Dermata Therapeutics Inc

This management proposal asks shareholders to approve issuance of shares underlying warrants issued in the December 23, 2025 private placement because Nasdaq Listing Rule 5635(d) requires stockholder approval where potential issuance could equal or exceed 20% of outstanding shares at the time of signing. Management seeks the approval to enable warrant holders to exercise their warrants and to permit the Company to receive potential cash proceeds (management estimates up to approximately $8.6 million if warrants are fully exercised) that support near-term liquidity and operations. The background context includes a December 2025 private placement and related placement agent warrants, pre-funded warrants, and common warrants; insiders participated on the same terms as outside investors. The Board argues approval is necessary to comply with Nasdaq rules and to preserve the value and fungibility of the private placement financing; without approval, the Company could be required to block exercise and lose access to pledged financing, which could impair its capital plan. The proposal also reflects the Company’s desire to avoid repeated time-consuming and costly requests for approval and to avoid delisting risk associated with non-compliance. The Audit Committee considered conflicts of interest (several insiders participated in the financing) and concluded the transaction terms and need for proceeds justified recommending approval. Approval will dilute existing holders if warrants are exercised, and the Board discloses that potential dilution and market pressure from future share sales could depress the stock price—factors shareholders must weigh against the Company’s funding needs. Given the narrow shareholder base and related-party participation, sophisticated investors should evaluate the assumptions about likely warrant exercise, the effective financing economics versus alternative capital sources, and the potential governance implications of insider participation. The Board recommends a FOR vote, arguing that the benefits of preserving the financing, complying with Nasdaq, and enabling the warrants’ economic terms outweigh the dilutive consequences.

The Warrant Repricing Proposal requests shareholder approval to reduce the exercise price of up to 120,734 January 2025 warrants from $12.70 to $2.04 (the price established in the December 23, 2025 Private Placement). Management's rationale is that the repricing equalizes economic terms between pre-existing warrant holders and new Private Placement investors, increases the likelihood these warrants will be exercised for cash (providing additional liquidity), and avoids administrative burdens of repeated solicitations. The proposal arises from the Company’s recent financings where insiders and other holders participated and certain historical warrants remained at significantly higher exercise prices; repricing is intended to restore alignment and support the Company’s capital plan. The Board discloses conflicts of interest because officers and directors hold affected warrants and participated in the transactions, and the Audit Committee reviewed those interests before recommending the amendment. If approved, shareholders will experience dilution up to 120,734 shares upon full exercise and potential downward pressure on market price from incremental supply; if not approved, the Company may be unable to realize proceeds from the warrants and will need to repeatedly seek approval in periodic meetings. For a sophisticated evaluation, consider the likelihood of exercise at the new price, the Company’s alternative funding sources, the timing of cash needs, and the relative economic fairness to legacy versus new investors. The Board recommends a FOR vote, asserting that the repricing is necessary to facilitate financing and align investor terms while recognizing dilution risk.

This management proposal asks shareholders to approve a board-adopted amendment increasing the 2021 Omnibus Equity Incentive Plan's share reserve to 402,214 shares (non-evergreen portion), which combined with the existing annual 5% evergreen provision is intended to provide material headroom for future equity grants. Management argues that equity awards are crucial to recruit, retain and motivate employees and non-employee directors in the competitive biotech market and that the current reserve (effectively exhausted) is insufficient for planned 2026 grants. The Board evaluated peer practices and concluded the requested increase is consistent with market norms and necessary to execute compensation strategy without dilutive or administrative inefficiencies from frequent plan amendments. Approval also ensures certain stock options can qualify as incentive stock options under Section 422 and satisfies Nasdaq plan-approval requirements. If approved, dilution to current shareholders will occur over time as awards are granted and exercised; the Board has disclosed limits on director annual awards and other governance features designed to moderate dilution. If not approved, the Company would be constrained in granting equity to new hires and existing personnel, potentially increasing cash compensation demands or reducing competitiveness in talent markets. For a sophisticated investor, evaluate the projected burn rate (shares-per-year), the expected dilution trajectory under multiple compensation scenarios, potential clustering of grants, and whether the governance controls and vesting practices adequately align long-term shareholder interests. The Board recommends voting FOR the amendment, citing recruiting needs, peer benchmarking, and Nasdaq compliance as primary justifications.

This management proposal seeks authorization to adjourn the Annual Meeting to solicit additional proxies if Proposals 3, 4 or 5 lack sufficient votes at the meeting. Management frames this as a procedural safeguard to permit further outreach to holders (including brokers and beneficial owners) and to avoid multiple separate meetings or repeated filings; it is standard practice for financings or Nasdaq approvals where vote thresholds may be uncertain. The Board notes that adjournment votes are often used to obtain required approvals while preserving quorum and minimizing operational disruption; adjournment does not change the substantive proposals but extends the solicitation period. Approval can be seen as protective of the Company’s ability to complete approvals critical to financing and Nasdaq compliance, but it also gives management additional time to influence outcomes, which shareholders should weigh. The proposal is non-controversial in that it only authorizes procedural adjournment if necessary, but investors should consider whether management will use the additional period responsibly and whether repeated adjournments would create uncertainty. The Board unanimously recommends a FOR vote to ensure the Company has the flexibility needed to secure approvals for the Issuance, Repricing and Plan Amendment proposals if initial support is insufficient.