{"url_path":"/sec/drmaw/10-q/2026/item-1a","section_key":"item-1a","section_title":"Item 1A RISK FACTORS**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1853816/0001493152-26-022719-index.html","accession_number":"0001493152-26-022719","cik":"0001853816","ticker":"DRMA","issuer_name":"Dermata Therapeutics, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1853816/0001493152-26-022719-index.html","primary_entity_key":"0001853816","primary_entity_name":"Dermata Therapeutics, Inc."},"word_count":436,"has_tables":true,"body_markdown":"**ITEM\n1A: RISK FACTORS**\n\n \n\nOur\noperations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk\nFactors” in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 26, 2026. No material\nchanges to such risk factors have occurred during the three months ended March 31, 2026, except as described below:\n\n** **\n\n**We\nare involved in litigation with Villani, Inc. relating to our Spongilla-based products and commercialization activities, which could\nadversely affect our business, operations, financial condition and ability to commercialize our products.**\n\n \n\nOn\nApril 23, 2026, Villani, Inc. (“Villani”) filed a complaint against us in the U.S. District Court for the Central District\nof California asserting claims for false advertising under the Lanham Act, breach of contract, and conversion, and seeking injunctive\nrelief. Villani has also stated that it intends to initiate an arbitration proceeding against us seeking monetary damages. Although no\narbitration demand has been served to date, we may become subject to additional claims, damages, costs, or other remedies in connection\nwith any such proceeding.\n\n \n\nIn\nconnection with the litigation, Villani sought a temporary restraining order (“TRO”) and preliminary injunction against\nus. On May 6, 2026, the Court denied the TRO in part related to a breach of contract and conversion claims and granted the TRO in\npart on the false or misleading advertising statements, which imposes certain temporary restrictions on specific statements the\nCompany can make pending further proceedings. Villani has also requested a preliminary injunction, which, if granted, could extend\nor grant new restrictions imposed by the Court during the pendency of any arbitration proceeding or related litigation. We intend to\nvigorously defend ourselves against these claims; however, litigation and arbitration proceedings are inherently uncertain, costly,\nand time-consuming.\n\n \n\nWhile\nwe are not currently restrained from manufacturing, promoting, advertising, using, selling, offering for sale, distributing, or\ndelivering in commerce any product or regimen containing Spongilla, if Villani were to obtain a preliminary injunction, arbitration\naward, or otherwise, we could be restricted or delayed in our ability to market, manufacture, distribute, advertise, sell, or\ncommercialize certain of our current or planned products, including products containing our *Spongilla*. Such restrictions\ncould disrupt our planned product launches, impair relationships with suppliers, manufacturers, distributors, marketing partners, or\ncustomers, require us to modify our products, branding, formulations, or marketing claims, or otherwise adversely affect our\ncommercialization strategy. In addition, defending this matter may require significant management attention and financial resources, result in substantial legal expenses,\ndivert resources from our business operations and strategic initiatives, and expose us to reputational harm."}