Biofrontera Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2026 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number 001-40943 Biofrontera Inc. (Exact name of registrant as specified in its charter) Delaware 47-3765675 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 660 Main Street , 1 st Floor , Woburn , Massachusetts 01801 (Address of principal executive offices) (Zip Code) (781) 245-1325 (Registrant’s telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, par value $0.001 per share BFRI The Nasdaq Stock Market LLC Warrants to purchase common stock BFRIW The Nasdaq Stock Market LLC Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of August 11, 2026, there were 14,852,359 shares outstanding of the registrant’s common stock, par value $ 0.001 per share. TABLE OF CONTENTS PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements 3 Condensed Consolidated Balance Sheets as of June 30, 2026 (unaudited) and December 31, 2025 3 Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2026 (unaudited) and 2025 (unaudited) 4 Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2026 (unaudited) and 2025 (unaudited) 5 Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 (unaudited) and 2025 (unaudited) 6 Notes to Condensed Consolidated Financial Statements 7 ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 35 ITEM 4. Controls and Procedures 35 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 36 ITEM 1A. Risk Factors 36 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 36 ITEM 3. Defaults Upon Senior Securities 36 ITEM 4. Mine Safety Disclosures 36 ITEM 5. Other Information 36 ITEM 6. Exhibits 36 Signatures 37 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements BIOFRONTERA INC. CONDENSED CONSOLIDATED BALANCE SHEETS ( In thousands, except par value and share amounts ) June 30, 2026 December 31, 2025 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 4,659 $ 6,392 Investment, related party 8 9 Accounts receivable, net 5,545 7,291 Inventories 1,097 1,426 Prepaid expenses and other current assets 892 2,279 Other assets, related party 234 686 Total current assets 12,435 18,083 Inventories, long term 3,658 3,729 Property and equipment, net 2,139 2,158 Operating lease right-of-use assets 2,813 1,584 Intangible assets, net 2,568 2,650 Other assets 451 360 Total assets $ 24,064 $ 28,564 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 4,315 1,855 Accounts payable, related parties, net 1,044 4,811 Accounts payable 1,044 4,811 Operating lease liabilities 472 332 Accrued expenses and other current liabilities 4,710 4,897 Total current liabilities 10,541 11,895 Long-term liabilities: Convertible notes payable, net 4,620 4,589 Warrant liabilities 526 351 Operating lease liabilities, non-current 2,412 1,240 Other liabilities 9 9 Total liabilities 18,108 18,084 Commitments and contingencies (see Note 17) - - Stockholders’ equity: Convertible Preferred Stock, $ 0.001 par value, 20,000,000 shares authorized; no Series B-1; 1,850 and 2,050 Series B-2; 6,498 and 6,593 Series B-3; 9,707 and 10,719 Series C; and 3,019 Series D shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively - - Common stock, $ 0.001 par value, 70,000,000 shares authorized; 14,206,126 and 11,648,323 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively 14 12 Additional paid-in capital 139,243 138,413 Accumulated deficit ( 133,301 ) ( 127,945 ) Total stockholders’ equity 5,956 10,480 Total liabilities and stockholders’ equity $ 24,064 $ 28,564 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 BIOFRONTERA INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ( In thousands, except per share amounts and number of shares ) (Unaudited) 2026 2025 2026 2025 Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Product revenues, net $ 12,003 $ 9,030 $ 22,087 $ 17,617 Operating expenses Cost of revenues, related party 2,185 2,380 4,016 5,455 Cost of revenues, other 225 262 510 455 Cost of revenues 225 262 510 455 Selling, general and administrative 9,628 10,528 20,623 19,183 Selling, general and administrative, related party 41 69 42 76 Patent remediation expense - - 392 - Research and development 448 870 1,348 2,077 Total operating expenses 12,527 14,109 26,931 27,246 Loss from operations ( 524 ) ( 5,079 ) ( 4,844 ) ( 9,629 ) Other income (expense) Change in fair value of warrant liabilities 44 153 ( 175 ) 702 Change in fair value of investment, related party ( 1 ) 2 ( 1 ) 2 Interest expense, net ( 126 ) ( 115 ) ( 251 ) ( 220 ) Other income (expense), net 26 ( 264 ) ( 62 ) ( 363 ) Total other income (expense) ( 57 ) ( 224 ) ( 489 ) 121 Loss before income taxes ( 581 ) ( 5,303 ) ( 5,333 ) ( 9,508 ) Income tax expense 23 21 23 19 Net loss $ ( 604 ) $ ( 5,324 ) $ ( 5,356 ) $ ( 9,527 ) Loss per common share: Basic and diluted $ ( 0.05 ) $ ( 0.57 ) $ ( 0.44 ) $ ( 1.05 ) Weighted-average common shares outstanding: Basic and diluted 12,923,710 9,351,557 12,306,944 9,108,091 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 BIOFRONTERA INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except number of shares) (Unaudited) Shares Amount Shares Amount Capital Deficit Total Three and Six Months Ended June 30, 2026 Preferred Stock Common Stock Additional Paid-in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance, April 1, 2026 22,381 $ - 11,873,323 $ 12 $ 138,755 $ ( 132,697 ) $ 6,070 Conversion of Series B-2 Preferred into Common ( 200 ) - 282,600 - - - - Conversion of Series B-3 Preferred into Common ( 95 ) - 134,235 - - - - Conversion of Series C Preferred into Common ( 1,012 ) - 1,619,463 2 ( 2 ) - - Conversion of convertible notes into Common - - 296,505 - 227 - 227 Stock-based compensation - - - - 263 - 263 Net loss - - - - - ( 604 ) ( 604 ) Balance, June 30, 2026 21,074 - 14,206,126 14 139,243 ( 133,301 ) 5,956 Balance, January 1, 2026 22,381 $ - 11,648,323 $ 12 $ 138,413 $ ( 127,945 ) $ 10,480 Conversion of Series B-2 Preferred into Common ( 200 ) - 282,600 - - - - Conversion of Series B-3 Preferred into Common ( 95 ) - 134,235 - - - - Conversion of Series C Preferred into Common ( 1,012 ) - 1,619,463 2 ( 2 ) - - Conversion of convertible notes into Common - - 296,505 - 227 - 227 Issuance of shares for restricted stock units - - 225,000 - - - - Stock-based compensation - - - - 605 - 605 Net loss - - - - - ( 5,356 ) ( 5,356 ) Balance, June 30, 2026 21,074 $ - 14,206,126 $ 14 $ 139,243 $ ( 133,301 ) $ 5,956 Three and Six Months Ended June 30, 2025 Preferred Stock Common Stock Additional Paid-in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance, April 1, 2025 10,129 - 8,873,932 9 122,072 ( 121,612 ) 469 Conversion of Series B-2 Preferred into Common ( 725 ) - 1,024,425 - - - Conversion of Series B-3 Preferred into Common ( 170 ) - 240,210 - - - Stock based compensation - 187 187 Net loss - - - ( 5,324 ) ( 5,324 ) Balance, June 30, 2025 9,234 - 10,138,567 9 122,259 ( 126,936 ) ( 4,668 ) Balance, January 1, 2025 10,129 - 8,873,932 9 121,833 ( 117,409 ) 4,433 Balance 10,129 - 8,873,932 9 121,833 ( 117,409 ) 4,433 Conversion of Series B-2 Preferred into Common ( 725 ) - 1,024,425 - - - - Conversion of Series B-3 Preferred into Common ( 170 ) - 240,210 - - - - Stock based compensation - - - 426 - 426 Net loss - - - - ( 9,527 ) ( 9,527 ) Balance, June 30, 2025 9,234 - 10,138,567 9 122,259 ( 126,936 ) ( 4,668 ) Balance 9,234 - 10,138,567 9 122,259 ( 126,936 ) ( 4,668 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 BIOFRONTERA INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) 2026 2025 Six Months Ended June 30, 2026 2025 Cash flows from operating activities: Net loss $ ( 5,356 ) $ ( 9,527 ) Adjustments to reconcile net loss to cash flows used in operations: Depreciation and amortization 120 55 Reduction in the carrying amount of right-of-use assets 263 386 Stock-based compensation 605 426 Non-cash interest expense 259 240 Allowance for credit losses 40 ( 57 ) Change in fair value of warrant liabilities 175 ( 702 ) Realized/unrealized (gain)/ loss in investment, related party 1 ( 2 ) Loss from termination of operating leases 4 - Changes in operating assets and liabilities: Accounts receivable 1,706 1,418 Other receivables, related party ( 54 ) - Prepaid expenses and other assets 1,296 45 Other assets, related party 452 ( 953 ) Inventories 386 2,618 Accounts payable 2,461 2,412 Accounts payable, related parties, net ( 3,714 ) ( 4,674 ) Operating lease liabilities ( 184 ) ( 371 ) Accrued expenses and other liabilities ( 188 ) 1,524 Cash flows used in operating activities ( 1,728 ) ( 7,162 ) Cash flows from investing activities Purchases of property and equipment ( 5 ) ( 4 ) Cash flows used in investing activities ( 5 ) ( 4 ) Cash flows from financing activities Proceeds from stockholder advances - 8,500 Cash flows provided by financing activities - 8,500 Net change in cash, cash equivalents ( 1,733 ) 1,334 Cash, cash equivalents and restricted cash, at the beginning of the period 6,592 6,105 Cash, cash equivalents and restricted cash, at the end of the period $ 4,859 $ 7,439 Supplemental disclosure of cash flow information Interest paid - 3 Income taxes paid, net 21 21 Supplemental non-cash financing activities Addition of right-of-use assets in exchange for operating lease liabilities $ 1,529 $ 98 Conversion of convertible note payable and PIK interest into common stock $ 227 - The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Biofrontera Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Organization and Business Overview Biofrontera Inc., a Delaware corporation (the “Company,” “we,” “us,” “our,” 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 (or “AKs”). With our national commercial team, we generate revenue by selling our products directly to dermatology offices and groups. We conduct all clinical trials relating to Ameluz ® in the United States through Biofrontera Discovery GmbH (“Discovery”), our wholly owned subsidiary organized under the laws of Germany and formed in February 2022. Our research and development (“R&D”) programs are focused on label expansion for Ameluz ® as well as supporting PDT growth by improving the capabilities of the RhodoLED ® Lamps to better fulfill the needs of dermatologists. On October 20, 2025, the Company 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 acquired all rights in the United States (the “U.S. Rights”) to Ameluz ® and RhodoLED ® (the “Strategic Transaction”). In exchange for the U.S. Rights, and in addition to a monthly earnout payable to the Biofrontera Group and the Company’s assumption of 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”). The Strategic Transaction was funded through an $ 11.0 million investment by existing investors. See Note 13. Related Party Transactions for additional information. On November 6, 2025, the Company completed the sale of the long-lived intangible asset relating to its Xepi product line. The Company received fixed consideration in the amount of $ 3.0 million and may receive up to $ 7.0 million of variable consideration contingent upon the buyer’s future activities. See Note 10. Asset Held for Sale , to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”) for additional information. On May 6, 2026, the U.S. International Trade Commission (the “Commission”) issued a Limited Exclusion Order (“LEO”) and cease and desist order (“CDO”) prohibiting the Company from importing and/or selling the RhodoLED ® XL in the United States and restricting the Company from selling Ameluz ® for use with the RhodoLED ® XL (the “ITC Matter”). See Note 17. Commitments and Contingencies for additional information. Liquidity and Going Concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. Since we commenced operations in 2015, we have generated significant losses. The Company incurred net cash outflows from operations of $ 1.7 million and $ 7.2 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, the Company’s accumulated deficit was $ 133.3 million. The Company’s primary sources of liquidity are its cash collected from the sales of its products and cash flows from financing transactions. As of June 30, 2026, we had cash and cash equivalents of $ 4.7 million, compared to $ 6.4 million as of December 31, 2025. As discussed above and in Note 17. Commitments and Contingencies, in connection with the ITC Matter, the Company has recorded an estimated remediation cost of $0.5 million and expects related cash disbursements to occur over the twelve months following July 6, 2026; these disbursements are reflected in the Company's cash flow forecasts used in this assessment. Based on currently available information, management does not expect this matter to materially impair the Company's core Ameluz ® revenue base. The Company cannot provide assurance that it will ultimately achieve profitable operations and become operating cash flow positive or raise additional debt or equity capital. Additionally, the current capital resources are not adequate to continue operating and maintaining the business strategy for a period of twelve months from the issuance date of this report. Management believes that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from the issuance date of this Quarterly Report on Form 10-Q. The Company plans to address the conditions that raise substantial doubt regarding its ability to continue as a going concern by, among other things, continuing to expand the commercialization of Ameluz ® in the United States while controlling expenses; drawing on a working capital line of credit; pursuing the realization of an additional $ 1.0 million in milestone payments from the sale of the Xepi intangible asset expected in December 2026; and, if necessary, securing additional capital through equity or debt financings to support commercial expansion and R&D programs. 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. The condensed 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. 7 2. Summary of Significant Accounting Policies Basis for Preparation of the Financial Statements The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the Company’s opinion, the unaudited condensed consolidated financial statements include all material adjustments, all of which are of a normal and recurring nature, necessary to present fairly the Company’s financial position as of June 30, 2026, the Company’s operating results for the three and six months ended June 30, 2026 and 2025, and the Company’s cash flows for the six months ended June 30, 2026 and 2025. The accompanying financial information as of December 31, 2025 is derived from audited financial statements. Interim results are not necessarily indicative of results for a full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the 2025 Form 10-K. All amounts shown in these financial statements and tables are in thousands and amounts in the notes are in millions, except percentages and per share and share amounts. With the exception of the accounting policies below, there have been no new or material changes to the significant accounting policies discussed in the 2025 Form 10-K. Reclassification of Prior Year Presentation Certain prior period amounts have been reclassified for consistency with the current period presentation. Depreciation expense and amortization expense previously presented separately in the condensed consolidated statements of cash flows have been combined into a single line item. The reclassification was limited to the condensed consolidated statements of cash flows and had no impact on the reported results of operations. The Nasdaq Stock Market, LLC (“Nasdaq”) Compliance On 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) (the “Minimum Bid Price Requirement”) 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 had no impact on the listing or trading of the Company’s securities on Nasdaq. Under Nasdaq Listing Rule 5810(c)(3)(A), the Company had a period of 180 calendar days, or until June 30, 2026, to regain compliance with the rule referred to in this paragraph. On May 6, 2026, we received written notification from Nasdaq, with confirmation that for the last 10 consecutive business days, from April 22, 2026 to May 6, 2026, the closing bid price of the Company’s Common Stock had been at $ 1.00 per share or greater. Accordingly, the Company had regained compliance with the Minimum Bid Price Requirement and that the matter was closed. There can be no assurance that we will maintain compliance with the Minimum Bid Price Requirement or other continued listing standards in the future. Use of Estimates The preparation of the condensed consolidated financial statements in accordance with GAAP requires the use of estimates and assumptions by management that affect the reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities, as reported on the balance sheet date, and the reported amounts of revenues and expenses arising during the reporting period. The main areas in which assumptions, estimates and the exercising of judgment are appropriate relate to realization and valuation of receivables and inventory, valuation of warrant liabilities, impairment assessment of intangibles and other long-lived assets, share-based payments, deferred tax asset valuations, and contingent liability recognition. Estimates are based on historical experience and other assumptions that are considered appropriate in the circumstances. They are continuously reviewed but may vary from the actual values. Recently Adopted or Issued Accounting Pronouncements We evaluate Accounting Standard Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not included in our disclosures were assessed and determined to either be not applicable or are not expected to have a significant impact on our financial statements. In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20); Induced Conversions of Convertible Debt. This ASU clarifies requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. It is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company adopted this ASU on January 1, 2026, and the adoption did not have a material impact on its condensed consolidated financial statements and related disclosures. 8 In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides a practical expedient for estimating expected credit losses on current trade receivables and contract assets arising from revenue transactions. This ASU is effective for public business entities for annual reporting periods beginning after December 15, 2025, with early adoption permitted, and must be applied prospectively. The Company adopted this ASU on January 1, 2026, and the adoption did not have a material impact on its condensed consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, I ncome Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expense . The new guidance requires disaggregated information about certain income statement expense line items on an annual and interim basis. This ASU is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The new standard permits early adoption and can be applied prospectively or retrospectively. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures. In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) , which provides updates to refine the scope of the guidance on derivatives in Accounting Standards Codification (“ASC”) 815 and clarify the guidance on share-based noncash payments from customers in ASC 606. The derivative scope refinement excludes non-exchange-traded contracts with derivative accounting apart from variables based on market rates, prices and indices, variables based on the price or performance of a financial asset or liability of one of the parties to a contract, contracts involving the issuer’s own equity evaluated under ASC 815-40 and call or put options on debt instruments. The amendments in ASU 2025-07 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods and should be applied either prospectively or on a modified retrospective basis. We are currently evaluating the effect of adopting ASU 2025-07 on our consolidated financial statements and related disclosures. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements , which clarifies interim disclosure requirements. The guidance is effective for the Company’s interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures. In December 2025, the FASB issued ASU 2025-12, Codification Improvements , which addresses 33 issues, representing amendments to ASC topics that clarify, correct errors or make minor improvements. The amendments in ASU 2025-12 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual periods in which financial statements have not yet been issued or made available for issuance. If an entity adopts the amendments in this ASU in an interim period, it must adopt them as of the beginning of the annual period that includes that interim period. An entity may elect to early adopt the amendments on an issue-by-issue basis. We are currently evaluating the effect of adopting ASU 2025-12 on our consolidated financial statements and related disclosures. 3. Fair Value Measurements The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2026 and December 31, 2025 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: Schedule of Assets Measured at Fair Value On Recurring Basis (in thousands) Level June 30, 2026 December 31, 2025 Assets: Investment, related party 1 $ 8 $ 9 Liabilities: Warrant liability – 2023 Purchase Warrants 3 $ 434 $ 289 Warrant liability - 2022 Purchase Warrants 3 $ 41 $ 28 Warrant liability – 2022 Inducement Warrants 3 $ 51 $ 34 Total Liabilities $ 526 $ 351 Investment, related party As of June 30, 2026 and December 31, 2025, the Company owned 3,019 common shares of Biofrontera AG. The fair value of this investment was determined with Level 1 inputs through references to quoted market prices. 9 Warrant Liabilities The warrant liabilities are comprised of (i) outstanding warrants to purchase 170,950 shares of the common stock, originally issued in a private placement on May 16, 2022, as amended on November 2, 2023 to extend the expiration date until November 2, 2028 and revise the exercise price to $ 3.55 per share (the “2022 Purchase Warrants”); (ii) warrants to purchase 214,286 shares of common stock issued on July 26, 2022, as amended on November 2, 2023 to extend the expiration date until November 2, 2028 and revise the exercise price to $ 3.55 per share (the “2022 Inducement Warrants”); and (iii) warrants to purchase 1,807,500 shares of common stock issued on November 2, 2023 expiring five years following the date of issuance and with an exercise price of $ 3.55 per share (the “2023 Purchase Warrants”). See Note 14. Stockholders’ Equity for additional details. The 2023 Purchase Warrants, the 2022 Inducement Warrants and the 2022 Purchase Warrants were accounted for as liabilities as these warrants provide for a redemption right in the case of a fundamental transaction which fails the requirement of the indexation guidance under ASC 815-40. The resulting warrant liabilities are re-measured at each balance sheet date until their exercise or expiration, and any change in fair value is recognized in the Company’s condensed consolidated statements of operations. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the condensed consolidated statements of operations. The Company utilizes a Black-Scholes-Merton (“BSM”) model to estimate the fair value of the warrant liabilities which is considered a Level 3 fair value measurement. Certain inputs utilized in our BSM model may fluctuate in future periods based upon factors which are outside of the Company’s control. A significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair value of our warrant liabilities which could also result in material non-cash gain or loss being reported in our condensed consolidated statements of operations. The fair value for the Level 3 warrants at June 30, 2026 and December 31, 2025 was estimated using a BSM model based on the following assumptions at each measurement date: Schedule of Fair Value of Warrant Estimated by Using Black-Scholes Pricing Model Assumptions June 30, 2026 December 31, 2025 Stock price $ 0.95 $ 0.57 Expiration term (in years) 2.34 2.84 Volatility 95 % 105 % Risk-free Rate 4.1 % 3.51 % Dividend yield 0.0 % 0.0 % The following table presents the changes in the Level 3 warrant liabilities measured at fair value (in thousands): Schedule of Changes in Fair Value of Warrant Liabilities 2026 2025 Six Months Ended June 30, 2026 2025 Fair value at beginning of period $ 351 $ 1,250 Change in fair value of warrant liabilities 175 ( 702 ) Fair value at end of period $ 526 $ 548 10 4. Revenue We generate revenue primarily through the sales of our products, Ameluz ® and the RhodoLED ® Lamps. Traditional PDT treatments using a lamp are performed more frequently during the winter. As such, our revenue is subject to some seasonality and has historically been higher during the first and fourth quarters than during the second and third quarters. 5. Cash Balances and Statements of Cash Flows Reconciliation The Company maintains its cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation, which at times may exceed federally insured limits. The Company has not experienced any losses on these accounts and management does not believe that the Company is exposed to any significant risks with respect to these accounts. Restricted cash consists primarily of deposits of cash collateral held in accordance with the terms of our corporate credit cards. Long-term restricted cash was recorded in other assets in the condensed consolidated balance sheet. The following table provides a reconciliation of cash, cash equivalents, and restricted cash that sum to the total shown in the statements of cash flows: Schedule of Reconciliation of Cash, Cash Equivalents, and Restricted Cash (in thousands) June 30, 2026 December 31, 2025 Cash and cash equivalents $ 4,659 $ 6,392 Long-term restricted cash 200 200 Total cash, cash equivalents, and restricted cash shown on the consolidated statements of cash flows $ 4,859 $ 6,592 Long-term restricted cash was recorded in other assets in the condensed consolidated balance sheet. 6. Accounts Receivable, net Accounts receivable are mainly attributable to the sale of Ameluz ® in the United States and are expected to be collected within twelve months of the balance sheet date. Trade accounts receivable are stated at their net realizable value. The allowance for credit losses reflects our best estimate of expected credit losses of the receivables determined on the basis of historical experience and current information. In developing the estimate for expected credit losses, trade accounts receivable are segmented into pools of assets depending primarily on delinquency status, and reserve percentages are established for each pool of trade accounts receivable. In determining the reserve percentages for each pool of trade accounts receivable, we considered our historical experience with certain customers, regulatory and legal environments and other relevant current and future forecasted macroeconomic factors. If we become aware of any customer-specific factors that impact credit risk, specific allowances for these known troubled accounts are recorded. The allowance for credit losses was $ 0.2 million and $ 0.1 million as of June 30, 2026 and December 31, 2025, respectively. 11 7. Inventories Inventories are comprised of the following: Schedule of Inventories (in thousands) June 30, 2026 December 31, 2025 Inventory, short-term: Finished product $ 862 $ 1,426 Work in process 67 - Raw materials 168 - Total inventory, short-term $ 1,097 $ 1,426 Inventory, long term Finished product $ 741 $ 1,102 Work in process 1,017 649 Raw materials 1,900 1,978 Total inventory, long-term $ 3,658 $ 3,729 Total inventories $ 4,755 $ 5,155 Our long-term inventory balance relates to the RhodoLED ® Lamps. During the six months ended June 30, 2026, the Company recognized an inventory write-down of $ 0.1 million in connection with the U.S. International Trade Commission’s May 6, 2026 Notice of Final Determination (See Note 17. Commitments and Contingencies ). The write-down was recognized to reduce the carrying value of the affected inventory to its net realizable value in accordance with ASC 330-10-35 and is presented within cost of revenues, other in the condensed consolidated statements of operations. Other than the write-down noted above, no inventory write-downs or obsolescence reserves were recognized during the three and six months ended June 30, 2026 and 2025 that were material to the condensed consolidated financial statements. 8. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following: Schedule of Prepaid Expenses and Other Current Assets (in thousands) June 30, 2026 December 31, 2025 Value-added tax receivable $ 80 $ 1,218 Licenses 267 403 Clinical trials 50 171 Insurance 105 151 Inventory 233 - Other 157 336 Total $ 892 $ 2,279 9. Property and Equipment, Net Property and equipment, net consists of the following: Schedule of Property and Equipment, Net (in thousands) June 30, 2026 December 31, 2025 Manufacturing equipment $ 2,166 $ 2,126 Machinery & equipment 126 116 Computer equipment 54 102 Furniture & fixtures 58 81 Leasehold Improvements 7 - Property and equipment, gross 2,411 2,425 Less: Accumulated depreciation ( 272 ) ( 267 ) Property and equipment, net $ 2,139 $ 2,158 Depreciation expense was no t material to the condensed consolidated statements of operations for the three and six months ended June 30, 2026 and 2025 and was recorded in the condensed consolidated statements of operations within cost of revenues or selling, general and administrative expense, depending on the nature and use of the underlying asset. As of June 30, 2026 and December 31, 2025, $ 1.8 million of manufacturing equipment acquired in connection with the Strategic Transaction had not yet been placed in service and is therefore not being depreciated. The Company will commence depreciation of these assets over their estimated useful lives upon being placed in service. 12 10. Intangible Assets, Net Intangible assets, net are comprised of the following: Schedule of Intangible Assets, Net (in thousands) June 30, 2026 December 31, 2025 Intellectual property $ 2,656 $ 2,656 Accumulated amortization ( 98 ) ( 24 ) Intellectual property, net 2,558 2,632 Software 50 50 Intangible assets 50 50 Accumulated amortization ( 40 ) ( 32 ) Software, net 10 18 Intangible assets, net $ 2,568 $ 2,650 Intangible assets consist primarily of intellectual property acquired in the Strategic Transaction, which was recorded at an acquisition-date fair value of $ 2.7 million and is being amortized on a straight-line basis over an estimated useful life of 18 years. Internal use software is amortized over three years . Amortization expense was negligible and $ 0.1 million for the three and six months ended June 30, 2026, respectively, and negligible for the three and six months ended June 30, 2025. Amortization expense is recorded in the condensed consolidated statements of operations within cost of revenues or selling, general and administrative expense depending on the nature and use of the underlying intangible asset. No impairment losses were recognized for intangible assets during the three and six months ended June 30, 2026 and 2025. Estimated future amortization expense as of June 30, 2026 is as follows: Schedule of Estimated Future Amortization Expense Year (in thousands) Amount July – December 2026 $ 81 2027 148 2028 146 2029 146 2030 146 Thereafter 1,901 Total $ 2,568 13 11. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: Schedule of Accrued Expenses and Other Current Liabilities (in thousands) June 30, 2026 December 31, 2025 Employee compensation and benefits $ 2,225 $ 2,805 Professional fees 1,517 1,305 Patent remediation expense (See Note 17. Commitments and Contingencies – Legal Proceedings) 365 - Research and development 332 410 Product revenue allowances and reserves 54 57 Other 217 320 Total $ 4,710 $ 4,897 12. Debt Convertible Notes Payable On November 22, 2024, the Company issued $ 4.2 million in an aggregate principal amount of the Company’s Senior Secured Convertible Notes (the “Notes”) pursuant to a Securities Purchase Agreement entered into on November 21, 2024 with its principal stockholders. The Notes bear interest at 10.0 % per annum, payable in-kind (“PIK”) through the issuance of additional principal on a quarterly basis. In the Event of Default (as defined in the Notes), the interest will increase to 15 % per annum from the date of written notice from the holder. The Notes may be converted at any time into shares of the Company’s common stock at a conversion price of $ 0.78 per share subject to customary adjustments for stock splits, stock dividends and recapitalizations, as described in the Notes. The Notes mature on November 22, 2027, unless earlier converted or repurchased. The Company may not redeem the Notes at its option prior to maturity. Upon maturity, the Company will pay to the holders of the Notes an amount in cash representing all of the outstanding aggregate principal amount of the Notes, together with any accrued and unpaid interest. Alternatively, the entire amount of the Notes will be automatically converted to shares of common stock if the 10-day volume weighted average price of a share of the Company’s common stock on Nasdaq is greater than 250 % of the conversion price, and certain other conditions are met. The Notes provide for customary events of default and contain conversion limitations, providing that no conversion may be made if the aggregate number of shares of common stock beneficially owned by the holder would exceed 9.99 % immediately after conversion. There were no events of default at June 30, 2026. The Notes are secured by substantially all property of the Company, including but not limited to the Company’s assets, inventory, intellectual property and accounts. The Notes were accounted for as a liability under ASC 470 and the embedded conversion option has been assessed under ASC 815. Based on the Company’s evaluation, there were no embedded features that required bifurcation as a derivative liability. In connection with the issuance of the Notes, the Company incurred $ 0.2 million of debt issuance costs, consisting of legal fees. On May 11, 2026, one of the Note holders exercised its right to convert its $ 0.2 million aggregate principal amount of Notes, together with a negligible amount of accrued PIK interest, into 296,505 shares of the Company’s common stock at the conversion price of $ 0.78 per share. The carrying value of the converted Notes, net of allocable unamortized debt issuance costs, was reclassified to stockholders’ equity, and no gain or loss was recognized on the conversion in accordance with ASC 470. No other conversions have occurred since issuance. During the three and six months ended June 30, 2026, the Company recognized interest expense of $ 0.1 million and $ 0.2 million, respectively, and minimal discount amortization. During the three and six months ended June 30, 2025 the Company recognized interest expense of $ 0.1 million and $ 0.2 million, respectively, and minimal discount amortization. As of June 30, 2026 and December 31, 2025, the outstanding balance of the Notes was $ 4.6 million, which is shown net of the remaining unamortized issuance cost of $ 0.1 million. 13. Related Party Transactions We consider Biofrontera Group to be a related party, as prior to the Strategic Transaction, we relied on the Biofrontera Group as the sole supplier of Ameluz ® and the RhodoLED ® Lamps, and following the Strategic Transaction, it holds all 3,019 shares of our Series D Preferred Stock. License and Supply Agreement Under the Second Amended and Restated License and Supply Agreement (“Second A&R Ameluz LSA”), which was applicable for any tubes purchased through May 31, 2025, the Company had an exclusive, non-transferable license to market and sell its previously licensed products, Ameluz ® and RhodoLED ® Lamps, in the United States and was required to purchase the previously licensed products exclusively from Biofrontera Pharma GmbH (the “Former Ameluz Licensor”). Pursuant to the Second A&R Ameluz LSA, the price paid was set at twenty-five percent of the anticipated net selling price per unit through 2025 (the “Transfer Price”), which covered the cost of goods, royalties on sales, and services, including all regulatory efforts, agency fees, pharmacovigilance, and patent administration. 14 The Second A&R Ameluz LSA provided for the transfer of responsibilities for clinical trials relating to Ameluz ® in the US on June 1, 2024, including the Company assuming related contracts and transferring key personnel from the Former Ameluz Licensor to the Company. The Company entered into a Release of Claims with the Former Ameluz Licensor, dated February 13, 2024, pursuant to which the Company agreed to release the Former Ameluz Licensor from all claims and liabilities arising out of or relating to any failure by the Former Ameluz Licensor to perform certain obligations under the Second A&R Ameluz LSA with respect to clinical trials for which the Company assumed responsibility. Strategic Transaction with Biofrontera Group The Company entered into the Strategic Transaction on October 20, 2025. See Note 1. Organization and Business Overview for more information. Pursuant to the terms of the Agreements, retroactive to June 1, 2025, 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 earnout replaces a transfer pricing model under the now terminated Second A&R Ameluz LSA. At the acquisition date, the Company evaluated the terms of the earnout arrangement and concluded that the amount of contingent consideration was not reasonably estimable due to the significant uncertainty associated with the timing and magnitude of future net sales. Accordingly, no amount related to the earnout was included in the initial measurement of the cost of the acquired assets. The Company has elected to account for contingent consideration in an asset acquisition as the contingency is resolved (earned and payable). No contingent consideration liability is recognized for amounts not yet earned. The Company also agreed to assume the defense of co-defendant Biofrontera Group and all costs associated therewith in connection with certain legal actions pending in the United States which will be paid directly to the legal advisors by the Company. Details of the legal claims are disclosed in Note 17. Commitments and Contingencies – Legal Proceedings. Effective as of the date of the Strategic Transaction and for the following three years, as long as Biofrontera AG holds any shares of Series D Preferred Stock (or shares of common stock that were converted from Series D Preferred Stock), Biofrontera AG shall have the right to appoint (i) one individual to the Company’s board of directors if the board consists of seven or fewer members; or (ii) two individuals to the Company’s board of directors if the board consists of eight or more directors. If the Company does not achieve the Minimum Order Amount as defined in Note 17. Commitments and Contingencies for two consecutive calendar years starting on January 1, 2026, then the Biofrontera Group will have the right to terminate the Agreements and recover all assets transferred to the Company. Amounts Due and Payable Amounts due and payable to the Biofrontera Group as of June 30, 2026 and December 31, 2025 were $ 1.0 million and $ 4.8 million, respectively, and were recorded in accounts payable, related parties and when applicable, net of accounts receivable, in the condensed consolidated balance sheets. Amounts due from the Biofrontera Group as of June 30, 2026 and December 31, 2025 were $ 0.2 million and $ 0.7 million, respectively, and recorded as other assets, related party. Inventory Purchases Purchases from the Biofrontera Group of the previously licensed products (inclusive of estimated and actual purchase price adjustments) were $ 0.4 million and $ 0.8 million during the three and six months ended June 30, 2026, respectively. There were no inventory purchases from the Biofrontera Group for the three months ended June 30, 2025 and purchases of $ 3.0 million were made during the six months ended June 30, 2025. These purchases were recorded in inventories in the condensed consolidated balance sheets, and, when sold, in cost of revenues, related party in the condensed consolidated statements of operations. Earnout For the three and six months ended June 30, 2026, the Company expensed $ 1.4 million and $ 2.6 million, respectively, in earnouts in connection with the Strategic Transaction. The earnout was recorded in cost of revenues, related party in the condensed consolidated statements of operations. There were no earnout payments for the three and six months ended June 30, 2025. Other In November 2024, the Company issued $ 4.2 million in aggregate principal amount of Notes to certain stockholders. For each of the periods ended June 30, 2026 and December 31, 2025, the outstanding balance of the Notes was $ 4.6 million, including PIK interest. See Note 12. Debt-Convertible Notes Payable . 15 14. Stockholders’ Equity Under the Company’s Certificate of Third Amendment to the Amended and Restated Certificate of Incorporation, filed June 16, 2025, the Company is authorized to issue 70,000,000 shares of common stock, and 20,000,000 shares of preferred stock, par value $ 0.001 per share. The rights and preferences of the Company’s common stock and preferred stock are described in Note 17. Stockholders’ Equity , to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of the Company’s 2025 Form 10-K and are unchanged as of June 30, 2026. Common Stock: The holders of common stock are entitled to one vote for each share held. The Company has not declared any dividends since inception. During the six months ended June 30, 2026, the Company issued 225,000 shares of common stock upon the vesting of restricted stock units (“RSUs”) under the 2021 Omnibus Incentive Plan (“2021 Plan”) (see Note 15. Equity Incentive Plans and Share-Based Payments ). No shares of common stock were issued for RSUs during the three months ended June 30, 2026. During the three months ended June 30, 2026, the Company issued an aggregate of 2,332,803 shares of common stock in connection with conversions of outstanding securities, consisting of (i) 282,600 shares issued upon the conversion of 200 shares of Series B-2 Convertible Preferred Stock, par value $0.001 per share (the “Series B-2 Preferred Stock”) at a conversion ratio of 1,413-to-one, (ii) 134,235 shares issued upon the conversion of 95 shares of Series B-3 Convertible Preferred Stock, par value $0.001 per share (the “Series B-3 Preferred Stock”) at a conversion ratio of 1,413-to-one, (iii) 1,619,463 shares issued upon the conversion of 1,012 shares of Series C Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”) at a conversion ratio of 1,600.26-to-one, and (iv) 296,505 shares issued upon the conversion of $231,274 aggregate principal amount and accrued PIK interest of the Company’s Notes (consisting of $200,000 of principal and $31,274 of accrued PIK interest) at a conversion price of $ 0.78 per share. No shares of common stock were issued upon the exercise of warrants during the three or six months ended June 30, 2026. Warrants As of June 30, 2026, the Company had outstanding warrants to purchase an aggregate of 2,269,356 shares of common stock with an exercise price range of $ 3.55 to $ 100.00 per share and expiration dates ranging from November 2026 to November 2028. No warrants were issued, exercised, expired, forfeited or otherwise modified during the three or six months ended June 30, 2026. The Company’s outstanding warrants as of June 30, 2026 were as follows: Schedule of Warrants Outstanding Warrants Number of Shares Exercise Price Expiration Date Liability classified (See Note 3. Fair Value Measurements ) 2,192,736 $ 3.55 11/02/2028 Equity classified 76,620 100.00 11/02/2026 The liability-classified warrants are remeasured to fair value at each reporting date, with changes in fair value recognized in the condensed consolidated statements of operations. See Note 3. Fair Value Measurements for the change in fair value recognized during the six months ended June 30, 2026. Preferred Stock: During the three months ended June 30, 2026, 200 shares of Series B-2 Preferred Stock, 95 shares of Series B-3 Preferred Stock and 1,012 shares of Series C Preferred Stock were converted into shares of common stock as described above under Common Stock. There were no other changes in any series of preferred stock during the three and six months ended June 30, 2026. Shares of preferred stock issued and outstanding at June 30, 2026 and December 31, 2025 were as follows: Schedule of Preferred Stock Issued and Outstanding June 30, 2026 December 31, 2025 Conversion Price Series B-2 Convertible Preferred Stock 1,850 2,050 $ 0.7074 Series B-3 Convertible Preferred Stock 6,498 6,593 $ 0.7074 Series C Convertible Preferred Stock 9,707 10,719 $ 0.6249 Series D Convertible Preferred Stock 3,019 3,019 $ 0.6249 All series of preferred stock outstanding as of June 30, 2026 are classified as permanent equity on the Company’s condensed consolidated balance sheets. The Series C Preferred Stock and Series D Preferred Stock were reclassified from mezzanine equity to permanent equity following the Company’s September 16, 2025 special meeting of stockholders, in accordance with the limited exception under ASC 480-10-S99-3A(3)(f). 16 Convertible Debt The Notes issued in November 2024 originally allowed for up to 5,384,615 shares of common stock to be issued upon conversion of principal, plus additional shares issuable upon conversion of accrued PIK interest. During the three and six months ended June 30, 2026, a portion of the Notes representing $ 0.2 million of aggregate principal amount and accrued PIK interest was converted into 296,505 shares of common stock at a conversion price of $ 0.78 per share. No other conversions have occurred since issuance. As of June 30, 2026, the remaining $ 4.0 million of principal was convertible into 5,128,205 shares of common stock, exclusive of additional shares issuable upon conversion of accrued and unpaid PIK interest. The remaining unconverted portion of the Notes outstanding as of June 30, 2026, is detailed in Note 12. Debt – Convertible Notes Payable . 15. Equity Incentive Plans and Share-Based Payments 2021 Omnibus Incentive Plan In July 2021, the Board adopted, and our stockholders approved, the 2021 Plan, under which the maximum contractual term for stock options is 10 years. In June 2026, our stockholders approved the amendment and restatement of the 2021 Plan, including to increase the total number of shares of common stock authorized from 3,750,000 to 8,750,000 . As of June 30, 2026, there were 5,178,852 shares available for future awards under the amended 2021 Plan. Non-qualified stock options The Company recognizes the grant-date fair value of share-based awards granted as compensation expense on a straight-line basis over the requisite service period. The fair value of stock options is estimated at the time of grant using either a binomial lattice pricing model, or the BSM model for ‘plain vanilla’ options, each of which requires the use of inputs and assumptions such as the fair value of the underlying stock, exercise price of the option, expected term, risk-free interest rate, expected volatility and dividend yield. The Company elects to account for forfeitures as they occur. The assumptions and key inputs used in the BSM model for the stock options granted during the six months ended June 30, 2026 were as follows: exercise price of $ 0.78 to $ 0.90 , risk-free rate of 3.7 % to 3.8 %, volatility of 100 %, a dividend yield of 0.0 % and expected term of 5.27 years to 6 years. There were no equity grants awarded during the six months ended June 30, 2025. Share-based compensation expense of $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2026, respectively, and $ 0.1 million and $ 0.3 million for the three and six months ended June 30, 2025, respectively, was recorded in selling, general and administrative expenses, with a negligible amount recorded in research and development in the accompanying condensed consolidated statements of operations. 17 Options outstanding and exercisable under the employee share option plan as of June 30, 2026 and a summary of option activity during the six months then ended is presented below. Schedule of Stock Option Activity Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (1) Outstanding at December 31, 2025 1,886,718 $ 2.70 7.46 - Granted 815,088 $ 0.89 - - Exercised - $ - - - Canceled or forfeited ( 31,338 ) $ 2.49 - - Outstanding at June 30, 2026 2,670,468 $ 2.15 7.75 $ 46 Exercisable at June 30, 2026 712,097 $ 5.06 6.41 $ 1 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that were in the money at June 30, 2026. As of June 30, 2026, there was $ 0.8 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.30 years. Share-Based Compensation (RSUs) RSU-related share-based compensation expense of $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2026, respectively, and $ 0.1 million for both the three and six months ended June 30, 2025 was recorded in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. Schedule of Restricted Stock Units Shares Weighted Average Remaining Contractual Term Weighted Average Grant Date Fair Value Unvested balance at December 31, 2025 412,500 - $ 0.99 Awarded 237,500 - $ 0.90 Issued ( 225,000 ) - $ 1.06 Forfeited - - $ - Unvested balance at June 30, 2026 425,000 0.91 $ 0.90 As of June 30, 2026, there was $ 0.3 million of unrecognized compensation related to unvested RSUs, which is expected to be recognized over a period of 1.41 years. 16. Net Loss per Share Basic net loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is calculated by dividing net loss by the diluted weighted average number of common shares outstanding during the period. The diluted shares include the dilutive effect of stock-based awards based on the treasury stock method. In periods where a net loss is recorded, no effect is given to potentially dilutive securities, since the effect would be anti-dilutive. The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data): Schedule of Basic and Diluted Net Loss per Share Attributable to Common Stockholders 2026 2025 2026 2025 Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Net loss $ ( 604 ) $ ( 5,324 ) $ ( 5,356 ) $ ( 9,527 ) Weighted average common shares outstanding, basic and diluted 12,923,710 9,351,557 12,306,944 9,108,091 Net loss per share, basic and diluted $ ( 0.05 ) $ ( 0.57 ) $ ( 0.44 ) $ ( 1.05 ) 18 The following table sets forth the securities that were anti-dilutive for diluted EPS for the periods presented but which could potentially dilute EPS in the future: Schedule of Anti-dilutive Securities Excluded from Computation of Earnings per Share 2026 2025 June 30, 2026 2025 Common stock warrants 2,269,356 2,269,356 Common stock options and RSUs 3,095,468 1,740,679 Unit Purchase Options 20,182 20,182 Series B convertible preferred stock 11,795,724 13,047,642 Series C convertible preferred stock 15,533,724 - Series D convertible preferred stock 4,831,185 - Convertible notes 6,009,921 5,716,926 Total 43,555,560 22,794,785 Anti-dilutive securities 43,555,560 22,794,785 17. Commitments and Contingencies Leases The Company leases office space, warehouse space and vehicles. The Company has elected the short-term lease exemption under ASC 842-20-25-2 for leases with an initial term of twelve months or less. For its office, warehouse and vehicle leases, the Company has not elected the practical expedient in ASC 842-10-15-37 and therefore does not combine lease components with associated non-lease components. The lease for our office space at 120 Presidential Way, Woburn, MA expired in November 2025. The Company elected to not renew the lease and has no remaining commitments under this agreement. Lease expense was recognized through the expiration date, and the ROU asset and related lease liability were derecognized. The Company’s corporate headquarters is located at 660 Main Street, Woburn, MA, under a 63-month operating lease that commenced on December 1, 2025 and expires on February 28, 2031. Under the terms of the agreement, the Company was entitled to a rent-free period for the first three months of the lease and reduced rent payments for months four through nine, followed by periodic escalated payments thereafter. The Company provided the landlord with a security deposit in the amount of $ 0.2 million, which was recorded as other assets in the condensed consolidated balance sheets. The Company also leases office and warehouse space at Hemmelrather Weg 201, 51377 Leverkusen, Germany under an operating lease agreement commencing on January 1, 2026, with a lease term of 10 years with automatic twelve-month renewal periods thereafter unless terminated by either party upon twelve months’ prior written notice. The Company has not included any of the automatic twelve-month renewal periods in the lease term used to measure the operating lease liability, as the Company is not reasonably certain to exercise these renewal options at lease commencement. The new lease arrangement resulted in $ 1.3 million of right-of-use-assets obtained in exchange for new operating lease liabilities. The lease includes an initial rent-free period of three months, with the base rent subject to adjustment if the German consumer price index moves by ten percent or more from the lease commencement date or most recent adjustment. In connection with the lease, the Company provided a security deposit in the amount of $ 0.1 million. The Company leases vehicles under a master agreement, pursuant to which each vehicle is leased for an initial non-cancelable term of twelve months, and thereafter on a month-to-month basis. Based on historical retention experience of approximately three years, the vehicles have varying expiration dates through August 2029. 19 Operating lease cost was $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2026, respectively, and $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2025, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $ 0.3 million and $ 0.4 million for the six months ended June 30, 2026 and 2025, respectively. At June 30, 2026, the weighted-average remaining lease term for the Company’s operating leases was 6.5 years and the weighted-average discount rate was 9.9 %. Future lease payments under non-cancelable leases as of June 30, 2026 were as follows (in thousands): Schedule of Future Commitments and Sublease Income Years ending December 31, Future lease commitments July – December 2026 389 2027 663 2028 630 2029 591 2030 558 Thereafter 1,095 Total future minimum lease payments $ 3,926 Less imputed interest $ ( 1,042 ) Total lease liability $ 2,884 Minimum Sales or Minimum Order Until the earlier to occur of (i) the Company manufactures orders meeting one million tubes of Ameluz ® during the period from June 1, 2025 through May 31, 2031, or (ii) the expiration of patent protection, which is expected to occur in December 2043 (the “Asset Reversion Term”), starting January 1, 2026 and continuing until the end of the Asset Reversion Term, the Company shall be required to manufacture or order from suppliers at least 80,000 tubes of Ameluz ® per year (the “Minimum Order Amount”). The Company is on track to meet the annual Minimum Order Amount by the end of the year. Supply Agreement On December 12, 2025, Discovery entered into a Supply Agreement (“Supply Agreement”) with Midas Pharma GmbH (“Midas”). Among other things, the Supply Agreement provides that Midas will supply Discovery or its contract manufacturers, in the aggregate, 100 kg of the active pharmaceutical ingredient (“API”) 5-Aminolevulinic acid Hydrochloride through the second quarter of 2028. Under the terms of the Supply Agreement, Discovery will provide Midas with a twenty-four (24) month non-binding rolling forecast, which shall 1) indicate the anticipated quantity of API required by the company and 2) be updated every twelve (12) months during the term of the agreement. Licensing Agreement with Optical Tools On December 2, 2022, the Company entered into the technology transfer agreement with Optical Tools LLC (“Optical Tools”), Stephen Tobin and Paul Sowyrda (the “OT Agreement”). The OT Agreement allowed for the transfer of the assigned patents and trademarks, and upon notification by the Company to Optical Tools, the research and development of certain prototypes. The Company paid a licensing fee of $ 0.2 million which was expensed during the year ended December 31, 2022. On May 28, 2023, the Company authorized Optical Tools to design, develop, manufacture, and deliver at least two portable photodynamic therapy lamp prototypes (“PDT Device”) using the technology in the assigned patents. The PDT Device provides illumination, based on different light profiles, to the external skin surface of the human body. The Company is to reimburse Optical Tools for all reasonable out-of-pocket, material and labor costs per the OT Agreement. 20 As part of the OT Agreement, Optical Tools will be eligible to receive regulatory and sales milestone payments totaling up to $ 1.0 million, and royalties of up to 3 % of net revenue of certain products developed under the OT Agreement. The Company did not make any milestone or royalty payments or accruals for such payments during the three and six months ended June 30, 2026 or 2025. Legal proceedings At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of ASC 450, Contingencies . The Company expenses as incurred the legal costs related to such legal proceedings. Legal Proceedings On September 13, 2023, Biofrontera was served with a complaint filed by DUSA Pharmaceuticals, Inc., Sun Pharmaceutical Industries, Inc., and Sun Pharmaceutical Industries LTD (collectively, “SUN”) in which SUN alleges (i) breach of contract, (ii) violation of the Lanham Act, and (iii) unfair trade practices under Massachusetts law. All claims stem from allegations that Biofrontera has promoted its Ameluz ® product in a manner that is inconsistent with its approved FDA labeling. Though this complaint was originally filed in the United States District Court for the District of Massachusetts, this matter has been transferred by agreement of the parties to the United States District Court for the District of New Jersey. In March 2024, Biofrontera filed a partial motion to dismiss the Lanham Act and Massachusetts statutory claims, which was denied on October 15, 2024. Biofrontera subsequently answered SUN’s complaint and filed counterclaims on October 30, 2024 alleging (i) violation of the Lanham Act, (ii) deceptive trade practices under Georgia law, and (iii) trade libel/product disparagement, which SUN answered on December 17, 2024. On March 11, 2025, Biofrontera received an additional notice alleging breach of contract through unlawful marketing practices which makes reference to similar previous communications sent by SUN to Biofrontera on February 4, 2022 and September 9, 2022. SUN has since amended its complaint to include the allegations contained therein with its existing claims. Discovery is ongoing in the above-referenced matters. The Company denies the claims brought by SUN and intends to defend them vigorously. Based on the Company’s assessment of the facts underlying the above claims and the uncertainty of litigation, the Company cannot estimate the possibility of a material loss, nor the potential range of loss that may result from this action. If the final resolution of the matter is adverse to the Company, it could have a material impact on the Company’s financial position, results of operations, or cash flows. Separately, on June 26, 2024 and June 27, 2024, SUN filed two complaints against Biofrontera, Biofrontera AG, Biofrontera Pharma, and Biofrontera Bioscience with the United States District Court for the District of Massachusetts (the “Massachusetts District Court”) and the Commission, both alleging that the RhodoLED ® XL infringes either/both of two patents held by SUN (individually, the “‘028 Patent” and the “‘512 Patent,” and collectively the “SUN Patents”). The complaint filed in the Massaschusetts District Court has been held in abeyance pending the completion of the investigation before the Commission and any subsequent appeals. In the Commission proceeding, a hearing was held in front of an administrative law judge (“ALJ”) between June 30, 2025 and July 3, 2025, and on September 30, 2025, the ALJ issued an Initial Determination (“ID”) finding the SUN Patents to be valid and infringed, and that importation of Biofrontera’s RhodoLED ® XL violates Section 337 of the Tariff Act of 1930. Following review by the Commission (during which time the ID had no immediate effect), on May 6, 2026, the Commission adopted the ID in its Final Determination (“FD”) and issued a LEO and corresponding cease and desist order (“CDO”), prohibiting the Company from importing and/or selling the RhodoLED ® XL in the United States and restricting the Company from importing or selling Ameluz ® for use with the RhodoLED ® XL. Importation and sale of Ameluz for use with the BF-RhodoLED is not affected. The LEO and CDO were both subject to a 60-day Presidential Review period that concluded on July 6, 2026, prior to which time the Company was permitted to continue to import and sell the RhodoLED ® XL (and Ameluz ® for use with the RhodoLED ® XL) and after which the Company has implemented measures to comply with the CDO and LEO, including but not limited to ceasing importation and sales of the RhodoLED ® XL (and Ameluz ® for use with the RhodoLED ® XL). Separately, Biofrontera challenged the validity of the SUN Patents by filing separate petitions for inter partes review (“IPR”) at the United States Patent Trial and Appeal Board (“PTAB”) for each of the SUN Patents. The IPR filed in relation to the ‘512 Patent was discretionarily denied by the PTAB on July 2, 2025 for administrative reasons. However, the IPR filed in relation to the ‘028 Patent was instituted in February 2025, and the PTAB issued a final written decision on February 23, 2026 (the “FWD”) finding all challenged claims in the ‘028 Patent to be unpatentable. On March 25, 2026, SUN requested that the Director of the United States Patent and Trademark Office (“USPTO”) review the FWD and either reverse and vacate the PTAB’s FWD, or vacate the PTAB’s FWD and de-institute the IPR, which the Company opposed. On July 29, 2026, the USPTO Director granted SUN’s request, vacating the PTAB’s FWD and dismissing the IPR concerning the ‘028 Patent. The Company may appeal both the Commission’s determination and the USPTO Director’s decision to the U.S. Court of Appeals for the Federal Circuit. In addition, on June 4, 2026, the Company submitted a ruling request to U.S. Customs and Border Protection regarding a redesigned version of the RhodoLED ® XL that the Company contends falls outside the purview of the LEO and CDO. No ruling has been issued and a response is expected in September or October 2026. The Company evaluated this matter and concluded that a loss is probable and reasonably estimable as of the balance sheet date. As such, the total estimated remediation cost of $ 0.5 million, representing management’s best estimate within a range of $ 0.4 million to $ 0.6 million, has been recognized as a $ 0.4 million charge to operating expenses within patent remediation expense and a $ 0.1 million charge to cost of revenues, other on the condensed consolidated statements of operations for the six months ended June 30, 2026, offset with an inventory write-down of $ 0.1 million, presented as a reduction of inventories on the condensed consolidated balance sheets, in accordance with ASC 330-10-35; and an accrued remediation liability of $ 0.4 million, presented within accrued expenses and other current liabilities on the condensed consolidated balance sheets. The Company continues to deny SUN's infringement allegations and disagrees with the Commission's Final Determination. The Company is complying, and intends to continue to comply, with the LEO and CDO for so long as they remain in effect. While there can be no assurance that any appeal will be successful or that the orders will be modified, rescinded, or stayed, the Company intends to continue to defend the remaining above-referenced matters vigorously. 21 Based on the Company’s assessment of the facts underlying the above-referenced patent matters, as well as the uncertainty of litigation, except as stated above, the Company cannot estimate the possibility of a material loss, nor the potential range of loss that may result from either action. Money damages are not available to SUN based on the ruling by the Commission or any related appeals. If the final resolution of the case before the Massachusetts District Court is adverse to the Company, it could have a material impact on the Company’s financial position, results of operations, or cash flows. 18. Segment Reporting The Company operates as one operating segment that derives revenue primarily from our principal product, Ameluz ® , which is a prescription drug approved for use in PDT using our RhodoLED ® Lamps, for the treatment of AKs. We are currently selling Ameluz ® for this indication in the United States. Ameluz ® (including the RhodoLED ® Lamps) accounts for substantially all of our revenue. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated net loss to allocate resources and assesses financial performance by comparing actual results to historical results and previously forecasted financial information. The following table presents selected financial information with respect to the Company’s single operating segment : Schedule of Operating Segment (in thousands) 2026 2025 2026 2025 Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2026 2025 2026 2025 Revenues, net $ 12,003 $ 9,030 $ 22,087 $ 17,617 Operating expenses: Cost of revenues 2,410 2,642 4,526 5,910 Direct sales 2,131 1,774 4,271 3,576 Sales support 2,267 2,100 4,816 4,196 General and administrative 4,397 6,464 9,732 11,011 Manufacturing related 135 - 629 - Regulatory and product affairs 368 - 479 - Patent remediation expense - - 392 - Research and development 448 870 1,348 2,077 Other operating expenses 371 259 738 476 Total operating expenses 12,527 14,109 26,931 27,246 Loss from operations ( 524 ) ( 5,079 ) ( 4,844 ) ( 9,629 ) Other income (expense), net ( 57 ) ( 224 ) ( 489 ) 121 Loss before income taxes ( 581 ) ( 5,303 ) ( 5,333 ) ( 9,508 ) Income tax expense 23 21 23 19 Net loss $ ( 604 ) $ ( 5,324 ) $ ( 5,356 ) $ ( 9,527 ) 19. Subsequent Events We have completed an evaluation of subsequent events after the balance sheet date of June 30, 2026 through the date this Quarterly Report on Form 10-Q was submitted to the Securities and Exchange Commission and identified the following material subsequent event. On July 8, 2026 391 shares of Series B-2 Convertible Preferred Stock were converted into 552,483 shares of the Company's common stock, at the 1,413-to-one conversion ratio described in Note 13. Stockholders' Equity . The conversion did not involve the payment or receipt of cash, and no gain or loss was recognized. 22 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s discussion and analysis (“MD&A”) provides supplemental information, which sets forth the major factors that have affected our financial condition and results of operations and should be read in conjunction with the Condensed Consolidated Financial Statements and related notes. The following information should provide a better understanding of the major factors and trends that affect our earnings performance and financial condition, and how our performance during the second quarter of 2026 compares with prior-year periods. Throughout this section, Biofrontera Inc., including its wholly owned subsidiary, Biofrontera Discovery GmbH (“Discovery” or “subsidiary”), is referred to as “Company,” “we,” “us,” or “our.” References to “Former Ameluz Licensor” refers to Biofrontera Pharma GmbH and references to the “Biofrontera Group” refer to Biofrontera AG and its consolidated subsidiaries. Trademarks, Trade Names, and Service Marks All trademarks, trade names, and service marks appearing in this Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Form 10-Q may be referred to without the symbols ® and ™, but such references should not be construed as any indication that their respective owners will not assert their rights thereto to the fullest extent under applicable law. We do not intend to use or display other companies’ trademarks, trade names, or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain statements in this Form 10-Q constitute “forward-looking statements.” Such statements include estimates of our expenses, future revenue, capital requirements, our need for additional financing, statements regarding the efficacy and intended use of our technologies under development, the timelines and strategy for bringing licensed products to market, the timeline for regulatory review and approval of our licensed products, and other statements that are not historical facts. The words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential,” “target,” “goal,” “assume,” “would,” “could” or similar words are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. You should read this Form 10-Q and the documents that we have filed as exhibits completely and with the understanding that our actual future results may be materially different from what we expect. While we have based these forward-looking statements on our current expectations and projections about future events, we may not actually achieve the plans, intentions or expectations disclosed in or implied by our forward-looking statements, and you should not place undue reliance on our forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions about us and accordingly, actual results or events could differ materially from the plans, intentions and expectations disclosed in or implied by the forward-looking statements we make. Factors that may cause such differences include, but are not limited to: ● our ability to achieve and sustain profitability; ● our ability to compete effectively in selling our products; ● our ability to expand, manage and maintain our direct sales and marketing efforts, including our ability to obtain the financing to develop our marketing strategy, if needed; ● changes in our relationship with our manufacturing partners and the possible impact of tariffs; ● our ability to manufacture our products; ● our ability to adequately protect our intellectual property and operate the business without infringing upon the intellectual property rights of others; ● our actual financial results may vary significantly from forecasts and from period to period; ● our estimates regarding anticipated operating losses, future revenues, capital requirements and our needs for additional financing; ● market risks regarding consolidation and group purchasing organizations (“GPOs”) in the healthcare industry; ● the willingness of healthcare providers to purchase our products if coverage, reimbursement and pricing from third-party payors for our products, or procedures using our products significantly declines; ● our ability to market, commercialize, achieve market acceptance for and sell our products; ● the fact that product quality issues or product defects may harm our business; ● any claims brought against the Company, including but not limited to product liability claims, claims of patent infringement, or claims challenging the validity of our intellectual property; 23 ● our ability to maintain compliance with The Nasdaq Stock Market, LLC (“Nasdaq”) continued listing standards; ● our ability to comply with the requirements of being a public company; ● the progress, timing and completion of research, development and preclinical studies and clinical trials for our products; ● our ability to obtain and maintain the regulatory approvals necessary for the marketing of our products in the United States; and ● those risks listed in the sections of our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”) entitled “Risk Factors.” More detailed information about us and the risk factors that may affect the realization of forward-looking statements, including the forward-looking statements in this Quarterly Report on Form 10-Q, is set forth in our filings with the Securities and Exchange Commission (“SEC”), including the 2025 Form 10-K. We urge investors and security holders to read those documents free of charge at the SEC’s web site at www.sec.gov. 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. Overview Biofrontera Inc. 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”). We generate revenue by selling our products, through our national commercial team, directly to dermatology offices and groups in the United States. We conduct our clinical development activities and hold certain manufacturing-related assets through Discovery, our wholly owned German subsidiary. Our research and development (“R&D”) programs are focused on label expansion for Ameluz ® and on enhancing the RhodoLED ® Lamps to support adoption of PDT in the United States. See Note 1. Organization and Business Overview in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional information about the Company and its subsidiary. Recent Key Developments Strategic Transaction with the Biofrontera Group. On October 20, 2025, we entered into (i) an Asset Purchase Agreement (the “Transfer Agreement”) and (ii) an Earnout Agreement (together with the Transfer Agreement, the “Agreements”), with the Biofrontera Group, pursuant to which the Company finalized the agreements to acquire all rights in the United States (the “U.S. Rights”) to Ameluz ® and the RhodoLED ® Lamps (the “Strategic Transaction”). Pursuant to the terms of the Agreements, retroactive to June 1, 2025, the Company will pay a monthly earnout of 12% of United States revenues of Ameluz ® in years when United States net sales are $65.0 million or less and an earnout of 15% on all revenue in years when United States net sales of Ameluz ® exceed $65.0 million, continuing until the expiration of patent protection on Ameluz ® allows for generic competition in the United States. The earnout replaces a transfer pricing model under the Company’s Second Amended and Restated License and Supply Agreement (“Second A&R Ameluz LSA”) by and among the Company and the Biofrontera Group, which has now been terminated pursuant to the Agreements. The new structure reduces overall cost for the Company and is expected to accelerate the Company’s timeframe to reach break-even. The results of operations for the three and six months ended June 30, 2026 reflect this revised cost structure, while the results of operations for the three and six months ended June 30, 2025 reflect the prior transfer-pricing model. Period-over-period comparisons of cost of revenues and related-party cost of revenues are therefore affected by this change, as discussed further under “Results of Operations” below. See Note 13. Related Party Transactions in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional information. Compliance with Nasdaq Listing Standards. On December 31, 2025, we received a letter from Nasdaq notifying us that the listing of our common stock was not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). On May 6, 2026, we received written notification from Nasdaq that we had regained compliance with the Minimum Bid Price Requirement and that the matter is closed. There can be no assurance that we will maintain compliance with the Minimum Bid Price Requirement or other continued listing standards in the future. See Note 2. Summary of Significant Accounting Policies – The Nasdaq Stock Market, LLC Compliance in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional information. 24 ITC Matter. On May 6, 2026, the International Trade Commission issued a Notice of Final Determination finding a violation of Section 337 of the Tariff Act of 1930 with respect to two asserted patents involving certain components of our RhodoLED ® XL Lamps. The Commission issued a Limited Exclusion Order and Cease and Desist Orders, with the orders relating to the ‘028 patent suspended pending further proceedings before the U.S. Patent Trial and Appeal Board. See Note 17. Commitments and Contingencies for additional information regarding this matter, which is referred to herein as the “ITC Matter.” Geopolitical Uncertainty and Tariffs. Recent actions by the U.S., including the imposition of significant tariffs on imports from certain countries, have heightened uncertainty in the global trade environment. These tariffs, along with potential retaliatory measures by other countries, may increase inflationary pressure and raise the costs of our products, which are exclusively imported from Europe. While several tariff announcements have been followed by announcements of limited exemptions and temporary pauses, these actions have caused substantial uncertainty and volatility in financial markets, and may result in further retaliatory measures. We may be unable to fully offset the impacts of tariffs by adjusting the pricing of our products. We continue to monitor developments and assess the potential impact on our supply chain, product cost, and pricing strategy. Strategy Our 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: ● expanding 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; ● leveraging 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; and ● strategically 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. We devote a substantial portion of our cash resources to the commercialization of Ameluz ® and the 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. We believe that important measures of our results of operations include product revenue, operating income (loss) and adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”; a non-GAAP measure). Our sole source of product revenue is sales of Ameluz ® and the RhodoLED ® Lamps. Our long-term financial objectives include consistent revenue growth and expanding operating margins. Accordingly, we are focused on product sales expansion to drive revenue growth and improve operating efficiencies, including effective resource utilization, information technology leverage, and overhead cost management. 25 Key Factor Affecting Our Performance Because traditional photodynamic therapy treatments using a lamp are performed more frequently during the winter, our revenue is subject to some seasonality and has historically been higher during the first and fourth quarters than during the second and third quarters. As a result, our historical results of operations may not be comparable to our results of operations in future periods, and our results of operations may not be directly comparable from period to period. Components of Our Results of Operations Product Revenues, Net We generate product revenues through the sale of our products Ameluz ® and RhodoLED ® Lamps . Revenues from product sales are recorded net of trade discounts and allowances and government rebates. The primary factors that determine our revenue derived from our products are: ● the level of orders generated by our sales force; ● the level of prescriptions and institutional demand for our products; and ● unit sales and average sales price. Cost of Revenues, Related Party Cost of revenues, related party, relating to inventory purchased from the Biofrontera Group is comprised of purchase costs of our products, Ameluz ® and RhodoLED ® Lamps, from Biofrontera Pharma GmbH and insignificant inventory adjustments due to scrapped, expiring and excess products. Cost of Revenues, Other Cost of revenues, other, is comprised of third-party logistics and distribution costs including packaging, freight, transportation, shipping and handling costs. 26 Selling, General and Administrative Expense Selling, general and administrative expenses consist principally of costs associated with our sales force, commercial support personnel, personnel in executive and other administrative functions, as well as medical affairs professionals. Other selling, general and administrative expenses include marketing, trade, and other commercial costs necessary to support the commercial and manufacturing operation of our products and professional fees for legal, consulting and accounting services, product regulation, quality management, as well as depreciation and amortization. Selling, General and Administrative Expenses, Related Party Selling, general and administrative expenses, related party, relate to the services provided by the Biofrontera Group, primarily for regulatory support and pharmacovigilance. These expenses were charged to us based on costs incurred plus 6% in accordance with the Amended and Restated Master Contract Services Agreement entered into in December 2021. Patent Remediation Expense The estimated remediation cost with respect to the ITC Matter of $0.5 million, representing management’s best estimate within a range of $0.4 million to $0.6 million, has been recognized as a $0.4 million charge to operating expenses within patent remediation expense and a $0.1 million charge to cost of revenues, other on the condensed consolidated statements of operations for the six months ended June 30, 2026. See Note 17. Commitments and Contingencies for additional information regarding the ITC Matter. Research and Development We conduct all clinical trials for Ameluz ® in the United States through Biofrontera Discovery GmbH, allowing for more effective cost management and direct oversight of trial efficiency. Our R&D expenses include costs directly attributable to the clinical development of Ameluz ® , 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. Change in Fair Value of Warrant Liabilities For warrants that are classified as liabilities, the Company records the fair value of the warrants at each balance sheet date and records changes in the estimated fair value as a non-cash gain or loss in the consolidated statements of operations until the warrants are exercised, expire or other facts and circumstances lead the warrant liabilities to be reclassified to stockholders’ equity or deficit. Interest Income (Expense), net Interest expense, net, primarily consists of interest on our convertible notes and short-term debt, including amortization of deferred costs. 27 Other Income (Expense), net Other income (expense), net primarily includes (i) gain on return of leased assets and (ii) gain (loss) on foreign currency transactions. Income Taxes As a result of the net losses we have incurred in each fiscal year since inception, we have recorded no provision for federal income taxes during such periods. Income tax expense incurred relates to state income taxes. Results of Operations Comparison of the Three Months Ended June 30, 2026 and 2025 The following table summarizes our results of operations for the three months ended June 30: ( in thousands) 2026 2025 Change Product revenues, net $ 12,003 $ 9,030 $ 2,973 Operating expenses: Cost of revenues, related party 2,185 2,380 (195 ) Cost of revenues, other 225 262 (37 ) Selling, general and administrative 9,628 10,528 (900 ) Selling, general and administrative, related party 41 69 (28 ) Research and development 448 870 (422 ) Total operating expenses 12,527 14,109 (1,582 ) Loss from operations (524 ) (5,079 ) 4,555 Other income (expense): Change in fair value of warrant liabilities 44 153 (109 ) Change in fair value of investment, related party (1 ) 2 (3 ) Interest expense, net (126 ) (115 ) (11 ) Other income (expense), net 26 (264 ) 290 Total other income (expense) (57 ) (224 ) 167 Loss before income taxes (581 ) (5,303 ) 4,722 Income tax expense 23 21 2 Net loss $ (604 ) $ (5,324 ) $ 4,720 Product Revenues, net Net product revenue for the three months ended June 30, 2026 was $12.0 million, an increase of $3.0 million, or 32.9%, compared to the three months ended June 30, 2025. The increase was primarily attributable to higher Ameluz ® net sales, reflecting $2.6 million or 30.0% growth in unit volume. Of the $2.6 million volume-driven revenue increase, approximately $1.9 million is attributable to accelerated order timing from certain customer accounts in anticipation of supply restrictions resulting from the ITC Matter, with the remainder reflecting improved sales execution and strategic sales team management. Additionally, a price increase implemented in the fourth quarter of 2025 contributed $0.3 million revenue increase. 28 Operating Expenses Cost of Revenues, Related Party Cost of revenues, related party for the three months ended June 30, 2026 was $2.2 million, a decrease of $0.2 million, or 8.2%, compared to the three months ended June 30, 2025. The decrease was primarily driven by a reduction in the purchase price of Ameluz ® resulting from the Strategic Transaction, which transitioned the Company from the transfer pricing model in place under the now-terminated Second A&R Ameluz LSA, which was 25% of net revenue, to a significantly lower cost structure comprised only of Ameluz ® direct cost and the 12% earnout applied to net revenue. Selling, General and Administrative Expenses Selling, general and administrative expenses for the three months ended June 30, 2026 were $9.6 million, compared to $10.5 million for the three months ended June 30, 2025. The decrease of $0.9 million was primarily driven by a $2.1 million reduction in general and administrative expenses, mainly from lower litigation-related legal fees as legal activity levels that peaked in the three months ended June 30, 2025 did not recur. This was partially offset by planned increases in direct sales of $0.4 million and sales support of $0.2 million, reflecting the Company’s continued investment in its commercial operations to support the 30% growth in Ameluz ® sales volume achieved in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, as well as $0.5 million of costs from manufacturing, regulatory and product affairs, activities that were new in 2026. Research and Development Expense Research and development expenses for the three months ended June 30, 2026 were $0.4 million, a decrease of $0.4 million compared to the three months ended June 30, 2025. The decrease was primarily attributable to certain clinical trials reaching substantial completion ahead of their originally planned timelines, resulting in lower trial-related expenditures in the current year period. In connection with the winding-down of our moderate to severe acne clinical trial, we reversed previously recorded accruals during the three months ended June 30, 2026, reflecting actual costs incurred upon substantial completion of the trial that were lower than previously estimated. This reversal is reflected as a credit within the moderate to severe acne category in the table below. The following table summarizes the major categories of our R&D expenses for the three months ended June 30: (in thousands) 2026 2025 Actinic keratosis $ 82 $ 90 Moderate to severe acne (5 ) 91 Superficial basal cell carcinoma 17 279 Personnel-related costs 323 402 Other research and development 31 8 Total $ 448 $ 870 29 Comparison of the Six Months ended June 30, 2026 and 2025 The following table summarizes our results of operations for the six months ended June 30: ( in thousands) 2026 2025 Change Product revenues, net $ 22,087 $ 17,617 $ 4,470 Operating expenses: Cost of revenues, related party 4,016 5,455 (1,439 ) Cost of revenues, other 510 455 55 Selling, general and administrative 20,623 19,183 1,440 Selling, general and administrative, related party 42 76 (34 ) Patent remediation expense 392 - 392 Research and development 1,348 2,077 (729 ) Total operating expenses 26,931 27,246 (315 ) Loss from operations (4,844 ) (9,629 ) 4,785 Other income (expense): Change in fair value of warrant liabilities (175 ) 702 (877 ) Change in fair value of investment, related party (1 ) 2 (3 ) Interest expense, net (251 ) (220 ) (31 ) Other expense, net (62 ) (363 ) 301 Total other income (expense) (489 ) 121 (610 ) Loss before income taxes (5,333 ) (9,508 ) 4,175 Income tax expense 23 19 4 Net loss $ (5,356 ) $ (9,527 ) $ 4,171 Product Revenues, net Net product revenue for the six months ended June 30, 2026 was $22.1 million, an increase of $4.5 million, or 25.4%, compared to the six months ended June 30, 2025. The increase was primarily attributable to higher Ameluz ® net sales, driven by growth in unit volume reflecting improved sales execution and strategic sales team management contributing approximately $2.1 million to revenue growth, as well as accelerated order timing from certain customer accounts in anticipation of supply restrictions resulting from the ITC Matter contributing approximately $1.9 million to revenue growth. Additionally, a higher average effective selling price following a list price adjustment implemented in the fourth quarter of 2025 contributed $0.4 million to revenue growth. Operating Expenses Cost of Revenues, Related Party Cost of revenues, related party for the six months ended June 30, 2026 was $4.0 million, a decrease of $1.4 million, or 26.4%, compared to the six months ended June 30, 2025. The decrease was primarily driven by a reduction in the Ameluz ® unit cost of $3.8 million resulting from the Strategic Transaction, as explained above. This decrease was partially offset by $2.6 million of earnout expense recognized under the royalty arrangement effective in the second half of 2025, with no comparable charge in the prior year period. 30 Selling, General and Administrative Expenses Selling, general and administrative expenses for the six months ended June 30, 2026 were $20.6 million, an increase of $1.4 million, or 7.5%, compared to the six months ended June 30, 2025. The increase was primarily driven by $0.7 million of higher direct sales expenses and $0.6 million of higher sales support expenses, reflecting headcount growth and increased commercial activity in support of Ameluz ® sales volume growth, as well as $1.1 million of combined costs from manufacturing and regulatory and product affairs. These increases were partially offset by a $1.3 million decrease in general and administrative expenses, driven by lower litigation-related legal fees. Patent Remediation Expense During the six months ended June 30, 2026, we recognized a total charge of $0.5 million reflecting the estimated cost to remediate the affected units of our RhodoLED ® XL Lamps in response to the ITC Matter. The total charge comprises (i) an inventory write-down of $0.1 million to reduce the carrying value of affected finished goods inventory and obsolete components in raw materials to net realizable value in accordance with ASC 330-10-35, which were charged to cost of revenues, other, and (ii) an accrued remediation liability of $0.4 million for the future cost activities charged to patent remediation expense. We expect to incur the cash component of these costs over the twelve months following the 60-day Presidential Review period, which concluded on July 6, 2026, as remediation activities are executed. In addition, the remediation is expected to result in a small, recurring increase in our per-unit cost of revenues for affected products; this prospective impact is reflected in our cost of revenues as units implementing the remediation are produced and sold. We do not expect the recurring per-unit cost increase to be material to our overall cost of revenues. Research and Development Expense Research and development expenses for the six months ended June 30, 2026 were $1.3 million, a decrease of $0.7 million compared to the six months ended June 30, 2025. The decrease was primarily attributable to certain clinical trials reaching substantial completion ahead of their originally planned timelines, resulting in lower trial-related expenditures in the current year period. The following table summarizes the major categories of our R&D expenses for the six months ended June 30: (in thousands) 2026 2025 Actinic keratosis $ 348 $ 232 Moderate to severe acne 23 218 Superficial basal cell carcinoma 127 832 Lamp Development 35 - Personnel-related costs 784 781 Other research and development 31 14 Total $ 1,348 $ 2,077 Change in Fair Value of Warrant Liabilities The change in fair value of warrant liabilities resulted in a loss of $0.2 million for the six months ended June 30, 2026, compared to a gain of $0.7 million for the six months ended June 30, 2025. The loss recognized during the six months ended June 30, 2026 was primarily attributable to the increase in our stock price at June 30, 2026 as compared to the stock price on December 31, 2025, which increased the fair value of the warrant liabilities. The gain recognized during the six months ended June 30, 2025 was primarily attributable to the decrease in our stock price at June 30, 2025 as compared to the stock price on December 31, 2024, which decreased the fair value of the warrant liabilities. 31 Net Loss to Adjusted EBITDA Reconciliation for the Three and Six Months Ended June 30, 2026 and 2025 We define adjusted EBITDA as net income or loss before interest income and expense, income taxes, depreciation and amortization, and other non-operating items from our statements of operations as well as certain other items considered outside the normal course of our operations specifically described below. Adjusted EBITDA is not a presentation made in accordance with GAAP. Our definition of adjusted EBITDA may vary from the use of similarly titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. Adjusted EBITDA should not be considered as an alternative to net income or loss, operating income/(loss), cash flows from operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance or liquidity. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Change in fair value of warrant liabilities : The warrants issued in conjunction with our private placement offerings and registered public offerings were accounted for as liabilities in accordance with ASC 815-40. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the consolidated statements of operations. We exclude the impact of the change in fair value of warrant liabilities as this is non-cash. Change in fair value of investment, related party : The Company accounts for its investment, related party in accordance with ASC 321, Investments - Equity Securities. Equity securities, which are comprised of investments in common stock, are initially recorded at cost, plus transaction costs, and subsequently measured at fair value, based on quoted market prices, with the gains and losses reported in the Company’s consolidated statements of operations. For the investments held in foreign currencies, the change in fair value attributable to changes in foreign exchange rates is included in gains and losses in the consolidated statements of operations. We exclude the impact of the realized and unrealized change in fair value of investments as this is non-cash. Stock-Based Compensation : To measure operating performance, we exclude the impact of costs relating to share-based compensation. Due to the subjective assumptions and the variety of award types, we believe that the exclusion of share-based compensation expense, which is non-cash, allows for more meaningful comparisons of our operating results to peer companies. Share-based compensation expense can vary significantly based on the timing, size and nature of awards granted. Patent Remediation Expense : During the six months ended June 30, 2026, we recognized a total charge of $0.5 million reflecting the estimated cost to remediate the affected units of our RhodoLED ® XL Lamps in response to the ITC Matter. The total charge comprises (i) an inventory write-down of $0.1 million to reduce the carrying value of affected finished goods inventory and obsolete components in raw materials to net realizable value in accordance with ASC 330-10-35, and (ii) an accrued remediation liability of $0.4 million for the future cost activities required to complete the remediation. We exclude these charges because they relate to a discrete adverse legal and regulatory matter that is not indicative of the Company’s ongoing operating performance. 32 Adjusted EBITDA margin is adjusted EBITDA for a particular period expressed as a percentage of revenues for that period. We use adjusted EBITDA to measure our performance from period to period and to compare our results to those of our competitors. In addition to adjusted EBITDA being a significant measure of performance for management purposes, we also believe that this presentation provides useful information to investors regarding financial and business trends related to our results of operations and that when non-GAAP financial information is viewed with GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance. The below table presents a reconciliation from net loss to Adjusted EBITDA for the three and six months ended June 30, 2026 and 2025: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net loss $ (604 ) $ (5,324 ) $ (5,356 ) $ (9,527 ) Interest expense, net 126 115 251 220 Income tax expense 23 21 23 19 Depreciation and amortization 65 22 120 46 EBITDA (390 ) (5,166 ) (4,962 ) (9,242 ) Change in fair value of warrant liabilities (44 ) (153 ) 175 (702 ) Change in fair value of investment, related party 1 (2 ) 1 (2 ) Patent remediation – inventory write-down - - 58 - Patent remediation expense - - 392 - Stock-based compensation 263 187 605 426 Adjusted EBITDA $ (170 ) $ (5,135 ) $ (3,731 ) $ (9,520 ) Adjusted EBITDA margin -1.4 % -56.9 % -16.9 % -54.0 % Adjusted EBITDA Adjusted EBITDA increased from ($5.1) million for the three months ended June 30, 2025 to ($0.2) million for the three months ended June 30, 2026, an improvement of $5.0 million. The improvement was primarily driven by a $3.2 million increase in gross profit, reflecting significantly higher Ameluz ® unit volume and a lower cost structure as described above. The decrease of $0.9 million in selling, general and administrative expenses and decrease of $0.4 million in research and development cost further increased adjusted EBITDA. Refer to the section above entitled “Selling, General and Administrative Expenses” for additional details. Adjusted EBITDA increased from ($9.5) million for the six months ended June 30, 2025 to ($3.7) million for the six months ended June 30, 2026, an improvement of $5.8 million. The improvement was primarily driven by a $5.9 million increase in gross profit, reflecting higher Ameluz ® unit volume and a lower cost structure as described above. Liquidity and Capital Resources The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. Since we commenced operations in 2015, we have generated significant losses. The Company incurred net cash outflows from operations of $1.7 million and $7.2 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, the Company’s accumulated deficit was $133.3 million. The Company’s primary sources of liquidity are its cash collected from the sales of its products and cash flows from financing transactions. As of June 30, 2026, we had cash and cash equivalents of $4.7 million, compared to $6.4 million as of December 31, 2025. As discussed in Note 17. Commitments and Contingencies, in connection with the ITC Matter the Company has recorded an estimated remediation cost of $0.5 million and expects related cash disbursements to occur over the twelve months following July 6, 2026; these disbursements are reflected in the Company's cash flow forecasts used in this assessment. Based on currently available information, management does not expect this matter to materially impair the Company's core Ameluz ® revenue base. The Company cannot provide assurance that it will ultimately achieve profitable operations and become operating cash flow positive or raise additional debt or equity capital. Additionally, the current capital resources are not adequate to continue operating and maintaining the business strategy for a period of twelve months from the issuance date of this report. Management believes that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from the issuance date of this Quarterly Report on Form 10-Q. The Company plans to address the conditions that raise substantial doubt regarding its ability to continue as a going concern by, among other things, continuing to expand the commercialization of Ameluz ® in the United States while controlling expense; drawing on a working capital line of credit; pursuing the realization of an additional $1.0 million in milestone payments from the sale of the Xepi intangible asset expected in December 2026; and, if necessary, securing additional capital through equity or debt financings to support commercial expansion and R&D programs. 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. The condensed 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. 33 Cash Flows The following table summarizes our cash provided by and (used in) operating, investing and financing activities: Six Months Ended June 30, (in thousands) 2026 2025 Net cash used in operating activities $ (1,728 ) $ (7,162 ) Net cash provided by (used) in investing activities (5 ) (4 ) Net cash provided by financing activities - 8,500 Net increase (decrease) in cash and restricted cash $ (1,733 ) $ 1,334 Operating Activities During the six months ended June 30, 2026, operating activities used $1.7 million of cash, primarily resulting from our loss from operations of $5.4 million, adjusted for net cash used by changes in our operating assets and liabilities of $2.2 million, non-cash expense of stock-based compensation of $0.6 million, reduction of right-of-use assets of $0.3 million, non-cash interest expense of $0.3 million, change in warrant valuation of $0.2 million, and depreciation and amortization in the aggregate of $0.1 million. During the six months ended June 30, 2025, operating activities used $7.2 million of cash, primarily resulting from our loss from operations of $9.5 million, adjusted for non-cash expense of stock-based compensation of $0.4 million, depreciation and amortization in the aggregate of $0.4 million, non-cash interest expense of $0.2 million, and net cash used by changes in our operating assets and liabilities of $2.0 million, partially offset by the change in fair value of warrant liabilities of $0.7 million. Investing Activities During the six months ended June 30, 2026 and 2025, net cash used in investing activities consisted of negligible fixed asset purchases. Financing Activities There were no financing activities during the six months ended June 30, 2026. During the six months ended June 30, 2025, net cash from financing activities consisted of an advance from certain stockholders in accordance with a securities purchase agreement dated June 27, 2025, for the issuance of Series C Preferred Stock, which was not issued until July 1, 2025. On July 1, 2025, upon issuance of the Series C Preferred Stock, the advance from stockholders was settled and reclassed to mezzanine equity. See Note 14. Stockholders’ Equity , for additional details. 34 Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with generally accepted accounting principles of the United States, or GAAP. The preparation of the financial statements in accordance with GAAP requires the use of estimates and assumptions by management that affect the value of assets and liabilities, as well as contingent assets and liabilities, as reported on the balance sheet date, and revenues and expenses arising during the reporting period. The main areas in which assumptions, estimates and the exercising of a degree of judgment are appropriate relate to contingent consideration, fair value measurements, valuation of intangible assets and impairment assessment, and stock compensation. Estimates are based on historical experience and other assumptions that are considered appropriate in the circumstances. They are continuously reviewed but may vary from the actual values. Our significant accounting policies are described in more detail in Note 2. Summary of Significant Accounting Policies , to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data in the 2025 Form 10-K. Critical Accounting Estimates A summary of our critical accounting estimates is discussed in the section entitled “Critical Accounting Estimates” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2025 Form 10-K. There were no material changes to our critical accounting estimates for the six months ended June 30, 2026, other than as noted below. Loss Contingency for ITC Matter With respect to the ITC Matter, our estimate of the loss is based on a bottom-up cost model encompassing component procurement, field service travel and labor, return-to-base rework, regulatory and quality activities, and other costs. The estimate is sensitive to a number of assumptions that may change as remediation activities progress, including, in particular, (a) the labor and the associated travel and lodging costs, (b) the unit cost of the remediation and the foreign exchange rate at which it is procured, (c) the regulatory pathway determined for the remediation and (d) the timing and outcome of the suspended limited exclusion order and cease and desist order as to the ‘028 patent. A change in any of these assumptions could result in a material change in the recorded accrual, which would be recognized prospectively as a change in estimate in accordance with ASC 250-10-45-17. Off-balance Sheet Arrangements Other than those items reflected in Note 17. Commitments and Contingencies , 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. Emerging Growth Company Status The Jumpstart Our Business Startups Act of 2012 permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected to take advantage of such extended transition period, which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. Item 3. Quantitative and Qualitative Disclosures About Market Risk As a “smaller reporting company,” we are not required to provide the information required by this Item. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2026, our disclosure controls and procedures were effective at the reasonable assurance level. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting during the most recent fiscal quarter ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). 35 PART II. OTHER INFORMATION Item 1. Legal Proceedings For information regarding legal proceedings in which we are involved, see Note 17. Commitments and Contingencies under the subsection titled “Legal Proceedings” in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. Item 1A. Risk Factors As a smaller reporting company, we are not required to provide disclosure pursuant to this item in this Form 10-Q. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not Applicable. Item 5. Other Information None. Item 6. Exhibits The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the SEC. Exhibit No. 10.1 Biofrontera Inc. Amended and Restated 2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 4.7 of the Company’s Form S-8 filed with the SEC on July 22, 2026) 31.1* Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101) * Filed herewith. 36 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BIOFRONTERA INC. Date: August 13, 2026 By: /s/ Hermann Luebbert Name: Hermann Luebbert Title: Chief Executive Officer & Chairman ( Principal Executive Officer ) Date: August 13, 2026 By: /s/ E. Fred Leffler, III Name: E. Fred Leffler, III Title: Chief Financial Officer (Principal Financial Officer) 37