What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-19 compared with 2025-03-18 · 328 added, 315 removed, 741 unchanged (46% of the section changed)

2 unchanged sentences

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firms (PCAOB ID:

Report of Independent Registered Public Accounting Firm (Grant Thornton LLP - PCAOB ID:

Report of Independent Registered Public Accounting Firm (Crowe LLP - PCAOB ID:

Report of Independent Registered Public Accounting Firm (KMJ Corbin & Company LLP - PCAOB ID:

Balance Sheets

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Eton Pharmaceuticals Inc.

Opinion on the financial statements

We have audited the accompanying balance sheet of Eton Pharmaceuticals, Inc.

(the “Company”) as of December 31, 2025, the related statement of operations, stockholders’ equity, and cash flows for the year ended December 31, 2025, 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, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

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 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 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 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 audits 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 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.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Medicaid Rebates and Related Liability

As described further in Note 3 to the financial statements, the Company recognizes revenue from product sales net of estimated sales deductions, including state Medicaid rebates.

The state Medicaid rebate and related liability are estimated based on monthly sales, historical experience of claims submitted by the various states and jurisdictions, historical rebate rates and estimated lag time of the rebate invoices.

We identified Medicaid rebates as a critical audit matter.

The principal considerations for our determination that Medicaid rebates and the related liability represent a critical audit matter were (i) the significant judgment applied by management in estimating and accruing Medicaid rebates and (ii) the high degree of auditor judgment and effort required to evaluate the assumptions underlying the estimate.

In addition, timing differences may arise between when product sales occur and when the Company receives related state Medicaid rebate invoices, which vary based on individual state Medicaid program requirements.

Our audit procedures related to Medicaid rebates and the related liability included, among others, the following:

Obtaining an understanding of the design of relevant controls over the estimation and recording of Medicaid rebates and the related liability.

Evaluating state Medicaid rebate invoices received and related payments made during the year and their potential impact on the accrual at December 31, 2025.

Testing the completeness and accuracy of Medicaid rebate‑eligible product sales by agreeing underlying sales data to supporting documentation.

Recalculating the estimated Medicaid rebate liability using management’s assumptions (rebate rates, patient coverage, timing of invoices and billing variability) and inputs, which we assessed for reasonableness based on historical experience and other data.

Agreeing rebates paid under state Medicaid programs during 2025 to supporting documentation.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2025.

Chicago, Illinois

March 19, 2026

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Stockholders and the Board of Directors of Eton Pharmaceuticals, Inc.

Deer Park, Illinois

Opinion on the Financial Statements

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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.

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.

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

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

State Medicaid Rebates and Liability

Critical Audit Matter Description

As described in Note 3 of the Notes to Financial Statements, the Company recognizes revenue from product sales net of estimated sales deductions, including state Medicaid rebates.

We determined that auditing management’s estimate of the state Medicaid rebates was a critical audit matter because it was especially challenging to evaluate management’s judgments related to the data and significant assumptions used to determine the rebates.

These include the identification of product sales subject to state Medicaid rebates as well as the historical rebate percentage applied to eligible sales.

Additionally, there can be timing differences between when product sales occur and when the Company receives the related state Medicaid rebate invoices, which can vary based on state Medicaid program requirements.

How the Critical Audit Matter was Addressed in the Audit

Our audit procedures over management’s estimated state Medicaid rebates and related liability included the following:

Evaluated management’s method to determine the rebate liability based on (1) product sales subject to state Medicaid rebates and (2) the applicable rebate percentages.

Tested the completeness and accuracy of state Medicaid rebate-eligible product sales by agreeing sales data to supporting documentation.

Agreed rebate percentages paid under state Medicaid programs in 2024 to corresponding invoices by product.

Recalculated the estimated rebate liability.

Assessed the reasonableness of management’s assumption of timing differences between product sales and the receipt of state Medicaid rebate invoices.

Evaluated subsequent state Medicaid rebate invoices and related payments to identify any information that might require an adjustment to the recorded liability.

Valuation of Acquired Inventory and Intangible Asset for the Increlex Acquisition

Critical Audit Matter Description

As described in Note 4 of the financial statements, on October 2, 2024, the Company entered into an asset purchase agreement to acquire Increlex from Ipsen S.A., with the transaction closing on December 19, 2024.

Management determined that the acquisition should be accounted for as a business combination under ASC 805.

We determined that auditing management’s valuation of the acquired inventory and intangible asset was a critical audit matter due to the significant judgment and estimation uncertainty involved in determining the fair value of the acquired inventory and intangible asset.

Evaluating the valuation of acquired inventory and intangible asset was complex because it involved management’s estimates and assumptions regarding:

Costs to complete and sell inventory, which required assessing expected selling prices and estimated costs to complete and sell acquired inventory.

Future cash flows, contributory asset charges and discount rates used to value the intangible asset.

Valuation methodologies and significant assumptions, which required specialized knowledge.

How the Critical Audit Matter was Addressed in the Audit

Our audit procedures over management’s valuation of the acquired inventory and intangible asset for the Increlex acquisition included:

Assessed the methodologies used to value the acquired inventory and intangible asset with assistance from valuation specialists.

Performed an inventory observation for the acquired inventory and agreed to management’s identified quantities in the inventory fair value analysis.

Assessed inventory valuation estimates by evaluating the reasonableness of management’s assumptions for costs to complete and sell acquired inventory.

Recalculated management’s analysis of the inventory value.

Assessed the reasonableness of the intangible asset valuation by evaluating projected financial data assumptions, contributory asset charges and discount rates used in valuation models.

Recalculated management’s analysis of the intangible asset value.

Evaluated financial statement disclosures to determine whether the fair value measurement considerations were adequately disclosed.

/s/ Crowe LLP

We have served as the Company’s auditor since 2024.

We served as the Company's auditor from 2024 to 2025

Oakbrook Terrace, Illinois

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Eton Pharmaceuticals, Inc.

To the Board of Directors and Stockholders of

Eton Pharmaceuticals, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Eton Pharmaceuticals, Inc.

(the “Company”) as of December 31, 2023, the related statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, 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 each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying statements of operations, stockholders’ equity, and cash flows of Eton Pharmaceuticals, Inc.

(the “Company”) for the year ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

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

Basis for Opinion

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

Our responsibility is to express an opinion on these financial statements based on our audits.

Our responsibility is to express an opinion on these financial statements based on our audit.

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

We conducted our audits in accordance with the standards of 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.

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.

Accordingly, we express no such opinion.

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

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.

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.

/s/ KMJ Corbin & Company LLP

We served as the Company's auditor from 2018 through 2024.

We served as the Company's auditor from 2018 to 2024.

Glendora, California

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Inventories, net

15,419 15,232

Prepaid expenses and other current assets

3 unchanged sentences

Intangible assets, net

30,878 34,881

Operating lease right-of-use assets, net

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Long-term debt, net of discount and including accrued fees

21,769 29,811

Operating lease liabilities, net of current portion

64 unchanged sentences

— — 3,137 — 3,137

Stock option exercises

Stock option exercises and vesting of restricted stock units

299,028 1 148 — 149

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86,782 — 229 — 229

Common stock issued related to restricted stock units

Stock warrant exercises

Shares withheld related to net share settlement of stock option exercises

( 50,867 ) — ( 180 ) — ( 180 )

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25,688,062 26 119,521 ( 104,070 ) $ 15,477

Common stock issued in private placement offering

583,334 1 6,999 — 7,000

Stock-based compensation

4 unchanged sentences

80,933 — 248 — 248

Shares withheld related to net share settlement of stock option exercises

Relative fair value of warrants issued in connection with debt

— — 1,170 — 1,170

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26,709,084 27 132,294 ( 107,893 ) $ 24,428

Common stock issued in private placement offering

583,334 1 6,999 — 7,000

Stock-based compensation

4 unchanged sentences

321,083 0 598 — 598

Relative fair value of warrants issued in connection with debt

— — — ( 4,601 ) ( 4,601 )

— — — ( 3,823 ) ( 3,823 )

Balances at December 31, 2025

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For the years ended

Cash flows from operating activities

Cash flows from (used in) operating activities

$ ( 4,601 ) $ ( 3,823 ) $ ( 936 )

Adjustments to reconcile net loss to net cash from operating activities:

Adjustments to reconcile net loss to net cash from (used in) operating activities:

Stock-based compensation

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4,044 1,146 901

Non-cash lease expense

Inventory step-up

Excess and obsolete inventory reserve

Debt discount amortization

696 1,109 117

Non-cash lease expense

Changes in operating assets and liabilities, net of impact of business acquisition:

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Other non-current assets and liabilities

Net cash from operating activities

Net cash from (used in) operating activities

10,524 969 6,815

Cash from investing activities

Cash from (used in) investing activities

Purchases of property and equipment

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— ( 9,988 ) ( 775 )

Net cash from investing activities

Net cash from (used in) investing activities

( 333 ) ( 40,014 ) ( 775 )

Cash flows from financing activities

Cash flows from (used in) financing activities

Net proceeds from the issuance of long-term debt

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Proceeds from stock option exercises

598 1,191 149

Payment of tax withholding related to net share settlement of stock option exercises

Employee stock purchase plan

Stock warrant exercises

Net cash from financing activities

Net cash from (used in) financing activities

815 32,593 ( 957 )

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Eton is an innovative pharmaceutical company focused on developing and commercializing treatments for rare diseases.

We currently have seven commercial rare disease products:

INCRELEX®, ALKINDI SPRINKLE®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone.

We have six additional product candidates in late-stage development:

ET- 400, ET- 600, Amglidia®, ET- 700, ET- 800 and ZENEO® hydrocortisone autoinjector.

We currently have eight commercial rare disease products:

INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous and Nitisinone.

We have five additional product candidates in late-stage development:

ET- 600, Amglidia®, ET- 700, ET- 800 and ZENEO® hydrocortisone autoinjector.

Note 2 — Liquidity Considerations

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The Company has prepared the accompanying financial statements in accordance with GAAP.

Certain prior period amounts, have been reclassified to conform to current year presentation in the financial statements and notes to financial statements and these reclassifications had no impact to prior period financial statements.

Certain prior period amounts, have been reclassified to conform to current year presentation in the financial statements and notes to the financial statements.

Use of Estimates

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If so, the Company concludes that the acquired set is a business.

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 3 — Summary of Significant Accounting Policies (continued)

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Segment Information

The Company operates the business on the basis of a single reportable segment, which includes seven commercial rare disease products:

INCRELEX®, ALKINDI SPRINKLE®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone.

The Company operates the business on the basis of a single reportable segment, which includes eight commercial rare disease products:

INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone.

The Company derives revenues from product sales to specialty pharmacy customers, who then provide order fulfillment, inventory storage and distribution services.

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Additionally, the measure of segment assets is reported on the Company’s balance sheet as total assets.

The Company's revenues and its accounts receivable balances are highly concentrated and consist of sales to and amounts due from AnovoRx and Optime Care for the Company's ALKINDI SPRINKLE®, Carglumic Acid, and Betaine Anhydrous products, as well as from Pentec Heath for sales of the Company’s PKU GOLIKE® product.

The Company's revenues and its accounts receivable balances are highly concentrated and consist of sales to and amounts due from AnovoRx and Optime Care for the Company's INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , GALZIN®, Carglumic Acid, Betaine Anhydrous and Nitisinone products, as well as from Pentec Health for sales of the Company’s PKU GOLIKE® product.

For the years ended December 31, 2025, 2024 and 2023 , AnovoRx product sales represented 84.6 %, 93.6 % and 78.2 % of net revenues, respectively.

As of December 31, 2025 and 2024 , AnovoRx product sales represented 88.4 % and 96.2 % of net accounts receivable.

For the years ended December 31, 2024, 2023 and 2022, the Company's revenues from external customers were entirely derived from U.S operations and did not include any foreign countries.

For the year ended December 31, 2025, the Company's revenues from external customers were derived from U.S operations and included product sales to U.S.

and foreign countries.

During the years ended December 31, 2024 and 2023, the Company's revenues from external customers were entirely derived from U.S operations and did not include any foreign countries.

As of December 31, 2025 and 2024 , all long-lived assets were domiciled within the U.S.

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The Company reviews its inventories for potential excess or obsolete issues on an ongoing basis and records a write-down if an impairment is identified.

As of December 31, 2024, inventories consisted of purchased finished goods, semi-finished goods and raw materials.

As of December 31, 2023, inventories consisted of purchased finished goods.

At December 31, 2024 inventories are shown net of a reserve for Nitisinone, Betaine Anhydrous, ALKINDI SPRINKLE® and PKU GOLIKE® inventory.

As of December 31, 2024, inventories included $ 5,000 in prepaid raw materials acquired in the INCRELEX® business acquisition.

At December 31, 2023, inventories are shown net of reserve for ALKINDI SPRINKLE® due to the risk of expiry prior to being sold.

As of December 31, 2025 and December 31, 2024 , inventories consisted of purchased finished goods, semi-finished goods and raw materials.

There was an inventory reserve of $ 1,199 and $ 605 at December 31, 2025 and 2024 , respectively.

As of December 31, 2024 , inventories included $ 5,000 in prepaid raw materials acquired in the INCRELEX® business acquisition.

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 3 — Summary of Significant Accounting Policies (continued)

Property and Equipment

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Maintenance and repairs are charged to expense as incurred, while renewals and improvements are capitalized.

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 3 — Summary of Significant Accounting Policies (continued)

Intangible Assets

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The cost is amortized on a straight-line basis over the estimated useful life of the product commencing on the approval date or the product acquisition date in accordance with ASC 350 — Intangibles - Goodwill and Other.

In November 2021, the Company purchased the rights for its Carglumic Acid product for $ 3,250 and that cost is being amortized over ten years.

A $ 750 payment related to the approval of Biorphen had been capitalized in 2019 and that cost was being amortized over five years.

As a result of the Biorphen sale to Dr.

Reddy’s (see Note 15 ), amortization of that asset was accelerated to record $ 275 of expense in June 2022 and the remaining $ 75 of expense in the last six months of the year ended December 31, 2022.

A $ 750 payment related to the approval of Rezipres® had been capitalized in Q1 2022 and that cost was being amortized over five years.

As a result of the sale to Dr.

Reddy’s, amortization of the Rezipres® asset was accelerated to record the remaining $ 738 in the three -month period ended June 30, 2022.

In September 2022, the Company purchased the rights for its Betaine Anhydrous product for $ 2,125 and that cost is being amortized over five years.

In October 2023, the Company purchased the rights for its Nitisinone product for $ 650 and that cost is being amortized over five years.

In March 2024 , the Company purchased the rights for its PKU GOLIKE® product which resulted in a $ 1,868 intangible asset that is being amortized over ten years.

In December 2024, the Company completed a business combination of INCRELEX® (mecasermin injection) for $ 21,250 and that cost is being amortized over ten years.

In December 2024, the Company acquired GALZIN® (zinc acetate) for $ 8,119 and that cost will be amortized over ten years.

The intangible assets, net on the Company’s balance sheet reflected $ 2,381 and $ 1,286 of accumulated amortization as of December 31, 2024 and 2023.

The Company recorded $ 1,096 , $ 790 , and $ 1,617 of amortization expense for the years ended December 31, 2024, 2023 and 2022 respectively.

The following table presents the Company's intangible asset as of December 31, 2025 and 2024:

Intangible asset

Carglumic Acid

10 November 2021

$ 3,250 $ 1,354 $ 1,896

5 September 2022

2,125 1,399 726

5 October 2023

10 March 2024

1,868 327 1,541

10 December 2024

21,250 2,200 19,050

10 December 2024

8,119 812 7,307

$ 37,262 $ 6,384 $ 30,878

Intangible asset

Carglumic Acid

10 November 2021

$ 3,250 $ 1,029 $ 2,221

5 September 2022

2,125 974 1,151

5 October 2023

10 March 2024

1,868 140 1,728

10 December 2024

21,250 76 21,174

10 December 2024

8,119 — 8,119

$ 37,262 $ 2,381 $ 34,881

T he Company recorded $ 4,003 , $ 1,096 , and $ 790 of amortization expense for the years ended December 31, 2025, 2024 and 2023 respectively.

The table below shows the estimated remaining amortization for these products for each of the five years from 2026 to 2030 and thereafter.

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No impairment was recognized during the years ended December 31, 2025, 2024 and 2023 .

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Debt Issuance Costs and Debt Discount and Detachable Debt-Related Warrants

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Debt discounts relate to the relative fair value of warrants issued in conjunction with the debt and are also recorded as a reduction to the debt balance and accreted over the expected term of the debt to interest expense using the effective interest method.

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 3 — Summary of Significant Accounting Policies (continued)

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These programs could be adversely affected by a significant interruption in the manufacturing process.

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 3 — Summary of Significant Accounting Policies (continued)

The Company is also subject to credit risk from its accounts receivable related to product sales as it extends credit based on an evaluation of the customer’s financial condition, and collateral is not required.

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and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct.

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determine those that are performance obligations and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

2 unchanged sentences

The exercise of a material right is accounted for as a contract modification for accounting purposes.

The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied at a point in time.

For the years ended December 31, 2022, 2023 and 2024, all revenues recognized in the Statements of Operations were point in time sales to the Company's customers.

Milestone Payments – If a commercial contract arrangement includes development and regulatory milestone payments, the Company will evaluate whether the milestone conditions have been achieved and if it is probable that a significant revenue reversal would not occur before recognizing the associated revenue.

Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received.

Eton Pharmaceuticals, Inc

2 unchanged sentences

Note 3 — Summary of Significant Accounting Policies (continued)

For the years ended December 31, 2023 , 2024 and 2025 , all revenues recognized in the Statements of Operations were point in time sales to the Company's customers.

Royalties – For arrangements that include sales-based royalties, including milestone payments based on a level of sales, which are the result of a customer-vendor relationship and for which the license is deemed to be the predominant item to which the royalties relate, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied.

The Company sells its INCRELEX®, ALKINDI SPRINKLE®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone products to pharmacy distributor customers which provide order fulfilment and inventory storage/distribution services.

The Company may sell products in the U.S.

to wholesale pharmaceutical distributors, who then sell the product to hospitals and other end-user customers.

Sales to wholesalers are made pursuant to purchase orders subject to the terms of a master agreement, and delivery of individual shipments represent performance obligations under each purchase order.

The Company sells its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone products to pharmacy distributor customers which provide order fulfilment and inventory storage/distribution services.

The Company uses a third -party logistics ( “3PL” ) vendor to process and fulfill orders and has concluded it is the principal in the sales to wholesalers because it controls access to the 3PL vendor services rendered and directs the 3PL vendor activities.

The Company has no significant obligations to wholesalers to generate pull-through sales.

For its INCRELEX®, ALKINDI SPRINKLE®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone

For its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI

TM , GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone

products, the Company bills at the initial product list price which are subject to offsets for patient co-pay assistance and potential state Medicaid reimbursements which are recorded as a reduction of net revenues at the date of sale/shipment.

1 unchanged sentence

The Company estimates the transaction price when it receives each purchase order taking into account the expected reductions of the selling price initially billed to the wholesaler/distributor arising from all of the above factors.

The Company has developed estimates for future returns and chargebacks and the impact of other discounts and fees it pays, although INCRELEX®, ALKINDI SPRINKLE®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone sales are not subject to returns.

The Company stores its INCRELEX®, ALKINDI SPRINKLE®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone inventory at its pharmacy distributor customer locations, and sales are recorded when stock is pulled and shipped to fulfill specific patient orders.

The Company has developed estimates for future returns and chargebacks and the impact of other discounts and fees it pays, although INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone.

sales are not subject to returns.

The Company stores its INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone.

inventory at its pharmacy distributor customer locations, and sales are recorded when stock is pulled and shipped to fulfill specific patient orders.

The Company may recognize revenue and cost of sales from products sold to wholesalers upon delivery to the wholesaler location.

6 unchanged sentences

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 3 — Summary of Significant Accounting Policies (continued)

Cost of Product Sales

2 unchanged sentences

Cost of sales also reflects any write-downs or reserve adjustments for the Company’s inventories.

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 3 — Summary of Significant Accounting Policies (continued)

Research and Development Expenses

9 unchanged sentences

Basic net income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period.

Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders for the period by the weighted average number of common and common equivalent shares, such as Series A Preferred, unvested restricted stock, stock options and warrants that are outstanding during the period.

Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders for the period by the weighted average number of common and common equivalent shares, such as unvested restricted stock, stock options and warrants that are outstanding during the period.

Common stock equivalents are excluded from the computation when their inclusion would be anti-dilutive.

12 unchanged sentences

The Company accounts for forfeitures as they occur.

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 3 — Summary of Significant Accounting Policies (continued)

As part of the process of preparing the Company’s financial statements, the Company must estimate the actual current tax liabilities and assess temporary differences resulting from differing treatment of items for tax and accounting purposes.

4 unchanged sentences

The Company accounts for income taxes under the provisions of ASC 740 - Income Taxes.

As of December 31, 2024, $ 382 is included in the balance sheets for unrecognized tax positions.

The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense.

The Company had no accrual for interest or penalties in its balance sheets at December 31, 2024 or 2023 , and has not recognized interest and penalties in the Statements of Operations for the years ended December 31, 2024, 2023 and 2022 .

For the years ended December 31, 2025 2024 and 2023, the Company recognized interest and penalties in the Statements of Operations for $ 3 , $ 6 and $ 0 , respectively.

As of December 31, 2025 , the Company is subject to taxation in the United States and certain individual states – primarily Illinois and Tennessee.

22 unchanged sentences

New Pronouncements Adopted

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures, which enhances reportable segment disclosure requirements primarily through expanded disclosures around significant segment expenses.

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

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

The Company adopted the new accounting pronouncement on January 1, 2024.

The adoption of this guidance did not have an effect on the Company’s financial position, results of operations and cash flows.

New Pronouncements Issued

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ):

1 unchanged sentence

The amendments are effective for the Company's annual periods beginning January 1, 2025, with early adoption permitted, and may be applied either prospectively or retrospectively.

The Company is assessing the guidance, noting the adoption impacts disclosure only.

The Company has adopted this new guidance in its financial statements on a prospective basis.

New Pronouncements Issued

In November 2024, the FASB issued ASU 2024 - 03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220 - 40 ).

3 unchanged sentences

This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted.

The Company is assessing the guidance, noting the adoption impacts disclosure only.

The Company is currently evaluating the effect of this new guidance on its financial statements.

Note 4 – Business Combination

13 unchanged sentences

therefore, the Company accounted for the Purchase Agreement as a business combination and applied the acquisition method of accounting.

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 4 – Business Combination (continued)

27 unchanged sentences

The separate consideration under the TSA will be expensed as occurred and when services are received.

Acquisition related costs

For the year ended December 31, 2024, the Company incurred acquisition related costs of $ 415 , which were expensed as incurred and included in general and administrative expenses in the Statements of Operations.

Unaudited actual and pro forma information

For the year ended December 31, 2024, the Company recognized $ 166 of net sales related to Increlex® in the Statements of Operations.

The following unaudited pro forma summary presents information of the Company, including Increlex®, as if the Purchase Agreement had occurred on January 1, 2023:

Year Ended December 31,

$ 53,206 $ 50,362

$ ( 6,590 ) $ ( 1,612 )

These pro forma results are for illustrative purposes and are not indicative of the actual results of operations that would have been achieved, nor are they indicative of future results of operations.

The unaudited pro forma information for all periods presented was adjusted to give effect to pro forma events that are directly attributable to the Purchase Agreement and are factually supportable.

The adjustments are based on information available to the Company at this time.

Accordingly, the adjustments are subject to change, and the impact of such changes may be material.

The unaudited pro forma results do not include any incremental cost savings that may result from the integration.

Acquisition/divestiture related costs

For the years ended December 31, 2025 and December 31, 2024 , the Company incurred acquisition and divestiture related costs of $ 581 and $ 415 , respectively, which were expensed as incurred and included in general and administrative expenses in the Statements of Operations.

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 5 – Property and Equipment

8 unchanged sentences

Depreciation expense for the years ended December 31, 2025, 2024 and 2023 was $ 41 , $ 50 and $ 44 , respectively.

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 6 – Inventory

Inventory consisted of the following:

Raw materials

$ 557 $ 5,355

Semi-finished goods

Finished goods

excess and obsolete inventory reserve

( 1,199 ) ( 605 )

Inventory, net

$ 15,419 $ 15,232

During the years ended December 31, 2025, 2024 and 2023 , provision reserves for excess and obsolete inventory was $ 594 , $ 529 and $ 15 , respectively.

Note 7 – Debt

In November 2019, the Company entered into a credit agreement (the “SWK Credit Agreement”) with SWK, which provided for up to $ 10,000 in debt financing.

The Company received proceeds of $ 5,000 at closing and was able to borrow an additional $ 5,000 upon the FDA approval of a second product developed by the Company.

In March 2020, the Company and SWK amended the SWK Credit Agreement, which provided the Company with the option to immediately draw an additional $ 2,000 and the ability to borrow up to another $ 3,000 based upon the FDA approval of EM- 100 and ALKINDI SPRINKLE® which subsequently occurred in September 2020.

Accordingly, the Company borrowed an additional $ 2,000 in August 2020.

Under the terms of the SWK Credit Agreement, the Company was required to maintain a minimum cash balance of $ 3,000 and pay 5.5 % of the loan principal balance commencing in February 2022 and then every three months thereafter until November 2024 at which time the remaining principal balance is due.

In February 2021, the Company notified SWK that it will not require additional borrowing capacity under the SWK Credit Agreement and terminated the additional borrowing capacity with SWK.

In connection with the initial $ 5,000 borrowed in November 2019, the Company issued warrants to SWK to purchase 51,239 shares of the Company’s common stock with an exercise price of $ 5.86 per share.

The relative fair value of these 51,239 warrants was $ 226 and was estimated using the Black-Scholes-Merton option pricing model with the following assumptions:

fair value of the Company’s common stock at issuance of $ 5.75 per share;

seven -year contractual term;

95 % volatility;

0 % dividend rate;

and a risk-free interest rate of 1.8 %.

In connection with the additional $ 2,000 borrowed in August 2020, the Company issued warrants for 18,141 shares of its common stock at an exercise price of $ 6.62 per share.

The relative fair value of the 18,141 warrants was $ 94 and was estimated using the Black-Scholes-Merton option pricing model with the following assumptions:

fair value of the Company’s common stock at issuance of $ 6.85 per share;

seven -year contractual term;

95 % volatility;

0 % dividend rate;

and a risk-free interest rate of 0.4 %.

These warrants (the “SWK Warrants”) are exercisable immediately and have a term of seven years from the date of issuance.

The SWK Warrants are subject to a cashless exercise feature, with the exercise price and number of shares issuable upon exercise subject to adjustment in connection with stock splits, dividends, reclassifications and other conditions.

In April 2022, the Company and SWK entered into an amendment to the SWK Credit Agreement which allowed for a deferral of loan principal payments until May 2023 and reduced the interest rate to LIBOR 3 -month plus 8.0 %, subject to a stated LIBOR floor rate of 2.0 %.

Because LIBOR was phased out as of June 2023, the Company amended the Credit Agreement in August 2023 to refer to Term SOFR , with an interest rate of Term SOFR plus 8.26 %, subject to a stated Term SOFR floor rate of 5.0 %.

In September 2024, the Company and SWK entered into an amendment to the SWK Credit Agreement, which was contingent upon the closing of the INCRELEX® Purchase Agreement.

Under the terms of the amendment, the Company expanded its existing credit facility by $ 25.7 million to $ 30.0 million, extended the facility’s maturity to three years from closing with a loan maturity date of December 17, 2027, and reduced the facility’s annual interest rate to Secured Overnight Financing Rate (“SOFR”) plus 6.75 %.

In connection with the amendment to the SWK Credit Agreement, the Company issued a warrant to the SWK for the purchase of up to 289,736 shares of common stock at a price of $ 5.32 per share.

The relative fair value of these 289,7369 warrants was $ 1,170 and was estimated using the BSM with the following assumptions:

fair value of the Company’s common stock at issuance of $ 6.00 per share with an exercise price of $5.32;

seven -year contractual term;

63.8 % volatility;

0 % dividend rate;

and a risk-free interest rate of 3.67 %.

As a result of subsequent amendments to the SWK Credit Agreement, the Company expanded its credit facility to $ 30,000 , extended the facility’s maturity to three years from closing with a loan maturity date of December 17, 2027, and reduced the facility’s annual interest rate to Secured Overnight Financing Rate (“ SOFR ”) plus 6.75 %.

Interest payments are payable quarterly, with quarterly principal payments of $ 3,000 beginning in May 2026 with a final principal payment of $ 9,000 due at maturity in December 2027.

The amended SWK Credit Agreement includes a 5.0 % exit fee payable at maturity and this exit fee payable will be accreted to interest expense in the Company's Statement of Operations using the effective interest expense method.

The amended SWK Credit Agreement contains a mandatory prepayment clause that can compel the Company to partially prepay the loan upon certain triggering events, which the Company has deemed to be remote.

Borrowing under the amended SWK Credit Agreement is secured by the Company's assets, contains customary default provisions, which include limits on additional indebtedness.

The SWK Credit Agreement includes a 5.0 % exit fee payable at maturity and this exit fee payable will be accreted to interest expense in the Company's Statement of Operations using the effective interest expense method.

The SWK Credit Agreement contains a mandatory prepayment clause that can compel the Company to partially prepay the loan upon certain triggering events, which the Company has deemed to be remote.

Borrowing under the SWK Credit Agreement is secured by the Company's assets, contains customary default provisions, which include limits on additional indebtedness.

As of December 31, 2025 and 2024 , the Company was in compliance with all financial covenants.

2 unchanged sentences

The Company had accrued interest of $ 425 and $ 182 as of December 31, 2025 and 2024 , respectively, which is included in accrued liabilities in the accompanying Balance Sheets.

As of December 31, 2025 and 2024, the effective interest rate was 14.62 % and 14.46 %, respectively.

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The table below reflects the future annual payments for the SWK loan principal as of December 31, 2025 .

5 unchanged sentences

The Company has 50,000,000 authorized shares of $ 0.001 par value common stock under its Amended and Restated Certificate of Incorporation.

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 7 — Common Stock (continued)

For the years ended December 31, 2024, 2023 and 2022, the Company issued 266,353 , 207,626 (net shares issued after a portion of 407,808 shares was a cashless exercise) and 25,000 , respectively, of its common stock resulting from stock option exercises under its 2018 Equity Incentive Plan (see Note 9 ).

For the years ended December 31, 2025, 2024 and 2023 , the Company issued 161,933 , 266,353 and 207,626 (net shares issued after a portion of 407,808 shares was a cashless exercise), respectively, of its common stock resulting from stock option exercises under its 2018 Equity Incentive Plan (see Note 10 ).

The Company withheld 50,867 shares for payroll tax obligations totaling $ 180 for the year ended December 31, 2023.

16 unchanged sentences

The holders of these warrants or their permitted transferees, are entitled to rights with respect to the registration under the Securities Act of their shares that are converted to common stock, including demand registration rights and piggyback registration rights.

These rights are provided under the terms of a registration rights agreement between the Company and the investors.

These rights are provided under the terms of a registration rights agreement between the Company and the holders.

On September 30, 2024, in c onnection with the Company's amendment to expand its existing credit facility to $ 30.0 million with SWK, the Company issued 289,736 warrants to SWK at a price of $ 5.32 per share.

The relative fair value of these 289,736 warrants was $ 1,170 and was estimated using the BSM with the following assumptions:

The fair value of these 289,736 warrants was $ 1,170 and was estimated using the BSM with the following assumptions:

fair value of the Company’s common stock at issuance of $ 6.00 per share with an exercise price of $5.32;

3 unchanged sentences

and a risk-free interest rate of 3.67 %.

A roll forward of warrants outstanding as of December 31, 2024 is listed in the table below:

Balance as of the beginning of the year

69,380 69,380

Issuance of SWK Warrants - Debt (Tranche #3)

289,736 289,736

Balance as of the end of the year

359,116 359,116

There were 1,067,242 warrants exercised on a cashless basis in 2022 resulting in 632,231 shares of common stock being issued by the Company.

There were no warrants exercised in 2023, 2024 or 2025.

13 unchanged sentences

On January 1, 2025, the share reserve was increased by 1,068,363 shares based on the 26,709,084 shares of common stock outstanding at December 31, 2024.

The exercise price for stock options granted is not less than the fair value of common stock as determined by the board of directors as of the date of grant.

On January 1, 2026, the share reserve was increased by 1,081,882 shares based on the 27,047,061 shares of common stock outstanding at December 31, 2025.The exercise price for stock options granted is not less than the fair value of common stock as determined by the board of directors as of the date of grant.

The Company uses the closing stock price on the date of grant as the exercise price.

To date, all stock options issued have been non-qualified stock options, and the exercise prices were set at the fair value for the shares at the dates of grant.

Options typically have a ten -year life, except for options to purchase 50,000 shares of the Company’s common stock granted to product consultants in July 2017 that expired, unexercised, in July 2022 as the Company was not able to file certain product submissions to the FDA prior to the five -year expiration date.

Furthermore, these option awards to the Company’s product consultants would not vest unless certain product submissions are made to the FDA, and accordingly, the Company has not recorded any expense for these contingently vesting option awards to its product consultants.

In July 2022 and September 2022, the Company’s board of directors approved modifications of certain outstanding awards of two senior executives, one of whom retired in May 2022 and the other whose employment was terminated in July 2022.

The combined awards had an exercise price range of $ 1.37 to $ 8.61 which were set to expire 90 days after retirement or termination as the case may be, and the Company extended the expiration dates to April 2023.

No other terms were modified.

Due to these modifications, the Company incurred a modification expense of approximately $ 104 that is included in general and administration expense on the Statement of Operations for the year ended December 31, 2022.

Stock options typically have a ten -year life, are issued in the form of non-qualified stock options, and the exercise prices were set at the fair value for the shares at the dates of grant.

In August 2024, the Company’s board of directors approved a modification of certain outstanding awards of a senior executive who retired in August 2024.

4 unchanged sentences

Of these amounts, $ 5,330 , $ 2,899 , and $ 2,864 was recorded in general and administrative expenses, respectively, and $ 182 , $ 266 , and $ 273 was recorded in R&D expenses, respectively.

The tax deductions related to stock compensation expense during the years ending December 31 2025, 2024 and 2023, were approximately $ 1,006 , $ 530 , and $ 486 , respectively, on a tax-effected basis.

Stock Options

16 unchanged sentences

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had strike prices lower than the fair value of the Company’s common stock at December 31.

The intrinsic value of the options exercised during 2024 was $ 1,867 .

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 9 — Share-Based Payment Awards (continued)

For the years ended December 31, 2024, 2023 and 2022, there were 266,353 , 207,626 and 25,000 shares issued for exercise of stock options, respectively f or proceeds of $ 1,190 , $ 149 and $ 35 , respectively.

The intrinsic value of the options exercised during the twelve -months ended December 31, 2025 and 2024 was $ 1,852 and $ 1,867 , respectively.

For the years ended December 31, 2025, 2024 and 2023 , there were 161,933 , 266,353 and 207,626 , shares issued for exercise of stock options, respectively for proceeds of $ 598 , $ 1,191 and $ 149 , respectively.

The assumptions used to calculate the estimated fair value of options granted during the years ended December 31, 2025, 2024 and 2023 under the BSM were as follows:

15 unchanged sentences

Treasury instruments with maturities similar to the expected term of the Company’s stock options.

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Expected Dividend — The Company has not issued any dividends in its history and does not expect to issue dividends over the life of the options and therefore has estimated the dividend yield to be zero.

2 unchanged sentences

Restricted Stock Units (RSUs)

The following table summarizes restricted stock unit activity during the year ended December 31, 2024 :

The following table summarizes restricted stock unit activity during the years ended December 31, 2025 and 2024:

Weighted Average Grant-Date

December 31, 2024

Fair Value Per Unit

6 unchanged sentences

226,068 $ 3.82

255,956 $ 14.02

( 159,150 ) $ 9.29

( 44,373 ) $ 6.92

Outstanding and unvested as of December 31, 2025

278,501 $ 9.57

Stock-based compensation related to RSUs was $ 1,985 , $ 241 and $ 239 for the years ended December 31, 2025, 2024 and 2023 , respectively.

As of December 31, 2025 , there was $ 2,032 of unrecognized stock-based compensation expense related to unvested RSUs which will be recognized over a weighted average period of 2.4 years.

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 9 — Share-Based Payment Awards (continued)

Employee Stock Purchase Plan

9 unchanged sentences

As of December 31, 2025 , there were 825,687 shares available for issuance under the ESPP.

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 11 — Basic and Diluted Net Loss per Common Share

8 unchanged sentences

$ ( 0.17 ) $ ( 0.15 ) $ ( 0.04 )

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 12 — Related-Party Transactions

Chief Executive Officer

The CEO has a partial interest in a company that the Company has partnered with for its EM- 100/Alaway Preservative Free eye allergy product as described below.

The Company acquired the exclusive rights to sell the EM- 100 product in the United States pursuant to a sales and marketing agreement (the “Eyemax Agreement”) dated August 11, 2017 between the Company and Eyemax LLC (“Eyemax”), an entity affiliated with the Company’s CEO.

Under the terms of the original agreement, the Company would pay Eyemax $ 250 upon FDA approval and $ 500 upon the first commercial sale of the product and pay Eyemax a royalty of 10 % on the net sales of all products.

The Eyemax Agreement was for an initial term of 10 years, subject to successive two -year renewals unless the Company elected to terminate the Eyemax Agreement.

On February 18, 2019, the Company entered into an Amended and Restated Agreement with Eyemax amending the Sales Agreement (the “Amended Agreement”).

Pursuant to the Amended Agreement, Eyemax sold the Company all of its right, title and interest in EM- 100, including any such product that incorporates or utilizes Eyemax’s intellectual property rights.

Pursuant to the Amended Agreement, the Company paid Eyemax two milestone payments:

(i) one milestone payment for $ 250 upon regulatory approval in the territory by the FDA of the first single agent product and (ii) one milestone payment for $ 500 following the first commercial sale of the first single agent product in the territory.

The Company realized $ 1,840 of the non-royalty and royalty revenue throughout the life of the product.

The EM- 100 asset and its associated product rights were sold to Bausch Health on February 18, 2019 and future potential royalties of twelve percent on Bausch Health sales of the product, named Alaway® Preservative Free by Bausch, which was approved by the FDA in September 2020, were to be split between Eyemax and the Company.

There were no amounts due to Eyemax under the terms of the Amended Agreement as of December 31, 2024 or December 31, 2023 , and Bausch Health discontinued sales of Alaway® Preservative Free effective March 24, 2023.

The CEO has a partial interest in a company that the Company has partnered with for its EM- 100/Alaway Preservative Free eye allergy product.

Previously, the Company acquired DS- 200 and all related intellectual property pursuant to an asset purchase agreement (the “Selenix Agreement”) dated June 23, 2017 between the Company and Selenix LLC (“Selenix”), an entity affiliated with the CEO.

On August 30, 2024, the Company amended the Selenix Agreement in tandem with an agreement to sell DS- 200 in August 2024 ( see Note 12 ).

Pursuant to the terms of the amended Selenix Agreement, Selenix waived its rights to future milestone payments and 50 % of DS- 200 profit in exchange for 45 % of proceeds received by Eton from the DS- 200 sale agreement.

Selenix is 50 % owned by Messa Holdings LLC (“Messa”), which is 100 % owned by the CEO.

The Company paid $ 220 to Selenix in October 2024.

In March 2025, the Company recognized licensing revenue of $ 1,500 and $ 675 in cost of sales from a development milestone.

In June 2025, the Company paid $ 675 to Selenix.

Note 13 — Leases

The Company recognizes a right-of-use (“ROU”) asset and a lease liability on the balance sheet for substantially all leases, including operating leases, and separates lease components from non-lease components related to its office space lease.

In May 2025, the Company entered into an amendment to its office lease agreement to expand its office space, from 5,507 square feet, to 8,079 square feet and to renew its lease term.

The amendment to the lease agreement is effective September 1, 2025 and the renewal period for the office lease is for a sixty-five month period through January 2031 and which includes tenant improvement allowances.

The Company removed its existing ROU asset and liability and recorded $ 333 in ROU assets, $ 189 in tenant improvement allowances and $ 522 in operating lease liabilities in association with the lease extension.

In June 2024, the Company renewed its office lease for a two -year period through March 2027 and recorded $ 219 in ROU assets and $ 219 in operating lease liabilities in association with the lease extension.

2 unchanged sentences

The ROU asset non-cash lease expense was $ 44 , $ 70 and $ 67 for the years ended December 31, 2025, 2024 and 2023 , respectively, and is reflected within non-cash lease expense on the Company’s Statements of Cash Flows.

As of December 31, 2024 and 2023, the weighted average remaining lease term was 2.25 and 1.25 years, respectively and as of December 31, 2024 and 2023, the weighted average discount rate was 8.6 % for each period.

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 12 — Leases (continued)

The table below presents the lease-related assets and liabilities recorded on the balance sheet as of December 31, 2024 :

As of December 31, 2025 and 2024 , the average remaining lease term was 5.17 and 2.25 years, respectively and as of December 31, 2025 and 2024 , the average discount rate was 11.8 % and 8.6 %.

respectively, for each period.

The table below presents the lease-related assets and liabilities recorded on the balance sheet as of December 31, 2025 and December 31, 2024:

Classification

7 unchanged sentences

Total operating lease liabilities

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The Company’s future annual lease commitments as of December 31, 2025 are as indicated below:

2030 & thereafter

Undiscounted lease payments

14 unchanged sentences

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 13 – Income Taxes (continued)

4 unchanged sentences

Stock-based compensation

Research & development capitalization

Research & development credits

Medicare reserves

Accruals and other

4 unchanged sentences

Deferred tax assets

$ 1,482 $ 404

Deferred tax liabilities:

Prepaid expenses

$ ( 838 ) $ ( 174 )

IRC 481(a) adjustments

Deferred consideration discount

3 unchanged sentences

Other deferred tax liabilities

( 177 ) ( 142 )

Deferred tax liabilities

4 unchanged sentences

The Company's valuation allowance represents the amount of tax benefits that are likely to not be realized.

Based on the uncertainty of future taxable income at this time, Management believes a 100 % valuation reserve for the $ 20,589 and $ 21,516 net deferred tax assets at December 31, 2024 and 2023 , respectively, is appropriate.

A reconciliation of the income tax adjustments used to derive income tax expense is shown below for the years ended December 31, 2024, 2023 and 2022 as follows:

The Company has gross federal net operating losses of $ 49,697 , which can be carried forward indefinitely, and gross state net operating losses of $ 52,400 , which begin to expire in 2035.

The Company's federal net operating losses, and certain state net operating losses, are subject to an 80% annual utilization limitation.

In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change (by value) in its equity ownership over a three -year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited.

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

A reconciliation of the provision for income taxes to the amount computed by applying the statutory federal income tax rate to income taxes after the adoption of ASU 2023 - 09 is as follows:

Year ended December 31, 2025

U.S federal statutory tax rate

$ ( 957 ) 21.00 %

State and local income taxes (1)

State income tax, net of federal tax benefit

( 170 ) 3.75 %

Change in valuation allowance

207 ( 4.54 %)

Change in state tax rate

Change in uncertain tax position reserve

( 22 ) 0.48 %

Return to provision related to tax credit study

Income tax credits

Research and development tax credits

( 63 ) 1.37 %

Orphan drug tax credits

( 391 ) 8.58 %

Return to provision related to tax credit study

( 741 ) 16.25 %

Changes in valuation allowance

2,305 ( 50.59 %)

Nontaxable or nondeductible items

Section 162(m) limitation

389 ( 8.53 %)

Stock-based compensation

( 424 ) 9.30 %

Return to provision adjustments

Changes in unrecognized tax benefits

( 207 ) 4.53 %

Effective tax rate

$ 43 ( 0.94 %)

( 1 ) The state jurisdiction that contributes to the majority (greater than 50% ) of the tax effect in this category is Tennessee.

A reconciliation of the provision for income taxes to the amount computed by applying the statutory federal income tax rate to income before income taxes after the adoption of ASU 2023 - 09 is as follows:

Benefit based on federal statutory rate

12 unchanged sentences

Income tax expense

$ 15 $ 247 $ —

For the years ended December 31, 2024, 2023 and 2022, the Company's effective income tax rate was ( 0.4 %), ( 35.9 %) and 0.0 %, respectively.

As of December 31, 2024, The Company has gross federal net operating loss of $ 49,815 , which can be carried forward indefinitely, and gross state operating loss of $ 52,911 , which begin to expire in 2034.

The Company's federal net operating losses, and certain state net operating losses, are subject to an 80% annual utilization limitation.

The Company recognizes tax benefits from uncertain positions if it is more likely than not that the tax position will be sustained by the tax authority upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position.

2 unchanged sentences

Beginning balance

$ 382 $ — $ —

Gross increases (decreases) related to prior year positions

Gross increases (decreases) related to current year positions

Decreases related to settlements with taxing authorities

Reductions related to statute of limitation expirations

Ending balance

$ 434 $ 382 $ —

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

As of December 31, 2025, approximately $ 434 , would reduce the Company’s annual effective tax rate, if recognized.

The Company recognizes interest and, if applicable, penalties for any uncertain tax positions.

Interest and penalties related to uncertain tax positions are recorded as a component of income tax expense.

The Company accrued for interest and penalties associated with unrecognized tax benefits for the years ended December 31, 2025 and 2024 in the amount of $ 3 and $ 6 , respectively.

No interest or penalties associated with unrecognized tax benefits were accrued for in the year ended December 31, 2023.

The Company files income tax returns in the U.S.

federal jurisdiction and various state jurisdictions.

With the exception of tax attributes created in prior years that may potentially be adjusted, the federal statute of limitations remains open for the 2022 tax year to present and the state statutes of limitations generally remain open for the 2021 tax year to present.

The amounts of cash income taxes, net of refunds, paid by the Company during the year ended December 31, 2025 was as follows:

Total net payments (refunds)

The amount of cash income taxes, net of refunds, paid by the Company during the years ended December 31, 2024 and 2023 was $ 82 and $ 247 , respectively.

Note 15 - Employee Savings Plan

7 unchanged sentences

License and Product Development Agreements

The Company has entered into various agreements in addition to those discussed above which are described below.

The three oral solution pediatric neurology product candidates discussed below, Topiramate, Zonisamide and Lamotrigine, were developed by the Company and its various product candidate development partners and the Company subsequently sold all its rights and interests in these three products to Azurity in 2021, but retained rights to certain royalties.

The Company has recognized $ 27,500 in milestone revenues to date from these three products, and in June 2023 the Company amended its asset purchase agreement with Azurity and sold the remaining royalty interests it received back to Azurity for $ 5,500 .

Azurity will assume royalty or profit share obligations owed to development partners as well as additional milestone payments based on sales volume targets.

Prior to January 1, 2022, the Company worked with Tulex Pharmaceuticals, Inc.

(“Tulex”) as a third -party contract manufacturer to develop an oral solution for Topiramate (fka ET- 101 ) which targets a neurological condition.

In November 2021, the product received approval from the FDA and was launched by Azurity in December 2021.

The Company recognized a $ 5,000 milestone revenue at launch which was reflected in accounts receivable on the Company’s balance sheet at December 31, 2021 and subsequently collected in January 2022.

On January 23, 2019, the Company entered into a Licensing and Supply Agreement (the “Agreement”) with Liquimeds Worldwide (“LMW”) for Zonisamide oral liquid, a development stage product candidate (“ET- 104” ).

Pursuant to the terms of the Agreement, the Company was to be responsible for regulatory and marketing activities and LMW was responsible for development and manufacturing of ET- 104.

The Company paid $ 650 to Azurity upon issuance of patent covering ET- 104 listed in the FDA’s Orange Book in November 2022.

Eton Pharmaceuticals, Inc.

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 15 — Commitments and Contingencies (continued)

In March 2020, the Company entered into an Exclusive Licensing and Supply Agreement (the “Alkindi License Agreement”) with Diurnal for marketing ALKINDI SPRINKLE® in the United States.

The Company has entered into various agreements which are described below.

In March 2020, the Company entered into an Exclusive License and Supply Agreement (the “Alkindi License Agreement”) with Diurnal for marketing ALKINDI SPRINKLE® in the United States.

In September 2020, ALKINDI SPRINKLE®’s New Drug Application (NDA) was approved by the FDA as a replacement therapy for pediatric patients with adrenocortical insufficiency.

For the initial licensing milestone fee, the Company paid Diurnal $ 3,500 in cash and issued 379,474 shares of its common stock to Diurnal, which were valued at $ 1,264 based on the Company’s closing stock price of $ 3.33 on March 26, 2020.

The Company paid Diurnal $ 1,000 for a 2023 sales milestone in January 2024 that was recorded as licensing cost of sales in December 2023, and will also pay Diurnal $ 2,500 if the product obtains orphan drug exclusivity status from the FDA.

The Company paid Diurnal $ 1,000 for a 2023 sales milestone in January 2024 that was recorded as licensing cost of sales in December 2023 and could pay up to $ 44,000 in additional commercial net sales milestones.

The Company will pay tiered royalties of 11.5 % to 17.0 % on net sales and could pay Diurnal $2,500 if the product obtains orphan drug exclusivity status from the FDA.

In December 2024, the Company and Diurnal entered into an amendment to the Alkindi License Agreement to extend the agreement terms to incorporate both ALKINDI SPRINKLE® and KHINDIVI TM in the existing agreement terms.

In June 2021, the Company acquired U.S.

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The Company paid Crossject $500 upon signing, $500 in March 2022 upon a completion of a successful technical batch and could pay up to $3,500 in additional development milestones and up to $6,000 in commercial milestones, as well as a 10% royalty on net sales.

In October 2021, the Company acquired the U.S.

marketing rights to Carglumic Acid Tablets.

The product’s Abbreviated New Drug Application (“ANDA”), which is owned by Novitium Pharma, was approved by the FDA in October 2021.

The product is an AB-rated, substitutable generic version of Carbaglu®.

The Company paid $ 3,250 upon signing and retains 50 % of the product profits with the balance being distributed to the licensor and manufacturer.

The Company launched this product in December 2021.

In June 2022, the Company sold its rights in Cysteine Hydrochloride, Biorphen®, and Rezipres® to Dr.

Under the terms of the transaction, Dr.

Reddy’s assumed immediate ownership of Eton’s rights and interest in the products.

The Company received $ 5,000 at closing, recorded as licensing revenue in the twelve months ended December 31, 2022.

In accordance with the terms of the agreement, $ 812 of Sintetica profit share receivables were expensed as cost of goods sold in the twelve months ended December 31, 2022.

In September 2022, the Company acquired an FDA-approved ANDA for Betaine Anhydrous for oral solution.

The ANDA was approved by the FDA in January 2022.

The Company paid $ 2,000 upon signing and an additional $ 125 in November 2023, and could pay up to $ 1,000 in commercial milestones.

The Company will retain 65 % of the product profits with the balance being distributed to the licensor.

In March 2023, the Company acquired rare disease endocrinology product candidate ET- 600 from Tulex.

1 unchanged sentence

The Company will pay Tulex $ 200 upon acceptance by the FDA of the NDA for the product, $ 250 upon first commercial sale of the product, and tiered royalties of 12.5 % to 17.0 % on net sales.

In October 2023, the Company acquired an FDA-approved ANDA for Nitisinone.

The ANDA was approved by the FDA in May 2023.

The Company paid $ 150 to the seller and an additional $ 500 of cure amounts owed to the manufacturer upon signing.

The Company will retain 80 % of the product profits with the balance being distributed to the manufacturer.

In March 2024, the Company acquired the U.S.

rights to PKU GOLIKE® from Relief Therapeutics Holding SA.

The Company paid $ 2,200 and could pay up to $ 2,000 in additional commercial milestones, consisting of one -time $ 500 payments when net sales in a year reach $ 4 million, $ 8 million, $ 15 million, and $ 20 million.

The Company paid $ 2,200 and could pay up to $ 2,000 in additional commercial milestones.

The Company will pay the seller a royalty of 30 % of net sales, which will include the cost of the product.

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

In August 2024, the Company entered into an agreement to sell its DS- 200 product candidate.

The Company received $ 500 upfront and could receive additional payments of up to $ 6,500 based on the achievement of certain future regulatory and commercial milestones related to DS- 200.

The Company will retain 45 % of the proceeds from the transaction with the balance being distributed to other partners.

The Company received $ 500 upfront and in March 2025, the Company recognized licensing revenue of $ 1,500 from a development milestone.

In addition, the Company could receive additional milestone payments of up to $ 5,000 based on the achievement of certain future development and commercial milestones related to DS- 200, of which the Company could recognize 45 % of the proceeds from future milestone from the transaction, with the balance being distributed to other partners.

In November 2024, the Company entered into a licensing agreement with AMMTeK.

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Amglidia was approved by the European Medicines Agency in 2018 and has been granted Orphan Drug Designation by the U.S.

has conducted a post-approval study tracking five years of real-world safety and efficacy in European patients, which will be used to support the Company's s New Drug Application (“NDA”) submission.

The Company intends to hold a meeting with the FDA in 2025.

Under the terms of the licensing agreement, the Company will not make any upfront payments and retains the right to terminate the licensing agreement based on FDA meeting results prior to any payments being owed.

The Company could pay up to $ 2,350 as follows:

$ 500 following the receipt of FDA minutes;

$ 550 upon NDA acceptance for review by FDA;

and $ 1,300 upon NDA approval by the FDA and first commercial sale.

has conducted a post-approval study tracking five years of real-world safety and efficacy in European patients, which will be used to support the Company's s NDA submission.

In July 2025, the Company paid $ 500 to AMMTek upon the receipt of FDA meeting minutes and under the terms of the licensing agreement, the Company could pay up to $1,850 as follows:

$ 550 upon NDA acceptance for review by the FDA and $ 1,300 upon NDA approval by the FDA and first commercial sale.

The Company would also be required to pay a royalty of 14 % of net sales to AMMTek.

2 unchanged sentences

The Company accounted for the purchase as a product acquisition and paid $ 7,000 and paid an additional $ 200 for product inventory.

The Company will pay the seller a royalty of 10 % of U.S net sales through the tenth anniversary of the Company's first commercial sales of the product in the U.S.

The Company will pay the seller a royalty of 10 % of U.S.

net sales through the tenth anniversary of the Company's first commercial sales of the product in the U.S.

In December 2024, the Company acquired INCRELEX® (mecasermin injection) from Ipsen S.A.

The Company paid $ 22,500 and paid an additional $ 7,500 for product inventory.

The Company will also make payments to seller of $ 2,500 on each of the first and second anniversaries of closing.

The Company paid $ 22,500 for the product and paid an additional $ 7,500 for product inventory.

The Company determined that the asset purchase agreement met the definition of a business under ASC 805;

therefore, the Company accounted for the asset purchase agreement as a business combination and applied the acquisition method of accounting.

See Note 4 — Business Combination for further discussion.

In addition, the Company will also make payments to seller of $ 2,500 on each of the first and second anniversaries of closing, of which $ 2,500 was paid to Ipsen S.A.

in December 2025.

As of December 31, 2025, the present value of the deferred consideration was $ 2,259 , with $ 241 to be accreted to interest expense over the remainder of the deferred consideration term using the effective interest rate method.

As of December 31, 2025, $ 2,259 was classified as accrued liabilities in the accompanying Balance Sheets.

In connection with the INCRELEX® product acquisition, the Company assumed the commercial manufacturing and supply agreement between Baxter Oncology GmbH and Ipsen Pharma SAS.

The commercial manufacturing and supply agreement was executed in November 2020 and expires in November 2027.

The commercial manufacturing and supply agreement is associated with the production of INCRELEX® for commercial usage and contains an annual production obligation and a maximum annual obligation.

For each contract year, there is an annual obligation of two batches, with a maximum obligation of three batches at batch price of 5,000 Euros.

Additionally, in connection with the INCRELEX® product acquisition, the Company assumed a manufacturing services agreement between Lonza Ltd and Ipsen Pharma SAS, as amended.

The manufacturing services agreement was executed in December 2022 and expires in December 2026.

The manufacturing services agreement is associated with the production of INCRELEX® bulk drug substance and contains an annual production obligation and a maximum obligation.

For each contract year, there is an annual obligation and the fixed pricing for each batch that will vary according to the yield on that particular batch and in accordance with the target yield in kilograms and number of ordered batches.

In March 2025, the Company out-licensed the commercial rights to INCRELEX® in territories outside of the U.S.

to Esteve Pharmaceuticals, S.A.

Under the terms of the licensing agreement, Esteve paid the Company in July 2025 €4,000 to license the rights to INCRELEX® for up to ten years, and Esteve also received an option to acquire the international rights in the future for a purchase price of up to €6,000.

In accordance with the accounting pronouncement guidance in ASC 606 with respect to the license and supply agreements between the Company and Esteve, the Company recognized in March 2025, $ 4,327 in accounts receivable, licensing revenues of $ 1,786 and deferred revenues of $ 2,541 .

With respect to deferred revenues, $ 457 and $ 1,762 are reflected in accrued liabilities and other long-term liabilities, respectively in the Company's Balance Sheets as of December 31, 2025.

Deferred revenues will be amortized to licensing revenues over the course of the agreements based on quarterly INCRELEX® product sales, and at the end of the license agreement, a deferred revenue residual will be recognized at the end of the initial term of the license agreement.

In addition, the Company also entered into a supply agreement with Esteve, and beginning in the third quarter of 2025, the Company began supplying product to Esteve at a fixed transfer price.

During the twelve months ended December 31, 2025, the Company recognized $ 322 in deferred revenues associated with the supply agreement.

In June 2025, in connection with the asset purchase agreement with Ipsen S.A, the Company purchased $ 11,540 in inventory.

Under the terms of the inventory purchase agreement, the Company will be required to make eight equal quarterly installment payments to Ipsen S.A, beginning in the third quarter of 2025.

Accordingly, as of December 31, 2025, the Company has classified $ 6,926 in accounts payable and $ 3,463 as other long-term liabilities in in the accompanying Balance Sheets.

During the twelve months ended December 31, 2025, the Company recognized $ 5,094 in inventory step-up expense associated with the inventory purchase from Ipsen S.A.

Indemnification

3 unchanged sentences

Accordingly, the Company has not recorded any liabilities for these indemnification rights and agreements as of December 31, 2025 or 2024 .

PART II (CONTINUED)

Eton Pharmaceuticals, Inc

NOTES TO FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 17 — Subsequent Events

In January 2026, the Company entered into a licensing and supply agreement for the U.S.

marketing rights for an ultra-rare disease metabolic product candidate.

Under the terms of the licensing and supply agreement, the Company paid $ 1,000 upon execution of the agreement and will pay seller $ 1,000 upon approval of the Abbreviated New Drug Application and commercial launch.

The Company will pay profit sharing of 30.0 % on net sales of the product candidate.

In February 2026, the Company announced that the FDA approved an NDA for DESMODA™ (desmopressin acetate) Oral Solution for the management of central diabetes insipidus, also known as arginine vasopressin deficiency, as antidiuretic replacement therapy for patients of all ages.

In February 2026, the Company entered into a license agreement with Pierre Fabre Medicament Sas (“Pierre Fabre”) for the exclusive rights to Hemangeol®, a product used for the treatment of proliferating infantile hermangioma.

Under of the terms of the license agreement, the Company paid $ 14,000 and will also purchase approximately $ 1,500 of inventory.

The Company will also purchase approximately $ 700 in additional inventory in May 2026.

The Company will pay royalties to Pierre Fabre of 8.0 % on net sales of Hemangeol®.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data