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NEXGEL, INC.

NEXGEL, INC.NXGLEarnings & Financial Report

Nasdaq · Health Care · Surgical & Medical Instruments & Apparatus

NEXGEL, INC. is a specialty consumer healthcare and medical technology firm that develops, manufactures and distributes ultra-gentle, irritation-free hydrogel products. Its offerings span over-the-counter skincare remedies, wound care solutions, and topical drug delivery platforms, serving consumer, clinical and pharmaceutical partner segments primarily across North America, with growing global distribution channels.

What changed in NEXGEL, INC.'s 10-K — 2023 vs 2024

Top changes in NEXGEL, INC.'s 2024 10-K

82 paragraphs added · 74 removed · 53 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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As with NEXDrape, we intend to file a 510(k) premarket submission with the FDA to demonstrate that NEXDrape is as safe and effective (or substantially equivalent to) a legally marketed surgical drape device. There can be no guarantee that the FDA approves our application, if submitted.
As with NEXDrape, we intend to file a 510(k) premarket submission with the FDA to demonstrate that NEXDerm is as safe and effective (or substantially equivalent to) a legally marketed surgical drape device. There can be no guarantee that the FDA approves our application, if submitted.
Contractual Obligations The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.
Contractual Obligations The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and is not required to provide the information under this item.
Our facility consists of 13,500 square feet of manufacturing space, which we currently operate at approximately 10% capacity. Given the significant unused capacity, we can expand rapidly to meet increased demand, including for our healthcare and consumer product lines as described in more detail below.
Our facility consists of 13,500 square feet of manufacturing space, which we currently operate at approximately 15% to 20% capacity. Given the significant unused capacity, we can expand rapidly to meet increased demand, including for our healthcare and consumer product lines as described in more detail below.
During the year ended December 31, 2022 one major customer accounted for approximately 29% of our revenue. We cannot be certain as to this customer’s intentions to use our services during and beyond the fiscal year ended December 31, 2023 since we do not currently have a contract with this customer.
During the year ended December 31, 2023 one major customer accounted for approximately 20% of our revenue. We cannot be certain as to this customer’s intentions to use our services during and beyond the fiscal year ended December 31, 2024 since we do not currently have a contract with this customer.
We believe that we are currently compliant with applicable anti-kickback, self-referral, false claims in all material respects. 8 Table of Contents Research and Development Costs For the years ended December 31, 2023 and 2022, we incurred approximately $103 thousand and $367 thousand, respectively, in research and development costs.
We believe that we are currently compliant with applicable anti-kickback, self-referral, false claims in all material respects. 8 Table of Contents Research and Development Costs For the years ended December 31, 2024 and 2023, we incurred approximately $78 thousand and $103 thousand, respectively, in research and development costs.
Other than as discussed above, we believe that, due to the size and scale of production of our suppliers, there should be an adequate supply of components and raw materials from our other suppliers. Customers During the year ended December 31, 2023, one major customer accounted for approximately 20%.
Other than as discussed above, we believe that, due to the size and scale of production of our suppliers, there should be an adequate supply of components and raw materials from our other suppliers. Customers During the year ended December 31, 2024, no customers accounted for 10% of our revenue.
We expect to incur increased costs in the future for our medical device business. Research and development will be an important component in the growth of our business. Employees As of December 31, 2023, we had 19 full-time employees. Of these employees, five are involved with finance, sales, marketing, and administration and 14 are involved with manufacturing and regulatory matters.
We expect to incur increased costs in the future for our medical device business. Research and development will be an important component in the growth of our business. Human Capital As of December 31, 2024, we had 19 full-time employees.
Additionally, we created a process where customers have the ability to create their own custom hydrogel products. Customers pay a development fee, eliminating our financial risk in the success or failure of the custom product.
We believe these white labeling opportunities will increase the markets’ awareness of us as a consumer-friendly and reliable supplier of customizable patches. Additionally, we created a process where customers have the ability to create their own custom hydrogel products. Customers pay a development fee, eliminating our financial risk in the success or failure of the custom product.
We believe our hydrogels, which do not use chemical cross-linking agents and can be made in paraben free formulations, will be attractive to other OTC brands, especially in the beauty and cosmetics industry, and their customers. We believe these white labeling opportunities will increase the markets’ awareness of us as a consumer-friendly and reliable supplier of customizable patches.
Custom and White Label Opportunities We are leveraging our hydrogel products and technologies by allowing other OTC brands to incorporate them into their products. We believe our hydrogels, which do not use chemical cross-linking agents and can be made in paraben free formulations, will be attractive to other OTC brands, especially in the beauty and cosmetics industry, and their customers.
To our knowledge, NexGel is one of two manufacturers using electron beam technology for high performance hydrogels for the wound care, cosmetic and drug delivery industries. Consumer Products and Medical Devices. As we expand our consumer products and medical device business, we will face a number of competitors.
To our knowledge, NexGel is one of two manufacturers using electron beam technology for high performance hydrogels for the wound care, cosmetic and drug delivery industries. However, the other manufacture does not currently offer its products to the outside consumer market and, as such, does not currently compete with us directly. Consumer Products and Medical Devices.
Our employees are not represented by a labor union or other collective bargaining groups, and we consider relations with our employees to be good. We currently plan to retain and utilize the services of outside consultants for additional research, testing, regulatory, accounting and tax services, legal compliance, and other services on an as needed basis.
We currently plan to retain and utilize the services of outside consultants for additional research, testing, regulatory, accounting and tax services, legal compliance, and other services on an as needed basis. We recognize and value our people as our most important asset in achieving our strategic goals.
Our hydrogel consumer products are marketed under the brand names MedaGel and LumaGel Beauty. The products we sell under our MedaGel brand primarily relate to over-the-counter (“OTC”) remedy solutions, such as blister and pain applications; while the products we sell under our LumaGel Beauty brand primarily relate to beauty and cosmetic solutions, such as wrinkle and skin cream applications.
The products we sell under our MedaGel brand primarily relate to healthcare over-the-counter (“OTC”) remedy solutions, such as blister and pain applications. In December 2023 we added a second consumer product brand when we completed the purchase of the Kenkoderm brand.
We intend for these products to address various market opportunities including the OTC pharmaceutical drug delivery market, pain management, beauty and cosmetics, sports related applications, cannabinoids (“CBD” and/or “THC”) and general podiatry. Custom and White Label Opportunities We are leveraging our hydrogel products and technologies by allowing other OTC brands to incorporate them into their products.
We continue to look for additional potential acquisitions as part of our consumer product “roll-up” strategy. Additionally, we have several more products in our development pipeline. We intend for these products to address various market opportunities including the OTC pharmaceutical drug delivery market, pain management, beauty and cosmetics, sports related applications, cannabinoids (“CBD” and/or “THC”) and general podiatry.
In December 2023 we added a third consumer product brand when we completed the purchase of the Kenkoderm brand. The Kenkoderm skincare line was originally developed by a dermatologist to provide alternative treatments for psoriasis that did not use steroids or biologics that often have side effects. Additionally, we have several more products in our development pipeline.
The Kenkoderm skincare line was originally developed by a dermatologist to provide gentle to the skin products for consumer with psoriasis. In May 2024, we added our third consumer product brand with the purchase of the Silly George brand. Silly George is a beauty brand primarily focused on false eyelashes and other eye related products.
Added
In May 2023, we formed a joint venture with CG Laboratories, Inc. called CG Converting and Packaging, LLC, which is located in Granbury, Texas and of which we own a 50% interest, allowing us to expand our ability to deliver finished goods to our growing customer base.
Added
As we expand our consumer products and medical device business, we will face a number of competitors.
Added
Of these employees, five are involved with finance, sales, marketing, and administration and 14 are involved with manufacturing and regulatory matters. Our employees are not represented by a labor union or other collective bargaining groups, and we consider relations with our employees to be good.
Added
We are continually working on a human resources strategy that helps drive the right culture, leadership, talent management, performance, reward and recognition, personal development, and ways of working to ensure we achieve our strategic goals while our people benefit from an exceptional experience.
Added
Our efforts in creating a working environment that draws out the best in our employees and allows them to fulfil their potential and support our goals focus on the following: · Attract, identify, develop and retain high-performing employees across all areas. · Develop and support the growth of management and leadership. · Enable the development of a high-performance culture in which staff performance can be supported, rewarded, enhanced and managed effectively. · Foster a values-based culture focused on diversity, equity, inclusion, well-being, and positive staff engagement. · Develop a total reward approach which is valued by staff and facilitates company objectives.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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We rely heavily on the Amazon marketplace for the sales and distribution of our consumer products to our end consumers. We believe that we have good relationships with Amazon.
We rely heavily on the Amazon and Shopify marketplaces for the sales and distribution of our consumer products to our end consumers. We believe that we have good relationships with both Amazon and Shopify.
The interests of our principal stockholders, officers and directors, who collectively beneficially own approximately 27% of our stock, may not coincide with yours and such stockholders will have the ability to control decisions with which you may disagree. As of April 10, 2024, our principal stockholders, officers and directors beneficially owned approximately 27% of our common stock.
The interests of our principal stockholders, officers and directors, who collectively beneficially own approximately 16.3% of our stock, may not coincide with yours and such stockholders will have the ability to control decisions with which you may disagree. As of March 27, 2025, our principal stockholders, officers and directors beneficially owned approximately 16.3% of our common stock.
Additionally, any prolonged disruption of Amazon’s website or its delivery and distribution of our consumer products could materially adversely impact our business. We have no contracts in place with our customers in either our contract manufacturing or consumer products business. The absence of such contracts could result in periods during which we must continue to pay costs without revenues.
We have no contracts in place with our customers in either our contract manufacturing or consumer products business. The absence of such contracts could result in periods during which we must continue to pay costs without revenues.
As of the date of the filing of this Form 10-K, we may be required to issue: ● 560,650 shares of common stock issuable upon the exercise of outstanding stock options at a weighted average exercise price of $2.350742 per share; ● 3,442,904 shares of common stock issuable upon the exercise of warrants at a weighted average exercise price of approximately $5.42034; and ● 50,812 shares of restricted common stock issuable upon vesting and another 13,750 shares of vested shares of restricted common stock.
As of the date of the filing of this Form 10-K, we may be required to issue: ● 588,397 shares of common stock issuable upon the exercise of outstanding stock options at a weighted average exercise price of $2.674538 per share; ● 4,765,205 shares of common stock issuable upon the exercise of warrants at a weighted average exercise price of approximately $5.183120; and ● 21,984 shares of restricted common stock issuable upon vesting and another 33,890 shares of vested shares of restricted common stock.
In such events, we could experience interruptions, delays, increased costs or quality control problems, which would have a material and adverse effect on our business, results of operations and financial condition. There can be no assurance that our internal controls over financial reporting will be able to detect fraud or other issues.
In such events, we could experience interruptions, delays, increased costs or quality control problems, which would have a material and adverse effect on our business, results of operations and financial condition.
The loss of any of our significant customers would have a significantly negative effect on our overall operations. We rely heavily on the Amazon marketplace for the sales and distribution of our consumer products, and if we are unable to maintain a good relationship with Amazon or if Amazon experiences disruptions, our business will suffer.
We rely heavily on the Amazon and Shopify marketplaces for the sales and distribution of our consumer products, and if we are unable to maintain a good relationship with Amazon and/or Shopify or if Amazon and/or Shopify experience disruptions, our business will suffer.
However, if we or any of our partners, (or if Amazon believes we or any of our partners have violated) its terms of service, Amazon could limit or terminate its relationship with us. Any limitation or termination of our relationship with Amazon could materially adversely affect one of all of our business, financial condition and our results of operations.
However, if we or any of our partners, (or if Amazon and/or Shopify believe we or any of our partners have violated) its terms of service, either Amazon and/or Shopify could limit or terminate its relationship with us.
If we fail to fully comply with the requirements of the Sarbanes-Oxley Act, our business may be harmed and our stock price may decline. 15 Table of Contents If securities or industry analysts do not publish research about our business, or publish negative reports about our business, our share price and trading volume could decline.
Any such failure could also lead to reputational damage and a decrease in the market price of our stock 15 Table of Contents If securities or industry analysts do not publish research about our business, or publish negative reports about our business, our share price and trading volume could decline.
In connection with the Merger, and as we continue to grow our business, our internal controls continue to become more complex and require more resources. 13 Table of Contents Our ability to provide customers with competitive services is dependent on our ability to attract and retain qualified personnel, including our senior management team.
If we do require but are not able to acquire sufficient additional funding or alternative sources of capital to meet our working capital needs, we will have to substantially curtail or discontinue our operations. 13 Table of Contents Our ability to provide customers with competitive services is dependent on our ability to attract and retain qualified personnel, including our senior management team.
Removed
We are dependent on significant customers. Our hydrogel manufacturing business is currently our primary source of revenue, and much of this revenue is generated from a limited number of clients, who account for a substantial percentage of our total revenues. For the year ended December 31, 2023, one major customer accounted for approximately 20% of our revenue.
Added
Any limitation or termination of our relationship with Amazon and/or Shopify could materially adversely affect our business, financial condition and our results of operations. Additionally, any prolonged disruption of Amazon’s and/or Shopify’s websites or its or their delivery and distribution of our consumer products could materially adversely impact our business.
Removed
We will be required under the Sarbanes-Oxley Act of 2002 to include a report of management on our internal controls that contains an assessment by management of the effectiveness of our internal control over financial reporting.
Added
We have a history of operating losses and may require but have difficulty or be unsuccessful in raising potentially needed capital in the future to continue to operate as a going concern. While we expect to be cash flow positive by the end of fiscal year 2025, there is no guarantee this will occur.
Removed
Because and so long as we are an emerging growth company, our public accounting firm auditing our financial statements will not be required to report on the effectiveness of internal control over financial reporting, and our stockholders will not have the benefit thereof. Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud.
Added
Currently we do not have sufficient cash resources to meet our plans for the next twelve months from the issuance of the financial statements included herein. Our recurring losses from operations, negative cash flows and potential need for additional capital raise substantial doubt about our ability to continue as a going concern.
Removed
However, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. There can be no assurance that all control issues or fraud will be detected.
Added
If we do require additional financing to fund our operations, such funds may not be available on acceptable terms, if at all, and such availability will depend on a number of factors, some of which are outside of our control, including general capital markets conditions and investors’ view of our prospects and valuation.
Removed
If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results or prevent fraud and our business may be harmed and our stock price may be adversely impacted.
Added
In addition, our ability to raise capital in the public capital markets, including through our at-the-market equity offerings, may in the future be limited by, among other things, SEC rules and regulations impacting the eligibility of smaller companies to use Form S-3 for primary offerings of securities.
Removed
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and to effectively prevent fraud. Any inability to provide reliable financial reports or to prevent fraud could harm our business. The Sarbanes-Oxley Act requires management to evaluate and assess the effectiveness of our internal control over financial reporting.
Added
In general, under the “baby shelf” rules if our public float is less than $75 million at the time we file our Annual Report on Form 10-K to update our Form S-3 and our public float remains less than $75, we may not sell more than the equivalent of one-third of our public float during any 12 consecutive months pursuant to the baby shelf rules.
Removed
In order to continue to comply with the requirements of the Sarbanes-Oxley Act, we are required to continuously evaluate and, where appropriate, enhance our policies, procedures and internal controls.
Added
Alternative public and private transaction structures may require additional time and cost, may impose operational restrictions on us, and may not be available on attractive terms.
Removed
If we fail to maintain the adequacy of our internal controls over financial reporting, we could be subject to litigation or regulatory scrutiny and investors could lose confidence in the accuracy and completeness of our financial reports.
Added
Further, investors’ perception of our ability to continue as a going concern may make it more difficult for us to obtain financing, or necessitate that we obtain financing on terms that are more favorable to investors, and could result in the loss of confidence by investors, suppliers and employees.
Removed
We cannot assure you that in the future we will be able to fully comply with the requirements of the Sarbanes-Oxley Act or that management will conclude that our internal control over financial reporting is effective.
Added
We have identified material weaknesses in connection with our internal control over financial reporting which, if not remediated, could adversely affect our business, reputation and stock price. Our executive management and Audit Committee have concluded that we have material weaknesses in our internal control over financial reporting.
Added
Specifically, we have not designed controls to ensure all accounting journals entries are reviewed and approved. We also identified one individual in our accounting department who has “super user” access and security administration rights to the financial reporting systems. Please see Item 9A - Control and Procedures for more information about identified material weaknesses.
Added
A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Added
We are in the process of designing and implementing measures to remediate the material weaknesses described above.
Added
Specifically, we expect to implement appropriate controls for accounting journal entry approvals, including the approval of our Chief Financial Officer, and to actively monitor any accounting user with elevated rights or assign another employee outside of an accounting and reporting role with elevated access.
Added
While we are designing and implementing measures to remediate the material weaknesses, we cannot predict the success of such measures or the outcome of our assessment of these measures at this time.
Added
We can give no assurance that these measures will remediate the weakness in internal control or that additional material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future.
Added
Our failure to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that may lead to restatements of our financial statements, cause us to fail to meet our reporting obligations, or prevent fraud.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+0 added−0 removed8 unchanged
Our cybersecurity risk management program includes the following: ● the use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls; ● cybersecurity awareness training of our employees, incident response personnel, and senior management; and There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information.
Our cybersecurity risk management program includes the following: ● the use of external service providers , where appropriate, to assess, test, or otherwise assist with aspects of our security controls; and ● cybersecurity awareness training of our employees, incident response personnel, and senior management There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on NASDAQ Capital Markets under the symbol “NXGL” and certain warrants to purchase our common stock issued on December 27, 2021 are trade on NASDAQ Capital Markets under the symbol “NXGLW.” Holders As of April 10, 2024, there were over 1,074 shareholders of record and 6,227,624 shares of common stock outstanding.
Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on NASDAQ Capital Markets under the symbol “NXGL” and certain warrants to purchase our common stock issued on December 27, 2021 are trade on NASDAQ Capital Markets under the symbol “NXGLW.” Holders As of March 27, 2025, there were over 1,047 shareholders of record and 7,654,037 shares of common stock outstanding.
Issuer Repurchases of Securities during the Fiscal Year Ended December 31, 2023 The Company did not repurchase any of its securities during the fiscal year ended December 31, 2023.
Sales of Unregistered Securities during the Fiscal Year Ended December 31, 2024 The Company did not sell any unregistered securities during the fiscal year ended December 31, 2024. Issuer Repurchases of Securities during the Fiscal Year Ended December 31, 2024 The Company did not repurchase any of its securities during the fiscal year ended December 31, 2024.
Removed
On November 29, 2021, we effected a 1-for-35 reverse stock split of our issued and outstanding common stock (the “Reverse Stock Split”).
Removed
As a result of the Reverse Stock Split, each issued and outstanding share of our common stock, and the per share exercise price of and number of shares of our common stock underlying our outstanding equity awards and warrants, was automatically proportionally adjusted based on the 1-for-35 Reverse Stock Split ratio.
Removed
No fractional shares of common stock were issued in connection with the reverse stock split, and all such fractional interests were rounded up to the nearest whole number. Sales of Unregistered Securities during the Fiscal Year Ended December 31, 2023 The Company did not sell any unregistered securities during the fiscal year ended December 31, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Off Balance Sheet Arrangements As of December 31, 2023, we had no off-balance sheet arrangements in the nature of guarantee contracts, retained or contingent interests in assets transferred to entities (or similar arrangements serving as credit, liquidity or market risk support to entities for any such assets), or obligations (including contingent obligations) arising out of variable interests in entities providing financing, liquidity, market risk or credit risk support to us, or that engage in leasing, hedging or research and development services with us.
Off Balance Sheet Arrangements As of December 31, 2024, we had no off-balance sheet arrangements in the nature of guarantee contracts, retained or contingent interests in assets transferred to entities (or similar arrangements serving as credit, liquidity or market risk support to entities for any such assets), or obligations (including contingent obligations) arising out of variable interests in entities providing financing, liquidity, market risk or credit risk support to us, or that engage in leasing, hedging or research and development services with us.
We consider the accounting policies discussed below to be critical to the understanding of our Financial Statements. Actual results could differ from our estimates and assumptions, and any such differences could be material to our Financial Statements. 23 Table of Contents Share-based compensation – We utilize share-based compensation in the form of incentive stock options.
We consider the accounting policies discussed below to be critical to the understanding of our Financial Statements. Actual results could differ from our estimates and assumptions, and any such differences could be material to our Financial Statements. Share-based compensation – We utilize share-based compensation in the form of incentive stock options.
Our ability to continue to operate as a going concern in the long term is dependent upon our ability to manage and grow our current products and to ultimately achieve profitable operations. Management may consider various options to raise capital to fund potential acquisitions through equity or debt offerings.
We expect to continue incurring losses for the near-term future. Our ability to continue to operate as a going concern in the long term is dependent upon our ability to manage and grow our current products and to ultimately achieve profitable operations. Management may consider various options to raise capital to fund potential acquisitions through equity or debt offerings.
For the foreseeable future, we anticipate that all available funds and any earnings generated in our business will be used to finance the growth of our business and will not be paid out as dividends to our shareholders.
We have never declared or paid any cash dividends on our common stock. For the foreseeable future, we anticipate that all available funds and any earnings generated in our business will be used to finance the growth of our business and will not be paid out as dividends to our shareholders.
Liquidity and Capital Resources Cash Flow (in thousands) Years Ended December 31, 2023 2022 Net cash used in operating activities $ (3,236 ) $ (2,992 ) Net cash provided by (used in) investing activities 4,456 (5,595 ) Net cash provided by (used in) financing activities 379 (3,662 ) Net increase (decrease) in cash and cash equivalents 1,599 (12,249 ) Cash and cash equivalents at beginning of year 1,101 13,350 Cash and cash equivalent at end of year $ 2,700 $ 1,101 As of December 31, 2023, we had $2,700 of cash and cash equivalents compared to $1,101 of cash and cash equivalents and $5,508 of marketable securities at December 31, 2022.
Liquidity and Capital Resources Cash Flow (in thousands) Years Ended December 31, 2024 2023 Net cash used in operating activities $ (3,867 ) $ (3,236 ) Net cash provided by (used in) investing activities (775 ) 4,456 Net cash provided by financing activities 3,749 379 Net increase (decrease) in cash and cash equivalents (893 ) 1,599 Cash and cash equivalents at beginning of year 2,700 1,101 Cash and cash equivalent at end of year $ 1,807 $ 2,700 As of December 31, 2024, we had $1,807 thousand of cash and cash equivalents compared to $2,700 thousand of cash and cash equivalents at December 31, 2023.
Furthermore, the Company plans to develop its own proprietary medical devices and explore drug delivery programs for its technology. Additionally, the Company continues to evaluate strategic initiatives (e.g., acquisitions) and additional capital raises through debt or equity may be necessary to achieve these objectives. We expect to continue incurring losses for the near-term future.
These products will be target marketed and sold online through social media, television and online marketplaces. Furthermore, the Company plans to develop its own proprietary medical devices and explore drug delivery programs for its technology. Additionally, the Company continues to evaluate strategic initiatives (e.g., acquisitions) and additional capital raises through debt or equity may be necessary to achieve these objectives.
Net cash provided by financing activities for year ended December 31, 2023 was $379 which is attributable to the proceeds of equipment notes payable of $315, proceeds from margin line of credit of $245, offset by principal payments of notes payments of $6 and payments of $175 made on the operating lease liability.
Net cash provided by financing activities for year ended December 31, 2023 was $379 thousand which is attributable to the proceeds of equipment notes payable of $315 thousand, proceeds from margin line of credit of $245 thousand, offset by principal payments of notes payments of $6 thousand and payments of $175 thousand made on the operating lease liability. 22 Table of Contents At December 31, 2024, current assets totaled $5,114 thousand and current liabilities totaled $2,470 thousand, as compared to current assets totaling $5,052 thousand and current liabilities totaling $2,549 thousand at December 31, 2023.
Gross profit was approximately 15.1% for the year ended December 31, 2023 compared to a gross profit of 12.5% for the year ended December 31, 2022. 20 Table of Contents The components of cost of revenues are as follows for the years ended December 31, 2023 and 2022 ($ in thousands): Year Ended December 31, 2023 2022 Cost of revenues Materials and finished products $ 2,147 $ 541 Compensation and benefits 451 702 Share-based compensation 14 - Depreciation and amortization 103 83 Equipment, production and other expenses 755 466 Total cost of revenues $ 3,470 $ 1,792 Cost of revenues increased by $1,678, or 93.6 %, to $3,470 for the year ended December 31, 2023, as compared to $1,792 for the year ended December 31, 2022.
Gross profit was approximately 31.6% for the year ended December 31, 2024 compared to a gross profit of 9.1% for the year ended December 31, 2023. 20 Table of Contents The components of cost of revenues are as follows for the years ended December 31, 2024 and 2023 ($ in thousands): Year Ended December 31, 2024 2023 Cost of revenues Materials and finished products $ 3,987 $ 2,147 Compensation and benefits 497 451 Share-based compensation 20 14 Depreciation and amortization 280 103 Commission and contract fees 523 245 Equipment, production and other expenses 633 755 Total cost of revenues $ 5,940 $ 3,715 Cost of revenues increased by $2,225 or 59.9%, to $5,940 for the year ended December 31, 2024, as compared to $3,715 for the year ended December 31, 2023.
Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 ($ in thousands) Revenues, net For the year ended December 31, 2023 revenues were $4,089 and increased by $2,041, or 99.7%, when compared to $2,048 for the year ended December 31, 2022.
Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 ($ in thousands) Revenues, net For the year ended December 31, 2024 revenues were $8,688 and increased by $4,599, or 112.5%, when compared to $4,089 for the year ended December 31, 2023.
The Company will manufacture and possibly convert/package the device while the strategic partner brings the product to market. Small market Medical Devices could be launched by the Company, but also be offered to a distributor to reach the full scale of the market.
We will manufacture and possibly convert/package the device while the strategic partner brings the product to market. Small market Medical Devices could be launched by us, but also be offered to a distributor to reach the full scale of the market. Other includes freight charged to customers who purchase the Company’s branded consumer products through their Spotify stores.
The following table highlights selling, general and administrative expenses by type for the years ended December 31, 2023 and 2022 ($ in thousands): Year Ended December 31, 2023 2022 Selling, general and administrative expenses Compensation and benefits $ 740 $ 526 Share-based compensation 203 282 Depreciation and amortization 126 16 Advertising, marketing, and Amazon fees 620 436 Investor and shareholder services 426 567 Franchise taxes and corporate insurance 224 405 Professional and consulting fees 1,339 643 Other expenses and professional fees 315 362 Total selling, general and administrative expenses $ 3,993 $ 3,237 Selling, general and administrative expenses increased by $756, or 23.4%, to $3,993 for the year ended December 31, 2023, as compared to $3,237 for the year ended December 31, 2022.
The following table highlights selling, general and administrative expenses by type for the years ended December 31, 2024 and 2023 ($ in thousands): Year Ended December 31, 2024 2023 Selling, general and administrative expenses Compensation and benefits $ 1,020 $ 740 Share-based compensation 337 203 Depreciation and amortization 156 126 Advertising, marketing, and Amazon fees 2,220 440 Investor and shareholder services 273 426 Franchise taxes and corporate insurance 157 224 Professional and consulting fees 1,651 1,339 Other expenses and professional fees 410 250 Total selling, general and administrative expenses $ 6,224 $ 3,748 Selling, general and administrative expenses increased by $2,476 or 66.1%, to $6,224 for the year ended December 31, 2024, as compared to $3,748 for the year ended December 31, 2023.
Net cash provided by investing activities was $4,456 million and net cash used in investing activities was $5,595 for the year ended December 31, 2023 and 2022, respectively, consisting of the sales of marketable securities of $5,699, offset by purchases of capital equipment of $696 and the Kenkoderm acquisition of $547 for the year ended December 31, 2023 and consisting of investments in marketable securities of $6,999, the sale of marketable securities for $1,500, and purchases of capital equipment of $96 for the year ended December 31, 2022.
Net cash used in investing activities was $775 thousand and net cash provided by investing activities was $4,456 thousand for the year ended December 31, 2024 and 2023, respectively, consisting of the sales of marketable securities of $68 thousand, offset by purchases of capital equipment of $443 thousand and the investment in the subsidiary Semmens Online of $400 thousand for the year ended December 31, 2024 while the sales of marketable securities of $5,699 thousand, offset by purchases of capital equipment of $696 thousand and the Kenkoderm acquisition of $547 thousand were for the year ended December 31, 2023.
This customer base expansion will enable us to provide financial stability for the foreseeable future, expand our current processes, and position us for long-term shareholder value creation. We have sufficient capital to maintain as a going concern due to the recent capital raise on February 14, 2024 (discussed further within Note 20).
This customer base expansion will enable us to provide financial stability for the foreseeable future, expand our current processes, and position us for long-term shareholder value creation. Our recent capital raise which closed on or about November 20, 2024 provides working capital necessary to continue our strategic objectives (discussed further within Note 13).
Gross profit (loss) Our gross profit was $619 for the year ended December 31, 2023 compared to a gross profit of $256 for the year ended December 31, 2022. The increase in the profit recorded for the year ended December 31, 2023, as compared to December 31, 2022, directly correlates to our higher sales.
Gross profit (loss) Our gross profit was $2,748 for the year ended December 31, 2024 compared to a gross profit of $374 for the year ended December 31, 2023 The increase of $2,374 in gross profit recorded for the year ended December 31, 2024, as compared to December 31, 2023, was primarily due to an increase in branded consumer products.
The Company is responsible for sales, marketing, and distribution. These products carry the Company’s brand names. Medical Devices/Other Medical Devices are a hybrid business, combining elements of Custom & White Label and Consumer Branded Products. Medical Devices, which are not yet marketed, are expected to be distributed through strategic partnerships.
We continue to look for additional potential acquisitions as part of our consumer product ‘roll-up” strategy. Medical Devices/Other Medical Devices are a hybrid business, combining elements of Custom & White Label and Consumer Branded Products. Medical Devices, which are not yet marketed, are expected to be distributed through strategic partnerships.
We also plan to continue building and developing our catalog of consumer products for sale to branding partners and to use our in-house capabilities to create and test market additional branded products. These products will be target marketed and sold online through social media, television and online marketplaces.
We intend to maintain and attempt to grow our existing contract manufacturing business. We also plan to continue building and developing our catalogue of consumer products for sale to branding partners and to use our in-house capabilities to create and test market additional branded products.
The decrease in share-based compensation year over year relates to the issuance of stock, restricted stock, and options to our CEO and options to board members in 2023 in comparison to companywide restricted stock awards issued to employees in 2022. 21 Table of Contents Advertising, marketing, and Amazon fees increased by $184, or 42.20%, to $620 for the year ended December 31, 2023, as compared to $436 for the year ended December 31, 2022.
The increase related to the issuance of stock options and restricted awards to our officers, employees, board of directors, and advisors. 21 Table of Contents Advertising, marketing, and Amazon fees increased by $1,780, or 404.5%, to $2,220 for the year ended December 31, 2024, as compared to $440 for the year ended December 31, 2023.
The increase corresponds to increased Amazon sales, partially offset by optimization of Amazon advertising spend in 2023. Investor and shareholder services decreased by $141, or 24.9%, to $426 for the year ended December 31, 2023, as compared to $567 for the year ended December 31, 2022. The decrease is due to the Company’s management of outsourced services.
The increase is due to the increased Amazon selling fees and an increase in advertising and marketing attributable to promoting Kenkoderm and Silly George. Investor and shareholder services decreased by $153, or 35.9%, to $273 for the year ended December 31, 2024, as compared to $426 for the year ended December 31, 2023.
As a result, we had working capital of $2,503 at December 31, 2023, compared to a working capital of $6,646 at December 31, 2022. The decrease in the working capital as of December 31, 2023 is primarily attributable to the loss from operations of $3,477. We have never declared or paid any cash dividends on our common stock.
As a result, we had working capital of $2,644 thousand at December 31, 2024, compared to a working capital of $2,503 thousand at December 31, 2023. The increase in the working capital as of December 31, 2024 is primarily attributable to the loss from operations of $3,554 thousand and proceeds from rights offering of $3,772 thousand.
Net cash used in operating activities was $3,236 and $2,992 for the years ended December 31, 2023 and 2022, respectively. See Notes 2 and 3 of the accompanying consolidated financial statements for a more detailed discussion of our marketable securities.
Net cash used in operating activities was $3,867 thousand and $3,236 thousand for the years ended December 31, 2024 and 2023, respectively.
Other expenses decreased by $47, or 13.0%, to $315 for the year ended December 31, 2023 from $362 for the year ended December 31, 2022. Other selling, general and administrative expenses generally consist of costs associated with our selling efforts and general management, including information technology, travel, training and recruiting.
Other Selling, general and administrative expenses generally consist of normal costs associated with our selling efforts and general management, including information technology, travel, training and credit card processing fees. Credit card processing fees in particular increased significantly from 2023 to 2024 with the inclusion of Silly George.
The cash earn-out can fluctuate higher or lower based on the quarterly results of the Kenkoderm business during 2024 according to the formula contained in the Asset Purchase Agreement relating to the Kenkoderm acquisition. Results of Operations The following sections discuss and analyze the changes in the significant line items in our statements of operations for the comparison years identified.
Results of Operations The following sections discuss and analyze the changes in the significant line items in our statements of operations for the comparison years identified.
Franchise taxes and corporate insurance decreased by $181, or 44.7%, to $224 for the year ended December 31, 2023, as compared to $405 for the year ended December 31, 2022. The vast majority of this decrease pertains to the Company’s reduction in authorized shares, which lowered its franchise tax expense.
The vast majority of this decrease pertains to the Company’s reduction in authorized shares, which lowered its franchise tax expense. The Company enjoyed the full benefit of the reduction in authorized shares throughout 2024, as opposed to a partial benefit in 2023.
The increase in our overall revenues was primarily due to sales growth in both our contract manufacturing and branded products, including revenue from the JV from March 1, 2023 through December 31, 2023 of $1,987. The Company has four distinct lines of business; Contract Manufacturing, Custom & White Label, Consumer Branded Products, and Medical Devices/Other.
The increase in our overall revenues was primarily due to sales growth in our branded consumer products, including gross revenue from Silly George of $2,889 for the period of acquisition through December 31, 2024, and an increase in Other Revenues of $238, which mostly consists of shipping revenue on our branded consumer products.
Share-based compensation decreased by $79, or 28.0%, to $203 for the year ended December 31, 2023, as compared to $282 for the year ended December 31, 2022.
The primary increase in expense, when compared to the prior period, is the increase in contract labor with the inclusion of Silly George. Share-based compensation increased by $134, or 66.0%, to $337 for the year ended December 31, 2024, as compared to $203 for the year ended December 31, 2023.
Professional and consulting fees increased by $696, or 108.2%, to $1,339 for the year ended December 31, 2023, as compared to $643 for the year ended December 31, 2022. We incurred significant expenses related to our European Medical Device Regulation project in preparation for entering European markets.
Professional and consulting fees increased by $312, or 23.3%, to $1,651 for the year ended December 31, 2024, as compared to $1,339 for the year ended December 31, 2023. We continued to incur accounting and consulting fees associated with public company governance requirements and professional services related to branded consumer products.
Compensation and benefits increased by $214, or 40.7%, to $740 for the year ended December 31, 2023, as compared to $526 for the year ended December 31, 2022. The number of employees increased compared to the prior year with the inclusion of the JV.
The increase in Selling, general and administrative expenses is primarily attributable to the factors described below. Compensation and benefits increased by $280, or 37.8%, to $1,020 for the year ended December 31, 2024, as compared to $740 for the year ended December 31, 2023.
Removed
Joint Venture On March 1, 2023, the Company acquired a 50% interest in its newly formed JV for its converting and packaging business. The JV agreement is effective March 1, 2023.
Added
In May 2023, we formed a joint venture with CG Laboratories, Inc. called CG Converting and Packaging, LLC, which is located in Granbury, Texas and of which we own a 50% interest, allowing us to expand our ability to deliver finished goods to our growing customer base. 19 Table of Contents We have four distinct lines of business; Contract Manufacturing, Custom & White Label, Consumer Branded Products, and Medical Devices/Other.
Removed
As a result of this transaction, the Company owns 50% of the JV, with the remaining 50% held by CG Labs. 19 Table of Contents Acquisition On December 1, 2023, we purchased substantially all of the assets Olympus Trading Company, LLC (the “Seller”) related to the Seller’s skincare line focused on reducing symptoms associated with psoriasis operating under the tradename “Kenkoderm” (“Kenkoderm acquisition”).
Added
We are responsible for sales, marketing, and distribution. The products we sell under our MedaGel brand primarily relate to healthcare over-the-counter (“OTC”) remedy solutions, such as blister and pain applications. In December 2023 we added a second consumer product brand when we completed the purchase of the Kenkoderm brand.
Removed
Under the terms of the Kenkoderm acquisition, the Company paid the Seller a cash payment of $546,500. Additionally, the Company shall pay the Seller a cash earn-out of the same amount each quarter, payable in the subsequent month flowing quarter end, of $136,625.
Added
The Kenkoderm skincare line was originally developed by a dermatologist to provide gentle to the skin products for consumer with psoriasis. In May 2024, we added our third consumer product brand with the purchase of the Silly George brand. Silly George is a beauty brand primarily focused on false eyelashes and other eye related products.
Removed
The increase in cost of revenues pertains to an increase in materials and finished products and equipment, production, and other expenses. These increases primarily align with the increased revenues. Selling, general and administrative expenses .
Added
The increase in cost of revenues is primarily aligned with sales of branded consumer products. As mentioned elsewhere, Silly George was acquired in May 2024 while Kenkoderm was acquired in December 2023. Selling, general and administrative expenses .
Removed
The increase in selling, general and administrative expenses is primarily attributable to an increase of compensation and benefits expense, advertising, marketing, and Amazon fees as well as the costs for professional and consulting fees.
Added
The decrease is due to a net reduction of investor services compared to the prior year period. Franchise taxes and corporate insurance decreased by $67, or 29.9%, to $157 for the year ended December 31, 2024, as compared to $224 for the year ended December 31, 2023.
Removed
Research and development expenses Research and development expenses decreased by $264 to $103 for the year ended December 31, 2023 from $367 for the year ended December 31, 2022. The decrease is due to the completion of development efforts of two proof of concept studies for drug delivery candidates utilizing our hydrogel technology.
Added
Additionally, consulting fees increased in 2024 with the acquisition of Silly George, which utilizes numerous consultants to assist with marketing, IT, graphic design, and various other services. Other expenses increased by $160, or 64.0%, to $410 for the year ended December 31, 2024 from $250 for the year ended December 31, 2023.
Removed
Net cash used in financing activities for year ended December 31, 2022 was $3,662 which is attributable to the principal payments of convertible notes of $3,511 and payments of $151 made on the operating lease liability. 22 Table of Contents At December 31, 2023, current assets totaled $5,052 and current liabilities totaled $2,549, as compared to current assets totaling $7,505 and current liabilities totaling $859 at December 31, 2022.
Added
Research and development expenses Research and development expenses decreased by $25 to $78 for the year ended December 31, 2024 from $103 for the year ended December 31, 2023. Research and development expenses are related to research costs incurred for potential products for existing or new customers.
Removed
We believe we have sufficient cash and marketable securities to operate our business plan into 2025. We intend to maintain and attempt to grow our existing contract manufacturing business.
Added
Net cash provided by financing activities for year ended December 31, 2024 was $3,749 thousand which is attributable to the proceeds from rights offering of $3,772 thousand, proceeds from non-controlling interest of $38 thousand, and proceeds from margin line of credit of $345 thousand, offset by principal payments of notes payments of $77 thousand, and change in contingent consideration of $279 thousand made on the operating lease liability, and $50 thousand of principal payment of financing lease liability.
Removed
Additionally, it is reasonably possible that estimates made in the financial statements have been, or will be, materially and adversely impacted in the near term as a result of these conditions, including the recoverability of long-lived assets.

Other NXGL 10-K year-over-year comparisons