NEXGEL INC
For the period ended Jun 30, 2024. Filed Aug 19, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 19, 2024
NXGL$3.60-12.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-13.
0001493152-24-018950
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-19.
0001493152-24-032936
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 61 previous paragraphs and 85 current paragraphs.
36 unchanged; 21 reworded; 22 added; 4 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 5 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Beginning in May 2024, the Company added the Silly George brand. Silly George is a beauty and cosmetics company focused on eyeliner, fake eyelashes, lash growth serum and mascara.
Current report
Joint Ventures
Current report
CGN
Current report
Enigma Health
Current report
Acquisitions
Current report
Kenkoderm
Current report
Silly George
Current report
On May 15, 2024, the Company purchased assets from Semmens Online Pty Ltd as Trustee for Semmens Business Trust (the “SG Seller”) related to the SG Seller’s eyeliner, fake eyelashes, lash growth serum and mascara business operating under the tradename “Silly George” (collectively, the “Business”).
Current report
Under the terms of the Purchase Agreement and on the Closing Date, the Company paid the SG Seller a cash payment of $400,000 and issued $200,000 in shares of the Company’s common stock based on the 10-Day VWAP (as defined in the SG Purchase Agreement), or 89,892 of shares of the Company’s common Stock. Additionally, the Company shall pay the Seller a cash earn-out based on 20% of the Net Profit (as defined in the SG Purchase Agreement) related to the Business for the fiscal quarterly period beginning June 30, 2024 and ending on June 30, 2028.
Current report
Branded Consumer Products
Current report
Advertising, marketing, Amazon fees increased by $276, or 166.3%, to $442 for the three months ended June 30, 2024, as compared to $166 for the three months ended June 30, 2023. The increase is due to the increased Amazon selling fees and an increase in advertising and marketing attributable to promoting Kenkoderm and Silly George.
Current report
Comparison of the Six Months ended June 30, 2024 and 2023 (in thousands)
Current report
Revenues, net
Current report
For the six months ended June 30, 2024, revenues were $2,706 and increased by $920, or 51.5%, when compared to $1,786 for the six months ended June 30, 2023. The increase in our overall revenues was primarily due to sales growth in our branded consumer products, including gross revenue from Silly George of $380 from May 15, 2024 through June 30, 2024, and partially offset by a decrease in contract manufacturing.
Current report
Gross profit. Our gross profit was $687 for the six months ended June 30, 2024, compared to a gross profit of $117 for the six months ended June 30, 2023. The increase of $570 in gross profit recorded for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to increase in branded consumer products. Gross profit was approximately 25.4% for the six months ended June 30, 2024, compared to a gross profit of 6.6% for the six months ended June 30, 2023.
Current report
Cost of revenues increased by $350, or 21.0%, to $2,019 for the six months ended June 30, 2024, as compared to $1,669 for the six months ended June 30, 2023. The increase in cost of revenues pertains to an increase in materials and finished products. The increase in cost of revenues is primarily aligned with sales of branded consumer products, as both Silly George and Kenkoderm were acquired after the comparable 2023 time period.
Current report
Selling, general, and administrative expenses increased by $855, or 50.9%, to $2,534 for the six months ended June 30, 2024, as compared to $1,679 for the six months ended June 30, 2023. The increase in selling, general, and administrative expenses is primarily attributable to increased Advertising, marketing and Amazon fees, which directly correlates to our growth in branded consumer products.
Current report
Share-based compensation increased by $62, or 147.6%, to $104 for the six months ended June 30, 2024, as compared to $42 for the six months ended June 30, 2023. The increase related to the issuance of stock options and restricted awards to our officers, employees, board of directors, and advisors.
Current report
Advertising, marketing, Amazon fees increased by $435 or 167.3%, to $695 for the six months ended June 30, 2024, as compared to $260 for the six months ended June 30, 2023. The increase is due to the increased Amazon selling fees and increase in advertising and marketing attributable to promoting Kenkoderm and Silly George.
Current report
Investor and shareholder services decreased by $87 or 36.7%, to $150 for the six months ended June 30, 2024, as compared to $237 for the six months ended June 30, 2023. The decrease is due to a net reduction of investor services compared to the prior year period.
Current report
Franchise taxes and corporate insurance decreased by $42 or 34.4%, to $80 for the six months ended June 30, 2024, as compared to $122 for the six months ended June 30, 2023. In the prior year period, a non-recurring adjustment resulted in an increase in franchise taxes.
Current report
Research and development expenses. Research and development expenses decreased by $6, or 7.1% to $78 for the six months ended June 30, 2024 from $84 for the six months ended June 30, 2023. Research and development expenses are related to research costs incurred for potential products for existing or new customers.
Removed paragraphs (4)
Previous report
Joint Venture
Previous report
Acquisition
Previous report
Consumer Branded Products
Previous report
Advertising, marketing, Amazon fees increased by $159, or 169.1%, to $253 for the three months ended March 31, 2024, as compared to $94 for the three months ended March 31, 2023. The increase primarily pertains to an increase in consumer branded product sales year over year.
Reworded paragraphs (21)
Previous wording
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”).
Current wording
On December 1, 2023, we purchased substantially all of the assets of Olympus Trading Company, LLC (the “Kenkoderm Seller”) related to the Seller’s skincare line focused on reducing symptoms associated with psoriasis operating under the tradename “Kenkoderm” (“Kenkoderm acquisition”).
Previous wording
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. 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.
Current wording
Additionally, the Company will pay the Kenkoderm Seller a cash earn-out of the same amount each quarter, payable in the subsequent month flowing quarter end, of $136,625, subject to adjustment. 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.
Previous wording
For the three months ended March 31, 2024 revenues were $1,266 and increased by $646, or 104.2%, when compared to $620 for the three months ended March 31, 2023. The increase in our overall revenues was primarily due to sales growth in both our contract manufacturing and branded products.
Current wording
For the three months ended June 30, 2024 revenues were $1,440 and increased by $273, or 23.4%, when compared to $1,167 for the three months ended June 30, 2023. The increase in our overall revenues was primarily due to sales growth in our branded consumer products, including gross revenue from Silly George of $380 from May 15, 2024 through June 30, 2024, and partially offset by a decrease in contract manufacturing.
Previous wording
The Company has four distinct lines of business; Contract Manufacturing, Custom and White Label, Consumer Branded Products, and Medical Devices.
Current wording
The Company has four distinct lines of business; Contract Manufacturing, Custom and White Label, Branded Consumer Products, and Medical Devices.
Previous wording
These products often infuse various ingredients into our base gel to develop unique product offerings to satisfy market demand (e.g. aloe infused into the gel for a beauty mask). The rollstock is converted and packaged into salable units. The finished goods are shipped to the customer, who is ultimately responsible for product distribution. Frequently these products started as development deals, in which the customer paid the company a small fee to develop a specific product. Once completed, the customer places a large order for newly developed product.
Current wording
These products often infuse various ingredients into our base gel to develop unique product offerings to satisfy market demand (e.g. aloe infused into the gel for a beauty mask). The rollstock is converted and packaged into saleable units. The finished goods are shipped to the customer, who is ultimately responsible for product distribution. Frequently these products started as development deals, in which the customer paid the company a small fee to develop a specific product. Once completed, the customer places a large order for newly developed product.
Previous wording
These products are finished goods marketed and sold directly to the customer by the Company through online and retail channels. The Company is responsible for sales, marketing, and distribution. These products carry the Company’s brand names, which include Medagel, Lumagel Beauty, and Kenkoderm.
Current wording
These products are finished goods marketed and sold directly to the customer by the Company through online and retail channels. The Company is responsible for sales, marketing, and distribution. These products carry the Company’s brand names.
Previous wording
Medical Devices are a hybrid business, combining elements of Custom and White Label and Consumer Branded Products. Medical Devices, which are not yet marketed, are expected to be distributed through strategic partnerships. 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.
Current wording
Medical Devices are a hybrid business, combining elements of Custom and White Label and Branded Consumer Products. Medical Devices, which are not yet marketed, are expected to be distributed through strategic partnerships. 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.
Previous wording
Gross profit (loss). Our gross profit was $277 for the three months ended March 31, 2024 compared to a gross loss of $57 for the three months ended March 31, 2023. The increase of $334 in gross loss quarter over quarter was primarily due to the increase in consumer branded products. Gross profit was 21.9% for the three months ended March 31, 2024 compared to a gross loss of (9.2%) for the three months ended March 31, 2023.
Current wording
Gross profit. Our gross profit was $410 for the three months ended June 30, 2024 compared to a gross profit of $175 thousand for the three months ended June 30, 2023. The increase of $235 in gross profit quarter over quarter was primarily due to the increase in branded consumer products. Gross profit was 28.5% for the three months ended June 30, 2024 compared to a gross profit of 15.0% for the three months ended June 30, 2023.
Previous wording
Cost of revenues increased by $312, or 46.1%, to $989 for the three months ended March 31, 2024, as compared to $677 for the three months ended March 31, 2023. The increase in cost of revenues is primarily aligned with the increase in revenue growth.
Current wording
Cost of revenues increased by $38, or 3.8%, to $1,030 for the three months ended June 30, 2024, as compared to $992 for the three months ended June 30, 2023. The increase in cost of revenues is primarily aligned with sales of branded consumer products, as both Silly George and Kenkoderm were acquired after the comparable 2023 time period.
Previous wording
Selling, general and administrative expenses increased by $349, or 43.8%, to $1,146 for the three months ended March 31, 2024, as compared to $797 for the three months ended March 31, 2023. The increase in Selling, general and administrative expenses is primarily attributable to the factors described below.
Current wording
Selling, general and administrative expenses increased by $506, or 57.4%, to $1,388 for the three months ended June 30, 2024, as compared to $882 for the three months ended June 30, 2023. The increase in Selling, general and administrative expenses is primarily attributable to the factors described below.
Previous wording
Compensation and benefits increased by $91, or 56.5%, to $252 for the three months ended March 31, 2024, as compared to $161 for the three months ended March 31, 2023. The number of employees increased compared to the prior period and officer compensation increased in conjunction with contract renewals.
Current wording
Compensation and benefits increased by $76, or 43.2%, to $252 for the three months ended June 30, 2024, as compared to $176 for the three months ended June 30, 2023. The number of employees increased compared to the prior period and officer compensation increased in conjunction with contract renewals.
Previous wording
Share-based compensation increased by $32, or 168.4%, to $51 for the three months ended March 31, 2024, as compared to $19 for the three months ended March 31, 2023. The share-based compensation related to the issuance of stock options and restricted awards to our officers, employees, and advisors in the prior year period.
Current wording
Share-based compensation increased by $30 or 130.4%, to $53 for the three months ended June 30, 2024, as compared to $23 for the three months ended June 30, 2023. The increase related to the issuance of stock options and restricted awards to our officers, employees, board of directors, and advisors.
Previous wording
Investor and shareholder services decreased by $34, or 35.4%, to $62 for the three months ended March 31, 2024, as compared to $96 for the three months ended March 31, 2023. The decrease is due to a reduction of investor services compared to the prior year period.
Current wording
Investor and shareholder services decreased by $52 or 37.1%, to $88 for the three months ended June 30, 2024, as compared to $140 for the three months ended June 30, 2023. The decrease is due to a net reduction of investor services compared to the prior year period.
Previous wording
Franchise taxes and corporate insurance increased by $14, or 31.8%, to $58 for the three months ended March 31, 2024, as compared to $44 thousand for the three months ended March 31, 2023.
Current wording
Franchise taxes and corporate insurance decreased by $41, or 65.1%, to $22 for the three months ended June 30, 2024, as compared to $63 thousand for the three months ended June 30, 2023. In the prior year period, a non-recurring adjustment resulted in an increase in franchise taxes.
Previous wording
Professional and consulting fees increased by $101, or 38.4%, to $364 for the three months ended March 31, 2024, as compared to $263 for the three months ended March 31, 2023. We continued to incur accounting and consulting fees associated with public company governance requirements. Additionally, we incurred significant expenses related to our European Medical Device Regulation project in preparation for entering European markets.
Current wording
Professional and consulting fees increased by $155, or 63.0%, to $401 for the three months ended June 30, 2024, as compared to $246 for the three months ended June 30, 2023. We continued to incur accounting and consulting fees associated with public company governance requirements and professional services related to branded consumer products.
Previous wording
Other Expenses decreased by $35, or 31.8%, to $75 for the three months ended March 31, 2024 from $110 for the three months ended March 31, 2023. 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.
Current wording
Other Expenses increased by $26, or 50.0%, to $78 for the three months ended June 30, 2024 from $52 for the three months ended June 30 2023. 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 recruiting.
Previous wording
Research and development expenses. Research and development expenses were $2 and $29 for the three months ended March 31, 2024 and March 31, 2023, respectively.
Current wording
Research and development expenses. Research and development expenses increased by $21, or 38.2%, to $76 for the three months ended June 30, 2024 from $55 for the three months ended June 30, 2023. Research and development expenses are related to research costs incurred for potential products for existing or new customers.
Previous wording
As of March 31, 2024, we had $2,419 of cashand cash equivalents, compared to $2,700 of cash and cash equivalents at December 31, 2023. Net cash used in operating activities was $1,092 and $709 for the three months ended March 31, 2024 and 2023, respectively.
Current wording
As of June 30, 2024, we had $1,069 of cashand cash equivalents, compared to $2,700 of cash and cash equivalents at December 31, 2023. Net cash used in operating activities was $1,792 and $1,926 for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
Net cash used in investing activities was $118 and net cash provided by $397 for the three months ended March 31, 2024 and 2023, respectively, consisting of the sales of marketable securities of $34 and the purchase of capital equipment of $152 for three months ended March 31, 2024 and consisting of the sales of marketable securities of $485 and purchases of capital equipment of $88 for three months ended March 31, 2023.
Current wording
Net cash used in investing activities was $704 and net cash provided by investing activities was $ 4,519 for the six months ended June 30, 2024 and 2023, respectively, consisting of the sales of marketable securities of $57, the purchase of capital equipment of $361 and the acquisition of $400 for six months ended June 30, 2024 and consisting of the sales of marketable securities of $4,772 and purchases of capital equipment of $253 for six months ended June 30, 2023.
Previous wording
Net cash provided by financing activities for the three months ended March 31, 2024 was $929 consisting of net proceeds from the RDO of $946, offset by principal payments of notes payable of $8 and by principal payment on financing lease liability of $9. Net cash used in financing activities for March 31, 2023 was $2 is attributable to the principal payments of notes payable.
Current wording
Net cash provided by financing activities for the six months ended June 30, 2024 was $865 consisting of net proceeds from the RDO of $946 and an investment of $37 by a joint venture partner, offset by principal payments of notes payable of $27, a change in contingent consideration liability of $69, and by principal payment on financing lease liability of $22. Net cash used in financing activities for June 30, 2023 was $3 is attributable to the principal payments of notes payable.
Previous wording
At March 31, 2024, current assets totaled $4,863 and current liabilities totaled $2,483, as compared to current assets totaling $5,052 and current liabilities totaling $2,549 at December 31, 2023. As a result, we had working capital of $2,380 at March 31, 2024, compared to a working capital of $2,503 at December 31, 2023. The change in the working capital as of March 31, 2024 is primarily attributable to the loss from operations of $871 and the net proceeds of $946 from the RDO.
Current wording
At June 30, 2024, current assets totaled $3,588 and current liabilities totaled $2,633 as compared to current assets totaling $5,052 and current liabilities totaling $2,549 at December 31, 2023. As a result, we had working capital of $955 at June 30, 2024, compared to a working capital of $2,503 at December 31, 2023. The change in the working capital as of June 30, 2024 is primarily attributable to the loss from operations of $1,925, cash paid for asset acquisition of $403, capital expenditures of $361, offset by net proceeds of $946 from the RDO.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
On January 6, 2023, the Company acquired a 50% interest in its newly formed JV to pursue branded consumer product retail opportunities and the development of new patch products. The JV agreement is effective January 6, 2023. As a result of this transaction, the Company owns 50% of the JV, with the remaining 50% held by Moiety.
Current report — wording carried from elsewhere
The components of cost of revenues are as follows for the six months ended June 30, 2024 and 2023 ($ in thousands):
Current report — wording carried from elsewhere
Selling, general, and administrative expenses. The following table highlights selling, general, and administrative expenses by type for the six months ended June 30, 2024 and 2023 ($ in thousands):
Current report — wording carried from elsewhere
Compensation and benefits increased by $183, or 57.0%, to $504 for the six months ended June 30, 2023, as compared to $321 for the six months ended June 30, 2023. The number of employees increased compared to the prior period and officer compensation increased in conjunction with contract renewals.
Current report — wording carried from elsewhere
Professional and consulting fees increased by $213 or 38.6% to $765 for the six months ended June 30, 2024, as compared to $552 for the six months ended June 30, 2023. We continued to incur accounting and consulting fees associated with public company governance requirements and professional services related to branded consumer products.
Current report — wording carried from elsewhere
Other expenses increased by $34, or 28.6%, to $153 for the six months ended June 30, 2024 from $119 for the six months ended June 30, 2023. 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 recruiting.