XML 29 R18.htm IDEA: XBRL DOCUMENT v3.25.3
Stockholders’ Equity
 9 Months Ended
Sep. 30, 2025
Equity [Abstract]  
Stockholders’ Equity

12. Stockholders’ Equity

 

Under the Company’s Certificate of Third Amendment to the Amended and Restated Certificate of Incorporation (“Certificate”), 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 (“Preferred Stock”).

 

 

Common Stock:

 

The holders of Common Stock are entitled to one vote for each share held. Holders of Common Stock are not entitled to receive dividends, unless declared by the Company’s board of directors (“Board”). 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. As of September 30, 2025, there were 11,648,323 shares of Common Stock outstanding.

 

As of September 30, 2025 we 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. These warrants have expiration dates ranging from November 2026 to November 2028. A summary of the warrants outstanding as of September 30, 2025 is presented below.

 

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

 

Series B Convertible Preferred Stock

 

On February 19, 2024, the Company entered into a securities purchase agreement (the “Preferred Purchase Agreement”), with certain accredited investors, pursuant to which the Company agreed to issue and sell, in a private placement (the “Offering”), (i) 6,586 shares of Series B-1 Convertible Preferred Stock, par value $0.001 per share (the “Series B-1 Preferred Stock”), and (ii) warrants to purchase 8,000 shares of Series B-3 Convertible Preferred Stock, par value $0.001 per share (the “Series B-3 Preferred Stock”), for an aggregate offering price of $8.0 million (the “2024 Preferred Warrants”). The conversion price of Series B-1 Preferred Stock and Series B-3 Preferred Stock is $0.7074 per share of Common Stock, such that each Series B share is convertible into 1,413 shares of the Common Stock. All of the 2024 Preferred Warrants were exercised for Series B-3 Preferred Stock during the second quarter of 2024. As of September 30, 2025, there were 2,050 shares of Series B-2 Preferred Stock and 6,593 shares of Series B-3 Preferred Stock issued and outstanding (convertible into 12,212,599 shares of Common Stock). Pursuant to the Preferred Purchase Agreement, the Company may be compelled to appoint two independent directors designated by Rosalind Advisors, Inc. to the Company’s Board. No such appointment has been made as of September 30, 2025. See rights and preferences of the Series B Preferred Stock as previously disclosed in the Company’s Form 10-K for the year ended December 31, 2024.

 

Series C Convertible Preferred Stock

 

As a condition precedent for the Strategic Transaction, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell, in a private placement up to 11,000 shares of Series C Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”) at a price of $1,000 per Series C Preferred Share for an aggregate offering price of $11.0 million. The offering consisted of two tranches, of which the first tranche of 8,500 Series C Preferred Shares closed on July 1, 2025. See Note 17. Subsequent Events for additional information on the second tranche.

 

On June 30, 2025, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred with the Delaware Secretary of State (the “Series C Certificate of Designation”) designating 11,000 shares of its authorized and unissued preferred stock as Series C Preferred Stock each with a stated value of $1,000 per share. As of September 30, 2025, there were 8,219 shares of Series C Preferred Stock issued and outstanding with the following terms, pursuant to the Series C Certificate of Designation:

 

 

Voting Rights. Holders of Series C Preferred Stock will be entitled to one vote for each whole share of Common Stock into which their Series C Preferred Stock is then-convertible on all matters submitted to a vote of stockholders, subject to certain limitations.

 

Conversion. Each share of Series C Preferred Stock is, subject to certain limitations, immediately convertible at the option of the holder thereof into the number of shares of the Company’s Common Stock equal to the original share price of $1,000 divided by 0.6249, rounded down to the nearest whole share.

 

Liquidation. Upon any liquidation, the assets of the Company available for distribution to its stockholders shall be distributed among the holders of the shares of Series C Preferred Stock, Series D Preferred Stock, any other classes of capital stock with liquidation rights and Common Stock, pro rata based on the number of shares of Common Stock held by each such holder, treating for this purpose all shares of Series C Preferred Stock as if they had been converted to Common Stock immediately prior to such liquidation, without regard to any limitations on conversion or otherwise.

 

Series D Convertible Preferred Stock

 

In connection with the Strategic Transaction, on June 30, 2025, the Company filed the Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock with the Delaware Secretary of State (the “Series D Certificate of Designation”) designating 3,019 shares of its authorized and unissued preferred stock as Series D Preferred Stock each with a stated value of $1,000 per share. There were 3,019 shares of Series D Preferred Stock issued and outstanding as of September 30, 2025. The Series D Preferred Stock was issued on July 2, 2025, however, the related Strategic Transaction was not finalized until October 20, 2025, creating a receivable for the issuance of equity shares as of September 30, 2025. In accordance with ASC 505-10-45-2 Receivables for Issuance of Equity reporting the receivable as an asset is generally not appropriate. Therefore, the related receivable for the issuance of Series D Preferred Stock was recognized net of the issuance in equity. The Series D Preferred Stock was booked at par value and the fair value will be applied once the asset acquisition is completed in October of 2025. See Note 17. Subsequent Events.

 

The following is a summary of the terms of the Series D Preferred Stock pursuant to the Series D Certificate of Designation:

 

Voting Rights. Holders of Series D Preferred Stock will be entitled to one vote for each whole share of Common Stock into which their Series D Preferred Stock is then-convertible on all matters submitted to a vote of stockholders, subject to certain limitations.

 

Conversion. Each share of Series D Preferred Stock, subject to certain limitations, is immediately convertible at the option of the holder thereof into the number of shares of the Company’s Common Stock equal to the original share price of $1,000 divided by 0.6249, rounded down to the nearest whole share.

 

Liquidation. Upon any liquidation, the assets of the Company available for distribution to its stockholders shall be distributed among the holders of the shares of Series D Preferred Stock, Series C Preferred Stock, any other classes of capital stock with liquidation rights and Common Stock, pro rata based on the number of shares of Common Stock held by each such holder, treating for this purpose all shares of Series D Preferred Stock as if they had been converted to Common Stock immediately prior to such liquidation, without regard to any limitations on conversion or otherwise.

 

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) if the board consists of eight or more directors the right to appoint two individuals. No appointments have been made through the filing date.

 

Convertible Debt

 

On November 22, 2024, the Company issued $4.2 million in an aggregate principal amount of the Notes. The Notes allow for up to 5,384,615 shares of Common Stock to be issued upon conversion for principal plus additional shares for PIK interest. See Note 10. Debt, for additional details.

 

 

Redeemable Preferred Stock

 

At issuance, the Series C Preferred and Series D Preferred Stock were redeemable in the event of a change in control that was not solely within the control of the Company. ASC 480-10-S99-3A(2) of the SEC’s Accounting Series Release No. 268 requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable (i) at a fixed or determinable price on a fixed or determinable date, (ii) at the option of the holder, or (iii) upon the occurrence of an event that is not solely within the control of the issuer. The Series C Preferred and Series D Preferred Stock had preference in liquidation over common stock upon deemed liquidation events that were not solely within the issuer’s control. As such the limited scope exception for permanent equity did not apply and the Series C Preferred and Series D Preferred Stock were classified as mezzanine equity at issuance.

 

Following the Special Shareholder Meeting on September 16, 2025, the Series C Preferred and Series D Preferred holders are entitled to receive the same form of consideration upon a liquidation event. Accordingly, the Series C Preferred and Series D Preferred stock were reclassified as permanent equity on our consolidated balance sheets and consolidated statements of change in stockholders’ equity as of September 30, 2025, due to the limited exception under ASC 480-10-S99-3A(3)(f).