NXGL NexGel Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 14, 2024

 

NEXGEL, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		001-41173		26-4042544
(State or other jurisdiction		(Commission		(IRS Employer
of incorporation)		File Number)		Identification No.)

 

2150 Cabot Boulevard West, Suite B Langhorne, Pennsylvania		19067
(Address of principal executive offices)		(Zip Code)

 

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

 

(Former name or former address, if changed since last report)

Not Applicable

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

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. ☐

 

 

 

Item 2.02

Results of Operations and Financial Condition

 

On August 14, 2024, NexGel, Inc. (the “Company”) issued a press release reporting the Company’s results for the quarter ended June 30, 2024, a copy of which is attached as Exhibit 99.1 hereto and is incorporated herein by reference.

 

The information in Item 2.02 of this Current Report on Form 8-K, including the information set forth in Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall Exhibit 99.1 filed herewith be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.		Description
99.1		Press release issued August 14, 2024.
104		Cover Page Interactive Data File (formatted as Inline XBRL)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: August 14, 2024
	NEXGEL, INC.
	By:	/s/ Adam Levy
		Adam Levy
		Chief Executive Officer

 

 

 

Exhibit 99.1

 

NEXGEL Reports Record Second Quarter 2024 Revenue of $1.44 Million

 

LANGHORNE, Pa. – August 14, 2024 – NEXGEL, Inc. (“NEXGEL” or the “Company”) (NASDAQ: “NXGL”), a leading provider of ultra-gentle, high-water-content hydrogel products for healthcare and consumer applications, today announced record second quarter 2024 revenue of $1.44 million and is reiterating revenue guidance for the 2024 third and fourth quarter of $2.2 million and $2.6 million, respectively.

 

Adam Levy, NEXGEL’s Chief Executive Officer, commented, “The second quarter of 2024 was a record revenue quarter for the Company, totaling $1.44 million, an increase of 23.4% year-over-year and 13.7% sequentially. Branded consumer product revenue was a key growth driver during the quarter led by our Silly George brand, which contributed revenue for approximately half the quarter. At the time of closing on the acquisition, Silly George was on a revenue run rate of $2 million. In July alone Silly George sales were over $380,000 on Shopify only. We continue to be excited with this acquisition and revenue opportunities from our partnerships with STADA and Cintas in the back half of this year.”

 

Second Quarter 2024 Business and Operational Highlights

 

	●	Acquired Silly George, an international beauty company with specialty in eye and eyelash consumer products.
	●	Announced the first product, Histasolv®, sold as DAOSIN® in Europe, to be distributed in partnership with STADA Arzneimittel AG (“STADA”) in North America.
	●	Signed agreement with Cintas Corporation, a leading provider of corporate identity uniforms, first aid and safety products and services to over 1 million businesses across North America, to distribute SilverSeal.

 

Subsequent Events

 

	●	Issued revenue guidance for the third and fourth quarters of 2024 of $2.2 million and $2.6 million, an increase of 83% and 140% year-over-year, respectively.
	●	Closed on registered direct offering led by insiders for gross proceeds of approximately $1.11 million.
	●	In partnership with Innovative Optics, a leading supplier of safety products and person protective equipment for medical, surgical, and aesthetic healthcare facilities globally, initiated an institutional review board study on the benefits of hydrogel application during laser hair removal.

 

Second Quarter 2024 Financial Highlights

 

For the quarter ended June 30, 2024, revenue totaled $1.44 million, an increase of $273,000, or 23.4%, as compared to $1.17 million for the quarter ended June 30, 2023. The increase in revenue was driven by sales growth in branded consumer products, including approximately 45 days of revenue from Silly George, partially offset by a decrease in contract manufacturing. Contract manufacturing revenue was impacted by CGN’s move into its new facility and will normalize and grow in the third and fourth quarter of 2024.

 

Gross profit totaled $410,000 for the three months ended June 30, 2024, compared to a gross profit of $175,000 for the three months ended June 30, 2023. The increase of $235,000 in gross profit year-over-year was primarily due to the increase in branded consumer products.

 

Gross profit margin for the second quarter of 2024 was 28.5% compared to a gross margin for the second quarter of 2023 of 15.0% and a gross profit margin of 21.9% in the first quarter of 2024.

 

Cost of revenues increased by $38,000, or 3.8%, to $1.03 million for the three months ended June 30, 2024, as compared to $992,000 for the three months ended June 30, 2023. The increase in cost of revenues is primarily aligned with sales of branded consumer products, partially offset by a decrease in cost of revenues from lower contract manufacturing revenue.

 

Selling, general and administrative expenses increased by $506,000 or 57.4%, to $1.39 million for the three months ended June 30, 2024, as compared to $882,000 for the three months ended June 30, 2023. The increase in selling, general and administrative expenses is primarily attributable to an increase in advertising, marketing, and Amazon fees, attributable to promotion of Kenkoderm and Silly George. The Company expects these costs to increase in the third quarter with a full quarter of Silly George revenue and with further growth in branded consumer products.

 

Research and development expenses increased by $21,000 to $76,000 for the three months ended June 30, 2024, from $55,000 for the three months ended June 30, 2023.

 

Net loss for the three months ended June 30, 2024, was $979,000 as compared to a net loss of $642,000 in the three months ended June 30, 2023.

 

As of June 30, 2024, the Company had a cash balance of approximately $1.1 million. Subsequent to the end of the quarter, the Company closed on a registered direct offering of $1.11 million, led by insiders. The use of proceeds for the financing is for working capital and the immediate requirement for additional inventory and marketing to meet the higher-than-expected demand for the Silly George brand products. The Company believes it has sufficient cash and marketable securities to operate its business plan into 2025.

 

 

As of August 14, 2024, NEXGEL had 6,324,266 shares of common stock outstanding, which number does not include the 444,000 shares of common stock we anticipate issuing in connection with our recent offering.

 

Second Quarter 2024 Financial Results Conference Call

Date: August 14, 2024

Time: 4:30 P.M. ET

Live Call: + 1-800-579-2543 (U.S. Toll Free) or + 1-785-424-1789 (International)

Webcast: Events and Presentations

 

For interested individuals unable to join the conference call, a replay will be available through August 28, 2024, by dialing + 1-844-512-2921 (U.S. Toll Free) or + 1-412-317-6671 (International). Participants must use the following code to access the replay of the call: 11156720. An archived version of the webcast will also be available for 90 days.

 

About NEXGEL, INC.

 

NEXGEL is a leading provider of healthcare, beauty, and over-the-counter (OTC) products including ultra-gentle, high-water-content hydrogels. Based in Langhorne, Pa., the Company has developed and manufactured electron-beam, cross-linked hydrogels for over two decades. NEXGEL brands include Silverseal®, Hexagels®, Turfguard®, Kenkoderm® and Silly George®. Additionally, NEXGEL has strategic contract manufacturing relationships with leading consumer healthcare companies.

 

Forward-Looking Statement

 

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “prospects,” “outlook,” and similar words or expressions, or future or conditional verbs, such as “will,” “should,” “would,” “may,” and “could,” are generally forward-looking in nature and not historical facts, including, without limitation, our revenue guidance for the third and fourth quarter of 2025. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance, or achievements to be materially different from any anticipated results, performance, or achievements for many reasons. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company’s forward-looking statements, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, including but not limited to the discussion under “Risk Factors” therein, which the Company filed with the SEC and which may be viewed at http://www.sec.gov/.

 

Investor Contacts:

 

Valter Pinto, Managing Director

KCSA Strategic Communications

212.896.1254

Nexgel@kcsa.com

 

 

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			467				400
Total current assets			3,587				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		$	9,775			$	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 15)			-				-
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			(16,454	)			(14,715	)
Total NexGel stockholders’ equity			4,166				4,697
Non-controlling interest in joint venture			360				469
Total stockholders’ equity			4,526				5,166
Total liabilities and stockholders’ equity		$	9,775			$	9,955

 

 

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)

 

		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 (expense), 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

 

 

NEXGEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(Unaudited)

(in thousands)

 

		Six Months Ended June 30,
		2024				2023
Operating Activities
Net loss		$	(1,738	)		$	(1,509	)
Adjustments to reconcile net loss to net cash used in operating activities:
Income (loss) attributable to non-controlling interest in joint venture			(146	)			60
Depreciation and amortization			144				68
Changes in ROU asset and operating lease liability			21				21
Share-based compensation and restricted stock vesting			118				53
Gain on investment in marketable securities			(57	)			124
Changes in fair value of warrant liability			(26	)			(77	)
Changes in operating assets and liabilities:
Accounts receivable			28				(728	)
Inventory			(127	)			(577	)
Prepaid expenses and other assets			(67	)			(226	)
Accounts payable			13				793
Accrued expenses and other current liabilities			(114	)			—
Deferred revenue			159				72
Net Cash Used in Operating Activities			(1,792	)			(1,926	)
Investing Activities
Proceeds from sales of marketable securities			57				4,772
Capital expenditures			(361	)			(253	)
Net cash paid for asset acquisition			(400	)			-
Net Cash Provided by (Used in) Investing Activities			(704	)			4,519
Financing Activities
Proceeds from equity offering, net of expenses			946				—
Investment by joint venture partner			37				—
Principal payment on financing lease liability			(22	)			—
Change in contingent consideration liability			(69	)			—
Principal payments of notes payable			(27	)			(3	)
Net Cash Provided by (Used in) Financing Activities			865				(3	)
Net Decrease in Cash			(1,631	)			2,590
Cash – Beginning of period			2,700				1,101
Cash – End of period		$	1,069			$	3,691
Supplemental Disclosure of Cash Flows Information
Cash paid during the year for:
Interest		$	27			$	—
Taxes		$	—			$	—
Supplemental Non-cash Investing and Financing activities
Shares issued in conjunction with asset acquisition		$	200			$	—
Property and equipment financed under notes payable		$	165			$	—
Property and equipment financed under financing leases		$	416			$	—
Property and equipment contributed as capital investment to JV		$	—			$	500
ROU asset and operating lease liabilities recognized upon consolidation of JV		$	—			$	334

 

 

v3.24.2.u1

Cover	Aug. 14, 2024
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 14, 2024
Entity File Number	001-41173
Entity Registrant Name	NEXGEL, INC.
Entity Central Index Key	0001468929
Entity Tax Identification Number	26-4042544
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	2150 Cabot Boulevard West
Entity Address, Address Line Two	Suite B
Entity Address, City or Town	Langhorne
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19067
City Area Code	(215)
Local Phone Number	702-8550
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Common Stock, par value $0.001
Title of 12(b) Security	Common Stock, par value $0.001
Trading Symbol	NXGL
Security Exchange Name	NASDAQ
Warrants to Purchase Common Stock
Title of 12(b) Security	Warrants to Purchase Common Stock
Trading Symbol	NXGLW
Security Exchange Name	NASDAQ

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