What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-19 compared with 2025-03-20 · 323 added, 416 removed, 175 unchanged (81% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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.” The following discussion should also be read in conjunction

with the financial statements and the Notes thereto appearing elsewhere in this Form 10-K.

Forward-Looking

Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements.

Certain statements

in this Form 10-K constitute “forward-looking statements”.

Such statements include statements regarding the timeline for

regulatory review and approval of our products, the availability of funding sources for continued development of such products, and other

statements that are not historical facts, including statements which may be preceded by the words “intends,” “may,”

“will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,”

“estimates,” “aims,” “believes,” “hopes,” “potential” or similar words.

Forward-looking

statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks

and uncertainties, many of which are beyond our control.

Actual results may differ materially from the expectations contained in the

forward-looking statements.

Part I, Item 1A, “Risk Factors” of this Form 10-K for a discussion of the factors that could cause such differences.

other factors besides those listed in Part I, Item 1A, “Risk Factors” or otherwise discussed in this Annual Report also could

adversely affect our results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties.

forward-looking statements made by us or on our behalf speak only as of the date they are made.

We do not undertake to publicly update

or revise our forward-looking statements as a result of new information, future events or otherwise, except as required by law.

(the “Company” or “Biofrontera”) is a United States based biopharmaceutical company commercializing a

portfolio of pharmaceutical products for the treatment of dermatological conditions with a focus on photodynamic therapy

The Company’s primary licensed products, which include Ameluz ® as well as the

BF-RhodoLED ® and RhodoLED ® XL lamps (the “RhodoLED ® Lamps”), are used for

the treatment of actinic keratoses, which are pre-cancerous skin lesions.

With our national commercial team, we generate revenue by

selling our licensed products directly to dermatology offices and groups.

We are currently selling

Ameluz ® in the United States under a n exclusive license and supply

agreement, the Second Amended and Restated License and Supply Agreement, effective as of February 13, 2024 with the Ameluz Licensor

(the “Second A&R Ameluz LSA”).

A&R Ameluz LSA reduced the Transfer Price of Ameluz ® from 50% to 25% which covers the cost of goods, royalties on

sales, and services including all regulatory efforts, agency fees, pharmacovigilance and patent administration for all purchases in

2024 and 2025.

Starting on January 1, 2026, until 2032 there will be stepwise increases in the Transfer Price from 25% to 35% for

sales related to actinic keratosis and, if approved by the FDA, basal cell carcinoma and squamous cell carcinoma.

The transfer price

for sales related to acne, another indication currently in development, will remain at 25% indefinitely.

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.

October 2024, the FDA approved the Company’s Supplemental New Drug Application to increase the maximally approved dosage of Ameluz ®

from one to three tubes per treatment.

This approval allows healthcare professionals greater flexibility in addressing larger or

multiple treatment areas for patients undergoing PDT for AK on the face and scalp, leading to greater convenience for both healthcare

providers and their patients.

In combination with the RhodoLED ® XL Lamp, providers can now treat a patient’s face

more efficiently.

Additionally, the change to the label and the RhodoLED ® XL are both foundational to support trunk and

extremities which we expect to add to the label in the next couple years.

in October 2024, the Company received results in its Phase III trial evaluating its drug-device therapy, Ameluz ® with

the BF-RhodoLED lamp, as a treatment for superficial basal cell carcinoma (“sBCC”).

The primary endpoint was a composite

of complete clinical and histological clearance of one preselected “main target” BCC lesion per patient 12 weeks after the

start of the last PDT cycle.

According to the phase III ALA-BCC-CT013 study, Ameluz®-PDT achieved 65.5% success, compared to 4.8%

success achieved with placebo-PDT.

Complete histological clearance was seen in 75.9% of these lesions in the Ameluz® arm, compared

to 19.0% with placebo.

Complete clinical clearance was achieved in 83.4% of patients treated with Ameluz® compared to 21.4% with

the third quarter of 2024, the Company reached the decision to divest its Xepi product line and the related intangible asset is

currently held for sale.

Xepi ® (ozenoxacin cream, 1%), is a topical non-fluorinated quinolone that inhibits bacterial

Currently, no antibiotic resistance against Xepi ® is known and it has been specifically approved by the FDA

for the treatment of impetigo, a common skin infection, due to Staphylococcus aureus or Streptococcus pyogenes.

Our exclusive

license and supply agreement, as amended (“Xepi LSA”), with Ferrer Internacional S.A.

(“Ferrer”) enables us

to market and sell this product in the United Sates.

However, the Company did not have any sales of Xepi ® during 2024

and generated limited revenue during 2023 from sales of Xepi due to third-party manufacturing delays that have impacted our

commercialization of the product.

Ferrer is now in the process of qualifying a new contract manufacturer.

If the new contract

manufacturer is qualified, we believe that it will be able to supply enough of the Xepi ® product line to meet market

demand for as long as we maintain it.

Nevertheless, the Company is working with a potential purchaser and expects to complete a sale

of the asset within the next three to six months.

The related intangible asset is presented as held for sale under current assets in

the Consolidated Balance Sheets.

Assets Held for Sale , for additional information.

principal objective is to improve patient outcomes through adoption and use of our licensed products in the United States.

elements of our strategy include the following:

our sales in the United States of Ameluz ® in combination with the RhodoLED ® Lamps for the

treatment of minimally to moderately thick actinic keratoses of the face and scalp and positioning Ameluz ® to be the

standard of care in the United States by focusing on acquisition of new customers and growth of the therapy in our

current customer base;

the potential for future approvals and label extensions of our licensed portfolio products that are in the pipeline for the United States

market with respect to Ameluz ® and

f urthering the clinical development of this product after taking

over responsibility for certain ongoing clinical trials since June 1, 2024, pursuant to the Second A&R Ameluz LSA ;

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.

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.

Overview and Recent Developments

Biofrontera Inc.

(the “Company” or “Biofrontera”)

is a United States 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”).

With our national commercial team, we generate revenue by selling our products directly to dermatology offices

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.

Strategic Transaction

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 Biofrontera AG and its consolidated subsidiaries (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

RhodoLED (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 (if not

terminated sooner by agreement of the parties).

The earnout replaces a transfer pricing model under the Company’s 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.

exchange for the U.S.

Rights, in addition to the aforementioned earnout and an agreement to transfer all costs associated

with the U.S.

business, Biofrontera AG received 3,019 shares of Series D Convertible Preferred Stock, par value $0.001 per share (the

“Series D Preferred Stock”).

With the completion of the Strategic Transaction, the Company assumed full

control of the Ameluz New Drug Application and Investigational New Drug, enabling the Company to manage ongoing and future clinical development

activities independently, and to take full responsibility for all aspects of manufacturing and marketing Ameluz and the RhodoLED lamps

The patent and trademark transfers further strengthen the Company’s intellectual property portfolio and market position

On November 6, 2025, the Company entered into an Asset Purchase Agreement

with an unaffiliated party, providing for the sale of the intangible asset relating to the Company’s product, Xepi, for initial

proceeds of $3 million with the potential for up to an additional $7 million in milestone payments.

This divestiture does not represent

a strategic shift that will have a major effect on our consolidated results of operations.

Assets Held for Sale , for

additional information.

with Nasdaq Listing Standards

December 31, 2025, the Company received a letter from Nasdaq notifying the Company that the listing of the Common Stock was not in compliance

with Nasdaq Listing Rule 5550(a)(2) as the closing bid price of the Common Stock was less than $1.00 per share for the previous 34 consecutive

business days.

The notice has no present impact on the listing or trading of the Company’s securities on Nasdaq.

Under Nasdaq Listing

Rule 5810(c)(3)(A), the Company has a period of 180 calendar days, or until June 30, 2026, to regain compliance with the rule referred

to in this paragraph.

for any reason, Nasdaq should delist our common stock from trading on its exchange and we are unable to obtain listing on another reputable

national securities exchange, a reduction in some or all of the following may occur, each of which could materially adversely affect

our stockholders:

the liquidity and marketability

of our common stock and/or publicly-traded warrants;

the market price of our

common stock;

our ability to obtain financing

for the continuation of our operations;

the number of institutional

and general investors that will consider investing in our common stock;

the number of market makers

in our common stock;

the availability of information

concerning the trading prices and volume of our common stock;

the number of broker-dealers

willing to execute trades in shares of our common stock.

addition, if we fail to regain compliance to be eligible to trade on Nasdaq or obtain listing on another reputable national securities

exchange, we may have to pursue trading on a less recognized or accepted market, such as the over the counter markets, our stock may

be traded as a “penny stock” which would make transactions in our stock more difficult and cumbersome, and we may be unable

to access capital on favorable terms or at all, as companies trading on alternative markets may be viewed as less attractive investments

with higher associated risks, such that existing or prospective institutional investors may be less interested in, or prohibited from,

investing in our common stock.

This may also cause the market price of our common stock to further decline.

principal objective is to improve patient outcomes through adoption and use of our products in the United States.

The key elements of

our strategy include the following:

our sales in the United States of Ameluz in combination with the RhodoLED Lamps for the treatment of minimally to moderately thick AKs

of the face and scalp and positioning Ameluz to be the standard of care in the United States by focusing on acquisition of new customers

and growth of the therapy in our current customer base;

the potential for future approvals and label extensions of our portfolio products that are in the pipeline for the United States

market with respect to Ameluz and furthering the clinical development of this product after taking over responsibility

for certain ongoing clinical trials since June 1, 2024;

strategically

managing our licensed portfolio, including opportunistically adding complementary products or services to our portfolio by acquiring

or licensing IP to further leverage our commercial infrastructure and customer relationships.

By executing these strategic objectives, we will fuel

company growth, deepen our trusted relationships in the dermatology community, and above all, help patients live healthier, more fulfilling

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.

managing our portfolio, including opportunistically adding complementary products or services to our portfolio by acquiring or licensing

IP to further leverage our commercial infrastructure and customer relationships.

executing these strategic objectives, we will fuel company growth, deepen our trusted relationships in the dermatology community, and

above all, help patients live healthier, more fulfilling lives.

devote a substantial portion of our cash resources to the commercialization of Ameluz and the BF-RhodoLED Lamps.

We have financed our

operating and capital expenditures through cash proceeds generated from our product sales, proceeds received from

convertible notes and equity financings.

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 related and

unrelated companies.

Our long-term financial objectives include consistent revenue growth and expanding operating margins.

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.

Our sole source of product revenue is sales of Ameluz and the BF-RhodoLED Lamps.

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.

RN, Stockfleth E, Connolly SM, et al.

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doi:10.1111/jdv.13180.

of Our Results of Operations

Components of Our Results of Operations

Revenues, net

generate product revenues through the third-party sales of our licensed products Ameluz ® and RhodoLED ®

Revenues from product sales are recorded net of trade discounts and allowances and government rebates.

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

generate product revenues through the sales of our products Ameluz and RhodoLED Lamps .

Revenues from product sales are recorded

net of trade discounts and allowances and government rebates.

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

level of orders generated by our sales force;

level of prescriptions and institutional demand for our licensed products;

sales prices.

Related Party

to June 1, 2024, the date on which we took over clinical trials, we generated insignificant related party revenue in connection with

an agreement with Biofrontera Bioscience to provide RhodoLED ® Lamps and associated services for the clinical trials

performed by Biofrontera Bioscience.

In the future, we do not expect to receive related party revenue regarding RhodoLED ®

Lamps and associated services for clinical trials.

of Revenues, Related Party

of revenues, related party, 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.

February 12, 2024, the Second A&R Ameluz LSA, among other things, was amended to change the Transfer Price from 50% to 25% of the

anticipated net selling price per unit through 2025 and then increasing over time pursuant to the schedule set forth in the Second A&R

Ameluz LSA to a maximum of 35% of the anticipated net selling price starting in 2032, subject to a minimum dollar amount per unit.

level of prescriptions and institutional demand for our products;

sales average sales price.

Cost of Revenues, Related Party

Cost of revenues, related party, relating to inventory

purchased before the Strategic Transaction, 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.

of Revenues, Other

5 unchanged sentences

Other selling, general and administrative

expenses include marketing, trade, and other commercial costs necessary to support the commercial operation of our licensed products

and professional fees for legal, consulting and accounting services.

Selling, general and administrative expenses also include the amortization

of our intangible assets and our legal settlement expenses.

expenses include marketing, trade, and other commercial costs necessary to support the commercial operation of our products and professional

fees for legal, consulting and accounting services, as well as depreciation and amortization.

General and Administrative Expenses, Related Party

general and administrative expenses, related party, relate to the services provided by Biofrontera AG, primarily for regulatory support

and pharmacovigilance.

These expenses are charged to us based on costs incurred plus 6% in accordance with the Amended and Restated 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.

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 Contact Services Agreement, (the “2021 Services Agreement”), entered into in December 2021.

and Development

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 ® , including personnel-related expenses, the cost of services provided by outside contractors, including services

related to the Company’s clinical trials, 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 development are expensed

in Fair Value of Contingent Consideration

connection with our acquisition of Cutanea Life Sciences, Inc (“Cutanea”) from Maruho Co., Ltd (“Maruho”) on March 25, 2019,

we recorded contingent consideration related to the estimated profits from the sale of Cutanea products to be shared equally with Maruho.

The fair value of such contingent consideration was determined to be $6.5 million on the acquisition date and was re-measured

at each reporting date until the contingency was resolved.

Our obligation relating to contingent consideration was relieved under a Confidential

Settlement Agreement and Mutual Release (the “Release”) dated December 27, 2023.

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,

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.

in Fair Value of Warrant Liabilities

2 unchanged sentences

expire or other facts and circumstances lead the warrant liabilities to be reclassified to stockholders’ equity or deficit.

Inducement Expense

connection with the Securities Purchase Agreement (“Purchase Agreement”), dated as of October 30, 2023, entered into with

an institutional investor, the Company entered into the Amendment to Common Stock Purchase Warrants, dated as of October 30, 2023 to

amend the common stock purchase warrant dated May 16, 2022 and the common stock purchase warrant dated July 26, 2022 (“Existing

Warrants”) to (i) revise the exercise price to $3.55 and (ii) extend the date until which the warrants can be exercised until November

As a result of the amendment to the existing warrants, the Company recognized inducement expense which was determined using

the Black-Scholes option pricing model before and after the warrant amendment.

of Warrant Fair Value Over Offering Proceeds

November 2, 2023, the Company issued common shares and warrants for common shares for net proceeds of $4.1 million.

The excess of the

fair value of the warrants at the issuance date over the proceeds received was recognized as a loss on the statement of operations.

in Fair Value of Investment, Related Party

4 unchanged sentences

exchange rates is included in gains and losses in the consolidated statement of operations.

the Release, the Company agreed to transfer 5,451,016 shares of Biofrontera AG to Maruho in exchange for the release of our obligations

relating to the Cutanea acquisition.

on Legal Settlement

the Release, the Company was released from its obligations to (i) repay $7.3 million in start-up cost financing to Maruho for Cutanea’s

redesigned business activities (“start-up cost financing”), and (ii) make certain profit-sharing payments pursuant to the Share

Purchase and Transfer Agreement, dated March 25, 2019, entered into with Maruho (as amended, the “Share Purchase Agreement”

In exchange, the Company agreed to transfer 5,451,016 shares of Biofrontera AG to Maruho.

The exchange of the

shares of Biofrontera AG for the release of the obligations mentioned above, resulted in a gain.

on Debt Extinguishment

May 8, 2023, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with MidCap Business Credit LLC,

providing us with a revolving line of credit in the aggregate principal amount of up to $6.5 million.

Effective as of January 4, 2024,

we voluntarily terminated the Loan Agreement and recognized a $0.3 million loss on debt extinguishment upon the early termination related

to prepayment fees and the write-off of deferred financing costs.

Income (Expense), net

1 unchanged sentence

Income (Expense), net

income, net primarily includes (i) gain on return of leased assets, and (ii) gain (loss) on foreign currency transactions.

income, net primarily includes (i) gain on return of leased assets, (ii) gain on sale of asset held for sale, and (iii) gain (loss) on

foreign currency transactions.

a result of the net losses we have incurred in each fiscal year since inception, we have recorded no provision for federal income taxes

14 unchanged sentences

Research and development

Change in fair value of contingent consideration

Total operating expenses

1 unchanged sentence

Change in fair value of warrant liabilities

Warrant inducement expense

Excess of warrant fair value over offering proceeds

Change in fair value of investment, related party

Loss on debt extinguishment

Gain on legal settlement

Interest expense, net

4 unchanged sentences

product revenue for 2025 increased $4.4 million, or 11.8% compared to 2024.

The increase was primarily driven by organic growth of Ameluz ®

sales volume of $0.5 million, a $1.7 million increase due to an increased Ameluz ® unit price, and the launch of

our RhodoLED ® XL Lamp, which resulted in sales of RhodoLED ® XL Lamps of $1.1 million.

The increase was primarily driven by organic growth of

Ameluz sales volume of $4.1 million and a $0.7 million increase due to an increased Ameluz unit price.

We still continued to grow

net revenues despite the impact of group purchasing organizations for independent dermatology offices’ efforts to erode

The Ameluz driven revenue increase was offset by a $0.3 million decline in sales of RhodoLED Lamps due to the initial surge

of sales 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.

of Revenues, Related Party

of revenues, related party increased $1.1 million, or 6.3% compared to 2023, driven by the increase in revenue.

Cost of revenues, increased

at a slower pace as compared to the sales increase of 9.7% due to cost savings under the Second A&R Ameluz LSA and volume discounts

under the original license and supply agreement with the Ameluz Licensors.

Cost of revenues, related party decreased $7.7 million,

or 43.4% compared to 2024 driven by changes in the purchase price of Ameluz primarily due to changes in the Company’s commercial

arrangements with the Biofrontera Group.

In connection with the Strategic Transaction, the Company transitioned from the transfer pricing

model in place under the now terminated Second A&R Ameluz LSA to a significantly lower cost structure.

Under the new arrangement,

the cost of revenues per unit reduced to approximately 5% beginning in July 2025, compared to a range of approximately 25%

to 50% of revenue applying to sales in 2024 and from January 1, 2025 through June 1, 2025.

Sales subject to the new rate of approximately

5% represented approximately 45% of total Ameluz sales volume for 2025.

In addition, $2.1 million of purchase price accrued relating to

units purchased in 2025 under the Second A&R Ameluz LSA was forgiven in connection with the Strategic Transaction, further reducing

the cost of revenues in 2025.

These decreases were partially offset by earnout payments made in 2025 under the Agreements

to the Biofrontera Group of $2.2 million.

General and Administrative Expenses

general and administrative expenses for 2024 decreased $5.2 million, or 13.3% compared to 2023.

This decrease was primarily driven

by a $3.0 million decrease in general and administrative expenses, primarily attributable to a decrease in external legal expenses

and expenses relating to financing activities.

The decrease was further driven 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 million reduction in direct sales personnel expenses due to reduction

in sales force and a $0.3 million reduction in direct sales travel and lodging.

Selling, general and administrative expenses for 2025 increased $4.0 million,

or 11.7% compared to 2024.

The increase was primarily driven by a $6.6 million rise in general and administrative expenses, largely attributable

to higher external legal costs and expenses related to patent claims.

Commitments and Contingencies – Legal Proceedings .

This increase was partially offset by a $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 Xepi Prescription Drug User fee write-off, a $0.3 million decrease in intangible asset

amortization, and a $0.2 million decrease in bad debt expense.

Selling, General and Administrative Expenses,

Related Party

Selling, general and administrative expenses,

related party increased by $0.6 million in 2025 compared to 2024, primarily due to the commercialization, regulatory and

manufacturing-related expenses incurred following the Strategic Transaction.

Acquisition .

and Development Expense

expenses for the year ended December 31, 2024 increased $2.0 million as compared to the year ended December 31, 2023.

was attributed to our assumption of all clinical trial activities for Ameluz ® in the United States effective June 1,

2024, allowing for more effective cost management and direct oversight of trial efficiency.

This increase in R&D expense was and

will continue to be offset in 2024 and 2025 by a reduction in the Transfer Price of Ameluz ® from 50% to 25% for

inventory purchases.

As of December 31, 2024, we generated savings of approximately $0.8 million from

inventory purchased in 2024 due to the reduced Transfer Price.

following table summarizes the major categories of our R&D expenses for the years ended December

31, 2024 and 2023:

R&D expenses for the year ended December 31, 2025 increased $1.6 million

as compared to the year ended December 31, 2024.

The increase was attributable to our responsibility over clinical trial activities for

Ameluz in the United States for the full year 2025, which we assumed control of starting June 1, 2024.

following table summarizes the major categories of our R&D expenses for the years ended December 31, 2025 and 2024:

Actinic keratosis

5 unchanged sentences

in Fair Value of Warrant Liabilities

change in fair value of warrant liabilities was driven primarily by a greater decrease in the underlying value of the Company’s

common stock during 2023 as compared to 2024.

in Fair Value of Investment, Related Party

of December 31, 2023, the Company had transferred substantially all of its investment in Biofrontera AG to Maruho in exchange for

the release of certain obligations, in accordance with the Release.

As a result, for the year ended December 31, 2024, the net

balance of our investment in Biofrontera AG and the related change in fair value was minimal.

on Legal Settlement

the Release, the Company was released from its obligations to repay $7.3 million in start-up cost financing to Maruho for Cutanea’s

redesigned business activities and released from having to make certain profit-sharing payments pursuant to the SPA.

In exchange, the

Company agreed to transfer 5,451,016 shares of Biofrontera AG to Maruho.

The exchange pursuant to the Release resulted in a gain of $7.4

million, recorded in December 2023.

There were no legal settlements that occurred in 2024.

increase of interest expense of $1.6 million was driven by the interest and debt discount recognized on the loans issued

on December 21, 2023, for an aggregate principal balance of $4.0 million.

The loans required the Company to make weekly payments of principal

and interest in the amount of approximately $0.2 million through July 5, 2024, the maturity date.

change in fair value of warrant liabilities was driven primarily by the decrease in the underlying value of the Company’s common

stock during 2025 as compared to 2024.

Interest expense decreased by $1.6 million due to

the decrease in the interest rate applicable to the outstanding convertible notes issued in November of 2024 (with an original balance

of $4.2 million), as compared to the term loan with a balance of $4.0 million that matured on July 5, 2024.

Income to Adjusted EBITDA Reconciliation for years ended December 31, 2025 and 2024

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or as a substitute for analysis of our results as reported under GAAP.

in fair value of contingent consideration:

Pursuant to the Share Purchase Agreement, the profits from the sale of Cutanea products

were to be shared equally between Maruho and Biofrontera until 2030.

The fair value of the contingent consideration was determined to

be $6.5 million on the acquisition date and was re-measured at each reporting date.

We exclude the impact of the change in fair value

of contingent consideration as this is non-cash.

Further, we were relieved of our obligations relating to the contingent consideration

under the Release.

As such, our future results of operations will not be impacted by the change in fair value.

in fair value of warrant liabilities:

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(“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 statement of operations.

We exclude the impact

of the change in fair value of warrant liabilities as this is non-cash.

inducement expense:

The warrant inducement expense was determined using the Black-Scholes option pricing model and was calculated

as the difference between the fair value of the applicable warrants prior to, and immediately after, the reduction in the exercise price

on the date of repricing and is presented within the statement of operations.

We exclude the impact of the change in fair value of the

warrant inducement expense as this is non-cash.

of warrant fair value over offering proceeds :

The excess of warrant fair value over offering proceeds was determined by the difference

between the fair value of the warrants upon issuance on November 2, 2023 and the proceeds received.

We exclude the impact of the variance

between the warrant fair value and the proceeds as this is non-cash.

The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in

fair value presented within the consolidated statement of operations.

We exclude the impact of the change in fair value of warrant liabilities

as this is non-cash.

in fair value of investment, related party:

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We exclude the impact of the realized and unrealized change in fair value of investments as this is non-cash.

on legal settlement :

Under the Release, we were relieved of our obligations relating to the start-up cost financing and profit sharing

under the Share Purchase Agreement in exchange for 5,451,016 shares of Biofrontera AG.

The exchange of the shares of Biofrontera AG for

the release of the liabilities mentioned above, both of which were recorded at their respective fair values at the exchange date, resulted

We exclude the impact of the gain on legal settlement as this is non-cash and non-recurring.

on debt extinguishment :

Effective as of January 4, 2024, we voluntarily terminated the Loan Agreement and recognized a $0.3 million

loss on debt extinguishment upon the early termination of the loan.

We exclude the impact of this loss as it is attributed to the prepayment

fee, which is considered non-recurring and the write-off of deferred financing costs, which is considered non-cash.

settlement expenses :

To measure operating performance, we exclude legal settlement expenses.

We do not expect to incur these types

of legal expenses on a recurring basis and believe the exclusion of such amounts allows management and the users of the financial statements

to better understand our financial results.

Loss on debt extinguishment :

as of January 4, 2024, we voluntarily terminated the Loan and Security Agreement dated May 8, 2023 with MidCap Business Credit LLC and

recognized a $0.3 million loss on debt extinguishment upon the early termination of the loan.

We exclude the impact of this loss as it

is attributed to the prepayment fee, which is considered non-recurring and the write-off of deferred financing costs, which is considered

Based Compensation :

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users of the financial statements to better understand our financial results.

on sale of asset held for sale :

The gain on the sale of an asset held for sale increases net income but is excluded from

adjusted EBITDA because it is a non-recurring, non-operating item.

While it may appear in other income, net, it is subtracted when calculating

adjusted EBITDA to reflect normalized, recurring operational performance and avoid overstating operational profitability.

EBITDA margin is adjusted EBITDA for a particular period expressed as a percentage of revenues for that period.

management uses adjusted EBITDA to measure our performance from period to period and to compare our results to those of our

We believe that adjusted EBITDA provides useful information to investors regarding financial and business trends

related to our results of operations and that, when non-GAAP financial information is viewed with GAAP financial information,

investors are provided with a more meaningful understanding of our ongoing operating performance.

management uses adjusted EBITDA to measure our performance from period to period and to compare our results to those of our competitors.

We believe that adjusted EBITDA provides useful information to investors regarding financial and business trends related to our results

of operations and that, when non-GAAP financial information is viewed with GAAP financial information, investors are provided with a

more meaningful understanding of our ongoing operating performance.

below table presents a reconciliation from net loss to Adjusted EBITDA for the years ended December 31, 2025 and 2024:

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Depreciation and amortization

Change in fair value of contingent consideration

Gain on sale of asset held for sale

Change in fair value of warrant liabilities

Warrant inducement expense

Excess of warrant fair value over offering proceeds

Change in fair value of investment, related party

Gain on legal settlement

Loss on debt extinguishment

Legal settlement expenses

Stock based compensation

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EBITDA increased from ($15.3) million for the year ended December 31, 2024 to ($10.6) million for the year ended December 31, 2025.

The increase was primarily driven by an increase in gross profit due to the increase in sales and a reduction in purchase price for

sales of inventory purchased under the Second A&R Ameluz LSA, and a decrease in selling, general and administrative

expenses due to a reduction in financing related activities and legal expenses.

These decreases were partially offset

by an increase in R&D expenses.

Our Adjusted EBITDA margin increased from (57.1%) for the year ended December 31, 2023 to

(40.9%) for the year ended December 31, 2024, as the impact of the decrease in cost of revenue and the decrease in selling,

general and administrative expenses outweighed the impact of the increase in revenue.

improvement was primarily driven by higher gross profit resulting from increased sales and a reduction in cost of revenues following

the Strategic Transaction.

Adjusted EBITDA also benefited from lower selling, general and administrative expenses, reflecting more disciplined

cost management, lower commercial activity levels, and optimization of personnel resources during the year.

These improvements were partially

offset by higher legal expenses related to patent claims and increased research and development expenses.

Our Adjusted EBITDA margin

increased from (40.9%) for the year ended December 31, 2024 to (25.4%) for the year ended December 31, 2025, as the favorable impact

of the higher gross profit and improved operating cost discipline outweighed the effect of the increased legal and research and development

and Capital Resources

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Company’s primary sources of liquidity are its cash collected from the sales of its products and cash flows from financing

transactions.

As of December 31, 2024, we had cash and cash equivalents of $5.9 million.

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 date of this Annual Report on

plans that are intended to mitigate the conditions that raise substantial doubt about the Company’s ability to continue as

a going concern include expanding the commercialization of Ameluz ® in the United States while

controlling expenses and limiting capital expenditures, as well as capitalizing on the reduced cost of inventory in line with the

terms of the Second A&R Ameluz LSA.

The Company also plans to secure additional capital through equity or debt financings, or

the sale of assets to carry out the Company’s planned commercial and development activities.

However, there can be no

assurance that the Company will be successful in executing the aforementioned commercial strategies and/or obtaining sufficient

funding on acceptable terms, if at all, and that the substantial doubt will be alleviated.

If the Company is unable to raise capital

when needed, the Company will not have sufficient cash resources and liquidity to fund its business

operations and the Company may

be forced to delay or reduce continued commercialization efforts or R&D programs which could have a material adverse effect on the Company and its financial statements.

financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the

amounts and classification of liabilities that might result from the outcome of the uncertainties described above, that might be necessary

should the Company be unable to continue as a going concern.

transactions, including $11.0 million of gross proceeds received in a private placement of Series C Preferred Stock in 2025.

December 31, 2025, we had cash and cash equivalents of $6.4 million.

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 date of this Annual Report on Form 10-K.

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,

expected realization of an additional $1.0 million in milestone payments from the sale of the Xepi intangible asset, and, if

necessary, securing additional capital through equity or debt financings.

However, there can be no assurance that the Company will

be successful in obtaining sufficient funding on acceptable terms, if at all.

If the Company is unable to raise additional capital

when needed, it will not have sufficient cash resources and liquidity to fund its business operations and may be forced to delay or

reduce continued commercialization efforts or R&D programs, which could have a material adverse effect on the Company and its

financial statements.

consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and

reported expenses that may be necessary if the Company were unable to continue as a going concern.

following table summarizes our cash provided by (and used in) operating, investing and financing activities:

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Net cash provided by financing activities

Net increase (decrease) in cash and restricted cash

Net increase in cash and restricted cash

the year ended December 31, 2025, operating activities used $13.4 million of cash, primarily resulting from our net loss of $10.5 million,

adjusted for the add back of non-cash income of $1.3 million and offset by net cash used by changes in our operating assets and liabilities

of $6.2 million.

Non-cash income includes a change in fair value of warrant liabilities of $1.7 million offset by stock-based compensation

of $1.0 million, non-cash interest expense of $0.3 million, loss on debt extinguishment of $0.3 million, provision for doubtful accounts

of $0.2 million and depreciation and amortization in the aggregate of $1.1 million.

and net cash used by changes in our operating assets and liabilities of $3.5 million, adjusted for the add back of non-cash expense of

$0.7 million.

Non-cash expense includes stock-based compensation of $1.0 million, non-cash interest expense of $0.5 million,

reduction of right of use assets of $0.7 million and depreciation and amortization in the aggregate of $0.1 million, offset by a change

in fair value of warrant liabilities of $0.9 million, gain on asset held for sale of $0.7 million, and allowance for credit losses of

$0.1 million.

the year ended December 31, 2024, operating activities used $10.3 million of cash, primarily resulting from our net loss of $17.8 million,

adjusted for the add back of non-cash income of $0.4 million and offset by net cash used by changes in our operating assets and liabilities

of $4.4 million.

Non-cash income includes a gain on legal settlement of $7.4 million and a change in fair value of warrant liabilities

of $6.5 million offset by a change in fair value of equity securities of $7.4 million, loss on warrant fair value over offering proceeds

of $2.3 million, warrant inducement expense of $1.1 million, stock-based compensation of $1.1 million, non-cash interest expense of $0.4

million, change in fair value of contingent consideration of $0.1 million, provision for doubtful accounts of $0.1 million and depreciation

and amortization in the aggregate of $1.1 million.

and net cash used by changes in our operating assets and liabilities of $6.2 million, adjusted for the add back of non-cash expense of

$1.3 million.

Non-cash expense includes stock-based compensation of $1.0 million, non-cash interest expense of $0.3 million, loss on

debt extinguishment of $0.3 million, provision for doubtful accounts of $0.2 million and depreciation and amortization in the aggregate

of $1.1 million offset by a change in fair value of warrant liabilities of $1.7 million.

During the year ended December 31, 2025, the Company

received $3.0 million in proceeds from the sale of the intangible asset relating to its Xepi product line, which was previously

classified as held for sale.

Asset Held for Sale for additional details.

the year ended December 31, 2024, the Company had minimal investing activities which consisted of proceeds from the sales of equity investments

which were partially offset by capitalized software and computer purchases.

the year ended December 31, 2023, investing activities provided $0.6 million, primarily resulting from the sale of shares of Biofrontera

the year ended December 31, 2025, net cash from financing activities of $10.9 million consisted of proceeds received in accordance with

a securities purchase agreement dated June 27, 2025, for the issuance of 11,000 shares of Series C Convertible Preferred Stock.

Stockholders’ Equity- Series C Convertible Preferred Stock , for additional details.

the year ended December 31, 2024, net cash provided by financing activities was $14.8 million which consisted of proceeds of $7.7 million,

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million on our short-term debt, and prepayment fees of $0.2 million to extinguish our line of credit.

Debt, for additional information.

the year ended December 31, 2023, net cash provided by financing activities was $8.4 million which consisted of net proceeds received

from our loan and line of credit of $3.9 million and net proceeds of $4.5 million from the issuance of common stock and warrants in a

public offering.

Policies and Significant Judgments and Estimates

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believe that the following are the most critical estimates which required significant judgments in the preparation of our financial statements.

Value – Warrant Liabilities

warrants issued in conjunction with our private placement offerings, including warrants for common stock, preferred stock and

warrants issued to induce conversion, were accounted for as liabilities in accordance with ASC 815-40 and are presented within

warrant liabilities in the accompanying consolidated balance sheet.

The warrant liabilities are measured at fair value at inception

and on a recurring basis, with changes in fair value presented within the consolidated statement of operations.

Company utilizes a Black-Scholes-Merton (“BSM”) option pricing model to estimate the fair value of the warrants for

common stock which is considered a Level 3 fair value measurement.

Due to the uncertainty of the how the convertible preferred

warrants would ultimately settle, the Company used a probability-weighted approach along with a BSM model equation to estimate the

fair value of the preferred warrants under different scenarios.

While we believe these assumptions were reasonable, the manner or

timeframe in which the warrants ultimately settle may differ.

The BSM option-pricing model considers several variables and

assumptions in estimating the fair value of financial instruments, including the per-share fair value of the underlying common

stock, exercise price, expected term, risk-free interest rate, expected stock price volatility over the expected term, and expected

annual dividend yield.

Certain inputs utilized in our BSM pricing model may fluctuate in future periods based upon factors which are

outside of the Company’s control.

Most significantly, due to the relatively limited period during which our stock has been

publicly traded, volatility is based on a weighted average of our historical volatility and of a selected peer group of publicly

traded companies within a similar industry.

A significant change in one or more of the aforementioned inputs used in the calculation of the fair

value may cause a significant change to the fair value of our warrant liability which could also result in material non-cash gain or

loss being reported in our consolidated statement of operations.

Contingencies

and Litigation

the ordinary course of our business, we are subject to various legal proceedings, claims and other regulatory matters, the outcomes

of which are subject to significant uncertainty.

At least quarterly, we review the status of each significant matter and assess its

potential financial exposure considering all available information including, but not limited to, the impact of negotiations,

settlements, rulings, advice of internal and external legal counsel and other updated information and events pertaining to a

particular matter.

If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably

estimated, we accrue a liability for the estimated loss.

Significant judgment is required in assessing the likelihood of a loss

being incurred and in estimating the loss or range of loss in each matter.

Due to the uncertainty of litigation and the preliminary

stage of the claims, we cannot estimate the possibility of a material loss, nor the potential range of loss that may result from

the actions discussed in Note 19.

Commitments and Contingencies – Legal Claims .

As additional information becomes available, we reassess the potential liability related to our pending litigation and

other contingencies and revise our estimates as applicable.

Revisions of our estimates of the potential liability could materially

impact our results of operations.

Additionally, if the final outcome of such litigation and contingencies differs adversely from

that currently expected, it would result in a charge to operating results when determined.

Commitments and

Contingencies – Legal Claims for more details .

Impairment Assessment-Intangible Assets and Asset Held for Sale

In the third quarter of 2024, the Xepi intangible asset was classified

as held for sale.

Subsequent to the major asset being classified as held for sale, impairment assessment is no longer considered a critical

estimate, and the Company does not consider the accounting under ASC 360-10-35-37 to 43 for assets held for sale to be a critical accounting

estimate because of the simplistic nature of the basis of the fair value measurement.

Assets Held for Sale.

to the classification as held for sale, the Company regularly reviewed the carrying amount of its long-lived assets to determine

whether indicators of impairment may have existed that warranted adjustments to carrying values or estimated useful lives.

the ordinary course of our business, we are subject to various legal proceedings, claims and other regulatory matters, the outcomes of

which are subject to significant uncertainty.

At least quarterly, we review the status of each significant matter and assess its potential

financial exposure considering all available information including, but not limited to, the impact of negotiations, settlements, rulings,

advice of internal and external legal counsel and other updated information and events pertaining to a particular matter.

If the potential

loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for

the estimated loss.

Significant judgment is required in assessing the likelihood of a loss being incurred and in estimating the loss

or range of loss in each matter.

Due to the uncertainty of litigation and the preliminary stage of the claims, we cannot estimate the

possibility of a material loss, nor the potential range of loss that may result from the actions discussed in Note 20.

and Contingencies – Legal Claims .

As additional information becomes available, we reassess the potential liability related

to our pending litigation and other contingencies and revise our estimates as applicable.

Revisions of our estimates of the potential

liability could materially impact our results of operations.

Additionally, if the final outcome of such litigation and contingencies

differs adversely from that currently expected, it would result in a charge to operating results when determined.

and Contingencies – Legal Claims for more details .

Assets and Impairment Assessment

The Company regularly reviews the carrying amount of its long-lived assets

to determine whether indicators of impairment may exist that warrant adjustments to carrying values or estimated useful lives.

In connection

with this review, assets were grouped at the lowest level at which identifiable cash flows were largely independent of other asset

If indications of impairment existed, projected future undiscounted cash flows associated with the asset grouping were

compared to the carrying amount to determine whether the asset’s value was recoverable.

An impairment loss would be recognized

when estimated undiscounted future cash flows expected to result from the use of an asset group were less than its carrying amount

and if the carrying value was also determined to be greater than its fair value.

The impairment loss would be based on the excess of

the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows.

determining future cash flows, various factors were taken into account, including the remaining useful life of each asset group,

forecasted growth rates, pricing, working capital, capital expenditures, and other cash needs specific to the asset group.

Additional considerations when assessing impairment included changes in our strategic, operational, and financial decisions,

economic conditions, demand for our product, and other corporate initiatives that may have eliminated or significantly decreased the

realization of future benefits from our long-lived assets.

Since the determination of future cash flows is an estimate of future

performance, future impairments may arise in the event that future cash flows do not meet expectations.

with this review, assets are grouped at the lowest level at which identifiable cash flows are largely independent of other asset groupings.

If indications of impairment exist, projected future undiscounted cash flows associated with the asset grouping are compared to the carrying

amount to determine whether the asset’s value is recoverable.

An impairment loss would be recognized when estimated undiscounted

future cash flows expected to result from the use of an asset group are less than its carrying amount and if the carrying value is also

determined to be greater than its fair value.

The impairment loss would be based on the excess of the carrying value of the impaired asset

group over its fair value, determined based on discounted cash flows.

determining future cash flows, we take various factors into account, including the remaining useful life of each asset group, forecasted

growth rates, pricing, working capital, capital expenditures, and other cash needs specific to the asset group.

Additional considerations

when assessing impairment include changes in our strategic, operational, and financial decisions, economic conditions, demand for our product

and other corporate initiatives which may eliminate or significantly decrease the realization of future benefits from our long-lived

Since the determination of future cash flows is an estimate of future performance, future impairments may arise in the event

that future cash flows do not meet expectations.

Consideration

In evaluating whether variable consideration

should be included in the transaction price (in the sale of asset held for sale and the sales-based earnout consideration in the

Strategic Transaction), the Company applies judgement in assessing whether it is probable that milestones or expected timing or

magnitude of future net sales will be met.

The Company will recognize the constrained variable consideration, if any, in the period

in which the associated uncertainty is resolved.

In connection with the sale of the Company’s

intangible asset related to Xepi, the $7.0 million of potential milestone payments related to achieving annual net sales thresholds

were fully constrained at the sale date due to significant uncertainty regarding the buyer’s future sales performance.

This uncertainty

is driven by factors outside the Company’s control including the buyer’s commercialization strategy, pricing decisions, and

general market conditions.

Additionally, the asset lacked sufficient historical revenue performance to reliably predict the likelihood

of achievement.

In connection with certain asset acquisition transactions,

the Company may agree to pay contingent consideration based on the future performance of the assets acquired.

Pursuant to the terms of

the Agreements, the Company will pay an earnout of 12% in years where Ameluz revenues in the United States are less than $65.0 million

and an earnout of 15% in years when Ameluz revenues in the United States exceed $65.0 million, continuing until the expiration of patent

protection on Ameluz.

The accounting for contingent consideration requires management to assess whether the obligation should be recognized

and measured at the acquisition date.

In certain circumstances, the Company may determine that the fair value of the earnout obligation

cannot be reasonably estimated at the acquisition date due to significant uncertainties regarding the timing and magnitude of future net

Changes in actual net sales relative to expectations could result in the recognition of material expense in future periods when

the contingency is resolved.

issued accounting pronouncements

description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations

is included in Note 2, Summary of Significant Accounting Policies—Recently Issued Accounting Pronouncements .

is included in Note 2.

Summary of Significant Accounting Policies—Recently Issued Accounting Pronouncements .

Sheet Arrangements

the contractual obligations and commitments discussed in the section entitled “Liquidity and Capital Resources” above, we did not have

during the periods presented, and we do not currently have, any other off-balance sheet arrangements, as defined in the rules and regulations

the contractual obligations and commitments discussed in the section entitled “Liquidity and Capital Resources” above, we

did not have during the periods presented, and we do not currently have, any other off-balance sheet arrangements, as defined in the

rules and regulations of the SEC.

Growth Company Status

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis