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.

Effective June 1, 2024, we assumed control of all clinical trials relating to Ameluz in the United States, allowing for more effective cost management and direct oversight of trial efficiency through Biofrontera Discovery GmbH (“Discovery”), our wholly owned subsidiary that was formed in Germany in 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, we entered into i) an Asset Purchase Agreement (the “Transfer Agreement”) and ii) an Earnout Agreement (together with the Transfer Agreement, the “Agreements”), with Biofrontera AG and its consolidated subsidiaries (the “Biofrontera Group”), pursuant to which the Company finalized the agreements to acquire all rights in the United States (the “U.S. Rights”) to Ameluz and RhodoLED (the “Strategic Transaction”). See Note 3. Asset Acquisition and Note 16. Related Party Transactions for additional information. 

In exchange for the U.S. Rights, in addition to the aforementioned earnout and an agreement to transfer all costs associated with the U.S. business, Biofrontera AG received 3,019 shares of Series D Convertible Preferred Stock, par value $0.001 per share (the “Series D Preferred Stock”).

The transaction was funded through an $11 million investment by existing investors, $8.5 million of which was funded in connection with a binding term sheet agreement effective June 30, 2025 with the Biofrontera Group (the “Term Sheet”) with the remaining $2.5 million funded on October 24, 2025, following the closing of the Strategic Transaction.

On November 6, 2025, the Company completed the sale of the long-lived intangible asset relating to its Xepi product line, previously classified as held for sale. See Note 10. Assets Held for Sale, for additional information.

Liquidity and Going Concern

The accompanying consolidated 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 $13.4 million and $10.3 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, the Company’s accumulated deficit was $127.9 million. The Company’s primary sources of liquidity are its cash collected from the sales of its products, and cash flows from financing transactions including net proceeds of $10.9 million received in a private placement of Series C Preferred Stock in 2025. As of December 31, 2025, we had cash and cash equivalents of $6.4 million. The Company cannot provide assurance that it will ultimately achieve profitable operations and become operating cash flow positive or raise additional debt or equity capital. Additionally, the current capital resources are not adequate to continue operating and maintaining the business strategy for a period of twelve months from the issuance date of this report. Management believes that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from the date of this Annual Report on Form 10-K.

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, expected realization of an additional $1.0 million in milestone payments from the sale of the Xepi intangible asset and, if necessary, securing additional capital through equity or debt financings. However, there can be no assurance that the Company will be successful in obtaining sufficient funding on acceptable terms, if at all. If the Company is unable to raise additional capital when needed, it will not have sufficient cash resources and liquidity to fund its business operations and may be forced to delay or reduce continued commercialization efforts or R&D programs which could have a material adverse effect on the Company and its financial statements.

The 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.