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: March 31, 2022


	☐	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: 001-36278

NexGel, Inc.

(Exact name of registrant as specified in its charter)


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)

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 non-accelerated 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 May 12, 2022, the registrant had 5,572,234 shares of common stock outstanding.

Table of Contents

nEXGEL, INC.

TABLE OF CONTENTS


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

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NEXGEL, INC

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2022 AND DECEMBER 31, 2021

(Unaudited)

(in thousands, except share and per share data)


	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

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 MONTHS ENDED MARCH 31, 2022 AND 2021

(Unaudited)

(in thousands, except share and per share data)


	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

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 MONTHS ENDED MARCH 31, 2022 AND 2021

(Unaudited)

(in thousands, except share data)


						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


						Retained
				Additional		Earnings		Total
	Common Stock			Paid-in		(Accumulated		Stockholders'
	Shares	Amount		Capital		Deficit)		Equity (Deficit)
Balance, January 1, 2021	2,838,047	$	3	$	2,570	$	(2,502)	$	71

Stock-based compensation	—		—		69		—		69

SEC Form 10-Q filed by NexGel Inc