,135 Cash and cash equivalents at end of period $ 6,480,930 $ 4,947,100 Non-cash financing activities: March 2025 Warrant Inducement issuance costs in accounts payable $ 12,987 - Issuance of abeyance shares ( 4 ) $ ( 2 ) May 2024 Warrant Reload issuance costs in accounts payable - $ 89,737 Deferred financing costs included in accounts payable or accrued expenses - $ 46,755 Supplemental disclosure: Cash paid for taxes $ 950 $ 950 The accompanying notes are an integral part of these financial statements. 7 DERMATA THERAPEUTICS, INC. Notes to Financial Statements (unaudited) 1. Organization and Basis of Presentation Dermata Therapeutics, Inc., (the “Company”), was formed in December 2014 as a Delaware limited liability company (“LLC”) under the name Dermata Therapeutics, LLC. On March 24, 2021, the Company converted from an LLC to a Delaware C-corporation and changed its name to Dermata Therapeutics, Inc. The Company is a clinical-stage biotechnology company focused on the treatment of medical and aesthetic skin conditions and diseases. Reverse Stock Splits On July 15, 2025, the Company held its annual meeting of stockholders at which time the stockholders approved the adoption of an amendment to its Amended and Restated Certificate of Incorporation, as amended, to effect a reverse stock split of its issued and outstanding shares of Common Stock, at a specific ratio, ranging from one-for-two to one-for-thirty, with the exact ratio determined by the Company’s board of directors without further approval or authorization of its stockholders. On August 1, 2025, the Company effected the reverse split of its shares of Common Stock at a ratio of 1-for-10, as approved by the Company’s board of directors (the “2025 Reverse Stock Split”). The par value was not adjusted as a result of the 2025 Reverse Stock Split. All issued and outstanding shares of Common Stock and per share amounts contained in the financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented. On May 7, 2024, the Company held its annual meeting of stockholders at which time the stockholders approved the adoption of an amendment to its Amended and Restated Certificate of Incorporation, as amended, to effect a reverse stock split of its issued and outstanding shares of Common Stock, at a specific ratio, ranging from one-for-five to one-for-thirty, with the exact ratio determined by the Company’s board of directors without further approval or authorization of its stockholders. On May 16, 2024, the Company effected the reverse split of its shares of Common Stock at a ratio of 1-for-15, as approved by the Company’s board of directors. The par value was not adjusted as a result of the May 2024 reverse stock split. All issued and outstanding shares of Common Stock and per share amounts contained in the financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented. Liquidity and Going Concern Uncertainty Since its inception, the Company has devoted substantially all of its resources to research and development activities and has not generated any revenue or commercialized any product candidates. As of June 30, 2025, cash and cash equivalents totaled $ 6.5 million and the Company had an accumulated deficit of $ 69.7 million. For the six months ended June 30, 2025, and the year ended December 31, 2024, the Company used cash of $ 4.6 million and approximately $ 11.1 million, respectively, in operations. The Company’s cash and cash equivalents are expected to fund operations into the second quarter of 2026. The Company anticipates that it will continue to incur net losses for the foreseeable future. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the one-year period following the date that these financial statements were issued. Historically, the Company’s principal sources of cash have included proceeds from the issuance of equity securities and debt. The Company’s principal uses of cash have included cash used in operations and payments for license rights. The Company expects that the principal uses of cash in the future will be for continuing operations, funding of research and development, conducting preclinical studies and clinical trials, and general working capital requirements. The Company expects that as research and development expenses continue to grow, it will need to raise additional capital to sustain operations and research and development. 8 Management’s Plan to Continue as a Going Concern To continue as a going concern, the Company will need, among other things, to raise additional capital resources. Until the Company can generate significant cash from operations, management’s plans to obtain such resources for the Company include proceeds from offerings of the Company’s equity securities or debt, or transactions involving product development, technology licensing or collaboration. Management can provide no assurance that any sources of a sufficient amount of financing or collaboration agreements will be available to the Company on favorable terms, if at all. The Company’s ability to raise additional capital may be adversely impacted by potential worsening of global economic conditions, potential future global pandemics or health crises, and the disruptions to, and volatility in, the credit and financial markets in the United States. Because of historical and expected operating losses and net operating cash flow deficits, there is substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements, which is not alleviated by management’s plans. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. 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. Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the accompanying financial statements reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair statement of the financial position, results of operations, cash flows, and stockholders’ equity for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ materially from those estimates. The unaudited financial statements included in this Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with Securities and Exchange Commission (the “SEC”) on March 17, 2025, which includes a broader discussion of the Company’s business and the risks inherent therein. 2. Summary of Significant Accounting Policies Use of Estimates The Company’s financial statements are prepared in accordance with GAAP. The preparation of the Company’s financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, and expenses and disclosure of contingent assets and liabilities in the financial statements and accompanying notes. On an ongoing basis, management evaluates these estimates and judgments, including those related to accrued research and development expenses, stock-based compensation, and equity instruments. The Company bases its estimates on various assumptions that it believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Segment Information Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company and the Company’s chief operating decision maker view the Company’s operations and manage its business in one operating segment, which is the business of developing and commercializing pharmaceutical candidates. Cash and Cash Equivalents The Company deposits its cash and cash equivalents with accredited financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”), which are held in checking and cash sweep accounts. At times, deposits held may exceed the amount of insurance provided by the FDIC. The Company maintains an insured cash sweep account in which cash from its main operating checking account is invested overnight in highly liquid, short-term investments. The Company considers all highly liquid investments with a maturity date of 90 days or less at the date of purchase to be cash equivalents. 9 Concentrations of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. The Company is exposed to credit risk in the event of a default by the financial institutions holding the Company’s cash and cash equivalents to the extent of the amounts held in excess of FDIC limits. The Company limits its credit risk by placing its cash and cash equivalents with financial institutions it believes are of high quality. To date, the Company has not experienced any losses on its deposits of cash and cash equivalents. Fair Value Measurement The Company uses a three-tier fair value hierarchy to prioritize the inputs used in the Company’s fair value measurements. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company does not have any Level 2 or Level 3 instruments. The Company believes the carrying amount of cash and cash equivalents, accounts payable and accrued expenses approximate their estimated fair values due to the short-term nature of these assets and liabilities. Interest Income Interest income consists of interest income earned on cash and cash equivalents from interest bearing demand accounts. Patent Costs Patent costs related to obtaining and maintaining patent protection in both the United States and other countries are expensed as incurred. Patents costs are classified as general and administrative expenses. Research and Development Research and development costs consist of expenses incurred in connection with the development of the Company’s product candidates. Such expenses include expenses incurred under agreements with contract research organizations, manufacturing and supply scale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial supply, outsourced laboratory services, including materials and supplies used to support the Company’s research and development activities, and payments made for license fees and milestones that have not been demonstrated to have commercial value. Such costs are expensed in the periods in which they are incurred. Upfront payments and milestone payments for licensed technology are expensed as research and development as incurred or when the milestone is achieved or is determined to be probable of being achieved. Advanced payments for goods or services to be received in the future for research and development activities are recorded as prepaid expenses and expensed as the related goods are received or services are performed. Income Taxes The Company is a C-Corporation and accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. 10 The Company records uncertain tax positions on the basis of a two-step process whereby (1) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. Any accrued interest and penalties are included within the related tax liability. Stock-Based Compensation The Company measures and recognizes compensation expense for all stock-based awards made to employees, directors, and non-employees, based on estimated fair values recognized using the straight-line method over the requisite service period. The fair value of options to purchase Common Stock granted to employees is estimated on the grant date using the Black-Scholes valuation model. The calculation of stock-based compensation expense requires that the Company make certain assumptions and judgments about variables used in the Black-Scholes model, including the expected term of the stock-based award, expected volatility of the underlying Common Stock, dividend yield, and the risk-free interest rate. Forfeitures are accounted for in the period they occur. Warrants The Company performs an assessment of warrants upon issuance to determine their proper classification in the financial statements based upon the warrant’s specific terms, in accordance with the authoritative guidance provided in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) , and ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity (“ASC 815-40”) . The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480 and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed in the Company’s own Common Stock and whether the warrant holders could potentially require cash settlement of the warrants. For issued or modified warrants that meet all the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be liability-classified and recorded at their initial fair value on the date of issuance and remeasured at fair value at each balance sheet date thereafter. The Company has performed an assessment of all warrants issued and modified and determined that the Company’s warrants are equity-classified. Comprehensive Loss Comprehensive loss includes net loss and other comprehensive income (loss) for the periods presented. The Company did not have other comprehensive income (loss) items such as unrealized gains and losses and so for the periods presented, comprehensive loss was equal to the net loss. Net Loss Per Share of Common Stock Basic net loss per share is calculated by dividing net loss attributable to common shareholders by the weighted-average number of shares outstanding during the period. The weighted-average number of shares of Common Stock outstanding includes (i) pre-funded warrants because their exercise requires only nominal consideration for the delivery of shares, and (ii) shares held in abeyance because there is no consideration required for delivery of the shares, (collectively, “basic shares”), without consideration of common stock equivalents. Diluted net loss per share is calculated by adjusting basic shares outstanding for the dilutive effect of common stock equivalents outstanding for the period. For purposes of the diluted net loss per share calculation, stock options and warrants are considered to be common stock equivalents but are excluded from the calculation of diluted net loss per common stock if their effect would be anti-dilutive. 11 The common share equivalents that are not included in the calculation of diluted net loss per share of Common Stock but could potentially dilute basic earnings per share in the future are as follows: Schedule of Potentially Diluted Basic Earnings Per Share 2025 2024 As of June 30, 2025 2024 Common Stock options 20,477 2,727 Common Stock warrants 1,238,949 110,924 Total potentially dilutive securities 1,259,426 113,651 Recent Accounting Pronouncements For the six months ended June 30, 2025, the Company has reviewed recent accounting standards and identified the following as relevant to the Company. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) . ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 as of January 1, 2025; however, there was no impact on its financial statements and income tax footnote. In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”) . ASU 2024-03 requires additional disclosures and disaggregation of certain costs and expenses presented on the face of the income statement. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its financial statements. 3. Balance Sheet Details The following provides certain balance sheet details: Schedule of Balance Sheet Details June 30, December 31, 2025 2024 Prepaid expenses and other current assets: Prepaid insurance $ 68,061 $ 349,824 Prepaid research and development costs 7,993 12,600 Prepaid other and other current assets 83,532 9,894 Total prepaid expenses and other current assets $ 159,586 $ 372,318 Accrued and other current liabilities: Accrued research and development costs $ 28,197 $ 295,392 Accrued compensation and benefits 490,703 731,632 Accrued other 93,678 137,759 Total accrued and other current liabilities $ 612,578 $ 1,164,783 4. Equity Securities A summary of the Company’s equity securities as of June 30, 2025, is as follows: Schedule of Equity Securities Description Authorized Issued Abeyance Reserved Outstanding Common Stock, par value $0.0001 250,000,000 637,757 388,700 - 637,757 Preferred Stock 10,000,000 - - - - Warrants - 1,238,949 - - 1,238,949 2021 Omnibus Equity Incentive Plan - 20,568 - 13 20,477 Total equity securities 260,000,000 1,897,274 388,700 13 1,897,183 12 Common Stock On March 27, 2025, the Company entered into an inducement offer letter agreement (the “March 2025 Inducement Letter”) with a holder (the “Holder”) of certain of its existing warrants to purchase an aggregate of 483,447 shares of the Company’s common stock. Such existing warrants were made up of (i) certain of the May 17, 2024 (the “May 2024 Warrants”), which were issued in two separate series, having an exercise price of $ 49.10 per share, and (ii) the September 16, 2024, which were issued in two separate series, having an exercise price of $ 15.80 per share (the “September 2024 Warrants” and together with the May 2024 Warrants, the “Existing Warrants”). Pursuant to the March 2025 Inducement Letter, the Holder agreed to exercise for cash its Existing Warrants at a reduced exercise price of $ 12.84 per share in consideration for the Company’s agreement to issue in a private placement (i) new Series A common stock purchase warrants (the “New Series A Warrants”) to purchase up to 498,080 shares of Common Stock (the “New Series A Warrant Shares”) and (ii) new Series B common stock purchase warrants (the “New Series B Warrants” and together with the New Series A Warrants, the “New Warrants”) to purchase up to 468,813 shares of Common Stock (the “New Series B Warrant Shares” and together with the New Series A Warrant Shares, the “New Warrant Shares”). The New Warrants were exercisable subject to stockholder approval, which the Company received at a stockholder meeting on July 15, 2025. The Company received net proceeds of approximately $ 5.7 million from the exercise of the Existing Warrants by the Holder, after deducting financial advisor fees and other offering expenses payable by the Company. As of June 30, 2025, the Holder has received 94,747 Common Shares, with the balance of 388,700 shares held in abeyance, to be released to the Holder at the Holder’s request. On January 21, 2025, the Company closed a private placement (the “January 2025 PIPE”) priced at the market under Nasdaq rules, in which it sold 193,539 shares of Common Stock, pre-funded warrants to purchase an aggregate of 7,246 shares of Common Stock with an exercise price of $ 0.01 per share (“January 2025 Pre-Funded Warrants”), and 200,785 warrants (the “January 2025 PIPE Warrants”) to purchase up to an aggregate of 200,785 shares of Common Stock. The January 2025 PIPE Warrants have an exercise price of $ 12.70 . Certain Company insiders, including the Company’s Chief Executive Officer, Chief Financial Officer and certain members of the Company’s board of directors, participated in the January 2025 PIPE. These Company insiders purchased an aggregate of 122,047 shares of Common Stock and January 2025 PIPE Warrants to purchase up to an aggregate of 122,047 shares of Common Stock, for an aggregate purchase price of approximately $ 1,550,000 . The purchase price per share of Common Stock and accompanying January 2025 PIPE Warrant for these Company insiders was the same as paid by other investors in the January 2025 PIPE. The January 2025 Warrants were exercisable subject to stockholder approval, which the Company received at a stockholder meeting on July 15, 2025. In connection with the January 2025 PIPE, the Company entered into a registration rights agreement with the investor, pursuant to which the Company agreed to prepare and file a registration statement with the SEC registering the resale of the shares of Common Stock underlying the securities sold in the January 2025 PIPE financing. The Company filed a Form S-3 on January 30, 2025, which was declared effective by the SEC on February 5, 2025. The Company received net cash proceeds of approximately $ 2.2 million from the January 2025 PIPE after deducting underwriters’ discounts and offering expenses of approximately $ 0.4 million. During the first quarter of 2025, all of the January 2025 Pre-Funded Warrants were exercised. As of June 30, 2025, no January 2025 Pre-Funded Warrants remained outstanding. On September 17, 2024, the Company closed a private placement (the “September 2024 PIPE”) priced at the market under Nasdaq rules, in which it sold 191,256 pre-funded warrants to purchase up to an aggregate of 191,256 shares of Common Stock with an exercise price of $ 0.01 per share (the “September 2024 Pre-Funded Warrants”), and 191,256 series A warrants (the “September 2024 PIPE Series A Common Warrants”) to purchase up to an aggregate of 191,256 shares of Common Stock and 191,256 series B warrants (the “September 2024 PIPE Series B Common Warrants” and together with the September 2024 PIPE Series A Warrants, the “September 2024 PIPE Warrants”) to purchase up to an aggregate of 191,256 shares of Common Stock. The September 2024 PIPE Warrants have an exercise price of $ 15.80 . In connection with the September 2024 PIPE, the Company entered into a registration rights agreement with the investor, pursuant to which the Company agreed to prepare and file a registration statement with the SEC registering the resale of the shares of Common Stock underlying the securities sold in the September 2024 PIPE financing. The Company filed a Form S-3 on September 19, 2024, which was declared effective by the SEC on September 24, 2024. The Company received net cash proceeds of approximately $ 3.1 million from the September 2024 PIPE after deducting underwriters’ discounts and offering expenses of approximately $ 0.4 million. As of December 31, 2024, 90,500 September 2024 Pre-Funded Warrants remained outstanding, which were exercised during the first quarter of 2025. As of June 30, 2025, no September 2024 Pre-Funded Warrants remained outstanding. 13 In June 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with a sales agent (the “Sales Agent”), providing for the sale of up to $ 1,157,761 of its shares of Common Stock as set forth in the ATM Agreement. The Sales Agent will be entitled to compensation at a fixed commission rate of 3.0 % of the gross sales price of the shares of Common Stock sold pursuant to the ATM Agreement, as well as other transactional fees. During July 2024, the Company issued 35,580 shares of Common Stock under the ATM Agreement resulting in gross proceeds of $ 1,157,248 before deducting issuance costs. After issuance of the 35,580 shares during July 2024, $ 513 remained registered under the ATM Agreement. On August 2, 2024, the Company increased the maximum aggregate offering amount of Common Stock issuable under the ATM Agreement by $ 505,000 , from $ 1,157,761 to $ 1,662,761 . During September 2024, the Company issued 19,421 shares of Common Stock under the ATM Agreement resulting in additional gross proceeds of $ 504,894 before deducting issuance costs. During 2024, the Company issued a total of 55,001 shares from its ATM resulting in net proceeds of $ 1.5 million after deducting issuer costs and other expenses related to setting up and issuing shares from the Company’s ATM. As of June 30, 2025, the Company does not have any remaining capacity under its ATM Agreement. On May 21, 2024, the Company closed on inducement agreements (the “May 2024 Inducement”) with certain holders (the “Holders”) of certain of the Company’s existing warrants to purchase up to an aggregate of 51,632 shares of the Company’s Common Stock, issued to the Holders on (i) May 26, 2023 (the “May 2023 Warrants”), having an exercise price of $ 324.00 per share, and (ii) November 2023 New Warrants (as defined below), which were issued in two separate series, each having an exercise price of $ 97.67 per share (together with the May 2023 Warrants, the “May 2024 Existing Warrants”). Pursuant to the May 2024 Inducement, the Holders agreed to exercise for cash their May 2024 Existing Warrants at a reduced exercise price of $ 51.60 per share in consideration for the Company’s agreement to issue in a private placement (i) new Series A Common Stock purchase warrants (the “New May 2024 Series A Warrants”) to purchase up to 60,117 shares of Common Stock, and (ii) new Series B Common Stock purchase warrants (the “New May 2024 Series B Warrants” and together with the New May 2024 Series A Warrants, the “New May 2024 Warrants”) to purchase up to 43,149 shares of Common Stock. The Company received net proceeds of approximately $ 2.3 million from the exercise of the May 2024 Existing Warrants by the Holders, after deducting placement agent fees and other offering expenses payable by the Company. Related to the May 2024 Inducement, during July 2024, the balance of 26,700 abeyance shares related to the May 2024 Warrant Inducement were released to the investor, leaving no further abeyance shares outstanding as of December 31, 2024. Preferred Stock While the Company has 10,000,000 shares of preferred stock authorized with a par value of $ 0.0001 , no shares of preferred stock are issued or outstanding as of June 30, 2025, or December 31, 2024, respectively. Warrants Summary of Warrants Outstanding The warrants outstanding as of June 30, 2025, are exercisable into 1,238,949 shares of Common Stock which had a fair value of $ 5.85 per share, based on the closing trading price on June 30, 2025. The aggregate intrinsic value of warrants outstanding as of June 30, 2025, is calculated as the difference between the exercise price of the warrants and the closing market price of the Company’s Common Stock on that date. The intrinsic value of warrants outstanding as of June 30, 2025, was zero . Schedule of Information of Outstanding Warrants Quantity of Warrants Outstanding as of Description June 30, 2025 December 31, 2024 Exercise Price Expiration Date Pre-IPO Series 1a Warrants 19 19 $ 49,200.00 11/15/2026 IPO Warrants 1,230 1,230 16,800.00 8/17/2026 IPO Underwriter Warrants 53 53 19,320.00 8/17/2026 March 2023 Offering Placement Agent Warrants 753 753 579.38 3/16/2028 May 2023 PIPE Placement Agent Warrants 371 371 428.45 5/23/2028 November 2023 Placement Agent Warrants 1,619 1,619 122.09 11/21/2028 May 2024 Series A Common Warrants 2,334 60,117 49.10 11/21/2029 May 2024 Series B Common Warrants - 43,149 49.10 5/21/2026 May 2024 Placement Agent Warrants 3,613 3,613 64.50 11/21/2029 September 2024 PIPE Series A Common Warrants - 191,256 15.80 3/18/2030 September 2024 PIPE Series B Common Warrants - 191,256 15.80 3/17/2026 September 2024 PIPE Placement Agent Warrants 13,386 13,386 22.88 3/18/2030 January 2025 PIPE Warrants 200,785 - 12.70 7/15/2030 January 2025 PIPE Placement Agent Warrants 14,053 - 15.88 7/15/2030 March 2025 Warrant Inducement Series A Warrants 498,080 - 12.84 7/15/2030 March 2025 Warrant Inducement Series B Warrants 468,813 - 12.84 1/15/2027 March 2025 Warrant Inducement Placement Agent Warrants 33,840 - 16.05 7/15/2030 Total warrants outstanding 1,238,949 506,822 14 Warrant Inducements In March 2025, the Company entered into the March 2025 Inducement Letter with a Holder who agreed to exercise 483,447 warrants to purchase Common Stock at a reduced exercise price of $ 12.84 per share in exchange for 498,080 New Series A Warrants and 468,813 New Series B Warrants with an exercise price of $ 12.84 per share. The March 2025 Inducement Letter, which resulted in the lowering of the exercise price of the Existing Warrants and the issuance of the New Warrants, is considered a modification of the Existing Warrants under the guidance ASC 815-40. The modification is consistent with the equity issuance classification under that guidance as the reason for the modification was to induce the holders of the Existing Warrants to cash exercise their warrants, which raised equity capital and generated net proceeds of approximately $ 5.7 million. As the Existing Warrants and the New Warrants were classified as equity instruments before and after the exchange, and as the exchange is directly attributable to an equity offering, the Company recognized the effect of the modification of approximately $ 4.9 million as an equity issuance cost. In May 2024, the Company completed the May 2024 Inducement with the Holders who agreed to exercise 51,632 warrants to purchase Common Stock at a reduced exercise price of $ 51.60 per share in exchange for 60,117 New May 2024 Series A Warrants and 43,149 New May 2024 Series B Warrants with an exercise price of $ 49.10 per share. The May 2024 Inducement, which resulted in the lowering of the exercise price of the May 2024 Existing Warrants and the issuance of the May 2024 New Warrants, is considered a modification of the May 2024 Existing Warrants under the guidance ASC 815-40. The modification is consistent with the equity issuance classification under that guidance as the reason for the modification was to induce the holders of the May 2024 Existing Warrants to cash exercise their warrants, which raised equity capital and generated net proceeds of approximately $ 2.3 million. As the May 2024 Existing Warrants and the May 2024 New Warrants were classified as equity instruments before and after the exchange, and as the exchange is directly attributable to an equity offering, the Company recognized the effect of the modification of approximately $ 1.5 million as an equity issuance cost. 5. Equity Incentive Plan Under the Company’s Omnibus Equity Incentive Plan (the “2021 Plan”) as amended, the Company may grant options to purchase shares of Common Stock, restricted stock awards, performance stock awards, incentive bonus awards, other cash-based awards or directly issue shares of Common Stock to employees, directors, and consultants of the Company. At the Company’s 2024 Annual Meeting of Stockholders held on May 7, 2024, the Company’s stockholders approved an amendment to the Company’s 2021 Plan to increase the number of shares of Common Stock authorized for issuance thereunder from 4,193 shares to 7,993 shares. Further at the Company’s 2024 Annual Meeting of Stockholders, the Company’s stockholders approved an amendment to the Company’s 2021 Plan, to increase the evergreen provision from one percent to five percent of the total number of the Company’s Common Stock outstanding starting on January 1, 2025. The five percent evergreen provision resulted in an additional 12,588 shares of Common Stock issuable pursuant to the 2021 Plan as of January 1, 2025. 15 Stock awards may be granted at an exercise price per share of not less than 100% of the fair market value at the date of grant. Stock awards granted are exercisable over a maximum term of 10 years from the date of grant and generally vest over a period of four years for employees and one year for directors of the Company’s Board and consultants. As of June 30, 2025, there remain 13 shares reserved for issuance under the 2021 Plan, as amended. Fair Value Measurement The Company uses the Black-Scholes option valuation model, which requires the use of highly subjective assumptions, to determine the fair value of stock-based awards. The fair value of each employee stock option is estimated on the grant date under the fair value method using the Black-Scholes model. The estimated fair value of each stock option is then expensed over the requisite service period, which is generally the vesting period. The assumptions and estimates that the Company uses in the Black-Scholes model are as follows: ● Fair Value of Common Stock. The fair value of Common Stock is measured as the Company’s closing price of Common Stock on the date of grant. ● Risk-Free Interest Rate. The Company bases the risk-free interest rate used in the Black-Scholes valuation model on the implied yield available on U.S. Treasury zero-coupon issues with a term equivalent to that of the expected term of the options. ● Expected Term. The expected term represents the period that the Company’s stock-based awards are expected to be outstanding, which is calculated using the simplified method for stock-based awards granted to employees, as the Company has insufficient historical information to provide a basis for an estimate. The simplified method calculates the expected term as the average of the vesting term plus the contractual life of the options. As permitted under ASC 718, the Company has elected to use the contractual term as the expected term for certain non-employee awards, on an award-by-award basis. ● Volatility. The Company determines the price volatility based on the historical volatilities of industry peers as it has limited trading history for its Common Stock price. Industry peers consist of several public companies in the biotechnology industry with comparable characteristics, including clinical trials progress and therapeutic indications. ● Dividend Yield. The expected dividend assumption is based on the Company’s current expectations about its anticipated dividend policy. To date, the Company has not declared any dividends to common shareholders and, therefore, the Company has used an expected dividend yield of zero. The Company granted stock options in January 2025 and 2024. There were no stock option grants during the second quarter of 2025 or 2024. The following table presents the weighted-average assumptions used for stock options granted during the following periods: Schedule of Weighted Average Assumptions used for Stock Options 2025 2024 Six Months Ended June 30, 2025 2024 Grant date fair value $ 11.59 $ 91.50 Risk-free interest rate 4.65 % 4.0 % Dividend yield 0.00 % 0.00 % Expected life in years 5.9 5.9 Expected volatility 110 % 110 % 16 Stock-based Compensation Expense In general, stock-based compensation is allocated to research and development expense or general and administrative expense according to the classification of cash compensation paid to the employee, director, or consultant to whom the stock award was granted. The following table summarizes the total stock-based compensation expense related to stock options included in the Company’s statements of operations: Schedule of Stock Based Compensation Expense 2025 2024 2025 2024 Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Research and development $ 8,100 $ 4,623 $ 15,720 $ 241,960 General and administrative 31,134 14,985 60,702 364,882 Total $ 39,234 $ 19,608 $ 76,422 $ 606,842 Stock-based compensation expense $ 39,234 $ 19,608 $ 76,422 $ 606,842 Stock Option Award Activity A summary of the Company’s 2021 Plan stock option activity is as follows: Schedule of Stock Option Activity Number of Options Outstanding Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in Years) Balance at December 31, 2024 5,227 $ 58.72 9.3 Options granted 15,250 13.80 - Options exercised - - - Options cancelled - - - Balance at June 30, 2025 20,477 $ 25.27 9.4 Options exercisable at June 30, 2025 4,592 $ 39.64 9.1 In January 2024, the Board unanimously approved to provide employees and directors of the Company the opportunity to cancel outstanding, out-of-the-money, stock options without consideration, in accordance with an option cancellation agreement. Accordingly, 674 of the 675 stock options outstanding as of December 31, 2023, were cancelled in February 2024. In accordance with accounting guidance provided in ASC 718, since the stock option cancellations were not accompanied by a concurrent grant, or offer to grant, a replacement award, any unrecognized compensation cost was recognized at the cancellation date. Accordingly, the Company recognized stock-based compensation expense of $ 568,372 resulting from the stock option cancellation during the first quarter of 2024. The aggregate intrinsic value of options outstanding and exercisable as of June 30, 2025, is calculated as the difference between the exercise price of the underlying options and the closing market price of the Company’s Common Stock on June 30, 2025, which was $ 5.85 per share. The intrinsic value of options outstanding and exercisable as of June 30, 2025, was zero . As of June 30, 2025, total unrecognized compensation cost related to stock options was approximately $ 0.3 million and the weighted average period over which this cost is expected to be recognized is 2.7 years. 17 6. Commitments and Contingencies Clinical Trials In March 2025, the Company announced positive topline results for its XYNGARI™ Phase 3 STAR-1 clinical trial. The total contract amount with the clinical research organization was approximately $ 7.2 million, which extended from the fourth quarter of 2023 into the second quarter of 2025. During the six months ended June 30, 2025, the Company recognized $ 0.7 million in research and development expense for the STAR-1 clinical trial. During the three and six months ended June 30, 2024, the Company recognized $ 1.6 million and $ 2.4 million, respectively, in research and development expense for the STAR-1 clinical trial. The STAR-1 clinical trial is completed, and no further expenses are expected to be incurred. Supplier Agreement As a result of Russia’s invasion of Ukraine, the United States, the United Kingdom, and the European Union governments, among others, have developed coordinated sanctions and export-control measure packages against Russian individuals and entities. The Company is currently a party to an exclusive supply agreement for the supply of the Spongilla raw material used in XYNGARI™ and DMT410 product candidates. The counterparty to this supply agreement is a Russian entity. The imposition of enhanced export controls and economic sanctions on transactions with Russia and Russian entities by the United States, the United Kingdom, and/or the European Union could prevent the Company from performing under this existing contract or any future contract it may enter or may prevent the Company from remitting payment for raw material purchased from the Company’s supplier. The Company has received multiple shipments of raw material from its supplier subsequent to the implementation of export controls and sanctions, containing additional quantities of Spongilla raw material, which will provide the Company with sufficient quantities of Spongilla to initiate and complete two Phase 3 studies in moderate-to-severe acne and support filing a new drug application for XYNGARI™ in acne upon the successful completion of two Phase 3 studies. Depending on the extent and breadth of new sanctions or export controls that may be imposed against Russia, otherwise or as a result of the impact of the war in Ukraine, it is possible that the Company’s ability to obtain additional supply of the Spongilla raw material used in XYNGARI™ and DMT410 product candidates could be negatively impacted, which could adversely affect its business, results of operations, and financial condition. License Agreements On March 31, 2017, the Company entered into a license agreement, as amended (the “License Agreement”) with Villani, Inc. whereby Villani has granted the Company an exclusive, sub-licensable, royalty-bearing license (the “License”) under the Licensed Patents (as defined in the License Agreement), to formulate, develop, seek regulatory approval for, make or sell products that contain Spongilla lacustris (alone or in combination with other active or inactive ingredients) for the treatment of diseases, disorders and conditions of the skin, including but not limited to acne, rosacea, psoriasis, atopic dermatitis, seborrheic dermatitis, actinic keratosis and eczema that were developed using certain licensed know-how (“Licensed Products”). The Company is responsible for the development (including manufacturing, packaging, non-clinical studies, clinical trials and obtaining regulatory approval and commercialization (including marketing, promotion, distribution, etc.)) for all Licensed Products. The original License Agreement was amended in 2019, and pursuant to the amended License Agreement, the Company was required to make future milestone payments to Villani in an aggregate amount of up to $ 20.25 million upon the achievement of specified development and sales milestones, payable in cash or in equity, at the option of Villani, as well as single-digit royalty payments on net sales. On July 30, 2021, the Company further amended the License Agreement in the Second Amendment to the License and Settlement Agreement (the “Second Amendment”). Pursuant to the Second Amendment, the Company is required to make future milestone payments to Villani in an aggregate amount of up to $ 40.5 million upon the achievement of specified development and sales milestones, payable in cash or in equity, at the option of Villani, as well as single-digit royalty payments on net sales. The Second Amendment includes customary terms relating to, among others, indemnification, intellectual property protection, confidentiality, remedies, and warranties. As of June 30, 2025, the Company evaluated the likelihood of the Company achieving the specified milestones and determined that the likelihood is not yet probable and as such no accrual of these payments is required as of June 30, 2025. 18 Collaboration Agreement On January 17, 2025, the Company entered into a Clinical Trial Collaboration Agreement (the “Clinical Trial Agreement”) with Revance Therapeutics, Inc. (“Revance”), pursuant to which the Company and Revance intend to conduct a multi-center clinical trial (the “Trial”) to evaluate the topical application of XYNGARI TM , the Company’s topical Spongilla powder (formerly referred to as DMT310), with Daxxify (daxibotulinumtoxinA-lanm), Revance’s botulinum toxin type A. Pursuant to the terms of the Clinical Trial Agreement, Revance has granted the Company a non-exclusive, worldwide, non-transferable, royalty-free license, with a right to sublicense (subject to limitations), to use certain Revance intellectual property, solely as necessary or useful for the Company to conduct the trial under the Clinical Trial Agreement. The Company has granted Revance a similar license to use XYNGARI TM and other compound(s) under the Clinical Trial Agreement. The Clinical Trial Agreement will terminate upon completion of the Trial, the delivery of the data resulting from the Trial and the completion of any statistical analyses of the data resulting from the Trial. Either party may terminate the Clinical Trial Agreement upon a material breach by the other party that remains uncured following 30 days after the date of written notice of such breach. In addition, either party may terminate the Clinical Trial Agreement immediately upon written notice if such party reasonably deems it necessary in order to protect the safety, health or welfare of subjects enrolled in the Trial. The Company has agreed to sponsor, conduct, and fund the Phase 2a clinical trial. As of June 30, 2025, the Company has not incurred any expenses related to the Revance Clinical Trial Agreement. Registration Rights Agreement In connection with the January 2025 PIPE (see Note 4), the Company entered into a Registration Rights Agreement with the purchasers, dated as of January 21, 2025 (the “Registration Rights Agreement”). The Registration Rights Agreement provides that the Company shall file a registration statement covering the resale of all of the registrable securities (as defined in the Registration Rights Agreement) with the SEC. The registration statement on Form S-3 required under the Registration Rights Agreement was filed with the SEC on January 30, 2025, and became effective on February 5, 2025. Upon the occurrence of any Event (as defined in the Registration Rights Agreement), which, among others, prohibits the purchasers from reselling the securities for more than ten consecutive calendar days or more than an aggregate of fifteen calendar days during any 12-month period, and should the registration statement cease to remain continuously effective, the Company would be obligated to pay to each purchaser, on each monthly anniversary of each such Event, an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 2.0% multiplied by the aggregate subscription amount paid by such purchaser in the Private Placement, up to a maximum of 12% of the aggregate subscription amount. As of June 30, 2025, the Company determined that the likelihood of the Company incurring liquidated damages pursuant to the Registration Rights Agreement is remote, and as such, no accrual of these payments is required as of June 30, 2025. Legal Proceedings In the normal course of business, the Company may be involved in legal proceedings or threatened legal proceedings. The Company is not a party to any legal proceedings or aware of any threatened legal proceedings which are expected to have a material adverse effect on its financial condition, results of operations or liquidity. 7. Segment Information Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company and the Company’s chief operating decision maker view the Company’s operations and manage its business in one operating segment, which is the business of identifying, developing, and commercializing pharmaceutical products for the treatment of medical and aesthetic skin conditions and diseases. The CODM, who is the Chief Executive Officer (“CEO”), President, and Chairman of the Board, manages and allocates resources to the operations of the Company on an entity-wide basis. The Company’s measure of segment profit or loss is net loss. Managing and allocating resources on an entity-wide basis enables the CEO to assess the overall level of resources available and how to best deploy these resources across functions and research and development projects that are in line with the Company’s long-term company-wide strategic goals. Consistent with this decision-making process, the CEO uses financial information for purposes of evaluating performance, forecasting future period financial results, allocating resources, and setting incentive targets. Operating expenses are used to monitor budget versus actual results. The CODM does not review assets in evaluating the results of the Company, and therefore, such information is not presented. 19 The following table summarizes the segment’s financial information including the Company’s significant segment expenses: Schedule of Segment Financial Information 2025 2024 2025 2024 Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Research and development $ $ $ $ Clinical ( 20,676 ) 1,568,812 705,645 2,439,727 Nonclinical 166,478 91,631 311,179 212,034 Personnel related 472,033 348,659 882,152 958,082 Total research and development $ 617,835 $ 2,009,102 $ 1,898,976 $ 3,609,843 General and administrative 1,154,896 874,640 2,213,559 2,477,459 Interest income 71,638 54,636 107,855 123,934 Net loss $ ( 1,701,093 ) $ ( 2,829,106 ) $ ( 4,004,680 ) $ ( 5,963,368 ) 8. Related Party Transaction In connection with the January 2025 PIPE financing, certain Company insiders, including the Company’s CEO, Chief Financial Officer and certain members of the Company’s board of directors, participated in the offering. These Company insiders purchased an aggregate of 122,047 Common Stock and Warrants to purchase up to an aggregate of 122,047 shares of Common Stock, for an aggregate purchase price of $ 1.55 million. The purchase price per share and accompanying Warrant for these Company insiders was the same as paid by other investors in the January 2025 PIPE. 9. Subsequent Events Subsequent to June 30, 2025, at the Holder’s request, the Company delivered 43,800 shares of Common Stock which were held in abeyance, related to the March 2025 Warrant Inducement. Accordingly, 344,900 shares are held in abeyance, which are not issued and not outstanding. As previously reported, on May 14, 2025, the Company received a letter from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s Common Stock for the prior 30 consecutive business days, the Company was not in compliance with the requirement to maintain a minimum bid price of $ 1.00 per share for continued listing on Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). The Staff further indicated that, based upon the Company’s implementation of a reverse stock split within the prior one-year period, the Company’s securities were subject to delisting from the Nasdaq Capital Market and would be suspended at the opening of business on May 23, 2025. The Company timely requested a hearing before the Panel, which request stayed any further suspension or delisting action by Nasdaq, pending the ultimate conclusion of the hearing process. On July 2, 2025, the Panel notified the Company that it has granted Company’s request for an exception until August 14, 2025, to demonstrate compliance with the Minimum Bid Price Requirement. There can be no assurance that the Company will be able to regain compliance and maintain its listing on the Nasdaq Capital Market. If the Company does not regain compliance with the Minimum Bid Price Requirement, or if the Company fails to satisfy another Nasdaq requirement for continued listing, Nasdaq could provide notice that the Company’s securities will become subject to delisting. At the Company’s 2025 annual meeting of stockholders on July 15, 2025, the Company’s stockholders approved an amendment to its Amended and Restated Certificate of Incorporation to effect a reverse stock split of the issued and outstanding shares of the Company’s common stock at a specific ratio, ranging from one-for-two to one-for-thirty, with the exact ratio to be determined by the Company’s board of directors without further approval or authorization of the Company’s stockholders. On July 15, 2025, the Company’s board of directors set and approved a reverse split ratio of one-for-ten and authorized the Company’s management to effect the reverse stock split on August 1, 2025. The number of shares of the Company’s authorized common stock was not affected by the 2025 Reverse Stock Split and the par value of the Company’s common stock remained unchanged at $ 0.0001 per share. Except where disclosed, all amounts related to number of shares and per share amounts have been retrospectively adjusted in these financial statements to reflect the 2025 Reverse Stock Split. 20