The accompanying notes are an integral part of these consolidated financial statements.

BIOFRONTERA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

Biofrontera Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1. Business Overview

We are

Biofrontera Inc (the “Company”). is a U.S.-based biopharmaceutical company specializing in the commercializationcommercializing a portfolio of pharmaceutical products for the treatment of dermatological conditions in particular, diseases caused primarily by exposure to sunlight that results in sun damage to the skin. Our principalwith a focus on photodynamic therapy (“PDT”) and topical antibiotics. The Company’s licensed products focus onare used for the treatment of actinic keratoses, which are pre-cancerous skin lesions that can sometimes lead to skin cancer. We also market a licensed topical antibiotic for treatment ofas well as impetigo, a bacterial skin infection.

Biofrontera Inc. includes its wholly owned subsidiary Bio-FRI GmbH, a limited liability company organized under the laws of Germany. Our subsidiary, Bioi-FRI was formed on February 9, 2022, as a German presence to facilitate our relationship with the Ameluz Licensor.

Our principal licensed product is Ameluz®Ameluz^®, which is a prescription drug approved for use in combination with our licensor’s FDA-approved medical device, the BF-RhodoLED® RhodoLED^® lamp series, for photodynamic therapy (“PDT”)PDT (when used together, “Ameluz^®PDT”) in. In the U.S.United States, the PDT treatment is used for the lesion-directed and field-directed treatment of actinic keratosiskeratoses (“AK”) of mild-to-moderate severity on the face and scalp. We are currently selling Ameluz®Ameluz^® for this indication in the U.S. under an exclusive license and supply agreement (“Ameluz LSA”), by between Biofrontera, Inc. and among us and Biofrontera Pharma GmbH and Biofrontera Bioscience GmbH (collectively, the (“Ameluz Licensor”) originally dated as of October 1, 2016, and as subsequently amended on October 8, 2021. Refer to Note 16, Related Party Transactions, for further details.Licensors.

Our second prescription drug licensed product in our portfolio is Xepi® (ozenoxacin cream, 1%), a topical non-fluorinated quinolone that inhibits bacterial growth. Currently, no antibiotic resistance against Xepi® is known and it has been specifically approved by the FDA for the treatment of impetigo, due to staphylococcus aureus or streptococcus pyogenes. The approved indication is impetigo, a common skin infection.infection, due to Staphylococcus aureus or Streptococcus pyogenes. It is approved for use in the United States in adults and children 2 months and older. We are currently selling Xepi® for this indication in the U.S.United States. under an exclusive license and supply agreement, as amended (“Xepi LSA”) with Ferrer Internacional S.A. (“Ferrer”) that was acquiredassumed by Biofrontera Inc. on March 25, 2019 through our acquisition of Cutanea Life Sciences, Inc. Refer to Note 16, Related Party Transactions, for further details.(“Cutanea”).

Liquidity and Going Concern

The Company’s primary sources of liquidity are its existing cash balances, cash collected from the sales of its products, and cash flows from equity financing transactions received in 2021.2022. As of March 31, 2022,2023, we had cash and cash equivalents of $22.413.5 million, compared to $24.517.2 million as of December 31, 2021.2022.

Since we commenced operations in 2015, we have generated significant losses. For the three months ended March 31, 20222023 and 2021,2022, we incurred lossesloss from operations of $3.15.5 million and $3.53.1 million, respectively. respectively. We incurred net cash outflows from operations of $2.13.7 million and $3.42.1 million, for the same periods, respectively. We had an accumulated deficit as of March 31, 20222023 of $73.387.0 million.

The Company’s short-term material cash requirements include working capital needs and satisfaction of contractual commitments including facility and auto leases (see Note 23,21. Commitments and Contingencies), Maruho start-up paymentscost financing repayments of $7.3million (see Note 3. Acquisition Contract Liabilities), and legal settlement expenses after reimbursement from Biofrontera AG a significant shareholder and our former parent company, of $5.62.5 million (see Note 13. Accrued Expenses and Other Current Liabilities).million. Long-term material cash requirements include potential milestone payments to Ferrer Internacional S.A, (see Note 23. Commitments and Contingencies) and contingent consideration payments to Maruho (seeconnected with Xepi sales (see Note 3. Acquisition Contract Liabilities)21. Commitments and Contingencies).

Additionally, we expect to continue to incur operating losses due to significant discretionary sales and marketing, medical affairs, and dermatology community outreach efforts as we seek to expand the commercialization of Ameluz^® and Xepi^®our licensed products in the United States. We also expect to incur additional expenses to add and improve operational, financial and information systems and personnel, including personnel to support our product commercialization efforts. In addition, we expect to incur significant costs to continue to comply with corporate governance, internal controlsregulatory reporting and similarother requirements applicable to us as a public company in the U.S. We expect capital expenditures to increase in 2022 to support the increase in our business needs including an ERP system.

These factors raise doubt about our ability to continue as a going concern, which we have determined are mitigated by the following plans. Based on current operating plans and financial forecasts, we expect that our revolving line of credit and expected proceeds from the sale of our investment in equity securities in addition to our current cash and cash equivalents will be sufficient to fund our operations for at least the next twelve months from the date of issuance of our financial statements. However, we expect to have to obtain either equity or additional debt financing to support our future long-term growth and to mitigate the risk of our operating costs significantly exceeding the amounts currently estimated. If our current operating plans or financial forecasts change, or we are unable to obtain additional financing, we may need to reduce the discretionary spend on promotional expenses, branding, marketing consulting and defer some hiring. While we expect to continue being flexible in our spending over the next twelve months, we do not consider there to be a need to significantly revise our operations currently.

2. Summary of Significant Accounting Policies

Basis for Preparation of the Financial Statements

The accompanying unaudited interim 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 (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the Company’s opinion, the unaudited 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 March 31, 2022,2023, the Company’s operating results for the three months ended March 31, 20222023 and 2021,2022, and the Company’s cash flows for the three months ended March 31, 20222023 and 2021.2022. The accompanying financial information as of December 31, 20212022 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2021,2022, filed with the SEC on April 11, 2022.March 13, 2023.

All amounts shown in these financial statements and accompanyingtables are in thousands and amounts in the notes are in thousands,millions, except percentages and per share and share amounts.

The Company’s significant accounting policies are discussed in Note 2—Summary of Significant Accounting Policies within the notes to financial statements for the year ended December 31, 2021,2022, included in the Company’s Annual Report on Form 10-K. There have been no significant changes to these policies during the three months ended March 31, 2022.2023.

Use of Estimates

The preparation of the financial statements in accordance with U.S. 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, valuation allowances for receivables and inventory, valuation of contingent consideration and warrant liabilities, valuationrealization of intangible and other long-lived assets, product sales allowances and reserves, share-based payments and income taxes including deferred tax assets and liabilities. 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 IssuedAdopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The new guidance requires that a lessee recognize assets and liabilities for leases with lease terms of more than twelve months and recognition, presentation and measurement in the financial statements will depend on the lease classification as a finance or operating lease. In addition, the new guidance will require disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. The JOBS ACT provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows us to delay the adoption of this new standard until it would otherwise apply to private companies. The new standard will be effective for us for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact of adopting this guidance.

In JuneSeptember 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires entities to record expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity’s current estimate of credit losses expected to be incurred. The new standard will bewas effective for us on January 1, 2023. The Company is currently evaluating the impact of adopting this guidance.2023, and did not have a material effect on our consolidated financial statements.

3. Acquisition Contract Liabilities

On March 25, 2019, we entered into an agreement (as amended, the “Share Purchase Agreement”) with Maruho Co, Ltd. (“Maruho”) to acquire 100% of the shares of Cutanea Life Sciences, Inc. (“Cutanea”). As of the date of the acquisition, Maruho Co, Ltd. owned approximately 29.9% of Biofrontera AG through its fully owned subsidiary Maruho Deutschland GmbH. Biofrontera AG is our former parent, and currently a significant shareholder.

Pursuant to the Share Purchase Agreement, Maruho agreed to provide $7.3 million in start-up cost financing for Cutanea’s redesigned business activities (“start-up costs”). These start-up costs are to be paid back to Maruho by the end of 2023 in accordance with contractual obligations related to an earn-out arrangement. In addition, as part of the earn-out arrangement with Maruho, the product profit amount from the sale of Cutanea products as defined in the share purchase agreement will be shared equally between Maruho and Biofrontera until 2030 (“contingent consideration”).

In connection with this acquisition in 2019, we recorded the $7.3 million in start-up cost financing, a $1.7 million contract asset related to the benefit associated with the non-interest bearingnon-interest-bearing start-up cost financing and $6.5 million of contingent consideration related to the estimated profits from the sale of Cutanea products to be shared equally with Maruho.Maruho (see Note 21. Commitment and contingencies – Cutanea payments).

The contract asset related to the start-up cost financing is amortized on a straight-line basis using a 6.0% interest rate over the 57-month term of the financing arrangement, which ends on December 31, 2023. The contract asset is shown net of the related start-up cost financing within acquisition contract liabilities, net.

The contingent consideration was recorded at acquisition-date fair value using a Monte Carlo simulation with an assumed discount rate of approximately 6.0% over the applicable term. The contingent consideration is recorded within acquisition contract liabilities, net. The amount of contingent consideration that could be payable is not subject to a cap under the agreement. The Company re-measures contingent consideration and re-assesses the underlying assumptions and estimates at each reporting period utilizing a scenario-based method.

Acquisition contract liabilities, net consist of the following:

 Schedule of Acquisition Contract Liabilities

4. Fair Value Measurements

The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at March 31, 20222023 and December 31, 20212022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Schedule of Fair Value Hierarchy Valuation Inputs

Investment in equity securities

As of March 31, 2023, the Company had an investment in shares of Biofrontera AG. The fair value of this investment was determined with Level 1 inputs through references to quoted market prices.

Contingent Consideration

Contingent consideration, which relates to the estimated profits from the sale of Cutanea products to be shared equally with Maruho, is reflected at fair value within acquisition contract liabilities, net on the consolidated balance sheets. The fair value is based on significant inputs not observable in the market, which represent a Level 3 measurement within the fair value hierarchy. The valuation of the contingent consideration utilizes a scenario-based method under which a set of payoffs are calculated using the term of the earnout, projections, and an appropriate metric risk premium. These payoffs are then discounted back from the payment date to the valuation date using a payment discount rate. Finally, the discounted payments are summed together to arrive at the value of the contingent consideration. The scenario-based method incorporates the following key assumptions: (i) the forecasted product profit amounts, (ii) the remaining contractual term, (iii) a metric risk premium, and (iv) a payment discount rate. The Company re-measures contingent consideration and re-assesses the underlying assumptions and estimates at each reporting period.

The following table provides a roll forward of the fair value of the contingent consideration:

 Schedule of Fair Value of Contingent Consideration

Warrant LiabilityLiabilities

WarrantsThe warrant liabilities, comprised of warrants to purchase one share of common stock issued in conjunction with thea private placement on May 16, 2022, expiring five and one-half years after the issue date and with an exercise price of $2.77 per share (the “Purchase Warrants”) and warrants to an institutional shareholder which closedpurchase one share of common stock issued on July 26, 2022, expiring on December 2, 20211, 2026 with an exercise price of $1.66 per share (the “Inducement Warrants”), were accounted for as liabilities in accordance with ASC 815-40. Pre-funded common stock purchase warrants to purchase up to 1,507,143 shares of our common stock at a nominal exercise price (the “Pre-funded Warrants”) were exercised in 2021815-40 and the common stock purchase warrants to purchase up to 2,857,143 shares of our common stock at an exercise price of $5.25 per share (the Purchase Warrants”) are presented within warrant liabilityliabilities in the accompanying consolidated balance sheets. The warrant liability isliabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the consolidated statements of operations.

The Company utilizes a Black-Scholes option pricing model to estimate the fair value of the Purchase Warrants and Inducement Warrants which is considered a Level 3 fair value measurement. Certain inputs utilized in our Black-Scholes pricing 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 fair value may cause a significant change to the fair value of our warrant liabilityliabilities which could also result in material non-cash gain or loss being reported in our consolidated statements of operations.

The fair value at March 31, 2023 was estimated using a Black-Scholes pricing model based on the following assumptions:

Schedule of Fair value Warrant by Using Black-Scholes Pricing Model Assumptions

The following table presents the changes in the warrant liabilityliabilities measured at fair value (in thousands):

Schedule of Changes in Fair Value Warrant Liabilities

5.Revenue

We generate revenue primarily through the sales of our licensed products Ameluz®, BF-RhodoLED® lamps and Xepi®. Revenue from the sales of our BF-RhodoLED® lamp and Xepi® are relatively insignificant compared with the revenues generated through our sales of Ameluz®.

We generated $9.6 million of Ameluz® revenue, $0.1 million Xepi® revenue, and $0.1 million of BF-RhodoLED® lamps revenue during the three months ended March 31, 2022. We generated $4.5 million of Ameluz® revenue, minimal Xepi® revenue, and $0.2 million of BF-RhodoLED® lamps revenue during the three months ended March 31, 2021.

Related party revenue relates to an agreement with Biofrontera Bioscience GmbH (“Bioscience”) for BF-RhodoLED® leasing and installation service. Refer to Note 16,15, Related Party Transactions.

An analysis of the changes in product revenue allowances and reserves is summarized as follows:

 Schedule of Revenue Allowance and Accrual Activities

6. Accounts Receivable, net

Accounts receivablereceivables are mainly attributable to the sale of Ameluz^®, the BF-RhodoLED^® and Xepi®. It is expected that all trade receivables will be settled 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 receivables are segmented into pools of assets depending primarily on delinquency status, and fixed reserve percentages are established for each pool of trade accounts receivables.

The allowance for doubtful accountscredit losses was $60,0000.1 and $18,000million as of March 31, 20222023 and December 31, 2021, respectively.2022.

7. Other Receivables, Related Party

TheAs of March 31, 2023 the Company has recorded a receivable of $11.33.8 million due from the Biofrontera Group of which $3.7 million is due from Biofrontera AG for its 50%50% share of the balance of a legal settlement (see Note 21. Commitments and Contingencies – Legal proceedings) for which both parties are jointly and severally liable for the total settlement amount of $22.5 million.liable. The Company has a contractual right to repayment of its share of the settlement paymentpayments, plus interest and other miscellaneous settlement costs, from Biofrontera AG under the Settlement Allocation Agreement (“Allocation Agreement”) entered into on December 9, 2021 and as amended on March 31, 2022, which providedprovides that the settlement payments would first be made by the Company and then reimbursed by Biofrontera AG for its share. Of the total receivable $8.4The million is short-term and $2.8 million is long-term. As of May 11, Biofrontera AG has not paid the first reimbursement amount to the Company. We determined that the potential of Biofrontera AG to default on its obligation was less than probable. This is supported by the March 31, 2022 Amended Settlement Allocation Agreement, between the Company and Biofrontera AG. The Amended Allocation Agreementas amended, provides certain remedies to the Company, if Biofrontera AG fails to make timely reimbursements, which the Company may implement in its sole discretion, including the ability to charge interest at a rate of 6.0% per annum for each day that any reimbursement is past due and the ability to offset any overdue reimbursement amounts against payments owed to Biofrontera AG by the Company (including amounts owed under the Company’s license and supply agreement for Ameluz^®). As such, no reserve for the receivable has been recorded as of March 31, 20222023 or December 31, 2021.2022.

The remaining $0.2 million of other receivables, related party pertains to service agreements and chargebacks. See Note 16- Related Party Transactions.

8.Inventories

Inventories are comprised of Ameluz^®, Xepi® and the BF-RhodoLED^® finished products.

In assessing the consumption of inventories, the sequence of consumption is assumed to be based on the first-in-first-out (FIFO) method. There was no provision for obsolescence recorded for the three months ended March 31, 2023 and 2022. We recorded a provision of $35,000 for Xepi® inventory obsolescence, for the three months ended March 31, 2021.

9.Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

Schedule of Prepaid Expenses and Other Current Assets

10. Property and Equipment, Net

Property and equipment, net consists of the following:

Schedule of Property and Equipment

Depreciation expense was $26,000 and $33,000, for the three months ended March 31, 2023 and 2022 was negligible and 2021, respectively, which was included in selling, general and administrative expense onin the consolidated statements of operations.

11. Intangible Asset, Net

Intangible asset, net consists of the following:

Schedule of Intangible Asset Net

The Xepi® license intangible asset was recorded at acquisition-date fair value of $4.6million and is amortized on a straight-line basis over the useful life of 11years. Amortization expense for the three months ended March 31, 20222023 and 20212022 was $0.1million.

We review the Xepi^® license intangible asset for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable.

The Company did not recognize any impairment charges during the three months ended March 31, 20222023 or March 31, 2021.2022.

12. Statement of Cash Flows Reconciliation

The following table provides a reconciliation of cash, cash equivalents, and restricted cash that sum to the total shown in the consolidated statements of cash flows:

Schedule of Reconciliation of Cash, Cash Equivalents, and Restricted Cash

13. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

Schedule of Accrued Expenses and Other Current Liabilities

14. Other Long-Term Liabilities

Other long-term liabilities consist of the following:

Schedule of Other Long Term Liabilities

15.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 for the three-month periods ended March 31, 20222023 and 2021.2022. Income tax expense incurred for the three months ended March 31, 20222023 and 20212022 relates to state income taxes. At March 31, 20222023 and December 31, 2021,2022, the Company had no unrecognized tax benefits.

The Company continues to be in a cumulative loss position and as such, is maintaining a full valuation allowance.

Interest and penalty charges, if any, related to unrecognized tax benefits would be classified as income tax expense in the accompanying consolidated statements of operations. As of March 31, 2022,2023, and December 31, 2021,2022, the Company has no accrued interest related to uncertain tax positions. Since the Company is in a loss carryforward position, it is generally subject to examination by the U.S. federal, state, and local income tax authorities for all tax years in which a loss carryforward is available.

16.15. Related Party Transactions

License and Supply Agreement

On October 1, 2016, the Company executed an exclusive license and supply agreement with Biofrontera Pharma GmbH (“Pharma”), which was amended in July 2019 to increase the Ameluz^® transfer price per unit from 35.0% to 50.0% of the anticipated net selling price per unit as defined in the agreement. It was further amended on October 8, 2021 so that the price we pay per unit will be based upon our sales history, although the minimum number of units to purchase per year remains unchanged. As a result of this amendment, the purchase price we pay Biofrontera Pharma for Ameluz^® will range from 30% to 50% of the anticipated net price per unit based on our level of annual revenue. Refer to Item I. Business - Commercial Partners and Agreements in our Annual Report on Form 10-K for the year ended December 31, 2021 for further details. Under the agreement, the Company obtained an exclusive, non-transferable license to use the Pharma’s technology to market and sell the licensed products, Ameluz^® and BF-RhodoLED^® and must purchase the licensed products exclusively from Pharma. There was no consideration paid for the transfer of the license.

Purchases of the licensed products during the three months ended March 31, 20222023 and 20212022 were $5.24.6 million and $3.05.2 million, respectively and recorded in inventories in the consolidated balance sheets, and, when sold, in cost of revenues, related party in the consolidated statements of operations. Amounts due and payable to Pharma as of March 31, 20222023 and December 31, 20212022 were $0.30.9 million and $0.31.3 million, respectively, which were recorded in accounts payable, related parties in the consolidated balance sheets.

Service Agreements

In December 2021, we entered into an Amended and Restated Master Contract Services Agreement, or Services Agreement,“Services Agreement”, which provides for the execution of statements of work that will replace the applicable provisions of our previous intercompany services agreement dated January 1, 2016, or 2016 Services Agreement, by and among us, Biofrontera AG, Biofrontera Pharma and Biofrontera Bioscience, enabling us to continue to use the IT resources of Biofrontera AG and its wholly owned subsidiaries (the “Biofrontera Group”) as well as providing access to the Biofrontera Group’s resources with respect to quality management, regulatory affairs and medical affairs. If we deem that the Biofrontera Group should continue to provide these services, we will execute a statement of work under the Services Agreement with respect to such services. We currently have statements of work in place regarding IT, regulatory affairs, medical affairs, pharmacovigilance, and investor relations services,pharmacovigilance, and are continuously assessing the other services historically provided to us by Biofrontera AG to determine 1) if they will be needed, and 2) whether they can or should be obtained from other third-party providers. As of March 31, 2023, we have migrated away from Biofrontera AG to third party providers for most of our significant IT services . Expenses related to the service agreement were $0.1 millionnegligible for the three months ended March 31, 2023 and $0.2 0.1million for the three months ended March 31, 2022, and 2021, respectively which were recorded in selling, general and administrative, related party. There were no amountsAmounts due to Biofrontera AG related to the service agreement as of March 31, 2022. Amounts due to Biofrontera AG related to the service agreement2023 and December 31, 2022 were $0.2million as of December 31, 2021and $0.2 million, respectively, which were recorded in accounts payable,offset against other receivables, related partiesparty in the consolidated balance sheets.  sheet.

Clinical Lamp Lease Agreement

On August 1, 2018, the Company executed a clinical lamp lease agreement with Biofrontera Bioscience GmbH (“Bioscience”) to provide lamps and associated services.

Total revenue related to the clinical lamp lease agreement was approximately $15,000 and $13,000minimal for the three months ended March 31, 20222023 and 2021,2022, respectively and was recorded as revenues, related party. Amounts due from Bioscience for clinical lamp and other reimbursements were approximately $99,0000.2 million and $92,0000.1 as of March 31, 20222023 and December 31, 2021,2022, respectively, which were recorded as other receivables, related party in the consolidated balance sheets.

Reimbursements from Maruho Related to Cutanea Acquisition

Pursuant to the Cutanea acquisition share purchase agreement, we received start-up cost financing and reimbursements for certain costs. These restructuring costs Maruho agreed to pay are referred to as “SPA costs” under the arrangement and are to be accounted for as other income. Refer to Note 3, Acquisition Contract Liabilities.

There were 0 amounts reimbursed relating to SPA costs for the three months ended March 31, 2022. For the three months ended March 31, 2021, the amounts reimbursed relating to SPA costs were $0.1 million and were recorded as other income in the statements of operations as the related expenses were incurred. As of March 31, 2022 and December 31, 2021 amounts due from Maruho, primarily relating to SPA cost reimbursements, were $56,000 for each of the periods and were recorded in other receivables, related parties in the balance sheets.

Others

The Company receives expense reimbursement from Biofrontera AG and Biofrontera Bioscience on a quarterly basis for costs incurred on behalf of these entities. Total expense reimbursements were $0.1 million for the three months ended March 31, 2022 and 2021, which were netted against expenses incurred within selling, general and administrative expenses.

The Company has recorded a receivable of $11.33.7 million and $6.4 million as of March 31, 2023 and December 31, 2022, respectively, due from Biofrontera AG for its 50%50% share of the balance of a legal settlement for which both parties are jointly and severally liable for the total settlement amount of $22.5 million. The Company has a contractual rightliable. Refer to repayment of its share of the settlement payment from Biofrontera AG under the Settlement Allocation Agreement entered into on December 9, 2021 and amended on March 31, 2022, which provided that the settlement payments would first be made by the Company and then reimbursed by Biofrontera AG for its share. The amended agreement provides certain remedies to the Company, if Biofrontera AG fails to make timely reimbursements, which the Company may implement in its sole discretion, including the ability to charge interest at a rate ofNote 7, Other Receivables, Related Party. There was 6.0%no per annum for each day that any reimbursement is past due and the ability to offset any overdue reimbursement amounts against payments owed to Biofrontera AG by the Company (including amounts owed under the Company’s license and supply agreement for Ameluz®). The Company has accrued $56,000 of interest income as of March 31, 2022. Of the total receivable of $11.3 million, $8.5 million is short-term and $2.8 million is a long-term receivable.

17. Restructuring costs

We restructured the business of Cutanea and incurred restructuring costs which were subsequently reimbursed by Maruho. Restructuring costs primarily relate to the winding down of Cutanea’s operations. There were 0 restructuring costsrecognized for the three months ended March 31, 2022. For2023 and $0.1 million of interest income for the three months ended March 31, 2021, restructuring costs were incurred2022, in connection with this receivable.

As of March 31, 2023, our investment in equity securities is valued at $7.6 million and consists of 6,466,946 common shares of Biofrontera AG, a significant shareholder of the amount of $0.3 million.Company.

18.16. Stockholders’ Equity

Under the Company’s amended and restated certificate of incorporation, dated December 21, 2020, the Company is authorized to issue 300,000,000 shares of common stock, par value $0.001 per share and 20,000,000 shares of preferred stock, par value $0.001.001 per share.

The holders of common stock are entitled to one vote for each share held. Common stockholders are not entitled to receive dividends, unless declared by the Board of Directors. The Company has not declared dividends since inception. In the event of liquidation of the Company, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. The outstanding shares of common stock are fully paid and non-assessable.

19.17. Equity Incentive Plans and Share-Based Payments

2021 Omnibus Incentive Plan

In 2021, our Board of Directors adopted and our shareholders approved, the 2021 Omnibus Incentive Plan (“2021 Plan). Under the original 2021 Plan, 2,750,000shares are reserved and authorized for awards and the maximum contractual term is 10 yearsfor stock options issued under the 2021 Plan. On December 12, 2022, the 2021 Plan was amended by our stockholders and the number of shares authorized for awards under the 2021 Plan was increased by 2,589,800 to 5,339,800. As of March 31, 2023, there were 2,946,988 shares available for future awards under the amended 2021 Plan.

Non-qualified stock options

DuringWe maintain the quarter ended March 31, 2022,2021 Plan for the Company granted non-qualifiedbenefit of our officers, directors and employees. Employee stock options to certain employees to purchase 28,378 shares of common stockgranted under the 2021 Omnibus Incentive Plan. ThePlan generally vest in equal annual installments over three years and are exercisable for a period of up to ten years from the grant date. Non-employee director options were granted to employeesvest in equal monthly installments following the date of grant and will be fully vested on March 2, 2022 with an exercise pricethe one-year anniversary of $2.96 and a contractual termthe date of ten years. Thesegrant. All stock options hadare exercisable at a grant-date fairprice as set by the Company at the time of the grant but shall not be less than the market value of $44,000 and vest annually over a three-year period, subject to the recipient’s continued service withcommon shares underlying the Company throughoption on the applicable vesting dates.grant date.

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 the Black-Scholes option pricing model, 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 fair value of each option grant was estimated on the grant date of March 2, 2022,the grant using the Black-ScholesBSM option pricing model with the following assumptions: fair value

Schedule of the underlying unit of $2.96Stock Options Assumptions, expected volatility of 55.0%, risk free rate of 1.79%, term of 6 years and a dividend yield of 0.

Share-based compensation expense of approximately $0.3 million and $0.1 million was recorded in selling, general and administrative expenses on the accompanying consolidated statement of operations for the three months ended March 31, 2022. There was 0 stock based compensation for the three months ended2023 and March 31, 2021.2022, respectively.

Options outstanding and exercisable under the employee share option plan as of March 31, 20222023 and a summary of option activity during the three months then ended is presented below.

 Schedule of Stock UnitOption Activity

As of March 31, 2022,2023, there was $1.32.0 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.702.1 years.

Share-Based Compensation (RSUs)

There were 0 RSU’s granted duringRestricted Stock Units (“RSUs”) will vest annually over two years, subject to the three months ended March 31, 2022. During the year ended December 31, 2021,recipient’s continued service with the Company granted to certain members of management 170,068 restricted stock units, or RSUs.through the applicable vesting dates. The fair value of each RSU is estimated based on the closing market price of the Company’s common stock on the grant date.

The RSUs had a grant-date fair value of $0.8 million and will be fully vested on June 9, 2022, six months after the grant date, subject to the recipient’s continued service with the Company through the applicable vesting dates. Share-based compensation expense of $0.1 million and $0.4 million for the RSUs was recorded in selling, general and administrative expenses in the accompanying statementconsolidated statements of operations for the three months ended March 31, 2022. There was 0 share-based compensation for the three months ended2023 and March 31, 2021.2022, respectively.

As of March 31, 2022,2023, there was $0.30.5 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 0.191.1 years.

Schedule of Restricted Stock Units

20.18. Interest Expense, net

Interest expense, net consists of the following:

Schedule of Interest Expense