PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company reported a shift to a $4.7 million stockholders' deficit, a $9.5 million net loss, and a going concern warning, despite a 12% revenue increase [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $20.1 million, while liabilities rose to $24.8 million, resulting in a $4.7 million stockholders' deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $7,239 | $5,905 | | Accounts receivable, net | $3,955 | $5,315 | | Inventories, net | $4,028 | $6,646 | | **Total Assets** | **$20,142** | **$22,101** | | **Liabilities & Equity** | | | | Total current liabilities | $19,687 | $12,021 | | Advance from Stockholders | $8,500 | $- | | Total liabilities | $24,810 | $17,668 | | Total stockholders' (deficit) equity | **$(4,668)** | **$4,433** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 revenue increased to $9.0 million, but net loss widened to $5.3 million, while six-month net loss improved to $9.5 million Statements of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues, net | $9,030 | $7,839 | $17,617 | $15,750 | | Loss from operations | $(5,079) | $(5,071) | $(9,629) | $(10,538) | | Net loss | $(5,324) | $(257) | $(9,527) | $(10,694) | | Loss per common share | $(0.57) | $(0.05) | $(1.05) | $(2.45) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities used $7.2 million in cash, offset by $8.5 million from financing, resulting in a $1.3 million net cash increase Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Cash flows used in operating activities | $(7,162) | $(8,045) | | Cash flows used in investing activities | $(4) | $(2) | | Cash flows provided by financing activities | $8,500 | $11,083 | | **Net increase in cash** | **$1,334** | **$3,036** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the Ameluz U.S. rights acquisition, $8.5 million financing, a going concern warning, and ongoing patent litigation - The company signed a binding term sheet to acquire all U.S. rights for Ameluz and RhodoLED, replacing the transfer pricing model with a **12-15% royalty payment structure**[24](index=24&type=chunk) - Substantial doubt exists about the Company's ability to continue as a going concern, with a **$7.2 million net cash outflow** from operations and a **$126.9 million accumulated deficit**[29](index=29&type=chunk)[30](index=30&type=chunk) - The company faces multiple legal claims from DUSA Pharmaceuticals and Sun Pharmaceutical regarding breach of contract, patent infringement, and unfair trade practices[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) - An **$11.0 million private placement** of Series C Preferred Stock was secured, with the first tranche of **$8.5 million received** on June 30, 2025[27](index=27&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 revenue growth, reduced cost of revenues, increased SG&A from legal costs, Nasdaq non-compliance, and going concern risks [Recent Key Developments](index=33&type=section&id=Recent%20Key%20Developments) The company received Nasdaq non-compliance notices for bid price and stockholders' equity, while acquiring Ameluz U.S. rights and securing an $11.0 million private placement - Received a Nasdaq non-compliance notice for its common stock bid price falling below **$1.00**, with a deadline of November 5, 2025, to regain compliance[147](index=147&type=chunk)[148](index=148&type=chunk) - Received a second Nasdaq non-compliance notice for failing to maintain **$2.5 million** minimum stockholders' equity, with an extension until October 10, 2025[151](index=151&type=chunk)[152](index=152&type=chunk) - A binding agreement was signed to acquire all U.S. rights to Ameluz and RhodoLED, transitioning from a transfer pricing to a royalty-based model[155](index=155&type=chunk) - An **$11.0 million private placement** of Series C Preferred Stock was agreed upon to fund the strategic transaction, with **$8.5 million received** on June 30, 2025[158](index=158&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Q2 2025 revenue grew 15.3% to $9.0 million, with cost of revenues down 41.8%, but SG&A rose 33.0% due to legal costs Comparison of Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Product revenues, net | $9,030 | $7,831 | $1,199 (15.3%) | | Cost of revenues, related party | $2,380 | $4,092 | $(1,712) (-41.8%) | | Selling, general and administrative | $10,528 | $7,915 | $2,613 (33.0%) | | Net loss | $(5,324) | $(257) | $(5,067) | Comparison of Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Product revenues, net | $17,617 | $15,732 | $1,885 (12.0%) | | Cost of revenues, related party | $5,455 | $8,038 | $(2,583) (-32.1%) | | Loss from operations | $(9,629) | $(10,538) | $909 | | Net loss | $(9,527) | $(10,694) | $1,167 | - The increase in SG&A expenses in Q2 2025 was primarily driven by a **$3.4 million increase in legal costs** related to patent claims[179](index=179&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces critical liquidity issues, with a $7.2 million operating cash burn, relying on external financing and the Xepi product line sale - The company has incurred significant losses since inception, with an accumulated deficit of **$126.9 million**, raising substantial doubt about its going concern ability[202](index=202&type=chunk) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,162) | $(8,045) | | Net cash provided by financing activities | $8,500 | $11,083 | | Net increase in cash | $1,334 | $3,036 | - Plans to address liquidity include external financing and finalizing the sale of its Xepi product line within one to three months[203](index=203&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "smaller reporting company," the company is exempt from providing market risk disclosures - As a "smaller reporting company," Biofrontera Inc. is not required to provide quantitative and qualitative disclosures about market risk[216](index=216&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[217](index=217&type=chunk) - No material changes were made to internal control over financial reporting during the quarter ended June 30, 2025[218](index=218&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in significant legal proceedings, including patent infringement and unfair trade practice claims from DUSA and Sun Pharmaceutical - This section refers to Note 16 for details on ongoing litigation with DUSA Pharmaceuticals and Sun Pharmaceutical regarding patent infringement and marketing practices[220](index=220&type=chunk)[120](index=120&type=chunk)[122](index=122&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Biofrontera Inc. is not required to provide a discussion of risk factors in its Form 10-Q - The company is not required to provide disclosure for this item as it qualifies as a smaller reporting company[221](index=221&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period - The company reported no unregistered sales of equity securities for the period[222](index=222&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including stock designations, corporate amendments, financing agreements, and officer certifications

Core Insights - Biofrontera Inc. has appointed George Jones as Chief Commercial Officer, effective August 25, 2025, to enhance its commercial functions including sales, marketing, and market access [1][2][3] Management Changes - The appointment of Mr. Jones follows the acquisition of rights and assets related to Ameluz and RhodoLED for the US market from Biofrontera AG, which includes FDA approval and patents [2] - The new royalty structure for Ameluz will range from 12% to 15%, a reduction from the previous 25% to 35% based on net sales, moving the company closer to cash break-even [2] Leadership Experience - Mr. Jones brings over 25 years of experience in commercial leadership within the specialty pharmaceutical and biotech sectors, having previously held significant roles at Currax Pharmaceuticals and Pernix Therapeutics [3][4][5] - His recent role as Chief Operating Officer at UpScriptHealth saw a threefold increase in partnership revenues, showcasing his ability to drive growth [6] Strategic Vision - The company aims to leverage Mr. Jones' expertise in building high-performing teams and driving sustainable growth to accelerate its commercial success, particularly in expanding Ameluz in the PDT space [7] - Mr. Jones expressed enthusiasm about joining Biofrontera, emphasizing the alignment of the company's focus on innovative dermatology treatments with his passion for patient outcomes [7] Company Overview - Biofrontera Inc. specializes in developing and commercializing photodynamic therapy (PDT) for dermatological conditions, particularly through its drug-device combination Ameluz and the RhodoLED lamp series [8]

Core Points - Biofrontera Inc. will report its financial results for the three and six months ended June 30, 2025 on August 13, 2025, after market close [1] - A conference call to discuss the financial results and business updates will be held on August 14, 2025, at 10:00 am ET [2] Company Overview - Biofrontera Inc. is a U.S.-based biopharmaceutical company focused on developing and treating dermatological conditions, particularly through photodynamic therapy (PDT) [3] - The company commercializes the drug-device combination Ameluz with the RhodoLED lamp series for the treatment of actinic keratosis (AK) and pre-cancerous skin lesions [3] - Biofrontera is conducting clinical trials to expand the use of its products for treating non-melanoma skin cancers and moderate to severe acne [3]

Core Viewpoint - Biofrontera Inc. has acquired all U.S. rights to Ameluz® and RhodoLED® from Biofrontera AG, marking a strategic move to enhance its presence in the U.S. dermatology market [1][3][7] Financial Summary - The acquisition was funded by an $11 million investment led by Rosalind Advisors, Inc. and AIGH Capital Management LLC [1][7] - Biofrontera Inc. will pay a monthly royalty of 12% on Ameluz® revenue under $65 million and 15% on revenue exceeding that threshold, replacing the previous transfer pricing model of 25% to 35% [2][7] - The first tranche of funding is $8.5 million, with a second tranche of $2.5 million expected upon finalization of a detailed asset transfer agreement by September 30, 2025 [4] Operational Changes - Biofrontera Inc. will assume full responsibility for the manufacture of Ameluz® and the RhodoLED® portfolio for the U.S. market, including all regulatory, quality management, pharmacovigilance, and commercial responsibilities [3][4] - The transition to a royalty-based agreement is expected to lead to cost reductions, allowing the company to reach breakeven more quickly and improve future profitability [4] Market Potential - The acquisition is seen as a significant opportunity to unlock the untapped potential of Ameluz® in the U.S. market, with expectations for growth and alignment of interests between Biofrontera Inc. and Biofrontera AG [5][7]

Core Viewpoint - Biofrontera Inc. is in negotiations with Biofrontera AG regarding a potential combination of the two companies or adjustments to their existing license and supply agreement, which may involve the transfer of rights and obligations and a reduction in transfer prices for licensed products sold in the US [1][2]. Company Overview - Biofrontera Inc. is a U.S.-based biopharmaceutical company that specializes in photodynamic therapy (PDT) for dermatological conditions, particularly focusing on the drug-device combination Ameluz and the RhodoLED lamp series for treating actinic keratosis (AK) and pre-cancerous skin lesions [3]. - The company is also conducting clinical trials to expand the use of its products for treating non-melanoma skin cancers and moderate to severe acne [3].

Core Points - Biofrontera Inc. announced the inclusion of its propylene glycol-free formulation of Ameluz nanoemulsion gel in the FDA's Orange Book, confirming its FDA-approved status and intellectual property protection [1][2][7] - The revised formulation eliminates propylene glycol, a known allergen, enhancing patient safety while maintaining treatment efficacy [3][4] - The patent for the new formulation was issued on April 22, 2025, and is valid until December 8, 2043, preventing generic competition during this period [2][3][7] Company Overview - Biofrontera Inc. specializes in biopharmaceuticals, focusing on dermatological treatments using photodynamic therapy (PDT) [5] - The company commercializes Ameluz in combination with the RhodoLED lamp series for treating actinic keratosis and is conducting clinical trials for additional applications [5]

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $8,600,000, representing a 9% increase from the same period last year [5][12] - Net loss for Q1 2025 was $4,200,000 or $0.47 per share, compared to a net loss of $10,400,000 or $2.88 per share for the prior year [15] - Adjusted EBITDA decreased from $4,600,000 in Q1 2024 to $4,400,000 in Q1 2025 [15][16] Business Line Data and Key Metrics Changes - Ameluz sales increased by $500,000 due to a higher unit price and the launch of the RotoLED XL lamp, which generated $200,000 in sales [12] - Total operating expenses decreased to $13,100,000 in Q1 2025 from $13,400,000 in Q1 2024 [12][13] - Cost of revenues decreased by $900,000 or 22.1% compared to last year, attributed to a reduced cost structure under the Ameluz license [13] Market Data and Key Metrics Changes - The company achieved a significant milestone with the granting of a patent for a new formulation of Ameluz, providing protection until December 2043 [6][7] - The enrollment of the final patient in the Phase three clinical trial for Ameluz was announced, aiming to extend the label for treatment beyond the face and scalp [8] Company Strategy and Development Direction - The company aims to achieve record revenues in 2025 without increasing costs, supported by past investments and sales force effectiveness [5] - Future goals include expanding Ameluz's applications to treat superficial basal cell carcinoma and moderate to severe acne, addressing significant medical needs [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving breakeven as quickly as possible, highlighting improved gross profit and reduced operating expenses [11] - The company is committed to exploring additional applications for Ameluz beyond actinic keratosis, indicating a proactive approach to growth [9] Other Important Information - Cash and cash equivalents as of March 31, 2025, were $1,800,000, down from $5,900,000 as of December 31, 2024 [16] - Inventory on hand was $6,500,000 compared to $6,600,000 as of December 31, 2024 [16] Q&A Session Summary Question: How many LAMP units were sold in Q1 2025? - The company placed 18 XL lamps in Q1 2025 [19][20] Question: Is there any sales force attrition affecting expenses? - There has been some turnover, but the company is committed to reorganizing the team for efficiency [24] Question: What is the status of reimbursement for the three-tube indication? - The company has ensured that Medicare covers the three-tube indication, with no reported refusals from doctors [29]

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $8.6 million, a 9% increase from the same period last year [5][12] - Net loss for Q1 2025 was $4.2 million or $0.47 per share, compared to a net loss of $10.4 million or $2.88 per share in Q1 2024 [14] - Adjusted EBITDA for Q1 2025 was $4.4 million, showing a decrease from $4.6 million in Q1 2024 [15] Business Line Data and Key Metrics Changes - Ameluz sales increased by $500,000 due to a higher unit price and the launch of the RotoLED XL lamp, which generated $200,000 in sales [12] - Total operating expenses decreased to $13.1 million in Q1 2025 from $13.4 million in Q1 2024 [12] Market Data and Key Metrics Changes - The company achieved a significant milestone with the granting of a patent for a new formulation of Ameluz, providing protection until December 2043 [6] - The final patient was enrolled in a Phase three clinical trial for Ameluz, aiming to extend its label for broader treatment applications [7][8] Company Strategy and Development Direction - The company aims to achieve record revenues in 2025 without increasing costs, supported by past investments and an effective sales force [5] - Future goals include expanding Ameluz's applications to treat superficial basal cell carcinoma and moderate to severe acne, addressing significant medical needs [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaching breakeven quickly, citing improved gross profit and reduced operating costs [11] - The company is committed to exploring additional applications for Ameluz beyond actinic keratosis, indicating a proactive approach to growth [9] Other Important Information - The company has cash and cash equivalents of $1.8 million as of March 31, 2025, down from $5.9 million at the end of 2024 [15] - Inventory on hand was $6.5 million, slightly down from $6.6 million at the end of 2024 [15] Q&A Session Summary Question: How many LAMP units were sold in Q1 2025? - The company placed 18 XL lamps in the first quarter [18][19] Question: Is there any sales force attrition affecting expenses? - Management noted some turnover but is committed to reorganizing the team for efficiency [23] Question: What is the status of gross margins and transfer pricing? - The company expects to maintain a 25% transfer price for inventory moving forward, which will impact gross margins [26][27] Question: What is the status of reimbursement for the three-tube indication? - Management confirmed that there have been no reported issues with reimbursement for using more than one tube [28]

Financial Performance - Total revenues for Q1 2025 were $8.6 million, a 9% increase from the same period last year[3] - The net loss for Q1 2025 was $4.2 million, or $(0.47) per share, compared to a net loss of $10.4 million, or $(2.88) per share, for the prior-year quarter[8] - Adjusted EBITDA improved from $(4.6) million in Q1 2024 to $(4.4) million in Q1 2025[9] - The net loss for the three months ended March 31, 2025, was $4,203 million, a significant improvement from a net loss of $10,437 million in the same period of 2024[19] - Adjusted EBITDA for the period was $(4,378) million, slightly better than the $(4,577) million reported in the previous year, indicating a narrowing loss[19] - The adjusted EBITDA margin improved to -51.0% from -57.9% year-over-year, reflecting better operational efficiency[19] - Overall, the financial results indicate a trend towards improved performance and reduced losses compared to the previous year[19] Cash and Expenses - Cash and cash equivalents decreased to $1.8 million as of March 31, 2025, down from $5.9 million on December 31, 2024[3] - Total operating expenses for Q1 2025 were $13.1 million, a slight decrease from $13.4 million in Q1 2024[5] - Selling, general and administrative expenses decreased by $0.6 million, or 6.5%, compared to Q1 2024[6] - Interest expense, net decreased to $106 million from $1,407 million, showing a substantial reduction in financing costs[19] - Depreciation and amortization expenses decreased to $29 million compared to $128 million in the prior year, indicating lower asset depreciation[19] - Stock-based compensation increased slightly to $239 million from $228 million, reflecting ongoing employee incentive programs[19] - The company reported no loss on debt extinguishment in the current period, compared to a loss of $316 million in the previous year[19] Research and Development - Research and development expenses increased by $1.2 million compared to Q1 2024, attributed to the assumption of all clinical trial activities for Ameluz in the U.S.[7] - The company achieved a key milestone in the Phase 3 study of Ameluz and RhodoLED photodynamic therapy, with the last patient completing the 1-year follow-up visit in December 2024[3] - The final patient was enrolled in the Phase 3 clinical trial evaluating Ameluz for treating mild to moderate actinic keratoses[3] - A patent approval was received for a revised formulation of Ameluz, extending protection through December 2043[3] Fair Value and Liabilities - The change in fair value of warrant liabilities resulted in a loss of $548 million, a significant decrease from a loss of $3,429 million in the previous year[19] - The change in fair value of investment related to a party was negligible, with no significant impact reported[19]

Core Insights - Biofrontera Inc. reported a 9% increase in revenues for Q1 2025, driven by strong sales of Ameluz and the launch of the RhodoLEDXL Lamp [1][2] - The company is excited about the enrollment of the final patient in a Phase 3 clinical trial for Ameluz, indicating progress in its product development pipeline [1][5] - The net loss for Q1 2025 was $4.2 million, a significant improvement from a net loss of $10.4 million in the same period last year [7][19] Financial Performance - Total revenues for Q1 2025 were $8.6 million, an increase of $0.7 million or 8.7% compared to Q1 2024 [2][5] - Operating expenses decreased to $13.1 million in Q1 2025 from $13.4 million in Q1 2024, reflecting cost management efforts [3][4] - Cash and cash equivalents decreased to $1.8 million as of March 31, 2025, down from $5.9 million at the end of 2024 [5] Cost Structure - Cost of revenues related to parties decreased by $0.9 million, or 22.1%, due to a reduced cost structure under the Ameluz license agreement [3] - Selling, general, and administrative expenses decreased by $0.6 million, or 6.5%, with notable reductions in marketing and sales team expenses [4] - Research and development expenses increased by $1.2 million due to the assumption of clinical trial activities for Ameluz in the U.S. [6] Clinical Developments - The final patient was enrolled in the Phase 3 clinical trial for Ameluz targeting mild to moderate actinic keratoses [5] - The company achieved a milestone in the Phase 3 study for Ameluz and RhodoLED PDT in treating superficial basal cell carcinoma [5] - Biofrontera received patent approval for a revised formulation of Ameluz, extending protection until December 2043 [5] Adjusted Metrics - Adjusted EBITDA improved from a loss of $4.6 million in Q1 2024 to a loss of $4.4 million in Q1 2025, driven by increased gross profit [8][19] - The adjusted EBITDA margin for Q1 2025 was -51.0%, compared to -57.9% in Q1 2024 [19]