Biofrontera Inc.

Previous wording

Management’s discussion and analysis (“MD&A”) provides supplemental information, which sets forth the major factors that have affected our financial condition and results of operations and should be read in conjunction with the Condensed Consolidated Financial Statements and related notes. The following information should provide a better understanding of the major factors and trends that affect our earnings performance and financial condition, and how our performance during the first quarter of 2026 compares with prior-year periods. Throughout this section, Biofrontera Inc., including its wholly owned subsidiary, Biofrontera Discovery GmbH (“Discovery” or “subsidiary”), is referred to as “Company,” “we,” “us,” or “our.” References to*“*Former Ameluz Licensor” refers to Biofrontera Pharma GmbH and references to the “Biofrontera Group” refer to Biofrontera AG and its consolidated subsidiaries.

Current wording

Management’s discussion and analysis (“MD&A”) provides supplemental information, which sets forth the major factors that have affected our financial condition and results of operations and should be read in conjunction with the Condensed Consolidated Financial Statements and related notes. The following information should provide a better understanding of the major factors and trends that affect our earnings performance and financial condition, and how our performance during the second quarter of 2026 compares with prior-year periods. Throughout this section, Biofrontera Inc., including its wholly owned subsidiary, Biofrontera Discovery GmbH (“Discovery” or “subsidiary”), is referred to as “Company,” “we,” “us,” or “our.” References to “Former Ameluz Licensor” refers to Biofrontera Pharma GmbH and references to the “Biofrontera Group” refer to Biofrontera AG and its consolidated subsidiaries.

Previous wording

All trademarks, trade names, and service marks appearing in this Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Form 10-Q are referred to without the symbols ® and ™, but such references should not be construed as any indication that their respective owners will not assert their rights thereto to the fullest extent under applicable law. We do not intend to use or display other companies’ trademarks, trade names, or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

Current wording

All trademarks, trade names, and service marks appearing in this Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Form 10-Q may be referred to without the symbols® and ™, but such references should not be construed as any indication that their respective owners will not assert their rights thereto to the fullest extent under applicable law. We do not intend to use or display other companies’ trademarks, trade names, or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

Previous wording

Strategic Transaction with the Biofrontera Group. 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 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 the RhodoLED Lamps (the “Strategic Transaction”). Pursuant to the terms of the Agreements, retroactive to June 1, 2025, the Company will pay a monthly earnout of 12% of United States revenues of Ameluz in years when United States net sales are $65.0 million or less and an earnout of 15% on all revenue in years when United States net sales of Ameluz exceed $65.0 million, continuing until the expiration of patent protection on Ameluz allows for generic competition in the United States. The earnout replaces a transfer pricing model under the Company’s Second Amended and Restated License and Supply Agreement (“Second A&R Ameluz LSA”) by and among the Company and the Biofrontera Group, which has now been terminated pursuant to the Agreements. The new structure reduces overall cost for the Company and is expected to accelerate the Company’s timeframe to reach break-even. The results of operations for the three months ended March 31, 2026 reflect a full quarter under this revised cost structure, while the three months ended March 31, 2025 reflect the prior transfer-pricing model. Period-over-period comparisons of cost of revenues and related-party cost of revenues are therefore affected by this change, as discussed further under “Results of Operations” below. SeeNote 12. Related Party Transactions in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional information.

Current wording

Strategic Transaction with the Biofrontera Group. 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 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 the RhodoLED® Lamps (the “Strategic Transaction”). Pursuant to the terms of the Agreements, retroactive to June 1, 2025, the Company will pay a monthly earnout of 12% of United States revenues of Ameluz® in years when United States net sales are $65.0 million or less and an earnout of 15% on all revenue in years when United States net sales of Ameluz® exceed $65.0 million, continuing until the expiration of patent protection on Ameluz® allows for generic competition in the United States. The earnout replaces a transfer pricing model under the Company’s Second Amended and Restated License and Supply Agreement (“Second A&R Ameluz LSA”) by and among the Company and the Biofrontera Group, which has now been terminated pursuant to the Agreements. The new structure reduces overall cost for the Company and is expected to accelerate the Company’s timeframe to reach break-even. The results of operations for the three and six months ended June 30, 2026 reflect this revised cost structure, while the results of operations for the three and six months ended June 30, 2025 reflect the prior transfer-pricing model. Period-over-period comparisons of cost of revenues and related-party cost of revenues are therefore affected by this change, as discussed further under “Results of Operations” below. SeeNote 13. Related Party Transactions in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional information.

Previous wording

Compliance with Nasdaq Listing Standards.On December 31, 2025, we received a letter from Nasdaq notifying us that the listing of our common stock was not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “the Minimum Bid Price Requirement”). On May 6, 2026, we received written notification from Nasdaq that we had regained compliance with the Minimum Bid Price Requirement and that the matter was closed. There can be no assurance that we will maintain compliance with the Minimum Bid Price Requirement or other continued listing standards in the future. SeeNote 18.Subsequent Events in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional information.

Current wording

Compliance with Nasdaq Listing Standards.On December 31, 2025, we received a letter from Nasdaq notifying us that the listing of our common stock was not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). On May 6, 2026, we received written notification from Nasdaq that we had regained compliance with the Minimum Bid Price Requirement and that the matter is closed. There can be no assurance that we will maintain compliance with the Minimum Bid Price Requirement or other continued listing standards in the future. SeeNote 2. Summary of Significant Accounting Policies – The Nasdaq Stock Market, LLC Compliance in our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional information.

Previous wording

ITC Matter. On May 6, 2026, the International Trade Commission issued a Notice of Final Determination finding a violation of Section 337 of the Tariff Act of 1930 with respect to two asserted patents involving certain components of our RhodoLED XL Lamps. The Commission issued a Limited Exclusion Order and Cease and Desist Orders, with the orders relating to the ‘028 patent suspended pending further proceedings before the U.S. Patent Trial and Appeal Board. SeeNote 16. Commitments and Contingencies for additional information regarding this matter, which is referred to herein as the “ITC Matter.”

Current wording

ITC Matter. On May 6, 2026, the International Trade Commission issued a Notice of Final Determination finding a violation of Section 337 of the Tariff Act of 1930 with respect to two asserted patents involving certain components of our RhodoLED® XL Lamps. The Commission issued a Limited Exclusion Order and Cease and Desist Orders, with the orders relating to the ‘028 patent suspended pending further proceedings before the U.S. Patent Trial and Appeal Board. SeeNote 17. Commitments and Contingencies for additional information regarding this matter, which is referred to herein as the “ITC Matter.”

Previous wording

We devote a substantial portion of our cash resources to the commercialization of Ameluz and the BF-RhodoLED Lamps. We have financed our operating and capital expenditures through cash proceeds generated from our product sales, proceeds received from convertible notes and equity financings.

Current wording

We devote a substantial portion of our cash resources to the commercialization of Ameluz® and the RhodoLED® Lamps. We have financed our operating and capital expenditures through cash proceeds generated from our product sales, proceeds received from convertible notes and equity financings.

Previous wording

We believe that important measures of our results of operations include product revenue, operating income (loss) and adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”; a non GAAP measure). Our sole source of product revenue is sales of Ameluz and the BF-RhodoLED Lamps. Our long-term financial objectives include consistent revenue growth and expanding operating margins. Accordingly, we are focused on product sales expansion to drive revenue growth and improve operating efficiencies, including effective resource utilization, information technology leverage, and overhead cost management.

Current wording

We believe that important measures of our results of operations include product revenue, operating income (loss) and adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”; a non-GAAP measure). Our sole source of product revenue is sales of Ameluz® and the RhodoLED® Lamps. Our long-term financial objectives include consistent revenue growth and expanding operating margins. Accordingly, we are focused on product sales expansion to drive revenue growth and improve operating efficiencies, including effective resource utilization, information technology leverage, and overhead cost management.

Previous wording

Cost of revenues, related party, relating to inventory purchased before the Strategic Transaction, is comprised of purchase costs of our products, Ameluz and RhodoLED Lamps, from Biofrontera Pharma GmbH and insignificant inventory adjustments due to scrapped, expiring and excess products.

Current wording

Cost of revenues, related party, relating to inventory purchased from the Biofrontera Group is comprised of purchase costs of our products, Ameluz® and RhodoLED® Lamps, from Biofrontera Pharma GmbH and insignificant inventory adjustments due to scrapped, expiring and excess products.

Previous wording

Selling, general and administrative expenses, related party, relate to the services provided by the Biofrontera Group, primarily for regulatory support and pharmacovigilance. These expenses were charged to us based on costs incurred plus 6% in accordance with the Amended and Restated Master Contact Services Agreement entered into in December 2021.

Current wording

Selling, general and administrative expenses, related party, relate to the services provided by the Biofrontera Group, primarily for regulatory support and pharmacovigilance. These expenses were charged to us based on costs incurred plus 6% in accordance with the Amended and Restated Master Contract Services Agreement entered into in December 2021.

Previous wording

Effective June 1, 2024, we took control of all clinical trials for Ameluz in the United States, allowing for more effective cost management and direct oversight of trial efficiency. Our R&D expenses include costs directly attributable to the clinical development of Ameluz, including personnel-related expenses, the cost of services provided by outside contractors, including services related to the Company’s clinical trial sites, facilities, depreciation, and other direct and allocated expenses. Along with our Ameluz clinical trials, our R&D program also aims to improve the capabilities of our RhodoLED Lamps to better fulfill the needs of dermatologists and improve the effectiveness of our commercial team by letting sales representatives carry approved devices with them, allowing for easier product demonstrations and evaluations. All costs associated with R&D are expensed as incurred.

Current wording

We conduct all clinical trials for Ameluz® in the United States through Biofrontera Discovery GmbH, allowing for more effective cost management and direct oversight of trial efficiency. Our R&D expenses include costs directly attributable to the clinical development of Ameluz®, including personnel-related expenses, the cost of services provided by outside contractors, including services related to the Company’s clinical trial sites, facilities, depreciation, and other direct and allocated expenses. Along with our Ameluz® clinical trials, our R&D program also aims to improve the capabilities of our RhodoLED® Lamps to better fulfill the needs of dermatologists and improve the effectiveness of our commercial team by letting sales representatives carry approved devices with them, allowing for easier product demonstrations and evaluations. All costs associated with R&D are expensed as incurred.

Previous wording

The following table summarizes our results of operations for the three months ended March 31, 2026 and 2025:

Current wording

The following table summarizes our results of operations for the three months ended June 30:

Previous wording

Net product revenue for the three months ended March 31, 2026 was $10.1 million, an increase of $1.5 million, or 17.4%, compared to the three months ended March 31, 2025. The increase was primarily attributable to higher Ameluz® net sales, reflecting 15.9% growth in unit volume, as well as the full period impact of a price increase implemented in the fourth quarter of 2025 that contributed approximately $0.2 million revenue increase.

Current wording

Net product revenue for the three months ended June 30, 2026 was $12.0 million, an increase of $3.0 million, or 32.9%, compared to the three months ended June 30, 2025. The increase was primarily attributable to higher Ameluz® net sales, reflecting $2.6 million or 30.0% growth in unit volume. Of the $2.6 million volume-driven revenue increase, approximately $1.9 million is attributable to accelerated order timing from certain customer accounts in anticipation of supply restrictions resulting from the ITC Matter, with the remainder reflecting improved sales execution and strategic sales team management. Additionally, a price increase implemented in the fourth quarter of 2025 contributed $0.3 million revenue increase.

Previous wording

Cost of revenues, related party for the three months ended March 31, 2026 decreased $1.2 million, or 40.5%, compared to the three months ended March 31, 2025. The decrease was primarily driven by a reduction in the purchase price of Ameluz® resulting from the transition pursuant to the Strategic Transaction from the transfer pricing model in place under the now-terminated Second A&R Ameluz LSA, which was 25% of net revenue, to a significantly lower cost structure comprised only of Ameluz direct cost and the 12% earnout applied to the net revenue.

Current wording

Cost of revenues, related party for the three months ended June 30, 2026 was $2.2 million, a decrease of $0.2 million, or 8.2%, compared to the three months ended June 30, 2025. The decrease was primarily driven by a reduction in the purchase price of Ameluz® resulting from the Strategic Transaction, which transitioned the Company from the transfer pricing model in place under the now-terminated Second A&R Ameluz LSA, which was 25% of net revenue, to a significantly lower cost structure comprised only of Ameluz® direct cost and the 12% earnout applied to net revenue.

Previous wording

The following table summarizes the major categories of our R&D expenses for the three months ended March 31, 2026 and 2025:

Current wording

The following table summarizes the major categories of our R&D expenses for the three months ended June 30:

Previous wording

During the three months ended March 31, 2026, we recognized a total charge of approximately $0.4 million reflecting the estimated cost to remediate the affected units of our RhodoLED XL Lamps in response to ITC Matter. The total charge comprises (i) an inventory write-down of approximately $0.1 million to reduce the carrying value of affected finished goods inventory and obsolete components in raw materials to net realizable value in accordance with ASC 330-10-35, which were charged to cost of revenues, other, and (ii) an accrued remediation liability of approximately $0.4 million for the future cost activities charged to patent remediation expense.

Current wording

During the six months ended June 30, 2026, we recognized a total charge of $0.5 million reflecting the estimated cost to remediate the affected units of our RhodoLED® XL Lamps in response to the ITC Matter. The total charge comprises (i) an inventory write-down of $0.1 million to reduce the carrying value of affected finished goods inventory and obsolete components in raw materials to net realizable value in accordance with ASC 330-10-35, which were charged to cost of revenues, other, and (ii) an accrued remediation liability of $0.4 million for the future cost activities charged to patent remediation expense.

Previous wording

We expect to incur the cash component of these costs over the twelve months following the 60-day Presidential Review period, concluding on July 6, 2026, as remediation activities are executed. In addition, the remediation is expected to result in a modest, recurring increase in our per-unit cost of revenues for affected products; this prospective impact is reflected in our cost of revenues as units implementing the remediation are produced and sold. We do not expect the recurring per-unit cost increase to be material to our overall cost of revenues.

Current wording

We expect to incur the cash component of these costs over the twelve months following the 60-day Presidential Review period, which concluded on July 6, 2026, as remediation activities are executed. In addition, the remediation is expected to result in a small, recurring increase in our per-unit cost of revenues for affected products; this prospective impact is reflected in our cost of revenues as units implementing the remediation are produced and sold. We do not expect the recurring per-unit cost increase to be material to our overall cost of revenues.

Previous wording

Research and development expenses for the three months ended March 31, 2026 decreased $0.3 million compared to the three months ended March 31, 2025. The decrease was primarily attributable to certain clinical trials reaching substantial completion ahead of their originally planned timelines, resulting in lower trial-related expenditures in the current year period.

Current wording

Research and development expenses for the six months ended June 30, 2026 were $1.3 million, a decrease of $0.7 million compared to the six months ended June 30, 2025. The decrease was primarily attributable to certain clinical trials reaching substantial completion ahead of their originally planned timelines, resulting in lower trial-related expenditures in the current year period.

Previous wording

Net Loss to Adjusted EBITDA Reconciliation for the Three Months Ended March 31, 2026 and 2025

Current wording

Net Loss to Adjusted EBITDA Reconciliation for the Three and Six Months Ended June 30, 2026 and 2025

Previous wording

Change in fair value of warrant liabilities: The warrants issued in conjunction with our private placement offerings and registered public offerings were accounted for as liabilities in accordance with ASC 815-40. 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. We exclude the impact of the change in fair value of warrant liabilities as this is non-cash.

Current wording

Change in fair value of warrant liabilities: The warrants issued in conjunction with our private placement offerings and registered public offerings were accounted for as liabilities in accordance with ASC 815-40. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the consolidated statements of operations. We exclude the impact of the change in fair value of warrant liabilities as this is non-cash.

Previous wording

Patent Remediation Expense: During the three months ended March 31, 2026, we recognized a total charge of approximately $0.4 million reflecting the estimated cost to remediate the affected units of our RhodoLED XL Lamps in response to the ITC Matter. The total charge comprises (i) an inventory write-down of approximately $0.1 million to reduce the carrying value of affected finished goods inventory and obsolete components in raw materials to net realizable value in accordance with ASC 330-10-35, and (ii) an accrued remediation liability of approximately $0.4 million for the future cost activities required to complete the remediation. We exclude these charges because they relate to a discrete adverse legal and regulatory matter that is not indicative of the Company’s ongoing operating performance.

Current wording

Patent Remediation Expense: During the six months ended June 30, 2026, we recognized a total charge of $0.5 million reflecting the estimated cost to remediate the affected units of our RhodoLED® XL Lamps in response to the ITC Matter. The total charge comprises (i) an inventory write-down of $0.1 million to reduce the carrying value of affected finished goods inventory and obsolete components in raw materials to net realizable value in accordance with ASC 330-10-35, and (ii) an accrued remediation liability of $0.4 million for the future cost activities required to complete the remediation. We exclude these charges because they relate to a discrete adverse legal and regulatory matter that is not indicative of the Company’s ongoing operating performance.

Previous wording

The below table presents a reconciliation from net loss to Adjusted EBITDA for the three months ended March 31, 2026 and 2025:

Current wording

The below table presents a reconciliation from net loss to Adjusted EBITDA for the three and six months ended June 30, 2026 and 2025:

Previous wording

Adjusted EBITDA increased from ($4.4) million for the three months ended March 31, 2025 to ($3.6) million for the three months ended March 31, 2026, an improvement of approximately $0.8 million. The improvement was primarily driven by a $2.7 million increase in gross profit, reflecting higher Ameluz unit volume and a significantly lower cost structure as described above. This improvement was partially offset by a $2.3 million increase in selling, general and administrative expenses. Refer to the section above entitled “Selling, General and Administrative Expenses” for additional details.

Current wording

Adjusted EBITDA increased from ($5.1) million for the three months ended June 30, 2025 to ($0.2) million for the three months ended June 30, 2026, an improvement of $5.0 million. The improvement was primarily driven by a $3.2 million increase in gross profit, reflecting significantly higher Ameluz® unit volume and a lower cost structure as described above. The decrease of $0.9 million in selling, general and administrative expenses and decrease of $0.4 million in research and development cost further increased adjusted EBITDA. Refer to the section above entitled “Selling, General and Administrative Expenses” for additional details.

Previous wording

The accompanying 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 $0.1 million and $4.1 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company’s accumulated deficit was $133 million. The Company’s primary sources of liquidity are its cash collected from the sales of its products and cash flows from financing transactions. As of March 31, 2026, we had cash and cash equivalents of $6.3 million, compared to $6.4 million as of December 31, 2025. 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 issuance date of this Quarterly Report on Form 10-Q.

Current wording

The accompanying 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 $1.7 million and $7.2 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, the Company’s accumulated deficit was $133.3 million. The Company’s primary sources of liquidity are its cash collected from the sales of its products and cash flows from financing transactions. As of June 30, 2026, we had cash and cash equivalents of $4.7 million, compared to $6.4 million as of December 31, 2025.

Previous wording

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, pursuing the 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.

Current wording

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 expense; drawing on a working capital line of credit; pursuing the realization of an additional $1.0 million in milestone payments from the sale of the Xepi intangible asset expected in December 2026; and, if necessary, securing additional capital through equity or debt financings to support commercial expansion and R&D programs. 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.

Previous wording

During the three months ended March 31, 2025, operating activities used $4.1 million of cash, primarily resulting from our loss from operations of $4.2 million, plus the change in fair value of warrant liabilities of $0.5 million adjusted for non-cash expense of stock-based compensation of $0.2 million, non-cash interest expense of $0.1 million, depreciation and amortization in the aggregate of $0.2 million, and net cash used by changes in our operating assets and liabilities of $0.1 million.

Current wording

During the six months ended June 30, 2025, operating activities used $7.2 million of cash, primarily resulting from our loss from operations of $9.5 million, adjusted for non-cash expense of stock-based compensation of $0.4 million, depreciation and amortization in the aggregate of $0.4 million, non-cash interest expense of $0.2 million, and net cash used by changes in our operating assets and liabilities of $2.0 million, partially offset by the change in fair value of warrant liabilities of $0.7 million.

Previous wording

During the three months ended March 31, 2026 and 2025, net cash used in investing activities consisted of negligible fixed asset purchases.

Current wording

During the six months ended June 30, 2026 and 2025, net cash used in investing activities consisted of negligible fixed asset purchases.

Previous wording

A summary of our critical accounting estimates is discussed in the section entitled “Critical Accounting Estimates” inItem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations inthe 2025 Form 10-K. There were no material changes to our critical accounting estimates for the three months ended March 31, 2026, other than as noted below.

Current wording

A summary of our critical accounting estimates is discussed in the section entitled “Critical Accounting Estimates” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2025 Form 10-K. There were no material changes to our critical accounting estimates for the six months ended June 30, 2026, other than as noted below.

Previous wording

With respect to the ITC Matter, our estimate of the loss is based on a bottoms-up cost model encompassing component procurement, field service travel and labor, return-to-base rework, regulatory and quality activities, and other costs. The estimate is sensitive to a number of assumptions that may change as remediation activities progress, including, in particular, (a) the labor and the associated travel and lodging costs, (b) the unit cost of the remediation and the foreign exchange rate at which it is procured, (c) the regulatory pathway determined for the remediation and (d) the timing and outcome of the suspended limited exclusion order and cease and desist order as to the ‘028 patent. A change in any of these assumptions could result in a material change in the recorded accrual, which would be recognized prospectively as a change in estimate in accordance with ASC 250-10-45-17.

Current wording

With respect to the ITC Matter, our estimate of the loss is based on a bottom-up cost model encompassing component procurement, field service travel and labor, return-to-base rework, regulatory and quality activities, and other costs. The estimate is sensitive to a number of assumptions that may change as remediation activities progress, including, in particular, (a) the labor and the associated travel and lodging costs, (b) the unit cost of the remediation and the foreign exchange rate at which it is procured, (c) the regulatory pathway determined for the remediation and (d) the timing and outcome of the suspended limited exclusion order and cease and desist order as to the ‘028 patent. A change in any of these assumptions could result in a material change in the recorded accrual, which would be recognized prospectively as a change in estimate in accordance with ASC 250-10-45-17.

Previous wording

Other than those items reflected inNote 16. Commitments and Contingencies we did not have during the periods presented, and we do not currently have, any other off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Current wording

Other than those items reflected inNote 17. Commitments and Contingencies, we did not have during the periods presented, and we do not currently have, any other off-balance sheet arrangements, as defined in the rules and regulations of the SEC.