Biofrontera(US:BFRI)2025-08-13 20:16PART I. FINANCIAL INFORMATION Item 1. Financial Statements 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 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 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 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 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 structure24 - 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 deficit2930 - The company faces multiple legal claims from DUSA Pharmaceuticals and Sun Pharmaceutical regarding breach of contract, patent infringement, and unfair trade practices120121122 - 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, 202527 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 compliance147148 - Received a second Nasdaq non-compliance notice for failing to maintain $2.5 million minimum stockholders' equity, with an extension until October 10, 2025151152 - A binding agreement was signed to acquire all U.S. rights to Ameluz and RhodoLED, transitioning from a transfer pricing to a royalty-based model155 - 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, 2025158 Results of Operations 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 claims179 Liquidity and Capital Resources 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 ability202 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 months203 Item 3. Quantitative and Qualitative Disclosures About Market Risk 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 risk216 Item 4. Controls and Procedures 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, 2025217 - No material changes were made to internal control over financial reporting during the quarter ended June 30, 2025218 PART II. OTHER INFORMATION Item 1. Legal Proceedings 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 practices220120122 Item 1A. Risk Factors 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 company221 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the reporting period - The company reported no unregistered sales of equity securities for the period222 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including stock designations, corporate amendments, financing agreements, and officer certifications