UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number: 001-41173

NexGel, Inc.

(Exact name of registrant as specified in its charter)

Delaware		26-4042544
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

2150 Cabot Blvd West, Suite B

Langhorne, PA

19047

(Address of principal executive office)

(Zip Code)

Registrant’s telephone number, including area code: (215) 702-8550

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001	NXGL	The Nasdaq Capital Market LLC
Warrants to Purchase Common Stock	NXGLW	The Nasdaq Capital Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a nonaccelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ☒
	Smaller reporting company ☒	Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 13, 2024, the registrant had 6,324,266 shares of common stock outstanding.

nEXGEL, INC.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	7
	Notes to Condensed Consolidated Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	36
ITEM 4.	Controls and Procedures	36

	PART II – OTHER INFORMATION
ITEM 1.	Legal Proceedings	37
ITEM 1A.	Risk Factors	37
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
ITEM 3.	Defaults Upon Senior Securities	37
ITEM 4.	Mine Safety Disclosures	37
ITEM 5.	Other Information	37
ITEM 6.	Exhibits	38

Signatures		39

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NEXGEL, INC

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2024 AND DECEMBER 31, 2023

(Unaudited)

(in thousands, except share and per share data)

	June 30, 2024			December 31, 2023
ASSETS:
Current Assets:
Cash	$	1,069		$	2,700
Accounts receivable, net		605			633
Inventory		1,446			1,319
Prepaid expenses and other current assets		468			400
Total current assets		3,588			5,052
Goodwill		1,128			1,128
Intangibles, net		855			326
Property and equipment, net		2,368			1,499
Operating lease - right of use asset		1,742			1,855
Other assets		95			95
Total assets	$	9,776		$	9,955

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	1,245		$	1,233
Accrued expenses and other current liabilities		284			398
Deferred revenue		179			20
Current portion of note payable		87			80
Warrant liability		176			146
Contingent consideration liability		370			439
Financing lease liability, current portion		55			-
Operating lease liabilities, current portion		237			233
Total current liabilities		2,633			2,549
Operating lease liabilities, net of current portion		1,632			1,727
Financing lease liability, net of current portion		339			-
Notes payable, net of current portion		645			513
Total liabilities		5,249			4,789

Commitments and Contingencies (Note 16)

Preferred stock, par value $0.001 per share, 5,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, par value $0.001 per share, 25,000,000 shares authorized; 6,324,266 and 5,741,838 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		6			6
Additional paid-in capital		20,614			19,406
Accumulated deficit		(16,453	)		(14,715	)
Total NexGel stockholders’ equity		4,167			4,697
Non-controlling interest in joint venture		360			469
Total stockholders’ equity		4,527			5,166
Total liabilities and stockholders’ equity	$	9,776		$	9,955

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

Table of Contents

NEXGEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(Unaudited)

(in thousands, except share and per share data)

	2024			2023			2024			2023
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
Revenues, net	$	1,440		$	1,167		$	2,706		$	1,786

Cost of revenues		1,030			992			2,019			1,669

Gross profit		410			175			687			117

Operating expenses
Research and development		76			55			78			84
Selling, general and administrative		1,388			882			2,534			1,679
Total operating expenses		1,464			937			2,612			1,763

Loss from operations		(1,054	)		(762	)		(1,925	)		(1,646	)

Other income (expense)
Interest expense		(30	)		(9	)		(46	)		(10	)
Interest income		1			2			2			2
Loss on sale of assets		(4	)		-			(4	)		-
Other income		6			-			6			4
Gain on investments		23			116			57			124
Changes in fair value of warrant liability		79			11			26			77
Total other income, net		75			120			41			197
Loss before income taxes		(979	)		(642	)		(1,884	)		(1,449	)
Income tax expense		-			-			-			-
Net loss	$	(979	)	$	(642	)		(1,884	)		(1,449	)
Less: Income attributable to non-controlling interest in joint venture		94			(53	)		146			(60	)
Net loss attributable to NexGel stockholders		(885	)		(695	)		(1,738	)		(1,509	)
Net loss per common share - basic	$	(0.14	)	$	(0.12	)		(0.28	)		(0.27	)
Net loss per common share - diluted	$	(0.14	)	$	(0.12	)		(0.28	)		(0.27	)
Weighted average shares used in computing net loss per common share - basic		6,254,659			5,662,338			6,118,212			5,624,275
Weighted average shares used in computing net loss per common share – diluted		6,254,659			5,662,338			6,118,212			5,624,275

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

Table of Contents

NEXGEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(Unaudited)

(in thousands, except share data)

Common Stock

Additional

Paid-in

Non-

controlling

Accumulated

Total

Stockholders’

Amount

Capital

Interest

Deficit

Equity

Balance, January 1, 2024

5,741,83

SEC Form 10-Q filed by NexGel Inc