Nexgel, Inc 10-Q for FY2022 Q1

Nexgel, Inc. (NXGL)

10-Q 2022-05-13 For: 2022-03-31

Added on April 08, 2026

About this 10-Q

Nexgel, Inc filed this 10-Q on May 13, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $396K; up 48.3% from $267K a year earlier
Net loss: $1.84M; compared with a net loss of $704K a year earlier
Diluted EPS: -$0.33; compared with -$0.25 a year earlier

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

2150 Cabot Blvd West, Suite B Langhorne, PA		19047
(Address of principal executive office)		(Zip Code)


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

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒

Smaller reporting company	☒	Emerging growth company	☒


PART I – FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	6
	Notes to Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	26
ITEM 4.	Controls and Procedures	26

PART II – OTHER INFORMATION

ITEM 1.	Legal Proceedings	27
ITEM 1A.	Risk Factors	27
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
ITEM 3.	Defaults Upon Senior Securities	27
ITEM 4.	Mine Safety Disclosures	27
ITEM 5.	Other Information	27
ITEM 6.	Exhibits	28

Signatures		29


	March 31,		December 31,
	2022		2021
ASSETS:
Current Assets:
Cash	$	10,520	$	13,350
Accounts receivable, net		132		209
Inventory		280		291
Prepaid expenses and other current assets		167		77
Total current assets		11,099		13,927
Goodwill		311		311
Intangibles, net		30		33
Property and equipment, net		698		723
Operating lease - right of use asset		1,879		1,926
Other assets		63		63
Total assets	$	14,080	$	16,983

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	183	$	254
Accrued expenses and other current liabilities		57		62
Deferred Revenue		—		—
Convertible notes payable		894		2,037
Note payable, current portion		14		10
Warrant liability		449		318
Operating lease liability, current portion		207		207
Total current liabilities		1,804		2,888
Long-Term Liabilities:
Operating lease liability, net of current portion		1,707		1,744
Notes payable, net of current portion		265		266
Total long-term liabilities		1,972		2,010
Total liabilities		3,776		4,898

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, 750,000,000 shares authorized; 5,572,234 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		6		6
Additional paid-in capital		18,946		18,891
Accumulated deficit		(8,648)		(6,812)
Total stockholders' equity		10,304		12,085
Total liabilities and stockholders' equity	$	14,080	$	16,983


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


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


	Three months ended
	March 31,
	2022		2021
Revenues, net	$	396	$	267

Cost of revenues		418		309

Gross loss		(22)		(42)

Operating expenses
Research and development		24		7
Selling, general and administrative		766		471
Total operating expenses		790		478

Loss from operations		(812)		(520)

Other income (expense)
Interest income (expense), net		(744)		(148)
Loss on debt extinguishment		(150)		(25)
Debt discount costs		—		(17)
Changes in fair value of warrant liability		(130)		6
Total other income (expense)		(1,024)		(184)
Loss before income taxes		(1,836)		(704)
Income tax expense		—		—
Net loss	$	(1,836)	$	(704)
Net loss per common share - basic	$	(0.33)	$	(0.25)
Net loss per common share - diluted	$	(0.33)	$	(0.25)
Weighted average shares used in computing net loss per common share - basic		5,572,234		2,873,008
Weighted average shares used in computing net loss per common share – diluted		5,572,234		2,873,008


						Retained
				Additional		Earnings		Total
	Common Stock			Paid-in		(Accumulated		Stockholders'
	Shares	Amount		Capital		Deficit)		Equity (Deficit)
Balance, January 1, 2022	5,572,234	$	6	$	18,891	$	(6,812)	$	12,085

Stock-based compensation	—		—		55		—		55

Net loss	—		—		—		(1,836)		(1,836)

Balance, March 31, 2022	5,572,234	$	6	$	18,946	$	(8,648)	$	10,304


	Three Months Ended March 31,
	2022		2021
Operating Activities
Net loss	$	(1,836)	$	(704)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		28		27
Changes in ROU asset and operating lease liability		10		—
Share-based compensation		55		90
Changes in fair value of warrant liability		130		(6)
Amortization of deferred financing costs		741		108
Loss on extinguishment of debt		150		25
Beneficial conversion feature in excess of face value		—		51

Changes in operating assets and liabilities:
Accounts receivable		77		(23)
Inventory		11		(19)
Prepaid expenses and other assets		(90)		121
Accounts payable		(71)		(14)
Accrued expenses and other liabilities		(2)		(1)
Net Cash Used in Operating Activities		(797)		(345)

Investing Activities
Capital expenditures		—		(267)
Net Cash Used in Investing Activities		—		(267)

Financing Activities
Issuance of common stock, net of issuance costs		—		285
Proceeds from notes payable		—		15
Principle payment of notes payable		(2,033)		(15)
Proceeds from notes payable (PPP)		—		128
Proceeds from convertible notes		—		1,337
Principal payment on convertible notes		—		(100)
Net Cash Provided by Financing Activities		(2,033)		1,650
Net Increase in Cash		(2,830)		1,038
Cash – Beginning of period		13,350		32
Cash – End of period	$	10,520	$	1,070
Supplemental Disclosure of Cash Flows Information
Cash paid during the year for:
Interest		—		—
Taxes		—		—

Supplemental Non-cash Investing and Financing activities
Fair value of beneficial conversion and warrant features of Convertible Notes Payable	$	—	$	1,276
Original issue discounts recognized on Convertible Notes Payable	$	—	$	343
Warrants issued for debt and equity financing costs	$	—	$	130


	Three months ending
	March 31,
	2022		2021
Contract manufacturing	$	135	$	226
Custom and white label finished goods manufacturing		—		—
NexGel branded consumer products		213		36
Other		48		5
Total	$	396	$	267


	Operating
	Lease
Maturity of Lease Liability	Liability
2022	$	155
2023		207
2024		207
2025		207
2026		263
Thereafter		1,165
Total undiscounted operating lease payments	$	2,204
Less: Imputed interest		(290)
Present value of operating lease liability	$	1,914
Weighted average remaining lease term		8.8 years
Weighted average discount rate		3.0	%


	March 31,
	2022
Cash paid for amounts included in the measurement of lease liability:
Operating cash flows from operating lease	$	52


	Useful Life	March 31,		December 31,
	(Years)	2022		2021
Machinery and equipment	3 - 10	$	940	$	940
Office furniture and equipment	3 - 10		50		50
Leasehold improvements	6		228		228
Construction in progress	N/A		—		—
			1,218		1,218
Less: accumulated depreciation and amortization			(520)		(495)
Property and equipment, net		$	698	$	723


Share-based compensation plan		434,939
Warrants to purchase common stock		3,637,190


	March 31,		December 31,
	2022		2021
Product/Technology Related
Identifiable intangible assets, gross	$	31	$	31
Accumulated amortization		(18)		(16)
Product/Technology Related identifiable intangible assets, net		13		15
Marketing Related
Customer related intangible asset, gross		17		17
Tradename related intangible asset, gross		7		7
Accumulated amortization		(7)		(6)
Marketing related identifiable intangible assets, net		17		18
Total Identifiable intangible assets, net	$	30	$	33


	Awards		Awards
	Reserved for		Available for
	Issuance	Awards Issued	Grant
2019 Plan	571,429	434,939	136,490



		Weighted		Weighted
		Average		Average
	Number of	Exercise		Contractual
	Options	Price		Term in Years
Outstanding at January 1, 2022	434,939	$	1.675747	8.56

Granted	—		—	—
Exercised	—		—	—
Forfeited	—		—	—
Cancelled	—		—	—
Expired	—		—	—
Outstanding at March 31, 2022	434,939	$	1.675747	8.31
Exercisable at March 31, 2022	366,364	$	2.134036	8.44


Volatility	171.12%- 183.48	%
Risk-free interest rate	0.46% - 0.86	%
Dividend yield	0.0	%
Expected term	5.0 – 5.75	years


	Warrants	Fair Value
Warrant Liability	Outstanding	per Share	Fair Value
Fair Value as of period ending 12/31/2021	265,305		$	318
Change in fair value of warrant liability				131
Fair Value as of period ending 3/31/2022	265,305		$	449


Exhibit No.		Description
3.1		Certificate of Incorporation of AquaMed Technologies, Inc. (incorporated by reference to Exhibit 3.1 to Form S-1, filed with the SEC on January 9, 2019).
3.2		Certificate of Amendment to Certificate of Incorporation of AquaMed Technologies, Inc. (incorporated by reference to Exhibit 3.2 to Form S-1, filed with the SEC on January 9, 2019).
3.3		Amended and Restated Certificate of Incorporation of AquaMed Technologies, Inc. (incorporated by reference to Exhibit 3.3 to Amendment No. 1 to Form S-1, filed with the SEC on March 11, 2019).
3.4		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of AquaMed Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed with the SEC on November 14, 2019)
3.5		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of NexGel, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed with the SEC on May 29, 2020)
3.6		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of NexGel, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed with the SEC on August 2, 2021)
3.7		Amended and Restated Bylaws of AquaMed Technologies, Inc. (incorporated by reference to Exhibit 3.5 to Amendment No. 1 to Form S-1, filed with the SEC on March 11, 2019).
31.1*		Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*		The following materials from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter March 31, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language), (i) Balance Sheets, (ii) Statements of Operations, (iii) Statements of Stockholders’ Equity, (iv) Statements of Cash Flows, and (v) Notes to the Financial Statements.
104*		Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit).


	NEXGEL, INC.

Date: May 12, 2022	By:	/s/ Adam Levy
	Name:	Adam Levy
	Title:	Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Adam E. Drapczuk III
	Name:	Adam E. Drapczuk III
	Title:	Chief Financial Officer
		(Principal Financial Officer)