What changed in this filing

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Item 1. Financial Statements

2026-05-14 compared with 2025-11-06 · 348 added, 426 removed, 479 unchanged (62% of the section changed)

1 unchanged sentence

Eton Pharmaceuticals, Inc.

Condensed Balance Sheet

Condensed Balance Sheets

(in thousands, except share and per share amounts)

September 30, 2025

March 31, 2026

December 31, 2025

3 unchanged sentences

Accounts receivable, net

13,408 11,757

Inventories, net

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$ 13,485 $ 10,976

Short-term debt, net of discount

Short-term debt, net of debt discount

Accrued Medicaid rebates

2 unchanged sentences

44,179 38,490

Long-term debt, net of current portion, debt discount and accrued exit fees

Long-term debt, net of current portion and debt discount

18,939 21,769

Operating lease liabilities, net of current portion

Long-term inventory payable

Other long-term liabilities

5 unchanged sentences

50,000,000 shares authorized;

26,817,535 and 26,709,084 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

27,359,791 and 27,047,061 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

Additional paid-in capital

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For the three months ended

For the nine months ended

September 30,

Licensing revenue

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Income (loss) before income tax expense

Income tax expense (benefit)

Income tax expense

Net income (loss)

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Condensed Statements of Stockholders ’ Equity

For the three months ended September 30, 2025 and 2024

(in thousands, except share amounts)

Additional Paid-in

Total Stockholders’

Balances at June 30, 2025

Stock-based compensation

Balances at September 30, 2025

Additional Paid-in

Total Stockholders’

Balances at June 30, 2024

Stock-based compensation

Stock option exercises and vesting of restricted stock

Relative fair value of warrants issued in connection with debt

Balances at September 30, 2024

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

Eton Pharmaceuticals, Inc.

Condensed Statements of Stockholders ’ Equity

For the nine months ended September 30, 2025 and 2024

For the three months ended March 31, 2026 and 2025

(in thousands, except share amounts)

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Stock-based compensation

Stock option exercises and vesting of restricted stock units

Balances at September 30, 2025

Stock option exercises and vesting of restricted stock

Balances at March 31, 2026

Additional Paid-in

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Stock-based compensation

Employee stock purchase plan

Stock option exercises and vesting of restricted stock

Relative fair value of warrants issued in connection with debt

Balances at September 30, 2024

Balances at March 31, 2025

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

2 unchanged sentences

(In thousands)

Nine months ended

September 30, 2025

September 30, 2024

Three months ended

March 31, 2026

March 31, 2025

Cash flows from (used in) operating activities

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

Net income (loss)

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

Stock-based compensation

1 unchanged sentence

Inventory step-up

Non-cash lease expense

Excess and obsolete inventory reserve

Debt discount amortization and non-cash interest expenses

Non-cash lease expense

Other operating activity

Changes in operating assets and liabilities:

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Other non-current assets and liabilities

Net cash from (used in) operating activities

Cash flows from (used in) investing activities

Net cash from operating activities

Cash flows used in investing activities

Purchases of product license rights

Purchases of property and equipment

Net cash from (used in) investing activities

Cash flows from (used in) financing activities

Repayment of long-term debt

Proceeds from employee stock purchase plan and stock option exercises

Net cash from (used in) financing activities

Net cash used in investing activities

Cash flows from financing activities

Proceeds from stock option exercises

Net cash from financing activities

Change in cash and cash equivalents

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Note 1 — Company Overview

Eton Pharmaceuticals, Inc.

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

The Company currently has eight commercial rare disease products:

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

The Company has five additional product candidates in late-stage development:

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

Note 2 — Liquidity Considerations

The Company believes its existing cash and cash equivalents of $ 37,121 as of September 30, 2025 in addition to revenues from products will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months from the date of filing of this quarterly report.

This estimate is based on the Company’s current assumptions, including assumptions relating to estimated sales and its ability to manage spending.

The Company could use its available capital resources sooner than currently expected.

Accordingly, the Company could seek to obtain additional capital through equity financings, the issuance of debt or other arrangements.

However, the Company cannot make assurances that it will be able to raise additional capital if needed or under acceptable terms.

The sale of additional equity may dilute existing stockholders, and newly issued stock could contain senior rights and preferences compared to currently outstanding common shares.

The Company’s existing debt obligation contains covenants and limits the Company’s ability to pay dividends or make other distributions to stockholders.

If the Company experiences delays in product development or sales growth, obtaining regulatory approval for its other product candidates, or is unable to secure such additional financing, it might need to scale back operations.

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

The Company currently has ten commercial rare disease products:

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

The Company has four additional product candidates in late-stage development:

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

Note 2 — Summary of Significant Accounting Policies

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The Company has prepared the accompanying condensed financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).

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

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

Unaudited Interim Financial Information

The accompanying interim condensed financial statements are unaudited and have been prepared on the same basis as the audited financial statements and, in the opinion of management, reflect all adjustments necessary for the fair presentation of the Company’s financial position as of September 30, 2025, and the results of its operations and its cash flows for the periods ended September 30, 2025 and 2024.

The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2025 and 2024 are also unaudited.

The accompanying interim condensed financial statements are unaudited and have been prepared on the same basis as the audited annual financial statements of the Company and, in the opinion of management, reflect all adjustments necessary for the fair presentation of the Company’s financial position as of March 31, 2026, and the results of its operations and its cash flows for the periods ended March 31, 2026 and 2025.

The financial data and other information disclosed in these notes related to the three months ended March 31, 2026 and 2025 are also unaudited.

The interim financial statements are condensed and generally do not repeat the disclosures in the annual financial statements.

As such, the interim financial statements herein should be read in conjunction with the Company’s latest annual financial statements filed on Form 10 -K on March 19, 2026.

The results for the three -month and nine -month periods ended September 30, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period.

The results for the three months ended March 31, 2026, are not necessarily indicative of results to be expected for the year ending December 31, 2026, any other interim periods, or any future year or period.

Use of Estimates

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Actual results could differ from those estimates or assumptions.

The Company evaluates each of its acquisitions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805” ), to determine whether the transaction is a business combination or an asset acquisition.

In determining whether an acquisition should be accounted for as a business combination or an asset acquisition, the Company first performs a screening test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets.

If this is the case, the acquired set is not deemed to be a business and is instead accounted for as an asset acquisition.

If this is not the case, the Company then further evaluates whether the acquired set includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs.

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

The Company accounts for business acquisitions using the acquisition method of accounting.

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When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions.

The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but these assumptions are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

The Company's estimates of fair value are based upon assumptions believed to be reasonable but that are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill.

During the measurement period, which may be up to one year from the acquisition date, the Company adjusts the provisional amounts of assets acquired and liabilities assumed with the corresponding offset to goodwill to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.

Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded within the Company’s consolidated statements of operations.

The Company accounts for acquisitions that do not meet the definition of a business as an asset acquisition.

The determination of whether a transaction represents a business combination or an asset acquisition requires significant judgment, including an evaluation of whether the acquired set includes a substantive process and whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets.

For transactions accounted for as asset acquisition, the Company allocates the purchase price, including transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis.

This allocation requires management to make significant estimates and assumptions, including the selection of valuation methodologies, discount rates, projected cash flows, and useful lives of acquired assets.

Changes in these assumptions could result in materially different allocations of the purchase price, which may impact future amortization expense.

In addition, because goodwill is not recognized in asset acquisitions, the assignment of value to identifiable intangible assets may be greater than in a business combination.

The Company amortizes finite-lived intangible assets over their estimated useful lives and evaluates indefinite-lived assets for impairment.

The determination of useful lives and the timing of impairment assessments require significant judgment and may materially affect the Company’s results of operations.

Critical estimates in valuing certain of the intangible assets acquired include:

Eton Pharmaceuticals, Inc.

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Note 2 — Summary of Significant Accounting Policies (continued)

future expected cash flows from customer contracts and license agreements;

historical and expected customer attrition rates and anticipated growth in revenues from acquired customers;

discount rates.

Segment Information

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.

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

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

The Company primarily derives revenues from product sales to a specialty pharmacy customer, AnovoRx , who then provides order fulfillment, inventory storage and distribution services.

In September 2025, the Company terminated its agreement with specialty pharmacy, Optime Care, and transitioned o rder fulfillment, inventory storage and distribution services to AnovoRx.

The Company’s chief operating decision-maker (“CODM”) is the Chief Executive Officer, who evaluates the Company’s financial performance and results of operations as a single operating segment.

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Segment revenues, expenses and profit or loss is reported on the Condensed Statements of Operations.

Additionally, the measure of segment assets is reported on the Company’s Condensed 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 INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM, Carglumic Acid, GALZIN® and Betaine Anhydrous products, as well as from Pentec Heath for sales of the Company’s PKU GOLIKE® product.

For the nine months ended September 30, 2025 and 2024, AnovoRx product sales represented 85.8 % and 98.5 % of net product revenues, respectively.

As of September 30, 2025 and December 31, 2024 , AnovoRx product sales represented 65.8 % and 96.2 % of net accounts receivable, respectively.

As of September 30, 2025 and December 31, 2024 , all long-lived assets were domiciled within the U.S.

Additionally, the measure of segment assets is reported on the Company’s Condensed Balance Sheets 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 for the Company's INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, 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 three months ended March 31, 2026 and 2025, AnovoRx product sales represented 88.9 % and 90.8 % of net revenues, respectively.

As of March 31, 2026 and December 31, 2025, AnovoRx product sales represented 80.7 % and 88.4 % of net accounts receivable.

During the three months ended March 31, 2026 and 2025, the Company's revenues from external customers were entirely derived from U.S operations.

As of March 31, 2026 and December 31, 2025, all long-lived assets were domiciled within the U.S.

Cash and Cash Equivalents

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All cash and cash equivalents are held in U.S.

financial institutions or invested in high-grade money market funds.

As of September 30, 2025 and December 31, 2024, the Company’s cash is in a non-interest-bearing account and a high-grade money market fund.

financial institutions or invested in short-term U.S.

treasury bills or high-grade money market funds.

From time to time, amounts deposited with its bank exceed federally insured limits.

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Accounts receivable are recorded at the invoiced amount and are non-interest bearing.

Accounts receivable are recorded net of allowances for cash discounts for prompt payment, distribution fees and chargebacks.

Accounts receivable are recorded net of allowances for credit losses and cash discounts for prompt payment.

The Company considers historical collection rates and the current financial status of its customers, as well as macroeconomic and industry-specific factors when evaluating potential credit losses.

Historically, the Company's accounts receivable balances have been highly concentrated with a select number of customers, consisting primarily of specialty pharmacies and large wholesale pharmaceutical distributors.

The Company's accounts receivable balances are highly concentrated with a select number of customers, consisting primarily of specialty pharmacies.

Given the size and creditworthiness of these customers, we have not experienced and do not expect to experience material credit losses.

The total for all accounts receivable reserves was $ 238 and $ 238 as of September 30, 2025 and December 31, 2024 , respectively.

The Company values its inventories at the lower of cost or net realizable value using the first -in, first -out method of valuation.

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 September 30, 2025 and December 31, 2024 , inventories consisted of purchased finished goods, semi-finished goods and raw materials.

At September 30, 2025 , inventories are shown net of a reserve for Nitisinone, Betaine Anhydrous, GALZIN®, 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 as the Company did not take title and possession to the raw materials until June 19, 2025.

At September 30 and December 31, 2024 inventories are shown net of a reserve for Nitisinone, Betaine Anhydrous, ALKINDI SPRINKLE® and PKU GOLIKE® inventory.

There was an inventory reserve of $ 942 and $ 605 at September 30, 2025 and December 31, 2024 , respectively.

As of March 31, 2026 and December 31, 2025, inventories consisted of purchased finished goods, semi-finished goods and raw materials.

Property and Equipment

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Construction in progress is capitalized but not depreciated until it is placed into service.

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

Depreciation expense for the nine -month periods ended September 30, 2025 and 2024 was $ 24 and $ 12 , respectively.

Intangible Assets

The Company capitalizes payments it makes for licensed products when the payment is based on FDA approval for the product and the cost is recoverable based on expected future cash flows from the product.

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.

If an acquired asset or asset group does not meet the definition of a business, as defined in ASC 805, the transaction is accounted for as an asset acquisition based on the principles described in ASC 805 - 50.

Asset acquisitions are accounted for using a cost accumulation and allocation model under which the cost of the acquisition is allocated to the assets acquired and liabilities assumed and the useful life is based on the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the Company

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.

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 for $ 1,868 and that cost is being amortized over ten years.

In December 2024, the Company purchased the rights for its INCRELEX® product for $ 21,250 and that cost is being amortized over ten years.

In December 2024, the Company purchased the rights for its GALZIN® product for $ 8,119 and that cost is being amortized over ten years.

Eton Pharmaceuticals, Inc.

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Note 2 — Summary of Significant Accounting Policies (continued)

The intangible assets, net on the Company’s Condensed Balance Sheet, reflected $ 5,384 and $ 2,381 of accumulated amortization as of September 30, 2025 and December 31, 2024, respectively.

The Company recorded $ 3,003 and $ 753 , of amortization expense for the nine months ended September 30, 2025 and 2024 , respectively.

Intangible Assets

The Company has historically capitalized payments it makes for licensed products when the payment is based on Food and Drug Administration (“FDA”) approval or near-term approval for the product and the cost is recoverable based on expected future cash flows from the product.

In January 2026, the Company purchased the licensing rights to a product that has not received FDA approval and accordingly, is classified as In-Process Research and Development (“IPR&D”) within Intangible assets, net on the Company's Condensed Balance Sheets as of March 31, 2026.

In February 2026, the Company entered into a licensing agreement to acquire the U.S.

rights to HEMANGEOL® (propranolol) oral solution from Pierre Fabre Medicament Sas (“Pierre Fabre”), in which the Company paid Pierre Fabre $ 14,000 upfront.

The Company accounted for this transaction as an asset acquisition, and after purchase accounting adjustments for inventory step-up costs of $ 1,131 , and including acquisition related expenses of $ 100 , the Company recorded $ 12,969 for the HEMANGEOL® intangible asset which is being amortized over its useful life of ten years.

Intangible assets are 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.

The following table presents the Company's intangible assets as of March 31, 2026 and December 31, 2025:

Intangible assets as of March 31, 2026

Carglumic Acid

10 November 2021

$ 3,250 $ 1,435 $ 1,815

5 September 2022

2,125 1,505 620

5 October 2023

10 March 2024

1,868 374 1,494

10 December 2024

21,250 2,732 18,518

10 December 2024

8,119 1,015 7,104

1,000 — 1,000

10 February 2026

12,969 107 12,862

$ 51,231 $ 7,493 $ 43,738

Intangible assets as of December 31, 2025

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

The Company recorded $ 1,109 and $ 1,001 of amortization expense for the three months ended March 31, 2026 and March 31, 2025, 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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If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the Company’s Condensed Statements of Operations for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

No impairment was recognized during the nine -month periods ended September 30, 2025 or 2024 .

No impairment was recognized during the three -month periods ended March 31, 2026 or 2025 .

Deferred Financing Costs, Debt Discount and Detachable Debt-Related Warrants

Costs incurred to issue debt are deferred and recorded as a reduction to the debt balance in the accompanying Condensed Balance Sheet.

Costs incurred to issue debt are deferred and recorded as a reduction to the debt balance in the accompanying Condensed Balance Sheets.

The Company amortizes these costs over the expected term of the related debt under the effective interest method.

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

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Note 2 — Summary of Significant Accounting Policies (continued)

The Company accounts for leases in accordance with ASC Topic 842 — Leases.

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In addition, the Company evaluates the recoverability of its right-of-use assets for possible impairment in accordance with its long-lived assets policy.

Operating leases are reflected on the Condensed Balance Sheet as operating lease right-of-use assets, current accrued liabilities and long-term operating lease liabilities.

The Company does not have any finance leases as of September 30, 2025 and December 31, 2024 .

Operating leases are reflected on the Condensed Balance Sheets as operating lease right-of-use assets, current accrued liabilities and long-term operating lease liabilities.

The Company does not have any finance leases as of March 31, 2026 and December 31, 2025 .

The Company commences recognizing operating lease expense when the lessor makes the underlying asset available for use by the Company and the operating lease expense is recognized on a straight-line basis over the term of the lease.

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Amounts incurred are classified as general and administrative expenses.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Note 3 — Summary of Significant Accounting Policies (continued)

Concentrations of Credit Risk, Sources of Supply and Significant Customers

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treasury bills from time to time.

The Company maintains its cash and cash equivalent balances with one major commercial bank and the deposits held with the financial institution exceed the amount of insurance provided on such deposits and is exposed to credit risk in the event of a default by the financial institutions holding its cash and cash equivalents to the extent recorded on the Condensed Balance Sheet.

The Company maintains its cash and cash equivalent balances with one major commercial bank and the deposits held with the financial institution exceed the amount of insurance provided on such deposits and are exposed to credit risk in the event of a default by the financial institution holding its cash and cash equivalents to the extent recorded on the Condensed Balance Sheets.

The Company believes the associated credit risk to be minimal.

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Additionally, management monitors its exposure to accounts receivable by periodically evaluating the collectability of the account receivable based on a variety of factors including the length of time the receivables are past due, the financial health of the customer and any prior customer credit loss experience.

Based upon the review of these factors, the Company recorded no allowance for credit losses at September 30, 2025 or December 31, 2024 .

Based upon the review of these factors, the Company recorded no allowance for credit losses at March 31, 2026 or December 31, 2025 .

Revenue Recognition for Contracts with Customers

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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.

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The Company assesses whether these options provide a material right to the customer and, if so, they are considered performance obligations.

Renewal options that provide a material right are treated as a separate performance obligation, allocated a portion of the transaction price and related revenue is deferred until the option is exercised or the option expires unused.

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.

Milestone Payments – If a commercial contract arrangement includes development 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.

Licensing Revenues – The Company recognizes revenues from licensing arrangements primarily associated with product license agreements that could contain development activity milestones and agreements to divest the licensing rights to products or product candidates.

At the inception of each licensing agreement, the Company assesses the goods or services promised within the contract to identify performance obligations.

If a license to the Company's product rights is determined to be distinct from other promised goods or services, it is accounted for as a separate performance obligation.

If a license grants the customer a right to use the Company's product license, revenue is recognized at the point in time when the license is transferred to the customer and the customer has the ability to use and benefit from the product license.

Additionally, revenue is recognized from product license agreements with development activity milestones when these development activities occur per the contractual terms of the agreement.

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.

Principal Versus Agent – Under the terms of the transitional services agreement (“TSA”) between the Company and Ipsen S.A, the Company evaluates whether its performance obligation is a promise to transfer product to a customer as the principal, or to arrange for product to be provided by another party using a control model as an agent.

This evaluation determined that the Company is not in control of establishing the transaction price, managing all aspects of the shipment process and taking the risk of loss for delivery, collection and returns.

Based on the Company's evaluation of the control model, it determined that the Company's responsibilities under the TSA was as an agent and not the principal, and correspondingly, such revenue related to products sold by Ipsen S.A are reported on a net versus a gross basis.

Significant Financing Component – In determining the transaction price, the Company will adjust consideration for the effects of the time value of money if the expected period between payment by the licensees and the transfer of the promised goods or services to the licensees will be more than one year.

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 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 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.

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

Eton Pharmaceuticals, Inc.

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Note 2 — Summary of Significant Accounting Policies (continued)

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.

INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI TM , GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous and Nitisinone sales are not subject to returns.

Upon recognition of revenue from product sales, the estimated amounts of chargebacks, prompt payment discounts and state Medicaid rebates are included in sales reserves, accrued liabilities and net accounts receivable.

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.

For the three months ended March 31, 2026 and 2025, all revenues recognized in the Condensed 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.

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

For the Company's INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, 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.

INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone product sales are not subject to returns.

Upon recognition of revenue from product sales, the estimated amounts of chargebacks, prompt pay discounts and state Medicaid are in sales reserves, accrued liabilities and net accounts receivable.

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®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone sales are not subject to returns.

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

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.

Cost of Sales

Cost of product sales consists of the profit-sharing and royalty fees with the Company’s product licensing and development partners, the purchase costs for finished products from third -party manufacturers, freight and handling/storage from the Company’s 3PL logistics service providers, and amortization expense of certain intangible assets.

Cost of product sales consists of the profit-sharing and royalty fees with the Company’s product licensing and development partners, the purchase costs for finished products from third -party manufacturers, freight and handling/storage from the Company’s 3PL logistics service providers and inventory step-up expense, and amortization expense of certain intangible assets.

The costs of sales for profit-sharing, royalty fees, purchased finished products, and the associated inbound freight expense are recorded when the associated product sale revenue is recognized in accordance with the terms of shipment to customers while outbound freight and handling/storage fees charged by the 3PL service provider are expensed as they are incurred.

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Actual results could differ from the Company’s estimates.

Upfront payments and milestone payments made for the licensing of technology for products that are not yet approved by the FDA are expensed as R&D in the period in which they are incurred.

Nonrefundable advance payments for goods or services to be received in the future for use in R&D activities are recorded as prepaid expenses and are expensed as the related goods are delivered or the services are performed.

Income (Loss) Per Shar e

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 unvested restricted stock, stock options and warrants that are outstanding during the period.

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

No such adjustments were made for the three and nine months ended September 30, 2025 and for the nine months ended September 30, 2024 and including the effects of common stock equivalents in the diluted earnings per share calculation would have been anti-dilutive (see Note 8 ).

Eton Pharmaceuticals, Inc.

2 unchanged sentences

Note 2 — Summary of Significant Accounting Policies (continued)

Income (Loss) Per Shar e

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

No such adjustments were made for the three months ended March 31, 2025 as including the effects of common stock equivalents in the diluted earnings per share calculation would have been anti-dilutive.

See Note 9 for further information.

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

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.

These differences result in deferred tax assets and liabilities, which are included within the Condensed Balance Sheet.

These differences result in deferred tax assets and liabilities, which are included within the Condensed Balance Sheets.

The Company must assess the likelihood that the deferred tax assets will be recovered from future taxable income and, to the extent the Company believes that recovery is not likely, a valuation allowance must be established.

To the extent the Company establishes a valuation allowance or increase or decrease to this allowance in a period, the impact will be included in income tax expense in the Condensed Statements of Operations.

As of September 30, 2025 and December 31, 2024 , the Company has established a 100 % valuation reserve against its deferred tax assets.

As of March 31, 2026 and December 31, 2025 , the Company has established a 100 % valuation reserve against its deferred tax assets.

See Note 10 for further information.

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Based on borrowing rates currently available to the Company, the carrying value of the debt obligation approximates its fair value.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Recent Accounting Pronouncements

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

Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

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 currently evaluating the effect of this new guidance on its condensed financial statements.

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

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2024 - 03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220 - 40 ).

Additionally, in January 2025, the FASB issued ASU 2025 - 01 to clarify the effective date of ASU 2024 - 03.

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

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

In December 2025, the FASB issued ASU 2025 - 12, Codification Improvements, which makes narrow-scope amendments to various topics within the Accounting Standards Codification to clarify and improve existing guidance.

This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after January 1, 2027, on a retrospective or prospective basis, with early adoption permitted.

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

Note 3 — Long-Term Debt

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

In connection with entering into the SWK Credit Agreement, 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 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 August 2020, the Company issued additional warrants for 18,141 shares of its common stock at an exercise price of $ 6.62 per share.

The 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 September 2024, the Company and SWK entered into a subsequent amendment to the SWK Credit Agreement.

Under the terms of the amendment, the Company expanded its existing 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 %.

In connection with the amendment to the SWK Credit Agreement, the Company issued a warrant to 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 289,736 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;

seven -year contractual term;

63.8 % volatility;

0 % dividend rate;

and a risk-free interest rate of 3.67 %.

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

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 Condensed 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 the occurrence of 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.

As of September 30, 2025 and December 31, 2024 , the Company was in compliance with all financial covenants.

The Company recorded interest expense of $ 1,212 and $ 211 for the three months ended September 30, 2025 and 2024, respectively, which included $ 189 and $ 29 , respectively of debt discount amortization and non-cash interest expense.

During the nine months ended September 30, 2025 and 2024, debt discount amortization and accrued exit fees was $ 555 and $ 70 , respectively, associated with the SWK Credit Agreement and $ 350 was associated with interest expense accretion during the nine months ended September 30, 2025 on the $ 5,000 deferred consideration due to Ipsen S.A (See Note 12 for further discussion).

As of September 30, 2025 and December 2024, the Company had accrued interest of $ 454 and $ 182 , respectively, which is included in accrued liabilities in the accompanying Condensed Balance Sheet.

The table below reflects the future payments for the SWK loan principal and interest as of September 30, 2025 .

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 March 31, 2026 and December 31, 2025, the Company was in compliance with all financial covenants.

During the three months ended March 31, 2026 and 2025, the Company recorded interest expense of $ 1,136 and $ 1,163 , respectively, which included $ 118 and $ 294 , respectively, of debt discount amortization and non-cash interest expense.

The Company had accrued interest of $ 431 and $ 425 as of March 31, 2026 and December 31, 2025, respectively, which is included in accrued liabilities in the accompanying Condensed Balance Sheets.

The table below reflects the future payments for the SWK loan principal as of March 31, 2026 .

Total payments

unamortized discount

accrued exit fees at September 30, 2025

Debt, net of unamortized discount and accrued exit fees

Note 5 — Common Stock

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

During the nine months ended September 30, 2025 , the Company issued 108,451 shares of its common stock resulting from stock option exercises under its 2018 Equity Incentive Plan as amended in December 2020.

In September 30, 2024 the Company issued 2,500 shares of its common stock resulting from stock option exercises under its 2018 Equity Incentive Plan.

accrued exit fees at March 31, 2026

Note 4 — Property and Equipment

Property and equipment consist of the following:

Computer hardware and software

Furniture and fixtures

Leasehold improvements

Property and equipment, gross

accumulated depreciation and amortization

Property and equipment, net

Depreciation expense for the three months ended March 31, 2026 and 2025 was $ 22 and $ 12 , respectively.

Eton Pharmaceuticals, Inc.

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(in thousands, except share and per share amounts)

Note 5 — Inventory

As of March 31, 2026 and December 31, 2025, inventory consisted of the following

Raw materials

Semi-finished goods

Finished goods

excess and obsolete inventory reserve

Inventory, net

Inventory reserves were $ 649 and $ 1,199 at March 31, 2026 and December 31, 2025 , respectively.

Note 6 — Common Stock

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

During the three months ended March 31, 2026 , the Company issued 312,730 shares of its common stock resulting from stock option exercises and vesting of restricted stock units under its 2018 Equity Incentive Plan as amended in December 2020 (the “2018 Plan”) .

During the three months ended March 31, 2025 the Company issued 108,451 shares of its common stock resulting from stock option exercises under its 2018 Plan.

Note 7 — Common Stock Warrants

The Company’s outstanding warrants to purchase shares of its common stock at September 30, 2025 are summarized in the table below.

The Company’s outstanding warrants to purchase shares of its common stock at March 31, 2026 are summarized in the table below.

Description of Warrants

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SWK Warrants – Debt – Tranche #1

51,239 $ 5.86

SWK Warrants – Debt – Tranche #2

18,141 $ 6.62

SWK Warrants – Debt – Tranche #3

289,736 $ 5.32

Total shares and weighted average exercise price

359,116 $ 5.46

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.

The holders of these warrants or their permitted transferees, are entitled to rights with respect to the registration under the Securities Act of 1933, as amended (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.

The issuance of these warrants was accounted for as equity and the fair value of the warrants issued were classified to additional paid-in capital in the Company's Condensed Balance Sheet.

The issuance of these warrants was accounted for as equity and the fair value of the warrants issued were classified to additional paid-in capital in the Company's Condensed Balance Sheets.

Note 8 — Share-Based Payment Awards

In November 2018 , the Company’s stockholders and board of directors approved the 2018 Equity Incentive Plan, as amended (the “2018 Plan”) which succeeded the 2017 Plan.

In November 2018 , the Company’s stockholders and board of directors approved the 2018 Plan which succeeded the 2017 Plan.

The 2018 Plan was amended by the board of directors in December 2020.

The Company has granted RSAs, stock options and RSUs for its common stock under the 2017 Plan and 2018 Plan as detailed in the tables below.

There were 1,076,595 shares available for future issuance under the 2018 Plan as of September 30, 2025.

All stock options issued have been non-qualified stock options and the exercise price is the closing stock price of the Company's common stock on the date of grant.

There were 1,301,548 shares available for future issuance under the 2018 Plan as of March 31, 2026.

All stock options issued have been non-qualified stock options and the exercise price was the closing stock price of the Company's common stock on the date of grant.

Non-qualified stock options typically have a ten -year life and non-qualified stock options that are expired, terminated, surrendered or canceled without having been fully exercised will be available for future awards under the 2018 Plan.

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On January 1, 2025, the share reserve was increased by 1,068,323 shares based on the 26,709,084 shares of common stock outstanding at December 31, 2024.

On January 1, 2024, the share reserve was increased by 1,027,522 shares based on the 25,688,062 shares of common stock outstanding at December 31, 2023.

On January 1, 2025, the share reserve was increased by 1,068,323 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 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 of the date of grant.

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

For the nine months ended September 30, 2025 and 2024 , the Company’s total stock-based compensation expense was $ 4,388 and $ 2,383 , respectively.

Of these amounts, $ 4,268 and $ 2,138 were recorded in general and administrative (“G&A”) expenses during the nine months ended September 30, 2025 and 2024, respectively, and $ 120 and $ 245 were recorded in research and development expenses for the nine months ended September 30, 2025 and 2024, respectively.

For the three months ended March 31, 2026 and 2025 , the Company’s total stock-based compensation expense was $ 1,518 and $ 1,200 , respectively.

Of these amounts, $ 1,469 and $ 1,161 were recorded in general and administrative (“G&A”) expenses during the three months ended March 31, 2026 and 2025, respectively, and $ 49 and $ 39 were recorded in research and development expenses for the three months ended March 31, 2026 and 2025, respectively.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Note 8 — Share-Based Payment Awards (continued)

Stock Options

The following table summarizes stock option activity during the nine months ended September 30, 2025 :

Outstanding as of December 31, 2024

5,918,616 $ 4.65

471,059 $ 13.12

( 108,451 ) $ 3.63

Forfeited/Cancelled

( 316,220 ) $ 4.99

Outstanding as of September 30, 2025

5,965,004 $ 5.34 6.6 $ 97,765

Options exercisable as of September 30, 2025

4,376,667 $ 4.83 5.9 $ 73,978

Options vested and expected to vest at September 30, 2025

5,965,004 $ 5.34 6.6 $ 97,765

The following table summarizes stock option activity during the nine months ended September 30, 2024:

The following table summarizes stock option activity during the three months ended March 31, 2026 :

Outstanding as of December 31, 2025

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Forfeited/Cancelled

( 264,717 ) $ 4.61

Outstanding as of September 30, 2024

Outstanding as of March 31, 2026

6,143,598 $ 6.24 6.2 $ 113,292

Options exercisable as of September 30, 2024

Options exercisable as of March 31, 2026

4,613,017 $ 5.04 5.4 $ 90,577

Options vested and expected to vest at September 30, 2024

Options vested and expected to vest at March 31, 2026

6,143,597 $ 6.24 6.2 $ 113,292

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Note 7 — Share-Based Payment Awards (continued)

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 at September 30, 2025 for those stock options that had strike prices lower than the fair value of the Company’s common stock.

Stock based compensation related to stock options was $ 3,747 and $ 1,991 for the nine -month periods ended September 30, 2025 and 2024 , respectively.

As of September 30, 2025 , there was a total of $ 5,792 of unrecognized compensation costs related to non-vested stock option awards, which will be recognized over a weighted average period of approximately 2.6 years.

During the nine months ended September 30, 2025, the Company issued 108,451 shares of its common stock resulting from stock option exercises at a weighted average exercise price of $ 3.63 per share with an intrinsic value of $ 1,167 .

During the nine months ended September 30, 2024, the Company issued 2,500 shares of its stock resulting from stock option exercises at a weighted average exercise price of $ 2.97 per share with an intrinsic value of $ 2 .

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 at March 31, 2026 for those stock options that had strike prices lower than the fair value of the Company’s common stock.

Stock based compensation related to stock options was $ 888 and $ 929 for the three -month periods ended March 31, 2026 and 2025 , respectively.

As of March 31, 2026 , there was a total of $ 9,166 of unrecognized compensation costs related to non-vested stock option awards, which will be recognized over a weighted average period of approximately 3.0 years.

During the three months ended March 31, 2026, the Company issued 272,597 shares of its common stock resulting from stock option exercises at a weighted average exercise price of $ 5.13 per share with an intrinsic value of $ 3,473 .

During the three months ended March 31, 2025, the Company issued 108,451 shares of its stock resulting from stock option exercises at a weighted average exercise price of $ 3.63 per share with an intrinsic value of $ 1,167 .

Restricted Stock Units (RSUs)

The following table summarizes restricted stock unit activity during the nine months ended September 30, 2025 :

Number of Units

Weighted Average Grant-Date Fair Value Per Unit

Outstanding and unvested as of December 31, 2024

226,068 $ 3.82

197,326 $ 13.27

( 84,204 ) $ 4.75

( 44,373 ) $ 6.92

Outstanding and unvested as of September 30, 2025

294,817 $ 12.95

The following table summarizes restricted stock unit activity during the nine months ended September 30, 2024:

The following table summarizes restricted stock unit activity during the three months ended March 31, 2026 :

Number of Units

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( 40,217 ) $ 13.00

Outstanding and unvested as of September 30, 2024

Outstanding and unvested as of March 31, 2026

531,909 $ 12.57

Stock-based compensation related to RSUs was $ 611 and $ 171 for the nine -month periods ended September 30, 2025 and 2024 , respectively.

As of September 30, 2025 , there was $ 2,239 of unrecognized stock-based compensation expense related to unvested RSUs, which will be recognized over a weighted average period of approximately 2.7 years.

Stock-based compensation related to RSUs was $ 521 and $ 190 for the three -month periods ended March 31, 2026 and 2025 , respectively.

As of March 31, 2026 , there was $ 6,054 of unrecognized stock-based compensation expense related to unvested RSUs, which will be recognized over a weighted average period of approximately 3.0 years.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Note 8 — Share-Based Payment Awards (continued)

Employee Stock Purchase Plan

The Company’s 2018 Employee Stock Purchase Plan (“ESPP”) provides for an initial reserve of 150,000 shares, and this reserve is automatically increased on January 1 of each year by the lesser of 1 % of the outstanding shares of common stock at December 31 of the preceding year or 150,000 shares of the Company's common stock, subject to reduction at the discretion of the Company’s board of directors.

As of September 30, 2025 , there were 842,581 shares available for issuance under the ESPP.

As of March 31, 2026 , there were 975,687 shares available for issuance under the ESPP.

The annual offerings consist of two stock purchase periods, with the first purchase period ending in June and the second ending in December.

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The terms of the ESPP provide a restart feature if the Company's stock price is lower at the end of a six -month period within the twelve -month offering period than it was at the beginning of the twelve -month offering period.

The Company recorded an expense of $ 30 and $ 145 related to the ESPP during the nine -month periods ended September 30, 2025 and 2024 , respectively.

During the nine- month periods ended September 30, 2025 , there were no shares issued under the ESPP due to the Company being unable to issue shares associated with ESPP purchases as a result of the previously disclosed requirement to file audited financial statements of INCRELEX® for the years ended December 31, 2023 and 2022 and for the nine months ended September 30, 2024 and 2023, as well as unaudited proforma financial information for the years ended December 31, 2024 and 2023, related to the purchase of INCRELEX® from Ipsen S.

As of September 30, 2025 and December 31, 2024 , the accompanying Condensed Balance Sheet include $ 145 and $ 42 , respectively, in accrued liabilities for employee ESPP contributions.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

The Company recorded an expense of $ 109 and $ 81 related to the ESPP during the three -month periods ended March 31, 2026 and 2025 , respectively.

As of March 31, 2026 and December 31, 2025 , the accompanying Condensed Balance Sheets include $ 258 and $ 45 , respectively, in accrued liabilities for employee ESPP contributions.

Note 9 — Basic and Diluted Net Loss per Common Share

For the three and nine months ended September 30, 2025 and 2024, basic and diluted net loss per share is computed using the weighted average number of shares of common stock outstanding during the period and includes common stock equivalents (using the treasury stock and “if converted” method) from stock options, RSUs, and warrants.

For the three months ended September 30, 2025 and 2024, 7,087,170 and 4,896,038 , respectively, in common stock equivalents are excluded from the calculation of diluted net loss per share because the effect is anti-dilutive.

For the nine months ended September 30, 2025 and 2024, 7,633,966 and 6,319,907 , respectively, in common stock equivalents are excluded from the calculation of diluted net loss per share because the effect is anti-dilutive.

During the three and nine months ended September 30, 2025 and 2024, included in the basic and diluted net loss per share calculation were RSUs awarded to directors that had vested, but the issuance and delivery of the shares are deferred until the director retires from service as a director.

For the three months ended March 31, 2026 and 2025, basic and diluted net income (loss) per share is computed using the weighted average number of shares of common stock outstanding during the period and includes common stock equivalents (using the treasury stock and “if converted” method) from stock options, RSUs, ESPP and warrants.

For the three months ended March 31, 2025, 4,130,700 , in common stock equivalents are excluded from the calculation of diluted net loss per share because the effect was anti-dilutive.

During the three months ended March 31, 2026 and 2025, included in the basic and diluted net loss per share calculation were RSUs awarded to directors that had vested, but the issuance and delivery of the shares are deferred until the director retires from service as a director.

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

Three Months Ended

Nine Months Ended

September 30,

Net income (loss)

$ ( 1,927 ) $ 627 $ ( 6,084 ) $ ( 3,225 )

Weighted average common shares outstanding, basic

26,893,000 25,900,000 26,891,000 25,814,000

Net income (loss) per share, basic

$ ( 0.07 ) $ 0.02 $ ( 0.23 ) $ ( 0.12 )

Weighted average common shares outstanding, diluted

26,893,000 26,550,000 26,891,000 25,814,000

Net income (loss) per share, diluted

$ ( 0.07 ) $ 0.02 $ ( 0.23 ) $ ( 0.12 )

Note 10 — Income Taxes

The following table summarizes the Company's income tax expense and effective tax rates for the three and nine months ended September 30, 2025 and 2024 :

The following table summarizes the Company's income tax expense and effective tax rates for the three months ended March 31, 2026 and 2025 :

Three Months Ended

Nine Months Ended

September 30,

Income (loss) before income taxes

$ ( 1,955 ) $ 501 $ ( 5,972 ) $ ( 3,297 )

Income tax expense (benefit)

( 28 ) ( 126 ) 112 ( 72 )

Income tax expense

Effective tax rate

1.4 % ( 25.1 %) ( 1.9 %) 2.2 %.

The Company’s quarterly income tax provision is calculated under the discrete method, which treats the interim period as if it were the annual period and determines the income tax expense or benefit on that basis.

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The Company believes, at this time, the use of this discrete method is more appropriate as the annual effective income tax rate cannot be reliably estimated given the Company's full valuation allowance recorded on its net deferred tax assets and annual utilization limitations that prevent the Company from fully offsetting its expected current income tax liabilities with its available net operating losses and income tax credits.

The Company's quarterly income tax provision calculated under the discrete method for the period ended September 30, 2025 captures the income tax effects of the One Big Beautiful Bill Act (“OBBBA”), which was enacted on July 4, 2025.

The Company's current income tax expense for the period ended September 30, 2025 includes the benefit of the OBBBA restoring the ability to immediately deduct domestic research & experimental expenditures under Internal Revenue Code Section 174.

The Company did not record any deferred income tax expense or benefit related to the OBBBA tax law changes during the period ended September 30, 2025 as the Company continues to record a full valuation allowance against its net deferred tax assets.

The effective tax rate for the three months and nine months ended September 30, 2025 varies from the three months and nine months ended September 30, 2024 primarily as a result of the Company's valuation allowance recorded against its net deferred tax assets and annual tax attribute limitations that result in current income tax expense.

Income taxes paid during the nine months ended September 30, 2025 and 2024 were $ 117 and $ 181 , respectively.

The Company's quarterly income tax provision calculated under the discrete method for the period ended March 31, 2026 captures the income tax effects of the One Big Beautiful Bill Act (“OBBBA”), which was enacted on July 4, 2025.

The Company's current income tax expense for the period ended March 31, 2026 includes the benefit of the OBBBA restoring the ability to immediately deduct domestic research and experimental expenditures under Internal Revenue Code Section 174.

The Company did not record any deferred income tax expense or benefit related to the OBBBA tax law changes during the period ended March 31, 2026 as the Company continues to record a full valuation allowance against its net deferred tax assets.

The effective tax rate for the three months ended March 31, 2026 varies from the three months ended March 31, 2025 primarily as a result of the Company's valuation allowance recorded against it net deferred tax assets and annual tax attribute limitations that result in current income tax expense.

Taxes paid during the three months ended March 31, 2026 and 2025 were $ 37 and $ 8 , respectively.

Tax refunds received during the three months ended March 31, 2026 and 2025 were $ 109 and $ 0 , respectively.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Note 11 — Related-Party Transactions

Chief Executive Officer

The Chief Executive Officer (“CEO”) has a partial interest in a company that the Company has entered into an agreement with as described below.

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.

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

In June 2025, t he Company paid $ 675 to Selenix.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

Note 12 — 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 o ffice space lease.

The Company recognizes a right-of-use (“ROU”) asset and a lease liability on the balance sheets 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 amendment to the lease agreement was 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.

The Company’s operating lease cost for the nine months ended September 2025 and 2024 as presented as G&A in the Condensed Statements of Operations was $ 36 and $ 61 , respectively.

For the nine months ended September 30, 2025 and 2024 , cash paid for amounts included in the measurement of operating lease liabilities was $ 68 and $ 35 , respectively.

The ROU asset non-cash lease expense for the nine months ended September 30, 2025 and 2024 was $ 35 and $ 53 , respectively, and is reflected within non-cash lease expense on the Company’s Condensed Statements of Cash Flows.

The table below presents the lease-related assets and liabilities recorded on the balance sheet as of September 30, 2025 and December 31, 2024 (in thousands).

September 30,

The Company’s operating lease cost as presented as G&A in the Statements of Operations was $ 24 and $ 22 for the three months ended March 31, 2026 and 2025, respectively.

For the three months ended March 31, 2026 and 2025, cash paid for amounts included in the measurement of operating lease liabilities was $ 25 and $ 23 , respectively.

The ROU asset non-cash lease expense was $ 9 and $ 17 for the three months ended March 31, 2026 and 2025, respectively, and is reflected within non-cash lease expense on the Company’s Condensed Statements of Cash Flows.

As of March 31, 2026 and December 31, 2025, the average remaining lease term was 4.9 and 5.2 years, respectively, and as of March 31, 2026 and December 31, 2025, the average discount rate was 11.8 % for each period.

The table below presents the lease-related assets and liabilities recorded on the balance sheets as of March 31, 2026 and December 31, 2025 :

Classification

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Total operating lease liabilities

The Company’s future lease commitments as of September 30, 2025 , are as indicated below:

The Company’s future lease commitments as of March 31, 2026 , are as indicated below:

2026 (Remainder)

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The Company is not aware of any pending or threatened litigation matters at this time that would have a material impact on the operations of the Company.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

License and product development agreements

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

The Company has entered into various agreements that include commitments and contingencies 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 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 ET- 400 in the existing agreement terms.

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.

The Company could pay up to $ 44,000 in future sales milestones.

The Company pays tiered royalties of 11.0 % to 17.0 % on net sales.

In June 2021 , the Company acquired U.S.

and Canadian rights to Crossject’s ZENEO® hydrocortisone needleless autoinjector, which is under development as a rescue treatment for adrenal crisis.

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.

March 2023, the Company acquired rare disease endocrinology product candidate ET-

600 from Tulex.

The Company paid

$ 450 to Tulex in

July 2023 as a result of successful manufacturing of registration batches.

The Company will pay Tulex

$ 200 upon acceptance by the FDA of the NDA for the product,

first commercial sale of the product, and tiered royalties of

17.0 % on net sales.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

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.

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

The Company could pay up to $3,500 in future development milestones and up to $6,000 in commercial milestones, as well as a 10% royalty on net sales.

In September 2022, the Company entered into a licensing agreement with Lukare Medical LLC (“Lukare”) to which the Company acquired the U.S.

rights to Betaine Anhydrous (betaine anhydrous oral solution).

Under the terms of the agreement, Lukare is entitled to a $ 250 commercial milestone payment upon Betaine Anhydrous achievement of a certain net sales and a $ 500 payment if no generic competitors have launched within 48 months after the effective date of the license agreement.

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

In February 2026, the FDA approved the NDA for ET- 600 (“DESMODA™”) and the Company launched DESMODA™ in March 2026 and was obligated to make a milestone payment of $ 250 (paid in April 2026).

The Company pays tiered royalties to Tulex of 12.5 % to 17.0 % on net sales of DESMODA™.

In March 2024 , the Company entered into a licensing agreement with APR Applied Pharma Research SA ( "APR") pursuant to which the Company agreed to acquire the U.S.

rights to various products under the PKU GOLIKE brand.

The Company could pay up to $2,000 in one -time sales milestones, and the Company pays a royalty of 30% of net sales less product costs to APR.

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

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.

pursuant to which the Company has agreed to acquire the U.S.

In March 2025 , the Company recognized licensing revenue of $ 1,500 from a development milestone payment.

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 would recognize 45 % of the proceeds from the future milestones, with the balance being distributed to other partners.

In November 2024 , the Company entered into a licensing agreement with AMMTeK pursuant to which the Company agreed to acquire the U.S.

rights to Amglidia (glyburide oral suspension).

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 NDA submission.

AMMTeK 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:

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during March of 2025 .

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.

The Company is required to 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 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.

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

As of September 30, 2025, the present value of the deferred consideration was $ 4,643 , with $ 357 to be accreted to interest expense over the remainder of the deferred consideration term using the effective interest rate method.

As of September 30, 2025, $ 2,500 was classified as accrued liabilities and $ 2,143 was classified as other long-term liabilities in the accompanying Condensed Balance Sheet.

The Company is obligated to pay the seller $ 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 March 31, 2026 and December 31, 2025 , the present value of the deferred consideration of $ 2,318 and $ 2,259 , respectively, was classified as accrued liabilities in the Condensed Balance Sheets, with $ 182 and $ 241 as of March 31, 2026 and December 31, 2025, respectively, to be accreted to interest expense over the remainder of the deferred consideration term using the effective interest rate method.

In connection with the INCRELEX® product acquisition, the Company assumed the commercial manufacturing and supply agreement between Simtra BioPharma Solutions 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.

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 2032 .

The manufacturing services agreement is associated with the production of INCRELEX® bulk drug substance and contains a minimum and a maximum obligation every twenty-four months.

Eton Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(in thousands, except share and per share amounts)

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

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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 Condensed Balance Sheet as of September 30, 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 three months ended September 30, 2025, the Company recognized $ 322 in deferred revenues associated with the supply agreement.

With respect to deferred revenues, $ 266 and $ 457 , respectively, are reflected in accrued liabilities and $ 1,817 and $ 1,762 , respectively, in other long-term liabilities in the Company's Condensed Balance Sheets as of March 31, 2026 and December 31, 2025 .

Deferred revenues will be amortized to 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.

During the three months ended March 31, 2026, the Company recognized $ 158 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, the Company has classified $ 6,949 in accounts payable and $ 5,188 as a long-term inventory payable in in the accompanying Condensed Balance Sheet.

During the nine months ended September 30, 2025, the Company recognized $ 3,673 in inventory step-up expense associated with the inventory purchase from Ipsen S.A.

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

Accordingly , the Company has classified $ 6,817 and $ 6,926 , respectively, in accounts payable and $ 1,704 and $ 3,463 , respectively, in other long-term liabilities in the accompanying Condensed Balance Sheets as of March 31, 2026 and December 31, 2025.

In February 2026, the Company entered into a licensing agreement to acquire the U.S.

rights to HEMANGEOL® (propranolol) oral solution from Pierre Fabre.

Under the terms of the licensing agreement, the Company will pay an 8 % royalty on net sales for the duration of the product’s patent protected life ( October 2028).

The Company accounted for this transaction as an asset acquisition.

Indemnification

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The Company believes the fair value of the indemnification rights and agreements is minimal.

Accordingly, the Company has not recorded any liabilities for these indemnification rights and agreements as of September 30, 2025 or December 31, 2024 .

Accordingly, the Company has not recorded any liabilities for these indemnification rights and agreements as of March 31, 2026 and December 31, 2025 .

Note 14 — Subsequent Events

On April 9, 2026, the Company entered into a sixth amendment to its credit agreement with SWK.

Under the amended terms of the SWK credit agreement, the interest rate was reduced from SOFR plus 6.75 % to SOFR plus 6.55 % with the SOFR floor reduced to 2.75 % from the previous 5.0 %.

Further, the interest only period was extended to November 2026.

There were no fees paid to SWK associated with the credit amendment and the amended credit agreement maturity date remained in December 2027.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

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

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.

We currently have ten commercial rare disease products:

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

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

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

Results of Operations (dollars in thousands)

During the three months ended September 30, 2025, we had $22,459 in total revenues that generated a gross profit of $7,855 compared to total revenues of $10,324 during the three-month period ended September 30, 2024 that generated a gross profit of $6,302 for the period.

The increase in product sales and royalties, net was the result of increased sales of ALKINDI SPRINKLE® and the addition of revenues from INCRELEX® and GALZIN® products in the current period.

During the nine months ended September 30, 2025, we had $58,669 in total revenues that generated a gross profit of $29,640 compared to total revenues of $27,364 during the nine-month period ended September 30, 2024 that generated a gross profit of $16,935 for the period.

During the nine months ended September 30, 2025, we had product sales and royalties, net of $55,383, compared to product sales and royalties, net of $26,864 during the nine months ended September 30, 2024, an increase of $28,519.

The increase in product sales and royalties, net was the result of increased sales of our INCRELEX® and incremental revenues from ALKINDI SPRINKLE® and GALZIN® products in the current period.

Licensing revenue during the nine months ended September 30, 2025 was $3,286 compared to $500 in licensing revenue during the nine months ended September 30, 2024.

The increase in licensing revenue during the nine months ended September 30, 2025 was due to $1,786 from our out-licensing of INCRELEX® rights outside of the U.S.

During the three months ended March 31, 2026, we had $24,266 in total revenues that generated a gross profit of $14,735 compared to total revenues of $17,282 during the three-month period ended March 31, 2025 that generated a gross profit of $9,861 for the period.

The increase in product sales and royalties, net was primarily the result of increased sales of INCRELEX®, GALZIN®, ALKINDI SPRINKLE®, and Carglumic Acid, and the addition of KHINDIVI™ sales in the current period.

Licensing revenue during the three months ended March 31, 2026 was zero compared to $3,286 in licensing revenue during the three months ended March 31, 2025.

Licensing revenue during the three months ended March 31, 2025 was due to $1,786 from our out-licensing of INCRELEX® rights outside of the U.S.

and $1,500 from the recognition of a development milestone event associated with our divestiture of DS-200.

Research and Development Expenses

During the three months ended September 30, 2025, we incurred $1,112 of research and development (“R&D”) expenses as compared to $505 for the same period in 2024.

During the nine months ended September 30, 2025, we incurred $5,985 of R&D expenses as compared to $4,126 for the same period in 2024.

The increase was primarily due to a $2,155 NDA filing fee for ET-600 and increased expenses associated with our ET-700 and ET-800 project development activities.

During the three months ended March 31, 2026, we incurred $1,875 of research and development (“R&D”) expenses as compared to $1,161 for the same period in 2025.

The increase was primarily due to higher clinical study expenses primarily associated with our KHINDIVI™ label expansion and increased expenses associated with our ET-700 project development activities.

General and Administrative Expenses

G&A expenses consist primarily of employee compensation expenses, legal and professional fees, product marketing expenses, distribution expenses, business insurance, travel expenses, and general office expenses.

During the three-month periods ended September 30, 2025 and 2024, we incurred $8,106 and $5,288, respectively, of G&A expenses.

During the nine-month periods ended September 30, 2025 and 2024, we incurred $26,963 and $16,035, respectively, of G&A expenses.

The increase in G&A expenses during the nine months ended September 30, 2025 was primarily attributable to an increase in product advertising and promotional expenses, higher stock-based compensation expense and an increase in compensation and benefit expenses due to an increase in general and administrative headcount during the current year.

G&A expenses consist primarily of employee compensation expenses, legal and professional fees, product marketing expenses, FDA fees, distribution expenses, business insurance, travel expenses, and general office expenses.

During the three-month periods ended March 31, 2026 and 2025, we incurred $10,446 and $9,170, respectively, of G&A expenses.

The increase in G&A expenses during the three months ended March 31, 2026 was primarily attributable to higher FDA fees as the Company no longer qualifies for the orphan fee exemption and higher employee-related costs due to increased headcount to support the business.

Liquidity and Capital Resources

As of September 30, 2025, we had total assets of $104.5 million, cash and cash equivalents of $37.1 million and working capital of $27.8 million.

We believe that our cash and cash equivalents on hand, along with continued product revenues, will be sufficient for at least the next twelve months of our operations.

However, our projected estimates for our product development spending, administrative expenses, and our working capital requirements could be inaccurate, or we may experience growth more quickly or on a larger scale than we expect, any of which could result in the depletion of capital resources more rapidly than anticipated and could require us to seek additional financing earlier than we expect to support our operations.

The following table sets forth a summary of our cash flows for the nine-month periods ended September 30, 2025 and 2024 (dollars in thousands):

Nine months ended

September 30, 2025

September 30, 2024

Net cash from (used in) operating activities

Cash from (used in) investing activities

Cash from (used in) financing activities

As of March 31, 2026, we had total assets of $97.7 million, cash and cash equivalents of $19.7 million and working capital of $9.1 million.

The following table sets forth a summary of our cash flows for the three-month periods ended March 31, 2026 and 2025 (dollars in thousands):

Three months ended

March 31, 2026

March 31, 2025

Net cash from operating activities

Cash used in investing activities

Cash from financing activities

Change in cash and cash equivalents

During the nine months ended September 30, 2025, net cash from operating activities was $22,075 compared to net cash from operating activities of $1,734 during the nine months ended September 30, 2024.

The increase in cash from operating activities during the nine months ended September 30, 2025 was primarily due to higher cash collections from product sales, an increase in accrued Medicaid rebates, a filing fee refund from the FDA related to ET-400 and the collection of a licensing milestone payment.

During the nine months ended September 30, 2025, net cash used in investing activities was $284 compared to net cash used in investing activities of $1,882 during the nine months ended September 30, 2024.

The decrease in net cash used in investing activities was primarily attributable to a $1,868 payment associated with the acquisition of the PKU GOLIKE® product license in March 2024.

During the nine months ended September 30, 2025, net cash provided by financing activities was $394 compared to net cash used in financing activities of $979 during the nine months ended September 30, 2024.

During the nine months ended September 30, 2025, proceeds from stock option exercises was $394 compared to $176 during the nine months ended September 30, 2024.

Additionally, during the nine months ended September 20, 2024, there was $770 in debt repayments compared with zero during the nine months ended September 30, 2025.

During the three months ended March 31, 2026, net cash from operating activities was $7,405 compared to $2,090 during the three months ended March 31, 2025.

The increase in cash from operating activities during the three months ended March 31, 2026 was primarily due to higher cash collections from product sales and lower cash outlay for inventory purchases.

During the three months ended March 31, 2026, net cash used in investing activities was $15,075 and was primarily attributable to a $14,000 payment associated with the acquisition of the U.S.

commercial rights to HEMANGEOL® in February 2026 and the $1,000 upfront payment for the licensing of U.S.

marketing rights to an ultra-rare disease product candidate (also in February 2026).

During the three months ended March 31, 2026, net cash from financing activities was $1,389 compared to $394 during the three months ended March 31, 2025.

The increase in net cash from financing activities related to increased proceeds from stock option exercises.

Non-GAAP Financial Measures

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These non-GAAP financial measures are intended to provide additional information on our performance, operations and profitability.

Adjustments to our GAAP figures as well as EBITDA includes non-recurring acquisition or divestiture-related costs, fees related to refinancing activities, as well as non-cash items such as share-based compensation, inventory step-up expense, depreciation and amortization, non-cash interest expense, and other non-cash adjustments.

Adjustments to our GAAP figures as well as EBITDA includes non-recurring acquisition or divestiture-related costs and severance costs, as well as non-cash items such as share-based compensation, inventory step-up expense, depreciation and amortization, and other non-cash adjustments.

Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred.

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The non-GAAP financial measures used by us may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies.

Reconciliations of reported GAAP net loss to EBITDA, adjusted EBITDA and non-GAAP net income, and the related per share amounts, were as follows (in thousands, except share and per share amounts):

Reconciliations of reported GAAP net income (loss) to EBITDA, adjusted EBITDA and non-GAAP net income, and the related per share amounts, were as follows (in thousands, except share and per share amounts):

For the three months ended

For the nine months ended

September 30,

GAAP Net income (loss)

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Interest expense (including debt discount amortization and non-cash interest expenses)

Income tax expense (benefit)

Income tax expense

Other non-GAAP adjustments:

5 unchanged sentences

Adjusted EBITDA

GAAP income (loss) before income tax

GAAP Net income (loss)

Non-GAAP adjustments:

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Weighted average number of common shares outstanding, diluted

GAAP (loss) income per share - Basic

GAAP income (loss) per share - Basic

Non-GAAP adjustments

Non-GAAP earnings per share - Basic

GAAP (loss) income per share - Basic

Non-GAAP income per share - Basic

GAAP income (loss) per share - Diluted

Non-GAAP adjustments

Non-GAAP earnings per share - Diluted

Non-GAAP income per share - Diluted

Represents depreciation expense related to our property and equipment.

Intangible amortization expenses are associated with our intellectual property rights related to INCRELEX®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous and Nitisinone.

During the three and nine months ended September 30, 2025, we recognized in cost of sales $1,324 and $3,673, respectively, for inventory step-up expense primarily attributable to INCRELEX® inventory revalued in connection with this product acquisition.

Represents share-based compensation expense associated with our stock option and restricted stock unit stock unit grants to our employees and non-employee directors and our employee share purchase plan.

Intangible amortization expenses are associated with our intellectual property rights related to INCRELEX®, HEMANGEOL®, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous and Nitisinone.

During the three months ended March 31, 2026 and 2025, we recognized in cost of sales $350 and $1,142, respectively, for inventory step-up expense primarily attributable to INCRELEX® inventory revalued in connection with this product acquisition.

Represents share-based compensation expense associated with our stock option and restricted stock unit grants to our employees and non-employee directors and our employee share purchase plan.

Represents severance and benefit expenses associated with role redundancy within commercial operations during the first quarter of 2025.

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Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 3 to our financial statements included herein, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.

While our significant accounting policies are described in more detail in Note 2 to notes to our financial statements included herein, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.

Revenue Recognition for Contracts with Customers

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We recognize 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 nine months ended September 30, 2025 and 2024, all revenues recognized in the Condensed Statements of Operations were point in time sales to our customers.

For the three months ended March 31, 2026 and 2025, all revenues recognized in the Condensed Statements of Operations were point in time sales to our customers.

Milestone Payments – If a commercial contract arrangement includes development milestone payments, we 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 our control or the licensee’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received.

At the inception of each licensing agreement, the Company assesses the goods or services promised within the contract to identify performance obligations.

If a license to the Company's product rights is determined to be distinct from other promised goods or services, it is accounted for as a separate performance obligation.

Licensing Revenues – We recognize revenues from licensing arrangements primarily associated with product license agreements that could contain development activity milestones and agreements to divest the licensing rights to products or product candidates.

At the inception of each licensing agreement, we assess the goods or services promised within the contract to identify performance obligations.

If a license to our product rights is determined to be distinct from other promised goods or services, it is accounted for as a separate performance obligation.

If a license grants the customer a right to use our product license, revenue is recognized at the point in time when the license is transferred to the customer and the customer has the ability to use and benefit from the product license.

Additionally, revenue is recognized from product license agreements with development activity milestones when these development activities occur per the contractual terms of the agreement.

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, we 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.

Principal Versus Agent – Under the terms of the transitional services agreement (“TSA”) between us and Ipsen S.A, we evaluate whether our performance obligation is a promise to transfer product to a customer as the principal, or to arrange for product to be provided by another party using a control model as the agent.

Principal Versus Agent – Under the terms of the transitional services agreement (“TSA”) between us and Ipsen S.A, we evaluated whether our performance obligation is a promise to transfer product to a customer as the principal, or to arrange for product to be provided by another party using a control model as the agent.

This evaluation determined that we are not in control of establishing the transaction price, managing all aspects of the shipment process and taking the risk of loss for delivery, collection and returns.

Based on the our evaluation of the control model, we determined that our responsibilities under the TSA was as an agent and not the principal, and correspondingly, such revenue related to products sold by Ipsen S.A are reported on a net versus a gross basis.

Based on our evaluation of the control model, we determined that our responsibilities under the TSA was as an agent and not the principal, and correspondingly, such revenue related to products sold by Ipsen S.A are reported on a net versus a gross basis.

Significant Financing Component – In determining the transaction price, we will adjust consideration for the effects of the time value of money if the expected period between payment by the licensees and the transfer of the promised goods or services to the licensees will be more than one year.

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.

INCRELEX®, ALKINDI SPRINKLE®, KHINDIVI

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

are not subject to returns.

Upon recognition of revenue from product sales, the estimated amounts of chargebacks, prompt payment discounts and state Medicaid are included in sales reserves, accrued liabilities and net accounts receivable.

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.

For our INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone products, we bill 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.

INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous, and Nitisinone product sales are not subject to returns.

Upon recognition of revenue from product sales, the estimated amounts of chargebacks, prompt pay discounts and state Medicaid are in sales reserves, accrued liabilities and net accounts receivable.

We store our INCRELEX®, HEMANGEOL®, ALKINDI SPRINKLE®, KHINDIVI™, DESMODA™, GALZIN®, PKU GOLIKE®, Carglumic Acid, Betaine Anhydrous and Nitisinone

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

The Company accounts for business acquisitions using the acquisition method of accounting.

We account for business acquisitions using the acquisition method of accounting.

Under this method of accounting, assets acquired and liabilities assumed are recorded at their respective fair values at the date of the acquisition.

When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions.

The Company’s estimates of fair value are based upon assumptions believed to be reasonable but that are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

Our estimates of fair value are based upon assumptions believed to be reasonable but that are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill.

The Company also uses best estimates and assumptions to determine the useful lives of those acquired intangible assets that have a finite life.

We account for acquisitions that do not meet the definition of a business as an asset acquisition.

For transactions accounted for as asset acquisition, we allocate the purchase price, including transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis.

Changes in these assumptions could result in materially different allocations of the purchase price, which may impact future depreciation and amortization expense.

In addition, because goodwill is not recognized in asset acquisitions, the assignment of value to identifiable intangible assets may be greater than in a business combination.

We amortize finite-lived intangible assets over their estimated useful lives and evaluates indefinite-lived assets for impairment.

The determination of useful lives and the timing of impairment assessments require significant judgment and may materially affect our results of operations.

Critical estimates in valuing certain of the intangible assets acquired include:

2 unchanged sentences

discount rates.

The Company accounts for stock-based compensation under the provisions of ASC 718 Compensation – Stock Compensation.

Stock-Based Compensation

We account for stock-based compensation under the provisions of ASC 718 Compensation – Stock Compensation.

The guidance under ASC 718 requires companies to estimate the fair value of the stock-based compensation awards on the date of grant and record expense over the related service periods, which are generally the vesting period of the equity awards.

Compensation expense is recognized over the period during which services are rendered by consultants and non-employees until completed.

At the end of each financial reporting period prior to completion of the service, the fair value of these awards is remeasured using the then-current fair value of our common stock and updated assumption inputs in the Black-Scholes option-pricing model (“BSM”).

The Company estimates the fair value of stock-based option awards using the BSM.

The fair value of these awards and assumption inputs are measured using the Black-Scholes option-pricing model (“BSM”).

We estimate the fair value of stock-based option awards using the BSM.

The BSM requires the input of subjective assumptions, including the expected stock price volatility, the calculation of expected term, forfeitures and the fair value of the underlying common stock on the date of grant, among other inputs.

3 unchanged sentences

The expected term of stock options granted is based on vesting periods and the contractual life of the options.

Expected volatilities are based on the Company's historical volatility subsequent to our IPO, which we believe represents the most accurate basis for estimating expected future volatility.

Expected volatilities are based on our historical volatility subsequent to our IPO, which we believe represents the most accurate basis for estimating expected future volatility.

We account for forfeitures as they occur.

2 unchanged sentences

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-Q

Item 1. Financial Statements