Biofrontera Inc. Stock Compensation Disclosure
2021 Omnibus Incentive Plan
In 2021, the Board adopted, and our shareholders approved, the 2021 Omnibus Incentive Plan (“2021 Plan”), under which the maximum contractual term is years for stock options issued. On June 12, 2024, the stockholders of the Company approved an amendment to the 2021 Plan to increase the number of shares authorized for issuance by shares, from shares to shares. As of December 31, 2025, there were shares available for future awards under the amended 2021 Plan.
Non-qualified stock options
We maintain the 2021 Plan for the benefit of our officers, directors and employees. Employee stock options granted under the 2021 Plan generally vest in equal annual installments over three years or semi-annually over one year in accordance with the respective award agreements and are exercisable for a period of up to ten years from the grant date. Non-employee director options vest in equal monthly installments following the date of grant and will be fully vested on the one-year anniversary of the date of grant. All stock options are exercisable at a price equal to or greater than the market value of the common shares underlying the option on the 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 either a Lattice 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 for the stock options granted in 2025 which were valued using the Lattice model were: exercise price of $, risk-free rate of approx. %, volatility of %, a dividend yield of %, and an option exercise multiple of 2.50x. The assumptions and key inputs for the stock options granted in 2024 valued using the BSM model were: exercise price of $ to $, risk-free rate of approx. % to %, volatility of %, expected term of to years, and a dividend yield of %.
The total grant-date fair value of options granted during the years ended December 31, 2025 and 2024 was $ million and $ million, respectively. The weighted average grant-date fair value of options granted during the years ended December 31, 2025 and 2024 was $ and $, respectively.
Share-based compensation expense related to stock options of $ million and $ million was recorded in selling, general and administrative expenses, with a negligible amount recorded as research and development on the accompanying consolidated statement of operations for the years ended December 31, 2025 and 2024, respectively.
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value (1) | |||||||||||||
| Outstanding at December 31, 2023 | 99,486 | $ | 39.36 | $ | ||||||||||||
| Granted | 1,289,954 | $ | 1.37 | |||||||||||||
| Exercised | $ | - | ||||||||||||||
| Canceled or forfeited | (30,722 | ) | $ | 11.77 | ||||||||||||
| Outstanding at December 31, 2024 | 1,358,718 | $ | 3.88 | $ | ||||||||||||
| Granted | 719,844 | $ | 1.00 | |||||||||||||
| Exercised | $ | - | ||||||||||||||
| Canceled or forfeited | (191,844 | ) | $ | 4.65 | ||||||||||||
| Outstanding at December 31, 2025 | 1,886,718 | $ | 2.70 | $ | ||||||||||||
| Exercisable at December 31, 2025 | 515,408 | $ | 6.61 | $ | ||||||||||||
| (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 December 31, 2025 and December 31, 2024. |
As of December 31, 2025, there was $ million of unrecognized compensation cost related to unvested stock options held by employees and directors, which is expected to be recognized over a weighted-average period of years.
Share-Based Compensation (RSUs)
RSUs will vest either annually over two years, or semi-annually over one year in accordance with the respective award agreements, subject to the recipient’s continued service with the Company 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.
Share-based compensation expense related to RSUs of $ million and $ million for the RSUs was recorded in selling, general and administrative expenses in the accompanying consolidated statement of operations for the years ended December 31, 2025 and 2024.
As of December 31, 2025, there was $ million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of years.
| Shares | Weighted Average Grant Date Fair Value | |||||||
| Unvested balance at December 31, 2023 | 4,771 | $ | 52.20 | |||||
| Awarded | 450,000 | $ | 1.06 | |||||
| Issued | (4,771 | ) | $ | 52.20 | ||||
| Forfeited | $ | |||||||
| Unvested balance at December 31, 2024 | 450,000 | $ | 1.06 | |||||
| Awarded | 187,500 | $ | 0.90 | |||||
| Issued | (225,000 | ) | $ | 1.06 | ||||
| Forfeited | $ | |||||||
| Unvested balance at December 31, 2025 | 412,500 | $ | 0.99 | |||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 19, 2026 | Showing above |
| 2024 | Mar 20, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 13, 2023 | |
| 2021 | Apr 11, 2022 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.