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Item 9A. Controls and Procedures

2025-03-17 compared with 2024-03-21 · 923 added, 163 removed, 548 unchanged (66% of the section changed)

13 unchanged sentences

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework provided in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management concluded that our internal control over financial reporting were effective as of December 31, 2023.

Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2024.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the year ended December 31, 2023, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal controls over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter and year ended December 31, 2024, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

13 unchanged sentences

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders.

The following table sets forth certain information regarding our current executive officers and directors, as of March 1, 2025:

Serving in Position Since

President, Chief Executive Officer and Chairman

Senior Vice President, Chief Financial Officer

Christopher J.

Senior Vice President, Chief Development Officer

Maria Bedoya Toro Munera, Ph.D.

Senior Vice President, Regulatory Affairs & Quality Assurance

Brittany Bradrick

Lead Director

Andrew Sandler, M.D.

Kathleen Scott

Wendell Wierenga, Ph.D.

Executive Officers

Proehl, President, Chief Executive Officer, and Chairman

Proehl became a director and our President and Chief Executive Officer in December 2014 and became our Chairman in April 2021.

Proehl has more than 30 years of experience within the pharmaceutical industry and 21 years of experience as a chief executive officer.

From January 2002 until January 2014, Mr.

Proehl was President and CEO of Santarus, Inc., where he led the sale of Santarus, Inc.

to Salix Pharmaceuticals, Inc.

for $2.6 billion.

Prior to Santarus, Inc., Mr.

Proehl worked for Hoechst Marion Roussel, Inc.

for 14 years, where he served in various capacities, including VP of Global Marketing.

While at Hoechst, he was responsible for marketing products in multiple therapeutic areas, including cardiology, allergy/respiratory, immunology, and neurology.

Proehl holds a B.S.

in Education from State University of New York at Cortland, an M.A.

in Exercise Physiology from Wake Forest University, and an M.B.A.

from Rockhurst University.

Proehl currently serves as chairman of the board of one public company, Tenax Therapeutics, Inc.

Proehl was selected as an officer and director due to his leadership experience at other companies and his history of founding and operating specialty pharmaceutical companies.

Van Hoose, Senior Vice President, Chief Financial Officer

Van Hoose became our Senior Vice President and Chief Financial Officer in September 2021.

Van Hoose is a seasoned and collaborative professional with over 20 years of experience in the life science industry.

Prior to joining Dermata, from September 2020 to April 2021, Ms.

Van Hoose served as Chief Financial Officer of TEGA Therapeutics, Inc., a private biotechnology company.

Prior to TEGA, from November 2019 to April 2020, Ms.

Van Hoose served as the head of finance for Curzion Pharmaceuticals, Inc., a private, rare disease company, until its acquisition by Horizon Therapeutics plc in April 2020.

Van Hoose also served as head of finance at Avelas Biosciences, Inc., a clinical-stage biotechnology company from December 2017 to July 2019.

From September 2005 to February 2016, Ms.

Van Hoose held leadership positions of increasing responsibilities at Acadia Pharmaceuticals, Inc., including Senior Director of Finance and Corporate Controller.

Van Hoose began her career at Deloitte and is a licensed Certified Public Accountant (California inactive).

Van Hoose earned her B.S.

in Accounting at the University of Southern California and M.B.A.

at the University of California, Irvine.

Christopher J.

Nardo, Ph.D., Senior Vice President, Chief Development Officer

Nardo became our Senior Vice President and Chief Development Officer in July 2022, and previously was our Senior Vice President of Development beginning in June 2015.

Nardo has more than 25 years’ experience in the biopharmaceutical industry and has successfully filed more than a dozen marketing applications in the United States, Europe, Canada, Australia and Japan.

His experience spans pre-clinical work through Phase 4 drug development of both small molecules and biologics for a broad range of therapeutic areas including:

dermatology, ophthalmology, oncology, antiviral, urology, auto-immune and cardiology.

From 2010 to 2015, Dr.

Nardo was Senior Director of Clinical Development at Allergan where he had responsibility for the conduct, submission, and approval of several global drug development programs, involving multiple dermatology assets, which included several new indications for BOTOX®.

From 2005 to 2010, Dr.

Nardo served as Vice President of Clinical Operations at Spectrum Pharmaceuticals where he worked on developing new therapeutic opportunities in oncology and urology, including Fusilev® and Zevalin®.

Prior to joining Spectrum, Dr.

Nardo held several clinical development positions with increasing responsibility at CancerVax Corporation, The Immune Response Corporation, and Procter and Gamble.

Nardo earned a Ph.D.

in Epidemiology from the University of North Carolina at Chapel Hill, an M.P.H.

from San Diego State University, and a B.S.

(Biology) from Loyola Marymount University.

Maria Bedoya Toro Munera, Ph.D., Senior Vice President, Regulatory Affairs & Quality Assurance

Bedoya Toro Munera became our Senior Vice President of Regulatory Affairs and Quality Assurance in January 2016.

Bedoya Toro Munera has more than 30 years of experience in regulatory compliance, quality control and quality assurance within the pharmaceutical industry.

From 2014 until its sale to Celgene in 2015, Dr.

Bedoya Toro Munera served as Senior Vice President, Regulatory Affairs and Quality Assurance at Receptos Inc.

Prior to Receptos, Inc., Dr.

Bedoya Toro Munera served as Senior Vice President of Regulatory Affairs and Quality Assurance at Santarus, Inc.

from June 2007 to January 2014.

She previously served as Senior Director Regulatory Affairs at Eisai Medical Research Inc., from November 2006 to May 2007, moving to Eisai from Ligand Pharmaceuticals, Inc.

when Ligand divested their oncology products to Eisai in November 2006.

Bedoya Toro Munera worked as Senior Director Global Regulatory Affairs and Compliance at Ligand from 2003 to 2006.

From 2000 to 2003, she served as Director Global Regulatory Affairs at Baxter Hyland Immuno.

From 1998 to 2000, Dr.

Bedoya Toro Munera worked at BASF Bioresearch Corporation as Director, Regulatory Affairs/Quality, and from 1996 to 1998, she worked as Director, Quality Assurance and Regulatory Compliance at Amylin Pharmaceuticals.

From 1988 to 1996, Dr.

Bedoya Toro Munera worked at Rhone-Poulenc Rorer in a number of increasingly responsible positions in regulatory compliance, quality assurance, quality control and compliance.

Bedoya Toro Munera holds an M.B.A.

from the University of Chicago, and a Ph.D.

in bio-analytical chemistry from Ohio University.

In addition, she has a M.A.

in bio-analytical chemistry and a B.S.

in chemistry from Western Michigan University.

Non-Employee Directors

Brittany Bradrick, Director

Bradrick became a director in January 2022.

Bradrick has served as the Chief Operating Officer and Chief Financial Officer of Neurelis, Inc.

since September 2022 and the Chief Financial Officer since October 2021.

Prior to joining Neurelis, Ms.

Bradrick was Chief Operating Officer and Chief Financial Officer at ViaCyte Inc.

from June 2020 to September 2021.

Prior to Viacyte, Ms.

Bradrick served in strategy and corporate development positions at Insulet Corporation as Vice President, Strategy & Corporate Development from 2016 to 2020 and as Director, Business Development & Alliance Management at Abbott Laboratories (NYSE:

Bradrick was appointed as a director to Spectrum Pharmaceuticals, Inc.

SPPI) on May 4, 2022 and was appointed as the chairperson to the audit committee on May 25, 2022.

Prior to these positions, Ms.

Bradrick was an investment banker for the life science industry at Piper Jaffray, Credit Suisse, and Chase Securities from 1997 to 2007.

Bradrick began her career as a Federal Reserve Bank Examiner.

Bradrick holds an M.B.A.

from the Johnson Graduate School of Management at Cornell University and a B.S.

in Business Administration from the University of Missouri.

Bradrick was selected as a director due to her extensive industry and financial experience.

Mary Fisher, Director

Fisher became a director upon the effectiveness of our initial public offering in August 2021.

Fisher currently serves as Chief Executive Officer, Chair, and a Director at Colorescience Inc., a science-based skincare company and former division of SkinMedica, Inc.

While at SkinMedica, Ms.

Fisher served as Chief Executive Officer from April 2008 to December 2012, where she led the successful sale of the company to Allergan, Inc.

for $350 million.

Prior to joining SkinMedica, from June 2000 to July 2007, Ms.

Fisher served as the Chief Operating Officer of Acorda Therapeutics, Inc.

She previously held management and leadership positions at Cephalon, Inc.

from March 1994 to March 1999, Immunex Corp.

from November 1990 to March 1994, and Boehringer Ingelheim from 1981 to 1990.

She previously served on the Board of Directors at ZELTIQ Aesthetics, Inc.

from September 2012 to April 2017, and Ovascience from June 2013 to August 2018.

Fisher currently sits on the Board of AVAVA, a position she has held since December 2024.

Fisher was selected as a director due to her extensive business and professional experience.

David Hale, Lead Director

Hale is our co-founder and has served as a member of our board of directors since December 2014, and as Lead Director since April 2021.

Hale is Chairman and CEO of Hale BioPharma Ventures, LLC a private company focused on the formation and development of biotechnology, specialty pharma, diagnostic and medical device companies.

Hale is a serial entrepreneur who has been involved in the formation and development of a number of successful biomedical companies.

He served as the Chairman of Santarus, Inc., a specialty biopharmaceutical company, since 2004 and a member of Santarus’ board since 2000, prior to its acquisition by Salix Pharmaceuticals, Ltd.

in 2014, and as Chairman of SkinMedica, Inc., prior to its sale to Allergan in 2012, Micromet, Inc., prior to its sale to Amgen Inc.

in 2012, Somaxon Pharmaceuticals, Inc., prior to its sale to Pernix Therapeutics Holdings Inc.

in 2013, Crisi Medical Systems, Inc., prior to its sale to Becton Dickinson & Company in 2015, and Agility Clinical, Inc.

prior to its sale to Precision Medicine Inc.

Hale is a co-founder and currently serves as Chairman of Oncternal Therapeutics, Inc.

ONCT), since 2013.

Hale is also a co-founder and currently serves as a director of Neurelis, Inc., a private company, and is a co-founder of Zerigo Health, Inc., Cadence, Inc., Evoke Pharma, Inc., Elevation Pharma, Inc., and Zogenix, Inc.

Hale is a co-founder and serves on the Board of Directors of BIOCOM and CONNECT and is a former member of the Board of the Biotechnology Innovation Organization (BIO), and the Biotechnology Institute.

He has served on the Board of Rady Children’s Hospital since 1986, including Chairman of the Board from 2011 to 2015, and is founder and Chairman of the Rady Children’s Institute of Genomic Medicine.

He is a member of the UCSD Rady School of Management Dean’s Advisory Council, a member of the board of the University of San Diego, and is a former Director of the San Diego Economic Development Corporation.

Hale was selected as a director due to his industry and executive business experience.

Mento, Ph.D., Director

Mento became a director upon the effectiveness of our initial public offering in August 2021.

Mento served as President and Chief Executive Officer of Histogen Inc.

from March 2023 until September 2023.

He assumed these positions in March of 2023.

From November 2021 to October 2023, Dr.

Mento served as Executive Chairman and Interim President and CEO of Histogen Inc.

Since July 2005, Dr.

Mento has served as a director on the board of directors of Conatus Pharmaceuticals, Inc.

and from July 2005 to December 2012, Dr.

Mento served as chairman of Conatus’ board of directors.

Mento was a co-founder of Conatus and served as its President and Chief Executive Officer from July 2005 until its merger with Histogen Inc.

Mento has over 35 years of combined experience in the biotechnology and pharmaceutical industries.

From 1997 to 2005, Dr.

Mento was President, Chief Executive Officer and a member of the board of directors of Idun Pharmaceuticals, Inc.

Mento guided Idun during its transition from a discovery focused organization to a drug development company with multiple products in or near human clinical testing.

In April 2005, Idun was sold to Pfizer Inc.

Previously, Dr.

Mento served as President of Chiron Viagene, Inc.

(subsequently Chiron Technologies, Center for Gene Therapy) from 1995 to 1997, and Vice President of Chiron Corporation from 1995 to 1997.

Mento was Vice President of research and development at Viagene from 1992 to 1995.

Prior to Viagene, Dr.

Mento held various positions at American Cyanamid Company from 1982 to 1992, including as Director of Viral Vaccine Research and Development at Lederle-Praxis Biologicals, a business unit of American Cyanamid.

Mento currently serves on the board of directors of Histogen, BIOCOM California and various academic and charitable organizations.

He previously served on the boards of Biotechnology Innovation Organization, BIO Emerging Companies Section Governing Board, BIO Health Section Governing Board, and Sangamo Biosciences, Inc.

Mento holds a Ph.D.

and M.S., both in Microbiology, from Rutgers University, and a B.A.

in Microbiology from Rutgers College.

Mento was selected as a director due to his experience in the biotechnology and pharmaceutical industries, including executive leadership experience at several pharmaceutical companies.

Andrew Sandler, M.D., Director

Sandler became a director upon the effectiveness of our initial public offering in August 2021.

Sandler served as Chief Medical Officer of Alpine Immune Sciences, Inc.

ALPN) from August 2022 until June 2024.

From September 2017 until June 2022, Dr.

Sandler served as Chief Medical Officer at Kiadis Pharma N.V.

Prior to Kiadis, Dr.

Sandler was Senior Vice President, Medical Affairs at Medivation (acquired by Pfizer) from January 2016 to June 2017.

Sandler held various additional roles including Chief Medical Officer and Seattle Site Head at Dendreon Pharmaceuticals from October 2010 to April 2015.

Prior to Dendreon, Dr.

Sandler was Chief Medical Officer at Spectrum Pharmaceuticals from September 2008 to April 2010, and Vice President, Head of Global Medical Affairs, Oncology for Bayer Healthcare Pharmaceuticals from February 2008 to February 2010.

Sandler also held various positions at Berlex Oncology/Schering AG from October 2003 to August 2008, and Seagen, Inc.

from October 1999 to June 2003.

Sandler was a Fellow in Hematology/Medical Oncology at the University of California, San Francisco (UCSF) from July 1994 to June 1996.

He did his Internship, Residency, and Chief Residency at Mt.

Sinai Hospital in New York, NY from July 1990 to June 1994.

Sandler attended and received his MD degree from Mount Sinai School of Medicine (Icahn School of Medicine at Mt.

Sinai) from July 1986 to June 1990.

In addition, he graduated from the University of Rochester with a B.S.

degree in Neuroscience in 1986.

Sandler was selected as a director due to his experience in the biotechnology and pharmaceutical industries as well as his leadership experience.

Kathleen Scott, Director

Scott became a director upon the effectiveness of our initial public offering in August 2021.

Scott is currently the Chief Financial Officer of ARS Pharmaceuticals, Inc., a publicly traded biotech company (Nasdaq:

Prior to ARS Pharmaceuticals, Ms.

Scott was the Chief Financial Officer of Neurana Pharmaceuticals from January 2017 to March 2022, Recros Medica from August 2014 to April 2021, Adigica Health from February 2016 to March 2021, Clarify Medical from August 2014 to December 2016, Oncternal Therapeutics from March 2016 to May 2016, MDRejuvena from August 2014 to August 2016, and BioSurplus from March 2010 to November 2014.

Prior to BioSurplus, Ms.

Scott was a Partner at RA Capital Advisors, a San Diego private investment bank providing financial advisory services.

Scott spent over 15 years with RA Capital Advisors, from December 1994 to July 2010, completing billions of dollars of mergers, acquisitions, divestitures, and restructurings for a broad range of corporate clients.

Scott started her career as an auditor in Arthur Andersen’s San Diego office, focusing on both public and private clients.

Scott was the past board chair and is a current director of the YMCA of San Diego County.

In September of 2023 Ms.

Scott became a director of NKGen Biotech, Inc.

NKGN) and is currently the chair of its audit and compensation committees.

Scott is a CPA and CFA charter holder and graduated magna cum laude from UCLA with a B.S.

in economics/business.

Scott was selected as a director due to her extensive industry and financial experience.

Wendell Wierenga, Ph.D., Director

Wierenga became a director in September 2016.

From June 2011 to January 2014, Dr.

Wierenga served as Executive Vice President, Research and Development at Santarus, Inc., a public biopharmaceutical company that was acquired by Salix Pharmaceuticals, Inc.

in January 2014.

From July 2004 to May 2011, Dr.

Wierenga served as Executive Vice President, Research and Development at Ambit Biosciences Corporation and Neurocrine Biosciences, Inc.

Prior to Neurocrine, from August 1999 to June 2004 he served as the Chief Executive Officer for Syrrx, Inc.

where he built an early-stage biotech company which was acquired by Takeda Pharmaceutical Company Limited in 2005.

From 1990 to 2000, Dr.

He also was Sr.

VP of Research at Parke Davis/Warner Lambert, when it was acquired by Pfizer Inc.

and prior to that held various positions in research at Upjohn Pharmaceuticals from 1974-1990.

Wierenga earned his Ph.D.

in chemistry from Stanford University and his B.A.

from Hope College in Holland, Michigan.

Wierenga is currently the chair of the Board of Directors of Crinetics Pharmaceuticals, Inc.

CRNX) and is also a member of the Board of Directors of Cytokinetics, Inc.

He was most recently was on the Board of Directors for Anacor Pharmaceuticals Inc.

and XenoPort, Inc.

prior to their sales to Pfizer Inc.

and Arbor Pharmaceuticals, LLC, respectively.

Wierenga was selected as a director due to his industry and executive business experience.

Classified Board of Directors

In accordance with the terms of our Certificate of Incorporation and our amended and restated bylaws, as amended, (“ Bylaws ”) our Board is divided into three classes, Class I, Class II, and Class III, with each class serving staggered three-year terms.

Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires.

Our directors are divided among the three classes as follows:

The Class I directors are Andrew Sandler, M.D., and Mary Fisher;

their terms will expire at the 2025 annual meeting of stockholders.

The Class II directors are David Hale, Brittany Bradrick, and Steven J.

Mento, Ph.D.;

their terms will expire at the 2026 annual meeting of stockholders.

The Class III directors are Gerald T.

Proehl, Wendell Wierenga, Ph.D., and Kathleen Scott;

their terms expire at the 2027 annual meeting of stockholders.

We expect that any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

The division of our Board into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control.

Our Certificate of Incorporation and Bylaws provide that the authorized number of directors may be changed only by resolution of our Board.

Our Certificate of Incorporation and Bylaws also provide that our directors may be removed only for cause, and that any vacancy on our Board, including a vacancy resulting from an enlargement of our Board, may be filled only by vote of a majority of our directors then in office, even if less than a quorum, or by a sole remaining director.

Family Relationships

There are no family relationships among any of our directors or executive officers.

Code of Business Conduct and Ethics

We have adopted a written code of business conduct and ethics that applies to our employees, officers and directors.

A current copy of the code is posted on the Corporate Governance section of our website, which is located at www.dermatarx.com.

We intend to disclose future amendments to certain provisions of our code of business conduct and ethics, or waivers of such provisions applicable to any principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and our directors, on our website identified above or in filings with the SEC.

Our Code of Business Conduct and Ethics is a “code of ethics,” as defined in Item 406(b) of Regulation S-K.

We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our website.

The information contained in, or that can be accessed through, our website is not incorporated by reference and is not part of this Form 10-K.

Insider trading arrangements and policies.

We have adopted an insider trading policy that governs the purchase, sale, and/or other transactions of our securities by our directors, officers and employees.

A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

In addition, with regard to the Company’s trading in its own securities, it is the Company’s policy to comply with the federal securities laws and the applicable exchange listing requirements in all respects.

Board Committees

Our Board has established an audit committee (“ Audit Committee ”), a compensation committee (“ Compensation Committee ”), and a Nominating and Corporate Governance Committee (“ Nominating and Corporate Governance Committee ”) Our Board may establish other committees to facilitate the management of our business.

The composition and functions of each committee named above are described below.

Members serve on these committees until their resignation or until otherwise determined by our Board.

Each of these committees operate under a charter that has been approved by our Board, which are available on our website.

Audit Committee.

Our Audit Committee consists of Kathleen Scott, Mary Fisher, and Brittany Bradrick, with Ms.

Scott serving as the Chairwoman of the Audit Committee.

Our Board has determined that the three directors currently serving on our Audit Committee are independent within the meaning of the Nasdaq Marketplace Rules and Rule 10A-3 under the Exchange Act.

In addition, our Board has determined that Kathleen Scott qualifies as an audit committee financial expert within the meaning of SEC regulations and the Nasdaq Marketplace Rules.

Each of the members of the Audit Committee meets the requirements for financial literacy under the applicable rules and regulations of the SEC and Nasdaq.

The Audit Committee’s responsibilities include:

appointing, approving the compensation of, and assessing the qualifications, performance and independence of our independent registered public accounting firm, and in particular the provision of additional services to each entity covered by the Audit Committee;

pre-approving audit and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;

reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us;

monitoring the audit of our financial statements;

setting policies for our hiring of employees or former employees of our independent registered public accounting firm;

reviewing our significant risks or exposures and assessing the steps that management has taken or should take to monitor and minimize such risks or exposures;

reviewing the adequacy of our internal control over financial reporting, including information system controls and security;

monitoring the effectiveness of our systems of internal control, internal audit and risk management for each entity covered by the Audit Committee;

establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns;

· recommending, based upon the audit committee’s review and discussions with management and the independent registered public accounting firm, whether our audited financial statements shall be included in our Annual Report on Form 10-K;

· monitoring our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;

· preparing the Audit Committee report required by the rules of the SEC to be included in our annual proxy statement;

· reviewing all related party transactions for potential conflict of interest situations and approving all such transactions;

· reviewing and discussing with management and our independent registered public accounting firm our earnings releases and scripts.

Our Audit Committee operates pursuant to a charter that is available on our website at https://ir.dermatarx.com/ under the Governance section.

Compensation Committee.

Our Compensation Committee consists of Wendell Wierenga, Ph.D., David Hale, and Andrew Sandler, M.D., with Dr.

Wierenga serving as the Chairman of the Compensation Committee.

Our Board has determined that the three directors currently serving on our Compensation Committee are independent under the listing standards, are “non-employee directors” as defined in rule 16b-3 promulgated under the Exchange Act and are “outside directors” as that term is defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “ Code ”).

The Compensation Committee’s responsibilities include:

reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, the officers who report directly to the chief executive officer and all officers who are “insiders” subject to Section 16 of the Exchange Act;

evaluating the performance of our chief executive officer and such other officers in light of such corporate goals and objectives and determining and approving, or recommending to our Board for approval, the compensation of our chief executive officer and such other officers;

appointing, compensating, and overseeing the work of any compensation consultant, legal counsel or other advisor retained by the compensation committee;

conducting the independence assessment outlined in the listing standards of the Nasdaq Capital Market with respect to any compensation consultant, legal counsel or other advisor retained by the compensation committee;

annually reviewing and reassessing the adequacy of the committee charter;

reviewing and establishing our overall management compensation and our compensation philosophy and policy;

overseeing and administering our equity compensation and other compensatory plans;

reviewing and approving our equity and incentive policies and procedures for the grant of equity-based awards and approving the grant of such equity-based awards;

reviewing and making recommendations to our Board with respect to non-employee director compensation;

producing a report, if required, on executive compensation to be included in our annual proxy statement or Annual Report on Form 10-K.

Our Compensation Committee operates pursuant to a charter that is available on our website at https://ir.dermatarx.com/ under the Governance section.

Nominating and Corporate Governance Committee.

Our Nominating and Corporate Governance Committee consists of David Hale, Steven Mento, Ph.D., and Andrew Sandler, M.D., with Mr.

Hale serving as the Chairman of the Nominating and Corporate Governance Committee.

All members of the Nominating and Corporate Governance Committee are independent directors as defined under the Nasdaq listing standards.

The nominating and corporate governance committee’s responsibilities include:

establishing procedures for identifying and evaluating board of director candidates, including nominees recommended by stockholder;

identifying individuals qualified to become members of our Board;

recommending to our Board the persons to be nominated for election as directors and to each of our Board’s committees;

developing and recommending to our Board a set of corporate governance principles;

articulating to each director what is expected, including reference to the corporate governance principles and directors’ duties and responsibilities;

reviewing and recommending to our Board practices and policies with respect to directors;

reviewing and recommending to our Board the functions, duties and compositions of the committees of our Board;

reviewing and assessing the adequacy of the committee charter and submitting any changes to our Board for approval;

considering and reporting to our Board any questions of possible conflicts of interest of Board members;

providing for new director orientation and continuing education for existing directors on a periodic basis;

performing an evaluation of the performance of the committee;

overseeing the evaluation of our Board.

Our Nominating and Corporate Governance Committee operates pursuant to a charter that is available on our website at https://ir.dermatarx.com/ under the Governance section.

EXECUTIVE COMPENSATION

Information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders.

Summary Compensation Table

The following table presents information regarding the total compensation awarded to, earned by, or paid to our chief executive officer, chief financial officer and the most highly-compensated executive officer (other than the chief executive officer and chief financial officer) who were serving as executive officers as of December 31, 2024 and December 31, 2023 for services rendered in all capacities to us for the years ended December 31, 2024 and December 31, 2023.

These individuals are our “Named Executive Officers” for 2024.

We had no other named executive officers in 2024 and 2023.

Name and Principal Position

$ 117,600 (1)

President and Chief Executive Officer

Senior Vice President, Chief Financial Officer

Christopher J.

Senior Vice President, Chief Development Officer

Bonuses earned for 2024 will be paid in 2025.

Bonuses earned for 2023 were paid in January 2024.

In accordance with SEC rules, this column reflects the aggregate grant date fair value of the stock option awards granted during 2024 and 2023.

These amounts have been computed in accordance with FASB ASC Topic 718.

Assumptions used in the calculation of this amount are described in Note 7 to our financial statements.

This amount does not reflect the actual economic value that will be realized by the executives upon the vesting of the stock options, the exercise of the stock options, or the sale of the common stock underlying such stock options.

These option awards outstanding as of December 31, 2023, were cancelled for no consideration in February 2024.

The Company did not award any replacement stock options.

Includes the option awards outstanding as of December 31, 2023, that were cancelled for no consideration in February 2024.

Employment Agreements with Our Named Executive Officers

We are party to employment agreements with each of our Named Executive Officers listed below.

Each of these Named Executive Officers are currently party to customary confidentiality and intellectual property assignment agreements with us.

On December 6, 2021, we entered into an employment agreement with Mr.

Proehl (the “ Proehl Agreement ”).

Under the terms of the Proehl Agreement, Mr.

Proehl holds the position of President and Chief Executive Officer and is due a base salary of $350,000 annually.

However, starting in July 2022, in an effort to preserve the Company’s cash, Mr.

Proehl voluntarily agreed to a base salary of $280,000, which the Compensation Committee approved and has not been increased since 2022.

In addition, Mr.

Proehl is eligible to receive an annual bonus, with a target amount equal to 50% of Mr.

Proehl’s base salary.

The actual amount of each annual bonus will be based upon the level of achievement of certain of our corporate objectives and Mr.

Proehl’s individual objectives, in each case, as established by the Company and Mr.

Proehl for the calendar year with respect to which the annual bonus relates.

The determination of the level of achievement of the corporate objectives and Mr.

Proehl’s individual performance objectives for a year shall be made by us in our reasonable discretion.

In addition, Mr.

Proehl is eligible to receive, from time to time, equity awards under our existing equity incentive plan, or any other equity incentive plan we may adopt in the future, and the terms and conditions of such awards, if any, will be determined by our board of directors or the Compensation Committee, in their discretion.

Proehl will also be eligible to participate in any executive benefit plan or program we adopt.

We may terminate Mr.

Proehl’s employment at any time without Cause (as that term is defined in the Proehl Agreement) upon four weeks prior written notice to Mr.

Proehl may terminate his employment for Good Reason (as that term is defined in the Proehl Agreement) upon 60 days written notice.

Proehl’s employment is terminated without Cause or for Good Reason, Mr.

Proehl will be entitled to receive (i) his earned but unpaid base salary through the final day of his employment, (ii) expenses reimbursable under the Proehl Agreement incurred on or prior to the last day of his employment, (iii) any amounts or benefits that are vested amounts or benefits that Mr.

Proehl is entitled to receive under any of our equity compensation plans (clauses (i) through (iii) collectively, the Accrued Obligations), (iv) severance payments equal to 12 months of Mr.

Proehl’s base salary (to be paid in a lump sum on the next regular payroll date within 60 days of Mr.

Proehl’s termination), (v) a pro-rated payment equal to the annual bonus the Board determines is due, and (vi) if elected, we will reimburse Mr.

Proehl for certain COBRA health benefits for 12 months.

Notwithstanding the above, if Mr.

Proehl’s employment is terminated without Cause or he resigns for Good Reason either within three months immediately preceding or within one year after a Change of Control (as defined in the 2021 Plan), Mr.

Proehl will receive (i) the Accrued Obligations, (ii) severance payments equal to 18 months of Mr.

Proehl’s base salary (to be paid in a lump sum on the next regular payroll date within 60 days of Mr.

Proehl’s termination), (iii) the targeted annual bonus amount the Board determines is due to Mr.

Proehl, (iv) if elected, we will reimburse Mr.

Proehl for certain COBRA health benefits for 18 months, and (v) Mr.

Proehl will be deemed to be fully vested in all of his outstanding equity awards as of the date of his termination.

Proehl’s employment is terminated with Cause or without Good Reason, he will be entitled to receive (i) his earned but unpaid base salary through the final day of his employment, (ii) expenses reimbursable under the employment agreement incurred on or prior to the last day of his employment, and (iii) any amounts or benefits that are vested amounts or benefits that Mr.

Proehl is entitled to receive under any of our equity compensation plans.

We may terminate Mr.

Proehl’s employment at any time for Cause upon written notice to Mr.

Proehl may voluntarily terminate his employment at any time without Good Reason upon four weeks prior written notice.

On November 19, 2021, we entered into an employment agreement with Ms.

Van Hoose, which was subsequently amended on January 1, 2022 (as amended, the “ Van Hoose Agreement ”).

Under the terms of the Van Hoose Agreement, she holds the position of Senior Vice President and Chief Financial Officer and receives a base salary of $328,500 annually.

In addition, Ms.

Van Hoose is eligible to receive an annual bonus, with a target amount equal to forty percent (40%) of Ms.

Van Hoose’s base salary.

The actual amount of each annual bonus will be based upon the level of achievement of our corporate objectives and Ms.

Van Hoose’s individual objectives, in each case, as established by us and Ms.

Van Hoose for the calendar year with respect to which the annual bonus relates.

The determination of the level of achievement of the corporate objectives and Ms.

Van Hoose’s individual performance objectives for a year shall be made by us in our reasonable discretion.

In addition, pursuant to the terms of her employment agreement, Ms.

Van Hoose is eligible to receive, from time to time, equity awards under our existing equity incentive plan, or any other equity incentive plan we may adopt in the future, and the terms and conditions of such awards, if any, will be determined by our board of directors or Compensation Committee, in their discretion.

Van Hoose is also eligible to participate in any executive benefit plan or program we adopt.

We may terminate Ms.

Van Hoose’s employment at any time without Cause (as that term is defined in the Van Hoose Agreement) upon two weeks prior written notice to Ms.

Van Hoose may terminate her employment for Good Reason (as that term is defined in the Van Hoose Agreement) upon 60 days written notice to us, upon which notice we have 30 days to cure the conditions that Ms.

Van Hoose considers to be Good Reason, subject to certain conditions set forth in her employment agreement.

Van Hoose’s employment is terminated without Cause or for Good Reason, Ms.

Van Hoose will be entitled to receive (i) the Accrued Obligations, (ii) severance payments equal to nine months of Ms.

Van Hoose’s base salary (to be paid in a lump sum on the next regular payroll date within 60 days of Ms.

Van Hoose’s termination), (iii) the targeted annual bonus amount the Board determines is due to Ms.

Van Hoose, and (iv) if elected, the Company will reimburse Ms.

Van Hoose for certain COBRA health benefits for nine months.

Notwithstanding the above, if Ms.

Van Hoose’s employment is terminated without Cause or she resigns for Good Reason either within three months immediately preceding or within one year after a Change of Control (as defined in the 2021 Plan), Ms.

Van Hoose will receive (i) the Accrued Obligations, (ii) severance payments equal to 12 months of Ms.

Van Hoose’s base salary (to be paid in a lump sum on the next regular payroll date within 60 days of Ms.

Van Hoose’s termination), (iii) the targeted annual bonus amount the Board determines is due to Ms.

Van Hoose, (iv) if elected, the Company will reimburse Ms.

Van Hoose for certain COBRA health benefits for 12 months, and (v) Ms.

Van Hoose will be deemed to be fully vested in all of her outstanding equity awards as of the date of her termination.

Van Hoose’s employment is terminated with Cause or without Good Reason, she is entitled to receive (i) her earned but unpaid base salary through the final day of her employment, (ii) expenses reimbursable under the employment agreement incurred on or prior to the last day of her employment, and (iii) any amounts or benefits that are vested amounts or benefits that Ms.

Van Hoose is entitled to receive under any of our equity compensation plans.

We may terminate Ms.

Van Hoose’s employment at any time for Cause upon written notice to Ms.

Van Hoose may voluntarily terminate her employment at any time without Good Reason upon two weeks prior written notice to us.

Christopher J.

On August 17, 2021, we entered into an employment agreement with Dr.

Nardo, which was subsequently amended on December 6, 2021, January 1, 2022, and July 1, 2022 (as amended, the “ Nardo Agreement ”).

Nardo holds the position of Senior Vice President, Chief Development Officer and receives a base salary of $349,500 annually.

In addition, Dr.

Nardo is eligible to receive an annual bonus, with a target amount equal to forty percent (40%) of Dr.

Nardo’s base salary.

The actual amount of each annual bonus will be based upon the level of achievement of our corporate objectives and Dr.

Nardo’s individual objectives, in each case, as established by us and Dr.

Nardo for the calendar year with respect to which the annual bonus relates.

The determination of the level of achievement of the corporate objectives and Dr.

Nardo’s individual performance objectives for a year shall be made by us in our reasonable discretion.

In addition, pursuant to the terms of his employment agreement, Dr.

Nardo is eligible to receive, from time to time, equity awards under our existing equity incentive plan, or any other equity incentive plan we may adopt in the future, and the terms and conditions of such awards, if any, will be determined by our board of directors or Compensation Committee, in their discretion.

Nardo is also eligible to participate in any executive benefit plan or program we adopt.

We may terminate Dr.

Nardo’s employment at any time without Cause (as that term is defined in the Nardo Agreement) upon two weeks prior written notice to Dr.

Nardo may terminate his employment for Good Reason (as that term is defined in the Nardo Agreement) upon 60 days written notice to us, upon which notice we have 30 days to cure the conditions that Dr.

Nardo considers to be Good Reason, subject to certain conditions set forth in his employment agreement.

Nardo’s employment is terminated without Cause or for Good Reason, Dr.

Nardo will be entitled to receive (i) the Accrued Obligations, (ii) severance payments equal to nine months of Dr.

Nardo’s base salary (to be paid in a lump sum on the next regular payroll date within 60 days of Dr.

Nardo’s termination), (iii) the targeted annual bonus amount the Board determines is due to Dr.

Nardo, and (iv) if elected, the Company will reimburse Dr.

Nardo for certain COBRA health benefits for nine months.

Notwithstanding the above, if Dr.

Nardo’s employment is terminated without Cause or he resigns for Good Reason either within three months immediately preceding or within one year after a Change of Control (as defined in the 2021 Plan), Dr.

Nardo will receive (i) the Accrued Obligations, (ii) severance payments equal to 12 months of Dr.

Nardo’s base salary (to be paid in a lump sum on the next regular payroll date within 60 days of Dr.

Nardo’s termination), (iii) the targeted annual bonus amount the Board determines is due to Dr.

Nardo, (iv) if elected, the Company will reimburse Dr.

Nardo for certain COBRA health benefits for 12 months, and (v) Dr.

Nardo will be deemed to be fully vested in all of his outstanding equity awards as of the date of his termination.

Nardo’s employment is terminated with Cause or without Good Reason, he is entitled to receive (i) his earned but unpaid base salary through the final day of his employment, (ii) expenses reimbursable under the employment agreement incurred on or prior to the last day of his employment, and (iii) any amounts or benefits that are vested amounts or benefits that Dr.

Nardo is entitled to receive under any of our equity compensation plans.

We may terminate Dr.

Nardo’s employment at any time for Cause upon written notice to Dr.

Nardo may voluntarily terminate his employment at any time without Good Reason upon two weeks prior written notice to us.

Outstanding Equity Awards at Fiscal Year End

The following table summarizes, for each of the named executive officers, the number of shares of common stock underlying outstanding stock options held as of December 31, 2024.

Number of Securities Underlying Unexercised Options

Unexercisable

Christopher J.

________________________

(1) This stock option award was granted January 4, 2024.

The shares underlying the option will vest as to 25% upon the 12-month anniversary of the grant date and will vest as to 75% in 36 equal monthly installments commencing on the 12-month anniversary of the grant date.

The outstanding options awards held by our Named Executive Officers as of December 31, 2023, were cancelled for no consideration in February 2024.

None of our Named Executive Officers have been granted any replacement options.

We otherwise did not engage in any repricings or other modifications or cancellations to any of our named executive officers’ outstanding option awards during the year ended December 31, 2024.

Director Compensation Table – 2024

The following table sets forth information concerning the compensation paid to our non-employee directors during 2024.

Paid in Cash (1)

Option Awards (3)(4)

Wendell Wierenga, Ph.D.

Kathleen Scott

Andrew Sandler, M.D.

Brittany Bradrick

________________________

Board of Director fees earned or paid in cash were for calendar year 2024, representing fees earned by our non-employee directors.

The Board of Directors did not receive stock awards in 2024.

All compensation was paid in cash.

In accordance with SEC rules, this column reflects the aggregate grant date fair value of the stock option awards granted during 2024.

These amounts have been computed in accordance with FASB ASC Topic 718.

Assumptions used in the calculation of this amount are described in Note 7 to our financial statements.

This amount does not reflect the actual economic value that will be realized by the directors upon the vesting of the stock options, the exercise of the stock options, or the sale of the common stock underlying such stock options.

In February 2024, the following options held by directors were cancelled for no consideration:

(i) options exercisable for 625 shares of common stock held by David Hale;

(ii) options exercisable for 1,378 shares of common stock held by Wendell Wierenga, Ph.D.;

(iii) options exercisable for 937 shares of common stock held by Kathleen Scott;

(iv) options exercisable for 937 shares of common stock held by Steven J.

Mento, Ph.D.;

(v) options exercisable for 937 shares of common stock held by Mary Fisher;

(vi) options exercisable for 937 shares of common stock held by Andrew Sandler, M.D.;

and (vii) options exercisable for 625 shares of common stock held by Brittany Bradrick.

None of our directors have been granted any replacement options.

Director Compensation Policy

We have adopted a compensation policy pursuant to which our non-employee board members receive $40,000 per year ($60,000 for Lead Director), each member of the Audit Committee receives $7,500 per year ($15,000 for the Chair), each member of the Compensation Committee receives $5,000 per year ($10,000 for the Chair), and each member of the Nominating and Corporate Governance Committee receives $4,000 per year ($8,000 for the Chair).

Any compensation to be paid under this policy may be made in cash or restricted stock units at the election of each board member which must be made in the prior calendar year.

As part of this director compensation policy, our directors may elect to receive their annual compensation (i) 100% in restricted stock units, (ii) 50% in cash and 50% in restricted stock units, or (iii) 100% in cash.

To the extent any of our directors elect to receive any of their compensation in restricted stock units, such restricted stock units will not be subject to any vesting term.

We have also adopted an equity compensation policy pursuant to which board members shall be granted stock options to purchase shares of our Common Stock upon joining the board of directors (“ New Director Grants ”), and at the beginning of each year, each then serving non-employee director shall be automatically granted stock options to purchase shares of our common stock (“ Continuing Director Grants ”).

New Director Grants vest upon the third anniversary of the date of grant, and the Continuing Director Grants vest in twelve equal monthly installments commencing on the date of grant.

These stock options shall have a term of ten years and shall have an exercise price equal to 100% of the fair market value of a share of common stock on the date of grant.

All options to be granted under this policy will be granted pursuant to our 2021 Plan.

The Company ’ s Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

We do not have any formal policy that requires us to grant, or avoid granting, equity-based compensation to our executive officers at certain times.

Consistent with our annual compensation cycle, the Compensation, Corporate Governance and Nominating Committee has for several years granted annual equity awards to its executive officers and directors at the start of the new fiscal year.

The timing of any equity grants to executive officers in connection with new hires, promotions, or other non-routine grants is tied to the event giving rise to the award (such as an executive officer’s commencement of employment or promotion effective date).

As a result, in all cases, the timing of grants of equity awards, including stock options, occurs independent of the release of any material nonpublic information, and we do not time the disclosure of material nonpublic information for the purpose of affecting the value of equity-based compensation.

No stock options were issued to executive officers in fiscal year 2024 during any period beginning four business days before the filing of a periodic report or current report disclosing material non-public information and ending one business day after the filing or furnishing of such report with the SEC.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders.

Securities Authorized for Issuance Under Equity Compensation Plans

On March 24, 2021, our Board and stockholders adopted the 2021 Plan which provides for the grant of incentive stock options and non-qualified stock options to purchase shares of our common stock and other types of awards.

On June 29, 2021, our Board and stockholders approved an amendment to the 2021 Plan to increase the aggregate number of shares of common stock available for issuance in connection with options and other awards granted under the 2021 Plan.

On June 22, 2023, our Board and stockholders approved an additional amendment to the 2021 plan to increase the aggregate number of shares of common stock available for issuance in connection with options and other awards under the 2021 Plan.

The general purpose of the 2021 Plan is to provide a means whereby eligible employees, officers, non-employee directors and other individual service providers develop a sense of proprietorship and personal involvement in our development and financial success, and to encourage them to devote their best efforts to our business, thereby advancing our interests and the interests of our stockholders.

By means of the 2021 Plan, we seek to retain the services of such eligible persons and to provide incentives for such persons to exert maximum efforts for our success and the success of our subsidiaries.

The following table provides information with respect to our compensation plans under which equity compensation was authorized as of December 31, 2024.

securities to

be issued upon

exercise price

Plan category

Equity compensation plans approved by security holders(1)

Equity compensation plans not approved by security holders

The amounts shown in this row include securities under the 2021 Plan.

In accordance with the “evergreen” provision in the 2021 Plan, an additional 125,888 shares were automatically made available for issuance on the first day of 2025, which represents 5% of the number of shares outstanding on December 31, 2024;

these shares are excluded from this calculation.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information regarding the beneficial ownership of our Common Stock as of March 1, 2025 by:

each of our stockholders who is known by us to beneficially own 5% or more of our Common Stock;

each of our named executive officers;

each of our directors;

all of our directors and current officers as a group.

Beneficial ownership is determined based on the rules and regulations of the SEC.

A person has beneficial ownership of shares if such individual has the power to vote and/or dispose of shares.

This power may be sole or shared and direct or indirect.

In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of our common stock that are subject to options or warrants held by that person and exercisable as of, or within 60 days of March 1, 2025 are counted as outstanding.

These shares, however, are not counted as outstanding for the purposes of computing the percentage ownership of any other person(s).

Except as otherwise noted in the footnotes to the table, we believe that each person or entity named in the table has sole voting and investment power with respect to all shares of our Common Stock shown as beneficially owned by that person or entity (or shares such power with his or her spouse).

Unless indicated below, the address of each individual listed below is c/o Dermata Therapeutics, Inc., 3525 Del Mar Heights Rd., #322, San Diego, CA 92130.

The percentage of the Common Stock beneficially owned by each person or entity named in the following table is based on 5,430,648 shares of common stock issued and outstanding as of March 1, 2025 plus any shares issuable upon exercise of options or warrants that are exercisable on or within 60 days after March 1, 2025 held by such person or entity.

Beneficial ownership representing less than 1% is denoted with an asterisk (*).

Name of Beneficial Owner (1)

5% or Greater Stockholders

Proehl Investment Ventures LLC

799,624 (3)(4)

Armistice Capital, LLC

Intracoastal Capital LLC

Named Executive Officers and Directors other than 5% or Greater Stockholders

803,925 (3)(4)(7)

Christopher J.

83,545 (10)(11)(12)

Wendell Wierenga, Ph.D.

Kathleen Scott

Andrew Sandler, M.D.

Brittany Bradrick

All Directors and Officers as a Group (11 persons)

*Less than 1%.

Unless noted otherwise, the address of all listed stockholders is 3525 Del Mar Heights Rd., #322 San Diego, CA 92130.

Each of the stockholder listed has sole voting and investment power with respect to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable.

We have determined beneficial ownership in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, which is generally determined by voting power and/or dispositive power with respect to securities.

Unless otherwise noted, the shares of Common Stock listed above are owned as of March 1, 2025, and are owned of record by each individual named as beneficial owner and such individual has sole voting and dispositive power with respect to the shares of common stock owned by each of them.

Proehl, our Chairman and Chief Executive Officer is the Chairman and Chief Executive Officer of Proehl Investment Ventures LLC.

Proehl’s ownership of Proehl Investment Ventures LLC, he may be deemed to have sole voting and dispositive control over the shares of our Common Stock held by Proehl Investment Ventures LLC.

As a result, Mr.

Proehl may be deemed to beneficially own the shares of our Common Stock held by Proehl Investment Ventures LLC.

Includes (i) 799,508 shares of Common Stock held by Proehl Investment Ventures LLC, and (ii) 116 shares of Common Stock issuable upon exercise of warrants held by Proehl Investment Ventures LLC that are exercisable within 60 days of March 1, 2025.

Excludes 787,402 shares of common stock issuable upon exercise of warrants that are not exercisable until the transaction in which they were issued is approved by the Company’s stockholders.

Includes, based on the Schedule 13G/A filed on February 14, 2025, by Armistice Capital, LLC, (i) 276,422 shares of Common Stock held by Armistice Capital, LLC.

Armistice Capital, LLC (“Armistice Capital”) is the investment manager of Armistice Capital Master Fund Ltd.

(the "Master Fund"), the direct holder of the shares, and pursuant to an Investment Management Agreement, Armistice Capital exercises voting and investment power over the securities of the Issuer held by the Master Fund and thus may be deemed to beneficially own the securities of the Issuer held by the Master Fund.

Boyd, as the managing member of Armistice Capital, may be deemed to beneficially own the securities of the Issuer held by the Master Fund.

The Master Fund specifically disclaims beneficial ownership of the securities of the Issuer directly held by it by virtue of its inability to vote or dispose of such securities as a result of its Investment Management Agreement with Armistice Capital.

Armistice Capital, LLC’s address is 510 Madison Avenue, 7th Floor, New York, New York 10022.

Includes, based on the Schedule 13G filed on January 28, 2025 by Intracoastal Capital LLC (“Intracoastal”), (i) 262,478 shares of Common Stock held by Intracoastal.

Kopin and Daniel B.

Asher, each of whom are managers of Intracoastal Capital LLC, have shared voting control and investment discretion over the securities reported herein that are held by Intracoastal.

As a result, each of Mr.

Kopin and Mr.

Asher may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the securities reported herein that are held by Intracoastal.

Includes (i) 247 shares of Common Stock held by Mr.

Proehl, (ii) 2,640 shares of Common Stock issuable upon exercise of stock options held by Mr.

Proehl exercisable within 60 days of March 1, 2025, (iii) 37 shares of Common Stock held by Mr.

Proehl as Trustee of the Megan Proehl Wilder 2020 Irrevocable Trust, (iv) 74 shares of Common Stock held by Mr.

Proehl as Trustee of the Allison Taylor Proehl 2020 Irrevocable Trust, (v) 149 shares of Common Stock held by Mr.

Proehl as Trustee of the Sean Michael Proehl Irrevocable Trust Dated December 18, 2020, and (vi) 595 shares of Common Stock and warrants to purchase up to 595 shares of Common Stock held by Mr.

Proehl as Trustee of the Proehl Family Trust.

Does not include 50,729 shares of Common Stock issuable upon exercise of stock options held by Mr.

Proehl that are not exercisable within 60 days of March 1, 2025.

Includes (i) 103 shares of Common Stock held by Dr.

Nardo, (ii) 1,041 shares of common stock issuable upon exercise of stock options held by Dr.

Nardo exercisable within 60 days of March 1, 2025, and (iii) 10 shares of Common Stock held by Dr.

Nardo as Co-Trustee of the Nardo Family Trust Dated October 3, 2001.

Does not include 22,292 shares of Common Stock issuable upon exercise of stock options held by Dr.

Nardo that are not exercisable within 60 days of March 1, 2025.

Includes (i) 78,741 shares of Common Stock held by Ms.

Van Hoose, and (ii) 1,055 shares of Common Stock issuable upon exercise of stock options held by Ms.

Van Hoose exercisable within 60 days of March 1, 2025.

Does not include 22,277 shares of Common Stock issuable upon exercise of stock options held by Ms.

Van Hoose that are not exercisable within 60 days of March 1, 2025.

Excludes 78,741 shares of common stock issuable upon exercise of warrants that are not exercisable until the transaction in which they were issued is approved by the Company’s stockholders.

David Hale, our Lead Director, is the Chairman and Chief Executive Officer of Hale BioPharma Ventures LLC.

Hale’s control of Hale BioPharma Ventures LLC, he may be deemed to have sole voting and dispositive control over the shares of our Common Stock held by Hale BioPharma Ventures LLC.

As a result, Mr.

Hale may be deemed to beneficially own the shares of our Common Stock held by Hale BioPharma Ventures LLC.

Includes (i) 80,957 shares of Common Stock held by Hale BioPharma Ventures LLC, and (ii) 12 shares of Common Stock held by Hale BioPharma Ventures LLC issuable upon exercise of warrants exercisable within 60 days of March 1, 2025.

Excludes 78,741 shares of common stock issuable upon exercise of warrants that are not exercisable until the transaction in which they were issued is approved by the Company’s stockholders.

Includes (i) 314 shares of Common Stock held by Mr.

Hale, (ii) 1,916 shares of Common Stock issuable upon exercise of stock options held by Mr.

Hale exercisable within 60 days of the Record Date, (iii) 50 shares of Common Stock held by a limited partnership of which Mr.

Hale serves as the General Partner and as such, has voting and dispositive control over the shares of Common Stock, and (iv) 148 shares of Common Stock and warrants to purchase up to 148 shares of Common Stock held by Mr.

Hale as Trustee of the Hale Family Trust.

Does not include 3,750 shares of Common Stock issuable upon exercise of stock options held by Mr.

Hale that are not exercisable within 60 days of March 1, 2025.

Includes (i) 259 shares of Common Stock held by Dr.

Wierenga, and (ii) 1,916 shares of Common Stock issuable upon exercise of stock options held by Dr.

Wierenga exercisable within 60 days of March 1, 2025.

Does not include 3,750 shares of Common Stock issuable upon exercise of stock options held by Dr.

Wierenga that are not exercisable within 60 days of March 1, 2025.

Includes (i) 10 shares of Common Stock held by Ms.

Scott as Trustee of the Scott 2008 Trust dated 3/28/08, (ii) 112 shares of Common Stock held by Ms.

Scott, and (iii) 1,916 shares of Common Stock issuable upon exercise of stock options held by Ms.

Scott exercisable within 60 days of March 1, 2025.

Does not include 3,750 shares of Common Stock issuable upon exercise of stock options held by Ms.

Scott that are not exercisable within 60 days of March 1, 2025.

Includes 1,916 shares of Common Stock issuable upon exercise of stock options held by Dr.

Mento exercisable within 60 days of March 1, 2025.

Does not include 3,750 shares of Common Stock issuable upon exercise of stock options held by Dr.

Mento that are not exercisable within 60 days of March 1, 2025.

Includes (i) 196,946 shares of Common Stock held by Ms.

Fisher, and (ii) 1,916 shares of Common Stock issuable upon exercise of stock options held by Ms.

Fisher exercisable within 60 days of March 1, 2025.

Does not include 3,750 shares of Common Stock issuable upon exercise of stock options held by Ms.

Fisher that are not exercisable within 60 days of March 1, 2025.

Excludes 196,851 shares of common stock issuable upon exercise of warrants that are not exercisable until the transaction in which they were issued is approved by the Company’s stockholders.

Includes (i) 99 shares of Common Stock held by Dr.

Sandler, and (ii) 1,916 shares of Common Stock issuable upon exercise of stock options held by Dr.

Sandler exercisable within 60 days of March 1, 2025.

Does not include 3,750 shares of Common Stock issuable upon exercise of stock options held by Dr.

Sandler that are not exercisable within 60 days of March 1, 2025.

Includes (i) 95 shares of Common Stock held by Ms.

Bradrick, and (ii) 1,916 shares of Common Stock issuable upon exercise of stock options held by Ms.

Bradrick exercisable within 60 days of March 1, 2025.

Does not include 3,750 shares of Common Stock issuable upon exercise of stock options held by Ms.

Bradrick that are not exercisable within 60 days of March 1, 2025.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders.

Transactions with Related Persons

The following is a description of transactions since January 1, 2023 to which we have been a participant in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than 5% of our voting securities, or any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements with our Named Executive Officers which are described under “Executive Compensation.”

Employment Agreement with Child of Chief Executive Officer

Sean Proehl, the son of Gerald T.

Proehl, our Chief Executive Officer, is currently employed as our Associate General Counsel.

Sean Proehl receives a salary of $200,000 a year.

In addition, Mr.

Sean Proehl is eligible to receive, from time to time, equity awards under our existing equity incentive plan, or any other equity incentive plan we may adopt in the future, and the terms and conditions of such awards, if any, will be determined by our Board of Directors or Compensation Committee, in its discretion.

Indemnification of Officers and Directors

We have entered into indemnification agreements with each of our current directors and executive officers.

These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.

We also intend to enter into indemnification agreements with our future directors and executive officers.

January 2025 Private Placement

On January 21, 2025, we entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional and accredited investors for the issuance and sale in a private placement (the “Private Placement”) of (i) 1,935,412 shares (the “Shares”) of our common stock, (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 72,468 shares of our common stock, at an exercise price of $0.001 per share, and (iii) warrants (the “Warrants”) to purchase up to 2,007,880 shares of our common stock at an exercise price of $1.27 per share.

The purchase price per Share and accompanying Warrant was $1.27 and the purchase price per Pre-Funded Warrant and accompanying Warrant was $1.269.

The Pre-Funded Warrants are exercisable immediately, and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.

The Warrants will be exercisable beginning on the effective date of stockholder approval of the issuance of the shares of common stock issuable upon exercise of the Warrants.

The Warrants will expire five years from the effective date of stockholder approval.

The Private Placement closed on January 23, 2025.

Certain related persons, including Gerald T.

Proehl, our Chief Executive Officer and Mary Fisher, member of our Board of Directors, participated in the Private Placement.

Proehl, through Proehl Investment Ventures LLC of which he is Managing Member, Chairman and Chief Executive Officer, purchased 787,402 Shares and accompanying Warrants for a purchase price of $1,000,000.54.

Mary Fisher purchased 196,851 Shares and accompanying Warrants for a purchase price of $250,000.77.

Other related persons, including Kyri K.

Van Hoose, our Chief Financial Officer, David F.

Hale, member of our Board of Directors and Sean Proehl, son of Mr.

Proehl and our Associate General Counsel, participated in the Private Placement as well, each of which purchased a number of Shares and accompanying Warrants for a purchase price less than $120,000.The purchase price per Share and accompanying Warrant for our insiders was the same as paid by other investors in the Private Placement.

The gross proceeds from the Private Placement were approximately $2.55 million.

In February 2025, the holder of the 72,468 Pre-Funded Warrants exercised their shares, resulting in a 72,468 share increase to Common Stock outstanding prior to the filing of this document.

Further information regarding the Private Placement is set forth in our Current Report on Form 8-K filed with the SEC on January 23, 2025

Policies and Procedures for Related Party Transactions:

Our Board has adopted a written related person transaction policy setting forth the policies and procedures for the review and approval or ratification of related person transactions.

This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets as of December 31, 2024, and 2023, and a related person had, has or will have a direct or indirect material interest, including without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person.

In reviewing and approving any such transactions, our audit committee is tasked to consider all relevant facts and circumstances, including, but not limited to:

(i) whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction with an unrelated party;

(ii) the extent of the related person’s interest in the transaction;

(iii) the benefits to the Company;

(iv) the impact on a director’s independence in the event the related person is a director, an immediately family member of a director or an entity in which a director is a partner, stockholder or executive officer;

(v) the availability of other sources for comparable products or services;

(vi) the terms of the transaction;

and (vii) the terms available to unrelated third parties.

All related-party transactions may only be consummated if our Audit Committee has approved or ratified such transaction in accordance with the guidelines set forth in the policy.

Any member of the Audit Committee who is a related person with respect to a transaction under review will not be permitted to participate in the deliberations or vote respecting approval or ratification of the transaction.

However, such director may be counted in determining the presence of a quorum at a meeting of the Audit Committee that considers the transaction.

Director Independence

The Nasdaq Stock Market LLC requires a majority of a listed company’s board of directors to be comprised of independent directors.

In addition, the rules require that each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act and compensation committee members must also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act.

Under the Nasdaq Listing Rules, a director will only qualify as an “independent director” if, among other things, in the opinion of the listed company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

In order to be considered independent for purposes of Rule 10A-3 of the Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries.

In order to be considered independent for purposes of Rule 10C-1, the board must consider, for each member of a compensation committee of a listed company, all factors specifically relevant to determining whether a director has a relationship to such company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to:

(1) the source of compensation of the director, including any consulting, advisory or other compensatory fee paid by such company to the director;

and (2) whether the director is affiliated with the company or any of its subsidiaries or affiliates.

Our Board undertook a review of its composition, the composition of its committees and the independence of each director.

Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board has determined that David Hale, Wendell Wierenga, Ph.D., Andrew Sandler, M.D., Mary Fisher, Steven J.

Mento, Ph.D., Brittany Bradrick, and Kathleen Scott do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the Rules of Nasdaq and the SEC .

PRINCIPAL ACCOUNTING FEES AND SERVICES

Information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders.

Principal Accountant Fees and Services

The following table presents the aggregate fees billed or anticipated to be billed for professional services rendered to us by Moss Adams for our fiscal years ended December 31, 2024, and December 31, 2023:

Audit Fees (1)

Audit-Related Fees

All Other Fees

Audit fees consist of fees incurred for professional services rendered for the audit of our annual financial statements, review of the quarterly financial statements, assistance with registration statements filed with the SEC, fees to cover technology and other expenses, and services that are normally provided by our independent registered public accounting firm in connection with regulatory filings or engagements.

Represents fees, including out of pocket expenses, for professional services provided in connection with the audit of our annual audited financial statements, the review of our quarterly financial statements and for consents and comfort letters provided in connection with the offerings of our Common Stock.

Tax fees are principally for services related to tax preparation and filing, as well as tax consulting services associated with tax preparation and filings.

No such fees were incurred related to the fiscal year ended December 31, 2024.

Pre-Approval Policies and Procedures

The Audit Committee has procedures in place for the pre-approval of audit and non-audit services rendered by the Company’s independent registered public accounting firm.

The Audit Committee generally pre-approves specified services in the defined categories of audit services, audit-related services, and tax services.

Pre-approval may also be given as part of the Audit Committee’s approval of the scope of the engagement of the independent auditor or on an individual, explicit, case-by-case basis before the independent auditor is engaged to provide each service.

The pre-approval of services may be delegated to one or more of the Audit Committee’s members, but the decision must be reported to the full Audit Committee at its next scheduled meeting.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Financial Statements

The financial statements and related notes, together with the report of Moss Adams LLP and Mayer Hoffman McCann P.C.

appear at pages F-1 through F-22 following the Exhibit List as required by “Part II—Item 8—Financial Statements and Supplementary Data” of the Form 10-K.

The financial statements and related notes, together with the report of Moss Adams LLP, appear at pages F-1 through F-22 following the Exhibit List as required by “Part II—Item 8—Financial Statements and Supplementary Data” of the Form 10-K.

Financial Statement Schedules

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(incorporated by reference to Exhibit 3.1 to the Company’s Current Report file on Form 8-K filed on March 13, 2023).

Amendment No.

3 to the Amended and Restated Certificate of Incorporation of Dermata Therapeutics, Inc., dated May 14, 2024 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on May 14, 2024).

Amended and Restated Bylaws of Dermata Therapeutics, Inc.

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(incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-1 filed with the SEC on August 6, 2021).

Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-1 filed with the SEC on August 6, 2021).

Form of Common Stock Purchase Warrant issued in the Company’s Initial Public Offering (incorporated by reference to Exhibit 4.4 of the Company’s Registration Statement on Form S-1 filed with the SEC on August 6, 2021).

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333-270195) filed on March 13, 2023).

Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on May 24, 2023).

Form of Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on May 24, 2023).

Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.

to the Company’s Current Report on Form 8-K filed on May 24, 2023).

Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on May 24, 2023).

Form of New Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 17, 2023).

Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on November 17, 2023).

Form of May 2024 New Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2024).

Form of May 2024 Placement Agent Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2024).

Form of September 2024 PIPE Series A/Series B Warrant (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed with the SEC on September 17, 2024).

Form of September 2024 PIPE Placement Agent Warrant (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed with the SEC on September 17, 2024).

Form of January 2025 PIPE Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2025).

Form of January 2025 PIPE Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2025).

Form of January 2025 PIPE Placement Agent Warrant (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2025).

Description of Securities.*

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Dermata Therapeutics, Inc.

2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company’s Registration Statement on Form S-1 filed with the SEC on August 6, 2021).†

2021 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company’s Registration Statement on Form S-1 filed with the SEC on August 6, 2021).†

Amendment No.

1 to the Dermata Therapeutics, Inc.

2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.15 of the Company’s Registration Statement on Form S-1 filed with the SEC on August 6, 2021).†

2021 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.14 of the Company’s Registration Statement on Form S-1 filed with the SEC on August 6, 2021).†

Amendment No.

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2021 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 3, 2023).†

Form of Nonqualified Stock Option Award under 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 of the Company’s Registration Statement on Form S-1 filed with the SEC on August 6, 2021).†

Form of Incentive Stock Option Award under 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 of the Company’s Registration Statement on Form S-1 filed with the SEC on August 6, 2021).†

Amendment No.

3 to the Dermata Therapeutics, Inc.

2021 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 7, 2024).

Form of Nonqualified Stock Option Award under 2021 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.3 of the Company’s Registration Statement on Form S-1 filed with the SEC on August 6, 2021).†

Form of Incentive Stock Option Award under 2021 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.4 of the Company’s Registration Statement on Form S-1 filed with the SEC on August 6, 2021).†

Employment Agreement dated December 6, 2021 by and between Dermata Therapeutics, Inc.

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Form of Inducement Letter (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 17, 2023).

Letter of Mayer Hoffman McCann P.C.

to the Securities and Exchange Commission, dated August 3, 2023 (incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K filed on August 3, 2023).

Form of May 2024 Inducement Letter (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2024).

ATM Agreement, dated June 7, 2024, by and between Dermata Therapeutics, Inc.

Wainwright & Co., LLC (incorporated by reference to Exhibit 1.1 of the Company’s Current Report on Form 8-K filed with the SEC on June 7, 2024).

Form of September 2024 PIPE Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on September 17, 2024).

Form of September 2024 PIPE Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on September 17, 2024).

Clinical Trial Collaboration Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 21, 2025).

Form of January 2025 PIPE Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2025).

Form of January 2025 PIPE Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2025).

Letter of CBIZ CPAs P.C.

(formerly Mayer Hoffman McCann P.C.) to the Securities and Exchange Commission, dated August 3, 2023 (incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K filed on August 3, 2023).

Insider Trading Policy.*

Consent of Moss Adams LLP.*

Consent of Mayer Hoffman McCann P.C.*

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).*

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Clawback Policy of Dermata Therapeutics, Inc.

(incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K filed with the SEC on March 21, 2024) †

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

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Report of Independent Registered Public Accounting Firm (PCAOB ID 659 )

Report of Independent Registered Public Accounting Firm (PCAOB ID 199)

Financial Statements:

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Statements of Operations

Statements of Stockholders’ Equity (Deficit)

Statements of Stockholders’ Equity

Statements of Cash Flows

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Opinion on the Financial Statements

We have audited the accompanying balance sheet of Dermata Therapeutics, Inc.

(the “Company”) as of December 31, 2023, the related statement of operations, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We also have audited the adjustments to the 2022 financial statements to retrospectively reflect the impact of the reverse stock split, described in Note 1.

In our opinion, such adjustments are appropriate and have been properly applied.

We were not engaged to audit, review or apply procedures to the 2022 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2022 financial statements taken as a whole.

We have audited the accompanying balance sheets of Dermata Therapeutics, Inc.

(the Company) as of December 31, 2024 and 2023, the related statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

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

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

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

As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency 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.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Moss Adams LLP

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We have served as the Company’s auditor since 2023.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and

Stockholders of Dermata Therapeutics, Inc.

Opinion on the Financial Statements

We have audited, before the effects of the adjustments to retrospectively apply the reverse stock split described in Note 1, the accompanying balance sheet of Dermata Therapeutics, Inc.

(“Company”) as of December 31, 2022, and the related statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).

The 2022 financial statements before the effects of the adjustments discussed in Note 1 are not presented herein.

In our opinion, the financial statements, before the effects of the adjustments to retrospectively apply the reverse stock split described in Note 1, present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the reverse stock split described in Note 1 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied.

Those adjustments were audited by Moss Adams LLP.

Going Concern Uncertainty

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

As discussed in Note 1 to the financial statements, the Company has incurred recurring losses and negative cash flows from operations and is dependent on additional financing to fund operations.

These conditions raise substantial doubt about its ability to continue as a going concern.

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

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We served as the Company's auditor from 2016 to 2023.

/s/ Mayer Hoffman McCann P.C.

San Diego, California

February 21, 2023

DERMATA THERAPEUTICS, INC.

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Other income and expenses:

Interest income, net

Interest income

$ ( 12,287,461 )

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DERMATA THERAPEUTICS, INC.

Statements of Stockholder’s Equity (Deficit)

Statements of Stockholder’s Equity

Stockholders’

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Issuance of Common Stock upon exercise of pre-funded warrants

Issuance of restricted stock unit awards

Issuance of Common Stock upon conversion of restricted stock units

Issuance of Common Stock upon exercise of warrants, net of issuance costs

Settlement of fractional shares paid in cash

Stock-based compensation

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$ ( 53,387,878 )

Issuance of Common Stock and warrants, net of issuance costs

Issuance of Common Stock upon exercise of pre-funded warrants

Issuance of Common Stock upon exercise of warrants, net of issuance costs

Issuance of abeyance shares

Issuance of Common Stock and warrants from May 2024 Warrant Inducement

Settlement of fractional shares paid in cash

Issuance of pre-funded warrants and warrants from September 2024 PIPE

Issuance of Common Stock upon exercise of pre-funded warrants

Issuance of Common Stock from ATM sales, net of issuance costs

Issuance of abeyance shares from warrant inducement

Stock-based compensation

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Cash flows from financing activities:

Proceeds from issuance of Common Stock and warrants, net of issuance costs

Proceeds from issuance of Common Stock, pre-funded warrants, and warrants, net of issuance costs

Proceeds from exercise of pre-funded warrants

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Incremental fair value of November 2023 warrant inducement

Issuance of abeyance shares

Incremental fair value of May 2024 warrant inducement

Issuance costs in accounts payable

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

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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.

Initial Public Offering

On August 17, 2021, the Company completed its initial public offering (“IPO”), in which it sold 160,714 shares of its common stock, par value $ 0.0001 per share (“Common Stock”), together with 160,714 warrants to purchase one share of Common Stock with an exercise price of $ 112.00 per share, at a combined offering price of $ 112.00 .

Additionally, the underwriters exercised their option to purchase an additional 24,106 warrants to purchase Common Stock with an exercise price of $ 112.00 per share, resulting in total IPO warrants issued of 184,820 at an exercise price of $ 112.00 .

The Company received net cash proceeds of approximately $ 15.4 million from the IPO after deducting underwriters’ discounts and offering expenses of approximately $ 2.6 million.

The Company’s shares of Common Stock and warrants are listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “DRMA,” and “DRMAW,” respectively, and both began trading in August 2021.

Reverse Stock Split

On August 17, 2021, the Company completed its initial public offering.

The Company’s shares of Common Stock and warrants are listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “DRMA,” and “DRMAW,” respectively.

The Company is a late-stage biotechnology company focused on the treatment of medical and aesthetic skin conditions and diseases.

Reverse Stock Splits

On March 13, 2023, the Company effected a reverse stock split of shares of the Company’s Common Stock at a ratio of 1-for-16 pursuant to an amendment to the Company’s certificate of incorporation approved by the Company’s board of directors (the “Board”), and stockholders.

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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.

Liquidity and Going Concern Uncertainty

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As of December 31, 2024, cash and cash equivalents totaled $ 3.2 million and the Company had an accumulated deficit of $ 65.7 million.

For the year ended December 31, 2023, the Company used cash of $ 6.4 million in operations.

The Company’s cash and cash equivalents are expected to fund operations into the third quarter of 2024.

For the year ended December 31, 2024, the Company used cash of approximately $ 11.1 million in operations.

In January 2025, the Company raised $ 2.6 million gross proceeds from the issuance of Common Stock, warrants, and pre-funded warrants related to a private placement financing disclosed in Note 10 – Subsequent Events.

The Company’s existing cash and cash equivalents are expected to fund operations into the third quarter of 2025.

The Company anticipates that it will continue to incur net losses for the foreseeable future.

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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 recent 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 consolidated financial statements, which is not alleviated by management’s plans.

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 the one-year period following the date that these financial statements are issued, 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.

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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 the estimated fair values of equity instruments.

Management evaluates its estimates on an ongoing basis.

On an ongoing basis, management evaluates these estimates and judgments, including those related to accrued research and development expenses, and the Company’s bonus accrual.

The Company bases its estimates on various assumptions that it believes are reasonable under the circumstances.

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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 expenses include expenses incurred under agreements with contract research organizations, manufacturing and supply scale-up expenses, 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.

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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.

The Company has operated as a C-Corporation since March 2021 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.

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.

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Stock-Based Compensation

In March 2021, the Company’s board of directors and shareholders approved the Dermata Therapeutics, Inc.

2021 Omnibus Equity Incentive Plan (the “2021 Plan”).

For stock options granted under the 2021 Plan, 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 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.

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Forfeitures are accounted for in the period they occur.

Restricted stock units (“RSUs”) granted under the 2021 Plan are measured at the grant date fair value of the Common Stock, with corresponding compensation expense recognized ratably over the requisite service period.

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 , and ASC 815, Derivatives and Hedging .

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.

The Company accounts for modifications and exchanges of warrants in accordance with ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the Emerging Issues Task Force) (“ASU 2021-04”) .

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.

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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) contingently issuable restricted stock units for which no future service is required as a condition to the delivery of the underlying Common Stock, (ii) pre-funded warrants because their exercise requires only nominal consideration for the delivery of shares, and (iii) shares held in abeyance because there is no consideration required for delivery of the shares, (collectively, “basic shares”), without consideration of common share equivalents.

Diluted net loss per share is calculated by adjusting basic shares outstanding for the dilutive effect of common share equivalents outstanding for the period.

For purposes of the diluted net loss per share calculation, stock options and warrants are considered to be common share equivalents but are excluded from the calculation of diluted net loss per common share if their effect would be anti-dilutive.

As the Company has reported a net loss for the periods presented, diluted net loss per common share is the same as the basic net loss per common share for the periods presented.

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.

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.

The following table presents the computation of basic and diluted net loss per share:

Year Ended December 31,

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For the year ended December 31, 2024, 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 .

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”) , which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.

ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023, and for interim reporting periods beginning January 1, 2025, with early adoption permitted.

The Company adopted ASU 2023-07 for the year ended December 31, 2024, which adoption only impacted the Company’s segment reporting disclosures.

See Note 9 – Segment Reporting for disclosures related to the adoption of ASU 2023-07.

In December 2023, the FASB issued ASU 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.

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The Company is currently evaluating the impact of this guidance on its financial statements and income tax footnote.

In November 2024, the FASB issued ASU 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.

Balance Sheet Details

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Prepaid other

Interest receivable

Total prepaid expenses and other current assets

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Equity Securities

On July 11, 2022, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the number of authorized shares of the Company’s Common Stock from 90,000,000 shares to 250,000,000 shares.

The increase in the number of authorized shares was approved by the holders of a majority of the outstanding shares of Common Stock of the Company at its annual meeting on July 11, 2022.

A summary of the Company’s equity securities as of December 31, 2024, is as follows:

Held in Abeyance

Pre-funded Warrants

Common Stock, par value $0.0001

Preferred Stock

Warrants (excluding pre-funded warrants)

2021 Omnibus Equity Incentive Plan

Total equity securities

On November 20, 2023, the Company closed on an inducement agreement (the “Inducement”) with a holder (the “Holder”) of certain of its existing warrants to purchase up to 3,472,095 shares of the Company’s common stock, issued to the Holder on (i) April 25, 2022 (as amended on March 20, 2023, the “April 2022 Warrants”) and (ii) March 20, 2023 (the “March 2023 Warrants” together with the April 2022 Warrants, the “Existing Warrants”).

The Existing Warrants had an exercise price of $ 2.82 .

Pursuant to the Inducement, the Holder agreed to exercise for cash its Existing Warrants at a reduced exercise price of $ 0.6511 per share in consideration for the Company’s agreement to issue in a private placement (i) new series A Common Stock purchase warrants (the “November 2023 Series A Common Warrants”) to purchase 3,707,944 shares of Common Stock and (ii) new series B Common Stock purchase warrants (the “November 2023 Series B Common Warrants” and together with the November 2023 Series A Common Warrants, the “New Warrants”) to purchase 3,236,246 shares of Common Stock .

The New Warrants are exercisable subject to stockholder approval, which the Company received at a stockholder meeting on January 12, 2024.

The Company received net cash proceeds of approximately $ 2.0 million from the Inducement after deducting underwriters’ discounts and offering expenses of approximately $ 0.3 million.

On May 26, 2023, the Company closed a private placement (the “2023 PIPE”) priced at the market under Nasdaq rules, in which it sold 458,555 shares of its Common Stock together with 342,322 pre-funded warrants to purchase up to an aggregate of 342,322 shares of Common Stock with an exercise price of $ 0.0001 per share (the “May 2023 Pre-Funded Warrants”), and 800,877 warrants to purchase up to an aggregate of 800,877 shares of Common Stock with an exercise price of $ 2.16 per share (the “May 2023 PIPE Common Warrants”) at a combined offering price of $ 2.285 .

The Company received net cash proceeds of approximately $ 1.5 million from the 2023 PIPE after deducting underwriters’ discounts and offering expenses of approximately $ 0.3 million.

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 1,912,569 pre-funded warrants to purchase up to an aggregate of 1,912,569 shares of Common Stock with an exercise price of $0.001 per share (the “September 2024 Pre-Funded Warrants”), and 1,912,569 series A warrants (the “September 2024 PIPE Series A Common Warrants”) to purchase up to an aggregate of 1,912,569 shares of Common Stock and 1,912,569 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 1,912,569 shares of Common Stock.

The September 2024 PIPE Warrants have an exercise price of $ 1.58 .

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 Securities and Exchange Commission (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, 905,000 September 2024 Pre-Funded Warrants remained outstanding.

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 355,806 shares of Common Stock under the ATM Agreement resulting in gross proceeds of $ 1,157,248 before deducting issuance costs.

After issuance of the 355,806 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 194,218 shares of Common Stock under the ATM Agreement resulting in additional gross proceeds of $ 504,894 before deducting issuance costs.

During the year ended December 31, 2024, the Company issued 550,024 shares from its ATM resulting in net proceeds of $ 1.4 million after deducting issuer costs and other expenses related to setting up and issuing shares from the Company’s ATM.

As of December 31, 2024, 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 516,336 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 $ 32.40 per share, and (ii) November 2023 New Warrants (as defined below), which were issued in two separate series, each having an exercise price of $ 9.7665 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 $ 5.16 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 601,174 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 431,498 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 267 ,000 of abeyance shares related to the May 2024 Warrant Inducement were released to the investor.

Accordingly, shares outstanding increased by 267,000 during the third quarter of 2024 related to the issuance of the 267,000 abeyance shares from the May 2024 Inducement, leaving no further abeyance shares outstanding.

On November 20, 2023, the Company closed on an inducement agreement (the “November 2023 Inducement”) with a holder (the “Holder”) of certain of its existing warrants to purchase up to 231,473 shares of the Company’s Common Stock, issued to the Holder on (i) April 25, 2022 (as amended on March 20, 2023, the “April 2022 Warrants”) and (ii) March 20, 2023 (the “March 2023 Warrants” together with the April 2022 Warrants, the “November 2023 Existing Warrants”).

The November 2023 Existing Warrants had an exercise price of $ 42.30 .

Pursuant to the November 2023 Inducement, the Holder agreed to exercise for cash its November 2023 Existing Warrants at a reduced exercise price of $9.7665 per share in consideration for the Company’s agreement to issue in a private placement (i) new series A Common Stock purchase warrants (the “November 2023 Series A Common Warrants”) to purchase 247,196 shares of Common Stock and (ii) new series B Common Stock purchase warrants (the “November 2023 Series B Common Warrants” and together with the November 2023 Series A Common Warrants, the “November 2023 New Warrants”) to purchase 215,749 shares of Common Stock.

The November 2023 New Warrants were exercisable subject to stockholder approval, which the Company received at a stockholder meeting on January 12, 2024.

The Company received net cash proceeds of approximately $ 2.0 million from the November 2023 Inducement after deducting underwriters’ discounts and offering expenses of approximately $ 0.3 million.

Related to the November 2023 Inducement, as of December 31, 2023, the Holder left 182,000 shares in abeyance at the Company’s transfer agent to be delivered to the Holder at their request, which were then delivered to the Holder on January 8, 2024.

Accordingly, as of December 31, 2023, 182,000 shares were held in abeyance, which were not issued and not outstanding.

Since all the abeyance shares from the November 2023 Inducement were released to the investor in January 2024, there were no remaining November 2023 Inducement shares held in abeyance as of December 31, 2024.

On May 26, 2023, the Company closed a private placement (the “May 2023 PIPE”) priced at the market under Nasdaq rules, in which it sold 30,570 shares of its Common Stock together with 22,821 pre-funded warrants to purchase up to an aggregate of 53,391 shares of Common Stock with an exercise price of $ 0.0001 per share (the “May 2023 Pre-Funded Warrants”), and 53,391 warrants to purchase up to an aggregate of 53,391 shares of Common Stock with an exercise price of $ 32.40 per share (the “May 2023 PIPE Common Warrants”) at a combined offering price of $ 34.275 .

The May 2023 PIPE Common Warrants were set to expire on November 27, 2028.

The Company received net cash proceeds of approximately $ 1.5 million from the May 2023 PIPE after deducting underwriters’ discounts and offering expenses of approximately $ 0.3 million.

The May 2023 Pre-Funded Warrants were exercised fully during the second quarter of 2023.

The May 2023 PIPE Common Warrants were exercised as part of the May 2024 Inducement.

On March 20, 2023, the Company closed a public offering (the “March 2023 Offering”) priced at the market under Nasdaq rules, in which it sold an aggregate of (i) 5,666 shares of Common Stock, (ii) pre-funded warrants (the “March 2023 Pre-Funded Warrants”) to purchase up to an aggregate of 102,208 shares of Common Stock with an exercise price of $ 0.0001 per share, (iii) Series A warrants (the “March 2023 Series A Common Warrants”) to purchase up to an aggregate of 107,874 shares of Common Stock, and (iv) Series B warrants (the “March 2023 Series B Common Warrants” and collectively with the March 2023 Series A Common Warrants, the “March 2023 Offering Warrants”) to purchase up to an aggregate of 107,874 shares of Common Stock.

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The Company received net cash proceeds of approximately $ 4.2 million after deducting the underwriter’s discounts and offering expenses of approximately $ 0.8 million.

The March 2023 Pre-Funded Warrants were fully exercised during the first quarter of 2023, and the March 2023 Offering Warrants were exercised as part of the Inducement in November 2023.

On April 25, 2022, the Company closed a private placement (the “April 2022 PIPE”), in which it sold 56,161 shares of its Common Stock together with 179,687 pre-funded warrants to purchase up to an aggregate of 179,687 shares of Common Stock with an exercise price of $ 0.0001 per share (the “April 2022 PIPE Pre-Funded Warrants”), and 235,849 warrants to purchase up to an aggregate of 235,849 shares of Common Stock with an exercise price of $ 21.20 per share (the “April 2022 PIPE Common Warrants”) at a combined offering price of $21.20.

The Company received net cash proceeds of approximately $ 4.3 million from the April 2022 PIPE after deducting underwriters’ discounts and offering expenses of approximately $ 0.7 million.

The April 2022 PIPE Pre-Funded Warrants were fully exercised during 2022, and the April 2022 PIPE Common Warrants were exercised as part of the Inducement in November 2023.

The March 2023 Pre-Funded Warrants were fully exercised during the first quarter of 2023, and the March 2023 Offering Warrants were exercised as part of the November 2023 Inducement.

Preferred Stock

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Abeyance Shares

Related to the November 2023 Inducement, the Holder left 2,730,000 shares in abeyance at the Company’s transfer agent to be delivered to the Holder at their request.

The 2,730,000 shares held in abeyance were delivered to the Holder on January 8, 2024.

Accordingly, as of December 31, 2023, 2,730,000 shares were held in abeyance, have not been issued and are not outstanding .

As of December 31, 2023, the Company had 182,000 shares held in abeyance at the Company’s transfer agent which were delivered to the Holder during 2024.

As of December 31, 2024, no abeyance shares are outstanding.

Summary of Warrants Outstanding

The table below lists outstanding warrants for the dates presented.

The warrants outstanding at December 31, 2023 are exercisable into 8,358,697 shares of common stock which had a fair value of $ 0.61 per share, based on the closing trading price on that day.

The table below lists outstanding warrants for the dates presented, excluding 905,000 pre-funded warrants with an exercise price of $ 0.001 outstanding as of December 31, 2024.

The warrants outstanding as of December 31, 2024, are exercisable into 5,068,455 shares of Common Stock which had a fair value of $ 1.35 per share, based on the closing trading price on December 31, 2024.

The aggregate intrinsic value of warrants outstanding as of December 31, 2024, 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 December 31, 2023, was zero due to the warrants’ exercise prices above market value.

The intrinsic value of warrants outstanding as of December 31, 2024, was zero.

Quantity of Warrants Outstanding as of

December 31, 2024

December 31, 2023

Exercise Price

Expiration Date

Pre-IPO Series 1a Warrants

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IPO Underwriter Warrants

April 2022 PIPE Common Warrants

March 2023 Series A Common Warrants

March 2023 Series B Common Warrants

March 2023 Offering Placement Agent Warrants

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November 2023 Series B Common Warrants

November 2023 Offering Placement Agent Warrants

November 2023 Placement Agent Warrants

May 2024 Series A Common Warrants

May 2024 Series B Common Warrants

May 2024 Placement Agent Warrants

September 2024 PIPE Series A Common Warrants

September 2024 PIPE Series B Common Warrants

September 2024 PIPE Placement Agent Warrants

Total warrants outstanding

Warrant Inducement

In November 2023, the Company completed the Inducement, in which a Holder agreed to exercise 3,472,095 common warrants to purchase Common Stock at a reduced exercise price of $ 0.6511 per share in exchange for the 3,707,944 November 2023 Series A Common Warrants and 3,236,246 November 2023 Series B Common Warrants with an exercise price of $ 0.6511 per share.

The New Warrants are exercisable subject to stockholder approval, which the Company received at a stockholder meeting on January 12, 2024.

The Inducement, 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 of ASU 2021-04.

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 for the Company of approximately $ 2.0 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 $ 3.0 million as an equity issuance cost.

Warrant Inducements

In May 2024, the Company completed the May 2024 Inducement with the Holders who agreed to exercise 516,336 warrants to purchase Common Stock at a reduced exercise price of $ 5.16 per share in exchange for 601,174 New May 2024 Series A Warrants and 431,498 New May 2024 Series B Warrants with an exercise price of $ 4.91 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.

In November 2023, the Company completed the November 2023 Inducement, in which a Holder agreed to exercise 231,472 common warrants to purchase Common Stock at a reduced exercise price of $ 5.16 per share in exchange for 247,196 November 2023 Series A Warrants and 215,749 November 2023 Series B Warrants with an exercise price of $ 9.7655 per share.

The November 2023 New Warrants were exercisable subject to stockholder approval, which the Company received at a stockholder meeting on January 12, 2024.

The November 2023 Inducement, which resulted in the lowering of the exercise price of the November 2023 Existing Warrants and the issuance of the November 2023 New Warrants, is considered a modification of the November 2023 Existing Warrants under the guidance of 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 holder of the November 2023 Existing Warrants to cash exercise their warrants, which raised equity capital and generated net proceeds for the Company of approximately $ 2.0 million.

As the November 2023 Existing Warrants and the November 2023 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 $ 3.0 million as an equity issuance cost.

Warrant Modification

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In accordance with ASU 2021-04, as the warrants were classified as equity instruments before and after the modification, and as the modification was directly attributable to an equity offering, the Company recognized the effect of the modification of approximately $ 0.1 million as an equity issuance cost.

The April 2022 PIPE Warrants were exercised as part of the November 2023 Inducement.

Equity Incentive Plan

Under the Company’s 2021 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.

Effective January 1, 2022, an evergreen provision contained in the Company’s 2021 Plan increased the total number of shares of common shares issuable under the 2021 Plan in an amount equal to one percent of the Company’s common shares outstanding as of December 31, 2021.

This evergreen provision resulted in an additional 7,701 and 5,205 shares of Common Stock issuable pursuant to the 2021 Plan as of January 1, 2023, and 2022, respectively.

At the Company’s 2023 Annual Meeting of Stockholders held on August 3, 2023, 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 by 513,150 shares to 629,069 shares.

Under the Company’s 2021 Omnibus Equity Incentive Plan as amended (“2021 Plan”), 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 41,937 shares to 79,930 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 one percent evergreen provision resulted in an additional 2,620 and 513 shares of Common Stock issuable pursuant to the 2021 Plan as of January 1, 2024, and 2023, respectively.

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.

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As of December 31, 2024, there remain 26,675 shares reserved for issuance under the 2021 Plan, as amended.

See Note 9 for a discussion of cancellation of stock options during the first quarter of 2024.

Fair Value Measurement

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Fair Value of Common Stock.

The estimated fair value of the Common Stock underlying the Company’s stock option plan was determined by management by considering various factors as discussed below.

All options to purchase shares of the Company’s Common Stock are intended to be exercisable at a price per share not less than the per-share fair value of the Company’s Common Stock underlying those options on the date of grant.

The fair value of Common Stock is measured as the Company’s closing price of Common Stock on the date of grant.

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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, as the Company has insufficient historical information to provide a basis for an estimate.

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.

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.

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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.

In December 2021, the Board authorized a stock option grant in lieu of a cash bonus for the Company’s Chairman and Chief Executive Officer.

The stock-based compensation expense of $0.4 million related to the stock option grant was booked to the fiscal year ended December 31, 2021;

however, the impact to additional paid-in capital was not booked until the first quarter of 2022, when the stock option award was granted.

The following table summarizes the total stock-based compensation expense related to stock options and RSUs included in the Company’s statements of operations:

The following table summarizes the total stock-based compensation expense related to stock options included in the Company’s statements of operations:

Research and development

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Options exercisable at December 31, 2024

The aggregate intrinsic value of options exercisable as of December 31, 2023, 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 that date, which was $ 0.61 per share.

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, 6,747 of the 6,763 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 total fair value of stock options vested as of December 31, 2024, was $ 60,263 .

The aggregate intrinsic value of options outstanding and exercisable as of December 31, 2024, 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 December 31, 2024, which was $ 1.35 per share.

The intrinsic value of options outstanding and exercisable as of December 31, 2024, was zero.

As of December 31, 2024, total unrecognized compensation cost related to stock options was approximately $ 0.2 million and the weighted average period over which this cost is expected to be recognized is 2.5 years.

Restricted Stock Units

During the year ended December 31, 2022, the Company issued 219,634 restricted stock units, or RSUs, as partial compensation to certain members of the Board for their services during 2022.

The Company recognized stock-based compensation expense of approximately $ 0.2 million for the year ended December 31, 2022, related to the RSU awards.

There were no RSUs issued or outstanding for the year ended December 31, 2023, and there is no unrecognized compensation expense related to RSUs as of December 31, 2023.

401(k) Employee Benefit Plan

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Clinical Trials

During the fourth quarter of 2023, the Company initiated a Phase 3 clinical trial, STAR-1, which is expected to report data in 2025.

The total contract amount with the clinical research organization is approximately $6.9 million, which will extend from the fourth quarter of 2023 to the first half of 2025, which has a 30-day termination notice period.

During the fourth quarter of 2023, the Company initiated a Phase 3 clinical trial, STAR-1, which is expected to report data in late March 2025.

The total contract amount with the clinical research organization is approximately $ 7.0 million, and the contract will extend from the fourth quarter of 2023 to the first half of 2025, and which has a 30-day termination notice period.

During the years ended December 31, 2024 and 2023, the Company has recognized $ 5.5 million and $ 0.6 million, respectively, in research and development expense for the STAR-1 trial.

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 DMT310 and DMT410.

The Company is currently a party to an exclusive supply agreement for the supply of the Spongilla raw material used in XYNGARI™ and DMT410.

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 DMT310 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 DMT310 and DMT410 could be negatively impacted, which could adversely affect its business, results of operations, and financial condition.

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 could be negatively impacted, which could adversely affect its business, results of operations, and financial condition.

License Agreements

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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.

Registration Rights Agreement

In connection with the September 2024 Private Placement (see Note 4), the Company entered into a Registration Rights Agreement with the purchasers, dated as of September 16, 2024, (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 September 19, 2024, and became effective on September 24, 2024.

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 December 31, 2024, 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 December 31, 2024.

Dermata operates as a corporation, and accordingly, the Company is taxable at the entity level for U.S.

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The Company is subject to examination by tax authorities in those jurisdictions from inception.

Subsequent Event

In January 2024, the Company granted 410,000 stock option awards to employees of the Company, subject to four-year vesting, with an exercise price of $ 0.6099 .

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, 101,465 of the 102,074 stock options outstanding as of December 31, 2023, were cancelled in February 2024.

The Company is not currently under examination by any jurisdiction.

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.

The following table summarizes the segment's financial information including the Company’s significant segment expenses:

Research and development

Personnel related

Total research and development

General and administrative

Interest income

$ ( 12,287,461 )

( 7,794,690 )

Subsequent Events

As of January 1, 2025, the Company’s 2021 Plan increased by 125,888 shares based upon a five percent evergreen upon 2,517,768 Common Shares outstanding of as of December 31, 2024, increasing the number of shares issuable under the 2021 Plan pool to 152,563 .

On January 13, 2025, the Company granted 152,500 stock option awards to employees and directors of the Company with an exercise price of $ 1.38 based upon the closing stock price on that day.

After the January 2025 stock option grants, the Company has 63 shares to be issued remaining in the 2021 Plan pool.

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, but no financial obligations or consideration is contemplated in the Clinical Trial Agreement.

On January 21, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional and accredited investors for the issuance and sale in a private placement (the “Private Placement”) of (i) 1,935,412 shares (the “Shares”) of the Company’s Common Stock, (ii) pre-funded warrants (“Pre-Funded Warrants”) to purchase up to 72,468 shares of Common Stock, at an exercise price of $0.001 per share, and (iii) warrants (the “Warrants”) to purchase up to 2,007,880 shares of Common Stock at an exercise price of $1.27 per share.

The purchase price per Share and accompanying Warrant was $1.27 and the purchase price per Pre-Funded Warrant and accompanying Warrant was $1.269 .

The Pre-Funded Warrants are exercisable immediately, and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.

The Warrants will be exercisable beginning on the effective date of stockholder approval of the issuance of the shares of Common Stock issuable upon exercise of the Warrants.

The Warrants will expire five years from the effective date of stockholder approval.

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 Private Placement.

These Company insiders purchased an aggregate of 1,220,476 Shares and Warrants to purchase up to an aggregate of 1,220,476 shares of Common Stock, for an aggregate purchase price of approximately $ 1,550,000 .

The purchase price per Share and accompanying Warrant for these Company insiders was the same as paid by other investors in the Private Placement.

The net proceeds to the Company from the Private Placement were approximately $ 2.4 million, after deducting placement agent fees and estimated offering expenses payable by the Company.

In February 2025, the holder of the 72,468 Pre-Funded Warrants exercised their shares, resulting in a 72,468 share increase to Common Stock outstanding prior to the filing of this document.

In January 2025, the Holder of the September 2024 PIPE pre-funded warrants exercised their remaining 905,000 pre-funded warrants.

Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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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