XML 28 R12.htm IDEA: XBRL DOCUMENT
v3.25.1

Fair Value Measurements | 12 Months Ended
--- | ---
Dec. 31, 2024
Fair Value Disclosures [Abstract] |
Fair Value Measurements | 3. Fair Value Measurements The following table presents information about the Company’s assets that are measured at fair value on a recurring basis 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
(in thousands) |  | Level |  |  | December 31, 2024 |  |  | December 31, 2023 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Investment, related party |  |  | 1 |  |  | $ | 7 |  |  | $ | 78 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Warrant liability – 2023 Purchase Warrants |  |  | 3 |  |  | $ | 1,030 |  |  | $ | 3,470 |
Warrant liability – 2022 Purchase Warrants |  |  | 3 |  |  | $ | 98 |  |  | $ | 328 |
Warrant liability – 2022 Inducement Warrants |  |  | 3 |  |  | $ | 122 |  |  | $ | 412 |
Warrant liability |  |  | 3 |  |  | $ | 122 |  |  | $ | 412 |
Total Liabilities |  |  |  |  |  | $ | 1,250 |  |  | $ | 4,210 |
Investment, related party As of December 31, 2024 and 2023, the Company owned 3,019 and 8,450 common shares of Biofrontera AG, respectively. The fair value of this investment was determined with Level 1 inputs through references to quoted market prices. See Note 6. Investment Related Party and Note 13. Related Party Transactions. Warrant Liabilities The warrant liabilities are comprised of (i) outstanding warrants to purchase 170,950 shares of 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 consolidated statement 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 consolidated statement of operations. The Company utilizes a Black-Scholes option pricing model to estimate the fair value of the warrant liabilities 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 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 consolidated statement of operations. The fair value for the Level 3 warrants at December 31, 2024 and December 31, 2023 was estimated using Black-Scholes pricing model based on the following assumptions: Schedule of Fair Value Warrant by Using Black-Scholes Pricing Model Assumptions
|  | December 31, 2024 |  |  | December 31, 2023 |
Stock price |  | $ | 1.09 |  |  | $ | 2.77 |
Expiration term (in years) |  |  | 3.84 |  |  |  | 4.84 |
Volatility |  |  | 105 | % |  |  | 95 | %
Risk-free Rate |  |  | 4.27 | % |  |  | 3.82 | %
Dividend yield |  |  | 0.0 | % |  |  | 0.0 | %
The warrants issued on February 22, 2024 to purchase 8,000 shares of Series B-3 Convertible Preferred Stock, par value $0.001 per share (the “2024 Preferred Warrants”), were also accounted for as liabilities, as they were redeemable in the event of a change in control, which was not solely within the control of the Company (see Note 14. Stockholders’ Equity). The 2024 Preferred Warrants were issued in the first quarter of 2024 and exercised prior to the end of the second quarter of 2024. The fair value for the Level 3 2024 Preferred Warrants was estimated utilizing a probability weighted average approach, which incorporated two scenarios. In scenario one, the warrant value was based on the underlying value of the convertible preferred stock, using an option-pricing model backsolve that solved for the value of our publicly traded equity on the valuation date to obtain the valuation date fair value of the Series B-3 Convertible Preferred Stock, then applied the Series B-3 Convertible Preferred Stock value into the BSM model equation to determine the value of the Series B-3 convertible warrants. In scenario two, the warrant value was based on the underlying value of the publicly traded common equity value. Scenario two assumes the preferred stock will be converted into Common Stock prior to a liquidity event. A simple BSM model was utilized to value the warrant under scenario two, using the closing price of our Common Stock as an input to the model. The BSM model used the following range of inputs and assumptions for the 2024 Preferred Warrants at the issuance date of February 22, 2024, for the three months ended March 31, 2024 and at the exercise date of May 13, 2024: (i) expected stock price volatility of 79.3% to 105%; (ii) risk-free interest rate of 5.39%; to 5.54%; (iii) expected life of the warrants of 0.003 to 0.21 years; and (iv) dividend yield of 0.0%. The fair value of the 2024 Preferred Warrants was $4.1 million at issuance and $5.4 million at the exercise date. See Note 14. Stockholders’ Equity for additional details. The following table presents the changes in the warrant liabilities measured at fair value (in thousands): Schedule of Changes in Fair Value Warrant Liabilities
|  | December 31, 2024 |  |  | December 31, 2023 |
Fair value at beginning of year |  | $ | 4,210 |  |  | $ | 2,843 |
Issuance of new warrants |  |  | 4,092 |  |  |  | 6,778 |
Exercise of warrants |  |  | (5,372 | ) |  |  | - |
Change in fair value of warrant liability |  |  | (1,680 | ) |  |  | (6,456 | )
Warrant inducement expense |  |  | - |  |  |  | 1,045 |
Fair value at end of year |  | $ | 1,250 |  |  |  | 4,210 |

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 820 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/820/tableOfContent + Details
Name: | us-gaap_FairValueMeasurementInputsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration