NEXGEL, INC.

Previous wording

We manufacture high water content, electron beam cross-linked, aqueous polymer hydrogels, or gels, used for wound care, medical diagnostics, transdermal drug delivery and cosmetics. We specialize in custom gels by capitalizing on proprietary manufacturing technologies. We have historically served as a contract manufacturer, supplying our gels to third parties who incorporate them into their own products. Beginning in 2020, we created two new lines of business for the Company. First, our own line of branded consumer products sold direct to consumers. Second, we expanded into custom and white label opportunities, which focuses on combining our gels with proprietary branded products and white label opportunities. All of our gel products are manufactured using proprietary and non-proprietary mixing, coating and cross-linking technologies. Together, these technologies enable us to produce gels that can satisfy rigid tolerance specifications with respect to a wide range of physical characteristics (e.g., thickness, water content, adherence, absorption, moisture vapor transmission rate [a measure of the passage of water vapor through a substance] and release rate) while maintaining product integrity. Additionally, we have the manufacturing ability to offer broad choices in the selection of liners onto which the gels are coated. Consequently, we and our customers are able to determine tolerances in moisture vapor transmission rate and active ingredient release rates while personalizing color and texture. 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.

Current wording

We manufacture high water content, electron beam cross-linked, aqueous polymer hydrogels, or gels, used for wound care, medical diagnostics, transdermal drug delivery and cosmetics. We specialize in custom gels by capitalizing on proprietary manufacturing technologies. We distribute our products as a contract manufacturer, supplying our gels to third parties who incorporate them into their own products. We also have a line of branded consumer products sold direct to consumers and custom and white label opportunities, which focuses on combining our gels with proprietary branded products and white label opportunities. All of our gel products are manufactured using proprietary and non-proprietary mixing, coating and cross-linking technologies. Together, these technologies enable us to produce gels that can satisfy rigid tolerance specifications with respect to a wide range of physical characteristics (e.g., thickness, water content, adherence, absorption, moisture vapor transmission rate [a measure of the passage of water vapor through a substance] and release rate) while maintaining product integrity. Additionally, we have the manufacturing ability to offer broad choices in the selection of liners onto which the gels are coated. Consequently, we and our customers are able to determine tolerances in moisture vapor transmission rate and active ingredient release rates while personalizing color and texture. Our joint venture with CG Laboratories, Inc. called CG Converting and Packaging, LLC, which is located in Granbury, Texas in which we own a 50% interest, allowing us to expand our ability to deliver finished goods to our growing customer base.

Previous wording

We have four distinct lines of business; Contract Manufacturing, Custom & White Label, Consumer Branded Products, and Medical Devices/Other, which are described below.

Current wording

We have four distinct lines of business; Contract Manufacturing, Custom & White Label, Consumer Branded Products, and Medical Devices/Other.

Previous wording

Customers order rolls of gel (“rollstock”). The rollstock is shipped to our customers, which they package into finished goods. Historically, this was the Company’s primary source of revenue.

Current wording

Customers order rolls of gel (“rollstock”). The rollstock is shipped to our customers, which they package into finished goods. Historically, this has been the Company’s primary source of revenue.

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 an 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 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.

Previous wording

These products are finished goods marketed and sold directly to consumers by the Company through online and retail channels. 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 applications. In December 2023 we added a second consumer product brand when we completed the purchase of the Kenkoderm brand. 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. We continue to look for additional potential acquisitions as part of our consumer product ‘roll-up” strategy.

Current wording

These products are finished goods marketed and sold directly to the customer by the Company through online and retail channels. 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. 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. We continue to look for additional potential acquisitions as part of our consumer product ‘roll-up” strategy.

Previous wording

For the nine months ended September 30, 2025, revenues were $8,625 and increased by $2,978, or 52.7%, when compared to $5,647 for the nine months ended September 30, 2024. The increase in our overall revenues was primarily due to sales growth in our branded consumer products, as the prior year period included gross revenue for a partial year from Silly George from May 15, 2024 through September 30, 2025.

Current wording

For the three months ended March 31, 2026 revenues were $2,650 and decreased by $156, or 5.6%, when compared to $2,806 for the three months ended March 31, 2025. The decrease in our overall revenues was primarily due to a decline in our branded consumer products, partially offset by an increase in Medical Device/Other revenues.

Previous wording

The components of cost of revenues are as follows for the three months ended September 30, 2025 and 2024 ($ in thousands):

Current wording

Cost of revenues are as follows for the three months ended March 31, 2026 and 2025 ($ in thousands):

Previous wording

Cost of revenues decreased by $94, or 5.2%, to $1,691 for the three months ended September 30, 2025, as compared to $1,785 for the three months ended September 30, 2024. The decrease in cost of revenues is primarily related to a decrease in depreciation and amortization expense.

Current wording

Cost of revenues decreased by $29, or 1.79%, to $1,589 for the three months ended March 31, 2026, as compared to $1,618 for the three months ended March 31, 2025. The decrease in cost of revenues is primarily aligned with decrease in sales.

Previous wording

Gross profit. Our gross profit was $3,690 for the nine months ended September 30, 2025, compared to a gross profit of $1,674 for the nine months ended September 30, 2024. The increase of $2,016 in gross profit recorded for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, was primarily due to increase in branded consumer products. Gross profit was approximately 42.8% for the nine months ended September 30, 2025, compared to a gross profit of 29.6% for the nine months ended September 30, 2024.

Current wording

Our gross profit was $1,061 for the three months ended March 31, 2026 compared to a gross profit of $1,188 for the three months ended March 31, 2025. The decrease of $127 in gross profit recorded for the three months ended March 31, 2026, as compared to March 31, 2025, was primarily due to the decrease in consumer branded products partially offset by an increase in Medical Device/Other revenue. Gross profit was 40.0% for the three months ended March 31, 2026 compared to a gross profit of 42.3% for the three months ended March 31, 2025.

Previous wording

Research and development expenses. Research and development expenses decreased by $70, or 89.7% to $8 for the nine months ended September 30, 2025 from $78 for the nine months ended September 30, 2024. Research and development expenses are related to research costs incurred for potential products for existing or new customers.

Current wording

Research and development expenses decreased by $1 to $0 for the three months ended March 31, 2026 from $1 for the three months ended March 31, 2025. Research and development expenses are related to research costs incurred for potential products for existing or new customers.

Previous wording

As of September 30, 2025, we had $938 of cash and cash equivalents and $920 in restricted cash, compared to $1,807 of cash and cash equivalents at December 31, 2024. Net cash used in operating activities was $1,592 and $3,008 for the nine months ended September 30, 2025 and 2024, respectively.

Current wording

As of March 31, 2026, we had $2,122 of cash and cash equivalents, compared to $1,058 of cash and cash equivalents at December 31, 2025. Net cash used in operating activities was $504 and $400 for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Net cash used in financing activities for the nine months ended September 30, 2025 was $1,671 is attributable to the proceeds from rights offerings and stock issuances of $963, proceeds from STADA of $1,000, offset by principal payments of notes payable of $71, principal payments of financing lease liabilities of $43, and payment of contingent consideration of $178.

Current wording

Net cash provided by financing activities for March 31, 2026 was $1,577 and was attributable to the proceeds from convertible notes payable of $1,618 offset by principal payments of notes payable and principal payments of financing lease liabilities of $41. Net cash used in financing activities for the three months ended March 31, 2025 was $215 and was attributable to $37 of principal payments of notes payable and principal payments of financing lease liabilities and payment of contingent consideration of $178.

Previous wording

At September 30, 2025, current assets totaled $5,602 and current liabilities totaled $3,308, as compared to current assets totaling $5,114 and current liabilities totaling $2,470 at December 31, 2024. As a result, we had working capital of $2,294 at September 30, 2025, compared to a working capital of $2,644 at December 31, 2024. The change in the working capital as of September 30, 2025 is primarily attributable to the loss from operations of $2,138.

Current wording

At March 31, 2026, current assets totaled $5,638 and current liabilities totaled $3,314, as compared to current assets totaling $4,338 and current liabilities totaling $2,956 at December 31, 2025. As a result, we had working capital of $2,324 at March 31, 2026, compared to a working capital of $1,382 at December 31, 2025. The increase in the working capital as of March 31, 2026 is primarily attributable to the loss from operations of $958 and proceeds from issuance of convertible debt of $1,618.

Previous wording

Management is exploring new product channel sales in consumer products, such as cosmetics, athletic products, and proprietary medical devices. The Company has increased its focus on sales and the develop of a sales pipeline for potential customers. 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.

Current wording

Management is exploring new product channel sales in consumer products, such as cosmetics, athletic products, and proprietary medical devices. The Company has increased its focus on sales and developing a sales pipeline for potential customers. 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.

Previous wording

Our recent August Financing provides working capital necessary to continue our strategic objectives (see Note 13). 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. 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.

Current wording

Our recent capital raise which closed on or about August 5, 2025 provides working capital necessary to continue our strategic objectives (discussed further within Note 2). 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. 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.