BFRI 10-K & 10-Q changes, risk factors and insider trading

Our business, results of operations and financial condition and the industry in which we operate are subject to various risks. We have listed below (in order of importance or probability of occurrence) the most significant risk factors we believe to be applicable to us, but they do not constitute all of the risks that may be applicable to us. New risks may emerge from time to time, and it is not possible for us to predict all potential risks or to assess the likely impact of all risks. References to past events are examples only and are not intended to be a complete listing or to indicate the likelihood of similar events occurring in the future. You should read this summary together with the more detailed description of each risk factor contained below.below, as well as other information in this Form 10-K and our other filings with the SEC, including our financial statements and the related notes and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in such filings. These disclosures reflect the Company’s beliefs and opinions as to factors that could materially and adversely affect the Company and its securities in the future. Some of these material risks include:

Risks Related to the License and Supply Agreements and our Licensed Products

Risks Related to the License and Supply Agreements and Our Licensed Products

Certain important patents for our licensed product Ameluz® expired in 2019. Although theThe process of developing generic topical dermatological products for the first time presents specific challenges that may deter potential generic competitors,competitors. If generic versions ofcompetitors Ameluz® maydo enter the market following the recent expiration of these patents. Ifmarket, this happens, we may needcause a tosignificant reduce drop in the price of Ameluz® significantly and mayour loseUnited significantStates market share.share for Ameluz, materially and adversely impacting our results of operations, business, and stock price.

TheWe Ameluzhold Licensorseveral holdspatent anotherfamilies protecting our products, including 1) a patent family protectingthat protects the technology relating to nanoemulsions forthat which they have been issued patents in various jurisdictions and which expireexpires in December 2027.2027, A2) corresponding United Statesa patent applicationfamily hasthat been filed byprotects the current Ameluz Licensorformulations (without propylene butglycol) isthat stillexpires pending.in We2043, and 3) several patent families regarding illumination protocols used in or planned for Ameluz PDT and covering the RhodoLED Lamps. However, we cannot guarantee that thisthese Unitedpatents States(or patentadditional willpatents befor issuedwhich or,we have applied, if issued, issued) will adequately protect us against copying by competitors.

Our business depends substantially on the success of our principal licensedproduct, product Ameluz®.Ameluz. If we or the Ameluz Licensor are unable to successfully obtain and maintain regulatory approvals or reimbursement for Ameluz® for existing and additional indications, our business may be materially harmed.

Although the Ameluzwe Licensor hashave received marketing approval in the United States for Ameluz® for lesion- and field-directed treatment of actinic keratosisAK in combination with PDT using the BF-RhodoLED® Lamps, there remains a significant risk that we will fail to generate sufficient revenue or otherwise successfully commercialize the product in the United States. The success of Ameluz our product will depend on several factors, including:

If we or the Ameluz Licensor do not achieve one or more of these factors in a timely manner, or at all, we could experience significant delays or an inability to successfully commercialize our licensed products, which would materially harm our business and we may not be able to earn sufficient revenue and cash flows to continue our operations.

Because thewe Ameluz Licensorhave received approval from the FDA to market in the United States Ameluz® in combination with PDT using the BF-RhodoLED® lamp,lamp series, any new lamp we may license would require new approval from the FDA. We cannot assure youthat that the Biofrontera Groupwe will develop any new lamps (beyond the BF-RhodoLED® XL lamplamp, which was approved by the FDA on October 21, 2021), or obtain any such new approval.

If our Licensorwe or our Licensors’ manufacturing partners, as applicable, fail to manufacture Ameluz®, Ameluz, RhodoLED® Lamps, or other marketed products in sufficient quantities and at acceptable quality and cost levels, or to fully comply with current good manufacturing practice, or cGMP,cGMP or other applicable manufacturing regulations, we may face a bar to, or delays in, the commercialization of theour products under license to us or we will be unable to meet market demand, and lose potential revenues.

Our Licensors supply us with the licensed product that we sell in the United States market. The manufacture of theour products we license requires significant expertise and capital investment. Currently, all commercial supply for each of our commercial licensed products are manufactured by single unaffiliated contract manufacturers. Our LicensorsWe would each need to spend substantial time and expense to replace theirour respective contract manufacturermanufacturers if any such contract manufacturer failed to deliver products in the quality and quantities quantities we demand or failed to meet any regulatory or cGMP requirements. Our LicensorsWe take precautions to help safeguard their respective manufacturing facilities, including acquiring insurance and performing on site audits. However, vandalism, terrorism or a natural or other disaster, such as a fire or flood, could damage or destroy manufacturing equipment or the inventory of raw material or finished goods, cause substantial delays in operations, result in the loss of key information, and cause additional expenses. Our Licensors’ insurance may not cover losses related to our licensed products in any particular case. In addition, regardless of the level of insurance coverage, damage to our Licensors’ facilities may have a material adverse effect on our business, financial condition and operating results.

Furthermore, while our Licensorswe take reasonable precautions to ensure the successful production of our commercially licensedcommercial products, theirour contract manufacturers may experience a myriad of business difficulties (i.e., workforce instability, supply chain issues, erosion of customer base, etc.) that could impact their financial solvency.

Our Licensors’ manufacturing partners must comply with federal, state and foreign regulations, including FDA regulations governing cGMP enforced by the FDA through its facilities inspection program and by similar regulatory authorities in other jurisdictions where we do business. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. For theour medical device productsproducts, we license, our Licensors are required to comply with the FDA’s Quality System Regulation, or QSR,QSR which covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our medical device products.

Our Licensors’ facilities orand our Licensors’ contract facilities, as applicable,facilities have been inspected by the FDA for cGMP compliance. If our Licensors’ or our Licensors’ contract manufacturers, as applicable,manufacturers do not successfully maintain cGMP compliance for these facilities, commercialization of our licensed products could be prohibited or significantly delayed. Even after cGMP compliance has been achieved, the FDA or similar foreign regulatory authorities at any time may implement new standards or change their interpretation and enforcement of existing standards for manufacture, packaging, testing of or other activities related to our licensed products. For our licensed commercialized medical device product, the FDA audits compliance with the through periodic announced and unannounced inspections inspections of manufacturing and other facilities. The FDA may conduct inspections or audits at any time. Similar audit rights exist in Europe and other foreign jurisdictions. Any failure to comply with applicable cGMP, QSR and other regulations may result in fines and civil penalties, suspension of production, product seizure or recall, imposition of a consent decree, or withdrawal of product approval, and would limit the availability of our product. Any manufacturing defect or error discovered after products have been produced and distributed also also could result in significant consequences, including adverse health consequences, injury or death to patients, costly recall procedures, re-stocking costs, warning letters, Form 483 reports, civil monetary penalties, product liability, damage to our reputation and potential for product liability claims. If our Licensorswe are required to find a new manufacturer or supplier, the process would likely require prior FDA and/or equivalent foreign regulatory authority approval and would be very time consuming. An inability to continue manufacturing adequate supplies of our licensed products at any contract facilities could result in a disruption in the supply of our licensedproducts. products. Delay or disruption in our ability to meet demand may result in the loss of potential revenue.

In addition, we are subject to regulations in various jurisdictions, including the Federal Drug Quality and Security Act and the Drug Supply Chain Security Act in the United States, which require us to develop electronic systems to serialize, track, trace and authenticate units of our licensed products through the supply chain and distribution system. Compliance with these regulations may result in increased expenses expenses for our company or impose greater administrative burdens on our organization, and failure to meet these requirements could result in in fines or other penalties.

If our Licensors’ efforts to protect the proprietary nature of theirour intellectual property related to our licensed products are not adequate, we may not be able to compete effectively in our market.

OurWe Licensors rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related related to theour products we license from them.products. Any disclosure to or misappropriation by third parties of their confidential proprietary information could enable competitors to quickly duplicate or surpass their technological achievements, thus eroding our competitive position in our market.

In addition, the patent applications that theywe own may fail to result in issued patents in the United States. Even if the patents do successfully issue, third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable. Furthermore, even if they are unchallenged, theirour patents and patent applications may not adequately protect their our intellectual property or prevent others from designing around theirour claims. If the breadth or strength of protection provided by the issued patents and patent applications our Licensorswe hold with respect to our licensed products is threatened, it could threaten our ability to commercialize our licensed products. Further, if the clinical trials for our licensed products are related, the period of time during which we could market our licensed products under patent protection would be reduced. Since patent applications in the United States are confidential for a period of time after filing, we cannot be certain that our Licensorswe were the first to file any patent application related to the products we license. Furthermore, for applications in which all claims are entitled to a priority date before March 16, 2013, an interference proceeding can be provoked by a third party or instituted by the USPTO to determine who was the first to invent any of the subject matter covered by the patent claims of our applications. For applications containing a claim not entitled to priority before March 16, 2013, there is greater level of uncertainty in the patent law with the passage of the America Invents Act (2012) which brings into effect significant changes to the United States patent laws that are yet untried and untested, and which introduces new procedures for challenging pending patent applications and issued patents. A primary change under this reform is creating a “first to file” system in the United States. This will require us to be cognizant going forward of the time from invention to filing of a patent application.products.

In addition to the protection afforded by patents, our Licensors maywe rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements of our product discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. Although our Licensorswe may require theirour employees to assign their inventions to us to the extent permitted by law, and may require our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Our trade secrets also could be independently discovered by our competitors, in which case, we would not be able to prevent use of such trade secrets by our competitors. The enforcement of a claim alleging that a party illegally obtained and was using our trade secrets could be difficult, expensive and time consuming and the outcome would be unpredictable. There exists a risk that we may not be able to detect when misappropriation of trade secrets has occurred or where a third party is using such trade secrets without our or their knowledge. The failure to obtain or maintain meaningful trade secret protection could adversely affect the competitive position of our products. Furthermore, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States or the EU. As a result, our Licensorswe may encounter significant problems in protecting and defending theirour intellectual property in the United States, in the EU and in other countries. If theywe are unable to prevent unauthorized material disclosure of their intellectual property to third parties, we may not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, operating results and financial condition.

TheWe Biofronteraare Groupand hashave been involved in intellectual property lawsuits to defend or enforce patents related to our licensed products and theywe or another licensor may become involved in similar suits in the future, which could be expensive, time-consuming and unsuccessful.

Competitors may infringe upon the patents for our licensed products. To counter infringement or unauthorized use, we or our Licensors may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that one or more of our Licensors’ patents is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings, could put one or more of our patents at risk of being invalidated, held unenforceable, or interpreted narrowly and could put our patent applications at risk of not issuing. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim or counterclaim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our infringing products, which may be impossible or require substantial time and monetary expenditure.

Our international dealings with our Licensors may pose currency risks, which may adversely affect our operating results and net income.

Our operating results may be affected by volatility in currency exchange rates and our ability to effectively manage our currency transaction risks. In general, we conduct our business with our Licensors and any third-party vendors in the local currency of the country in which such licensor or vendor operates. We do not manage our foreign currency exposure in a manner that would eliminate the effects of changes in foreign exchange rates. Therefore, changes in exchange rates between these foreign currencies, the dollar and the euro will affect our selling, general and administrative, related party, and the recorded levels of assets and liabilities held in a foreign currency and could result in exchange losses in any given reporting period.

The following section contains statements that are not statements of historical fact and are forward-looking statements within the meaning of the federal securities laws. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievement to differ materially from anticipated results, performance, or achievement, expressed or implied in such forward-looking statements. These statements reflect our current views with respect to future events, are based on assumptions, and are subject to risks and uncertainties. We discuss many of these risks and uncertainties at the beginning of this Form 10-K and under the sections captioned “Business” and “Risk Factors.” For more information on forward-looking statement, see the section titled “Special Note Regarding Forward-Looking Statements” included in Part 1 of this Form 10-K. The following discussion should also be read in conjunction with the financial statements and the Notes thereto appearing elsewhere in this Form 10-K.

Biofrontera Inc. (the “Company” or “Biofrontera”) is a United States based biopharmaceutical company commercializingengaging a portfolioin the development, manufacturing, and commercialization of pharmaceutical products for the treatment of dermatological conditions with a focus on photodynamic therapy (“PDT”). The Company’s primary licensed products, which include Ameluz® as well as the BF-RhodoLED® and RhodoLED® XL lampslamp series (together, the “RhodoLED® Lamps”), are used for the treatment of actinic keratoses,keratosis which(“AK”), area common skin condition characterized by the growth of pre-cancerous skin lesions lesions.(“AKs”). With our national commercial team, we generate revenue by selling our licensed products directly to dermatology offices and groups.

Effective June 1, 2024, we assumed control of all clinical trials relating to Ameluz® in the United States, allowing for more effective cost management and direct oversight of trial efficiency. Our research and development (“R&D”) program is focused on label expansion for Ameluz® as well as supporting PDT growth by improving the capabilities of our RhodoLED® Lamps to better fulfill the needs of dermatologists. The reduced LSA transfer price will allow the Company to finance such R&D activities and continue our commercial growth trajectory.

Our principal objective is to improve patient outcomes through adoption and use of our licensed products in the United States. The key elements of our strategy include the following:

We devote a substantial portion of our cash resources to the commercialization of our licensed products, Ameluz® and the BF-RhodoLED® Lamps. We have financed our operating and capital expenditures through cash proceeds generated from our product sales, short term debt and proceeds received from convertible notes and equity financings.

We believe that important measures of our results of operations include product revenue, operating income (loss) and adjusted EBITDA (a non-GAAP measure as defined below). Our sole source of product revenue is sales of products that we license from certain relatedAmeluz and unrelated companies.the BF-RhodoLED Lamps. Our long-term financial objectives include consistent revenue growth and expanding operating margins. Accordingly, we are focused on licensed product sales expansion to drive revenue growth and improve operating efficiencies, including effective resource utilization, information technology leverage, and overhead cost management.

We generate product revenues through the third-party sales of our licensed products Ameluz® and RhodoLED® Lamps. Revenues from product sales are recorded net of trade discounts and allowances and government rebates.

The primary factors that determine our revenue derived from our licensed products are:

Cost of revenues, related party, relating to inventory purchased before the Strategic Transaction, is comprised of purchase costs of our licensed products, Ameluz® and RhodoLED® Lamps from Biofrontera Pharma GmbH and insignificant inventory adjustments due to scrapped, expiring and excess products.

Selling, general and administrative expenses consist principally of costs associated with our sales force, commercial support personnel, personnel in executive and other administrative functions, as well as medical affairs professionals. Other selling, general and administrative expenses include marketing, trade, and other commercial costs necessary to support the commercial operation of our licensedproducts products and professional fees for legal, consulting and accounting services.services, Selling,as generalwell as depreciation and administrative expenses also include the amortization of our intangible assets and our legal settlement expenses.amortization.

Selling, general and administrative expenses, related party, relate to the services provided by the Biofrontera AG,Group, primarily for regulatory support support and pharmacovigilance. These expenses arewere charged to us based on costs incurred plus 6% in accordance with the Amended and Restated Master Master Contact Services Agreement, (the “2021 Services Agreement”), entered into in December 2021. The 2021 Services Agreement enables us to continue relying on Biofrontera AG and its subsidiaries for various services it has historically provided to us, including regulatory and pharmacovigilance support for as long as we deem necessary. We currently have statements of work in place regarding regulatory affairs, medical affairs, and pharmacovigilance, and are continuously assessing the other services historically provided to us by Biofrontera AG to determine (i) if they will be needed, and (ii) whether they can or should be obtained from other third-party providers.

Effective June 1, 2024, we took control of all clinical trials for Ameluz® in the Unites States, allowing for more effective cost management and direct oversight of trial efficiency. Our R&D expenses include costs directly attributable to the clinical development of Ameluz®, Ameluz, including personnel-related expenses, the cost of services provided by outside contractors, including services related to the Company’s clinical trials,trial sites, facilities, depreciation, and other direct and allocated expenses. Along with our Ameluz® clinical trials, our R&D program also aims to improve the capabilities of our RhodoLED® Lamps to better fulfill the needs of dermatologists and improve the effectiveness of our commercial team by letting sales representatives carry approved devices with them, allowing for easier product demonstrations and evaluations. All costs associated with research and developmentR&D are expensed as incurred.

Other income, net primarily includes (i) gain on return of leased assets, (ii) gain on sale of asset held for sale, and (iiiii) gain (loss) on foreign currency transactions.

Net product revenue for 20242025 increased $3.3$4.4 million, or 9.7%11.8% compared to 2023.2024. The increase was primarily driven by organic growth of Ameluz Ameluz® sales volume of $0.5$4.1 million,million and a $1.7$0.7 million increase due to an increased Ameluz® unit price,price. andWe still continued to grow net revenues despite the launchimpact of group purchasing organizations for independent dermatology offices’ efforts to erode ourprices. RhodoLED®The XLAmeluz Lamp,driven whichrevenue resultedincrease was offset by a $0.3 million decline in sales of RhodoLED®XL Lamps due to the initial surge of $1.1sales million.of BF-RhodoLED XL in 2024 in connection with its launch. BF-RhodoLED sales have been consistent with expectations and we plan to continue to sell both the BF-RhodoLED and RhodoLED XL.

Selling, general and administrative expenses for 20242025 decreasedincreased $5.2$4.0 million, or 13.3%11.7% compared to 2023.2024. ThisThe decreaseincrease was primarily driven by a $3.0$6.6 million decreaserise in general and administrative expenses, primarilylargely attributable to a decrease inhigher external legal expenses costs and expenses relatingrelated to financingpatent activities.claims. TheSee decreaseNote 20. Commitments and Contingencies – Legal Proceedings. This increase was furtherpartially drivenoffset by a decrease in general sales and marketing expenses of $1.8 million, primarily attributable to more targeted trade shows and conference spending and close management of promotional spend, including a $0.8$1.1 million reduction in direct sales personnel expenses resulting from a decrease in headcount from 2024 to 2025, $1.0 million in savings related to lower sales support activity levels, including $0.4 million due to reduction inXepi salesPrescription forceDrug andUser fee write-off, a $0.3 million reductiondecrease in directintangible sales travelasset amortization, and lodging.a $0.2 million decrease in bad debt expense.

The change in fair value of warrant liabilities was driven primarily by a greaterthe decrease in the underlying value of the Company’s common common stock during 20232025 as compared to 2024.

Management’s discussion and analysis (“MD&A”) provides supplemental information, which sets forth the major factors that have affected our financial condition and results of operations and should be read in conjunction with the Condensed Consolidated Financial Statements and related notes. The following information should provide a better understanding of the major factors and trends that affect our earnings performance and financial condition, and how our performance during the firstsecond quarter of 2026 compares with prior-year periods. Throughout this section, Biofrontera Inc., including its wholly owned subsidiary, Biofrontera Discovery GmbH (“Discovery” or “subsidiary”), is referred to as “Company,” “we,” “us,” or “our.” References to “Former Ameluz Ameluz Licensor” refers to Biofrontera Pharma GmbH and references to the “Biofrontera Group” refer to Biofrontera AG and its consolidated subsidiaries.

All trademarks, trade names, and service marks appearing in this Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Form 10-Q aremay be referred to without the symbols ® and ™, but such references should not be construed as any indication that their respective owners will not assert their rights thereto to the fullest extent under applicable applicable law. We do not intend to use or display other companies’ trademarks, trade names, or service marks to imply a relationship with, with, or endorsement or sponsorship of us by, any other companies.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain statements in this Form 10-Q constitute “forward-looking statementsstatements.”. Such statements include estimates of our expenses, future revenue, capital requirements, our need for additional financing, statements regarding the efficacy and intended use of our technologies under development, the timelines and strategy for bringing licensed products to market, the timeline for regulatory review and approval of our licensed products, and other statements that are not historical facts. The words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential,” “target,” “goal,” “assume,” “potentialwould,”, “target”, “goal”, “assume”, “would”, “could” or similar words are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. You should read this Form 10-Q and the documents that we have filed as exhibits completely and with the understanding that our actual future results may be materially different from what we expect. While we have based these forward-looking statements on our current expectations and projections about future events, we may not actually achieve the plans, intentions or expectations disclosed in or implied by our forward-looking statements, and you should not place undue reliance on our forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions about us and accordingly, actual results or events could differ materially from the plans, intentions and expectations disclosed in or implied by the forward-looking statements we make.

Biofrontera Inc. is a United States basedStates-based biopharmaceutical company engaging in the development, manufacturing, and commercialization of pharmaceutical products for the treatment of dermatological conditions with a focus on photodynamic therapy (“PDT”). The Company’s products, which include Ameluz® as well as the BF-RhodoLED® and RhodoLED® XL lamp series (together, the “RhodoLED® Lamps”), are used for the treatment of actinic keratosis (“AK”), a common skin condition characterized by the growth of pre-cancerous skin lesions (“AKs”). We generate revenue by selling our products, through our national commercial team, directly to dermatology offices and groups in the United States.

We conduct our clinical development activities and hold certain manufacturing-related assets through Discovery, our wholly owned German subsidiary. Our research and development (“R&D”) programs are focused on label expansion for Ameluz® and on enhancing the RhodoLED® Lamps to support adoption of PDT in the United States. See Note 1. Organization and Business Overview in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional information about the Company and its subsidiary.

Strategic Transaction with the Biofrontera Group. On October 20, 2025, we entered into (i) an Asset Purchase Agreement (the “Transfer Agreement”) and (ii) an Earnout Agreement (together with the Transfer Agreement, the “Agreements”), with the Biofrontera Group, pursuant to which the Company finalized the agreements to acquire all rights in the United States (the “U.S. Rights”) to Ameluz® and the RhodoLED® Lamps (the “Strategic Transaction”). Pursuant to the terms of the Agreements, retroactive to June 1, 2025, the Company will pay a monthly earnout of 12% of United States revenues of Ameluz ® in years when United States net sales are $65.0 million or less and an earnout of 15% on all revenue in years when United States net sales of Ameluz® exceed $65.0 million, continuing until the expiration of patent protection on Ameluz ® allows for generic competition in the United States. The earnout replaces a transfer pricing model under the Company’s Second Amended and Restated License and Supply Agreement (“Second A&R Ameluz LSA”) by and among the Company and the Biofrontera Group, which has now been terminated pursuant to the Agreements. The new structure reduces overall cost for the Company and is expected to accelerate the Company’s timeframe to reach break-even. The results of operations for the three and six months ended MarchJune 31,30, 2026 reflect a full quarter under this revised cost structure, while the results of operations for the three and six months ended March 31,June 30, 2025 reflect the prior transfer-pricing model. Period-over-period comparisons of cost of revenues and related-party cost of revenues are therefore affected by this change, as discussed further under “Results of Operations” below. See Note 12.13. Related Party Transactions in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional information.

Compliance with Nasdaq Listing Standards. On December 31, 2025, we received a letter from Nasdaq notifying us that the listing of our common stock was not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “the Minimum Bid Price Requirement”). On May 6, 2026, we received written notification from Nasdaq that we had regained compliance with the Minimum Bid Price Requirement and that the matter was is closed. There can be no assurance that we will maintain compliance with the Minimum Bid Price Requirement or other continued listing standards in the future. See Note 18.2. SubsequentSummary Eventsof Significant Accounting Policies – The Nasdaq Stock Market, LLC Compliance in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional information.

ITC Matter. On May 6, 2026, the International Trade Commission issued a Notice of Final Determination finding a violation of Section 337 of the Tariff Act of 1930 with respect to two asserted patents involving certain components of our RhodoLED® XL Lamps. The Commission issued a Limited Exclusion Order and Cease and Desist Orders, with the orders relating to the ‘028 patent suspended pending further proceedings before the U.S. Patent Trial and Appeal Board. See Note 16.17. Commitments and Contingencies for additional information regarding this matter, which is referred to herein as the “ITC Matter.”

We devote a substantial portion of our cash resources to the commercialization of Ameluz® and the BF-RhodoLEDRhodoLED® Lamps. Lamps. We have financed our operating and capital expenditures through cash proceeds generated from our product sales, proceeds received from from convertible notes and equity financings.

We believe that important measures of our results of operations include product revenue, operating income (loss) and adjusted earnings before before interest, taxes, depreciation and amortization (“Adjusted EBITDA”; a non GAAPnon-GAAP measure). Our sole source of product revenue is sales of Ameluz® and the BF-RhodoLEDRhodoLED® Lamps. Our long-term financial objectives include consistent revenue growth and expanding operating margins. Accordingly, we are focused on product sales expansion to drive revenue growth and improve operating efficiencies, including effective resource utilization, information technology leverage, and overhead cost management.

We generate product revenues through the sale of our products Ameluz® and RhodoLED® Lamps. Revenues from product sales are recorded net of trade discounts and allowances and government rebates.

Cost of revenues, related party, relating to inventory purchased beforefrom the StrategicBiofrontera Transaction,Group is comprised of purchase costs of our products, Ameluz® and RhodoLED® Lamps, from Biofrontera Pharma GmbH and insignificant inventory adjustments due to scrapped, expiring and excess products.

Selling, general and administrative expenses, related party, relate to the services provided by the Biofrontera Group, primarily for regulatory support and pharmacovigilance. These expenses were charged to us based on costs incurred plus 6% in accordance with the Amended and Restated Master ContactContract Services Agreement entered into in December 2021.

EffectiveWe June 1, 2024, we took control ofconduct all clinical trials for Ameluz® in the United States,States through Biofrontera Discovery GmbH, allowing for more effective cost management and direct oversight of trial efficiency. Our R&D expenses include costs directly attributable to the clinical development of Ameluz, Ameluz®, including personnel-related expenses, the cost of services provided by outside contractors, including services related to the Company’s clinical trial sites, facilities, depreciation, and other direct and allocated expenses. Along with our Ameluz® clinical trials, our R&D program also aims to improve the capabilities of our RhodoLED® Lamps to better fulfill the needs of dermatologists and improve the effectiveness of our commercial team by letting sales representatives carry approved devices with them, allowing for easier product demonstrations and evaluations. All costs associated with R&D are expensed as incurred.

Comparison of the Three Months endedEnded MarchJune 31,30, 2026 and 2025

The following table summarizes our results of operations for the three months ended MarchJune 31, 2026 and 202530:

Net product revenue for the three months ended MarchJune 31,30, 2026 was $10.1$12.0 million, an increase of $1.5$3.0 million, or 17.4%,32.9%, compared to the three months ended MarchJune 31,30, 2025. The increase was primarily attributable to higher Ameluz® net sales, reflecting 15.9%$2.6 million or 30.0% growth in unit volume, asvolume. well asOf the full$2.6 periodmillion impactvolume-driven revenue increase, approximately $1.9 million is attributable to accelerated order timing from certain customer accounts in anticipation of supply restrictions resulting from the ITC Matter, with the remainder reflecting improved sales execution and strategic sales team management. Additionally, a price increase implemented in the fourth quarter of 2025 that contributed approximately $0.2$0.3 million revenue increase.

Cost of revenues, related party for the three months ended MarchJune 31,30, 2026 decreasedwas $1.2$2.2 million, a decrease of $0.2 million, or 40.5%,8.2%, compared to the three months ended March 31,June 30, 2025. The decrease was primarily driven by a reduction in the purchase price of Ameluz® resulting from the transitionStrategic pursuantTransaction, towhich transitioned the Strategic TransactionCompany from the transfer pricing model in place under the now-terminated Second A&R Ameluz LSA, which was 25% of net revenue, to a significantly lower cost structure comprised only of Ameluz ® direct cost and the 12% earnout applied to the net revenue.

During the threesix months ended MarchJune 31,30, 2026, we recognized a total charge of approximately $0.4$0.5 million reflecting the estimated cost to remediate the affected units of our RhodoLED® XL Lamps in response to the ITC Matter. The total charge comprises (i) an inventory write-down of approximately $0.1 million to reduce the carrying value of affected finished goods inventory and obsolete components in raw materials to net realizable value in accordance with ASC 330-10-35, which were charged to cost of revenues, other, and (ii) an accrued remediation liability liability of approximately $0.4 million for the future cost activities charged to patent remediation expense.

We expect to incur the cash component of these costs over the twelve months following the 60-day Presidential Review period, concludingwhich concluded on July 6, 2026, as remediation activities are executed. In addition, the remediation is expected to result in a modest,small, recurring increase in our per-unit cost of revenues for affected products; this prospective impact is reflected in our cost of revenues as units implementing the remediation are produced and sold. We do not expect the recurring per-unit cost increase to be material to our overall cost of revenues.

Research and development expenses for the threesix months ended MarchJune 31,30, 2026 decreasedwere $0.3$1.3 million, a decrease of $0.7 million compared to the threesix months ended MarchJune 31, 30, 2025. The decrease was primarily attributable to certain clinical trials reaching substantial completion ahead of their originally planned timelines, resulting in lower trial-related expenditures in the current year period.

The following table summarizes the major categories of our R&D expenses for the threesix months ended MarchJune 31, 2026 and 202530:

Net Loss to Adjusted EBITDA Reconciliation for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

We define adjusted EBITDA as net income or loss before interest income and expense, income taxes, depreciation and amortization, and other non-operating items from our statements of operations as well as certain other items considered outside the normal course of our operations specifically described below. Adjusted EBITDA is not a presentation made in accordance with GAAP. Our definition of adjusted EBITDA may may vary from the use of similarly-titledsimilarly titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. Adjusted EBITDA should not be considered as an alternative to net income or loss, operating income/(loss), cash flows from operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance or liquidity. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

Change in fair value of warrant liabilities: The warrants issued in conjunction with our private placement offerings and registered public offerings were accounted for as liabilities in accordance with ASC 815-40. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the consolidated statementstatements of operations. We exclude the impact of the change in fair value of warrant liabilities as this is non-cash.

Patent Remediation Remediation Expense: During the threesix months ended MarchJune 31,30, 2026, we recognized a total charge of approximately $0.4$0.5 million reflecting the the estimated cost to remediate the affected units of our RhodoLED® XL Lamps in response to the ITC Matter. The total charge comprises (i) an inventory write-down of approximately $0.1 million to reduce the carrying value of affected finished goods inventory and obsolete components in raw materials to net realizable value in accordance with ASC 330-10-35, and (ii) an accrued remediation liability of approximately $0.4 million for the future cost activities required to complete the remediation. We exclude these charges because they relate to a discrete adverse legal and regulatory matter that is not indicative of the Company’s ongoing operating performance.

We use adjusted EBITDA to measure our performance from period to period and to compare our results to those of our competitors. In addition to adjusted EBITDA being a significant measure of performance for management purposes, we also believe that this presentation provides useful information to investors regarding financial and business trends related to our results of operations and that when nonnon-GAAP GAAPfinancial financial information is viewed with GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance.

The below table presents a reconciliation from net loss to Adjusted EBITDA for the three and six months ended MarchJune 31,30, 2026 and 2025:

Adjusted EBITDA increased from ($4.4$5.1) million for the three months ended MarchJune 31,30, 2025 to ($3.6$0.2) million for the three months ended MarchJune 31,30, 2026, 2026, an improvement of approximately $0.8$5.0 million. The improvement was primarily driven by a $2.7$3.2 million increase in gross profit, reflecting significantly higher Ameluz® unit volume and a significantly lower cost structure as described above. ThisThe improvementdecrease wasof partially offset by a $2.3$0.9 million increase in selling, general and administrative expenses.expenses and decrease of $0.4 million in research and development cost further increased adjusted EBITDA. Refer to the section above entitled “Selling, General and Administrative Expenses” for additional details.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. Since we commenced operations in 2015, we have generated significant losses. The Company incurred net cash outflows from operations of $0.1$1.7 million and $4.1$7.2 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. As of MarchJune 31,30, 2026, the Company’s accumulated deficit was $133$133.3 million. The Company’s primary sources of liquidity are its cash collected from the sales of its products and cash flows from financing transactions. As of MarchJune 31,30, 2026, we had cash and cash equivalents of $6.3$4.7 million, compared to $6.4 million as of December 31, 2025. The Company cannot provide assurance that it will ultimately achieve profitable operations and become operating cash flow positive or raise additional debt or equity capital. Additionally, the current capital resources are not adequate to continue operating and maintaining the business strategy for a period of twelve months from the issuance date of this report. Management believes that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from the issuance date of this Quarterly Report on Form 10-Q.

The Company plans to address the conditions that raise substantial doubt regarding its ability to continue as a going concern by, among other things, continuing to expand the commercialization of Ameluz® in the United States while controlling expenses,expense; drawing on a working capital line of credit; pursuing the realization of an additional $1.0 million in milestone payments from the sale of the Xepi intangible asset expected in December 2026; and, if necessary, securing additional capital through equity or debt financings.financings to support commercial expansion and R&D programs. However, there can be no assurance that the Company will be successful in obtaining sufficient sufficient funding on acceptable terms, if at all. If the Company is unable to raise additional capital when needed, it will not have sufficient sufficient cash resources and liquidity to fund its business operations and may be forced to delay or reduce continued commercialization efforts efforts or R&D programs which could have a material adverse effect on the Company and its financial statements.

During the threesix months ended MarchJune 31,30, 2026, operating activities used $0.1$1.7 million of cash, primarily resulting from our loss from operations of $4.3$5.4 million, offsetadjusted for net cash used by changes in our operating assets and liabilities of $3.4$2.2 million.million, Thenon-cash net decrease in operating accounts was attributable to the decrease in accounts receivable reflectiveexpense of the seasonal salesstock-based compensation of PDT$0.6 procedures,million, withreduction higherof salesright-of-use assets of $0.3 million, non-cash interest expense of $0.3 million, change in warrant valuation of $0.2 million, and depreciation and amortization in the fourth quarter, and collection in the first quarteraggregate of receivables$0.1 outstanding at year-end.million.

During the threesix months ended MarchJune 31,30, 2025, operating activities used $4.1$7.2 million of cash, primarily resulting from our loss from operations of $4.2$9.5 million, plus the change in fair value of warrant liabilities of $0.5 million adjusted for non-cash expense of stock-based compensation of $0.2 million, non-cash interest expense of $0.1$0.4 million, depreciation and amortization in the aggregate of $0.4 million, non-cash interest expense of $0.2 million, and net cash used by changes in our operating assets and liabilities of $0.1$2.0 million, partially offset by the change in fair value of warrant liabilities of $0.7 million.

During the threesix months ended MarchJune 31,30, 2026 and 2025, net cash used in investing activities consisted of negligible fixed asset purchases.