What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-03-21 compared with 2021-03-31 · 29 added, 341 removed, 1 unchanged (100% of the section changed)

Market for the Registrants Common Equity,

Related Stockholder Matters and Issuer Purchases of Equity Securities

of December 31, 2020, there were over 1,160 shareholders of record and 99,331,579 shares of common stock outstanding.

market for our common stock currently exists.

The value of our common stock is based on observable pricing on financing transactions and

ranged from $0.04 to $0.08 during the fiscal year ended 2021.

Sales of Unregistered Securities during

the Fiscal Year Ended December 31, 2020

From February 6, 2020 through March 20,

2020, the Company entered into Securities Purchase Agreements with certain accredited investors and issued an aggregate of 15,500,000

shares of the Company’s common stock at a price per share equal to $0.04 for an aggregate purchase price of $620,000 (the “Private

Placement”).

Alere Financial, A Division of Cova Capital Partners, LLC (“Alere”), served as the placement agent for

the Private Placement and received a total fee equal to 6% of the total gross proceeds and warrants to purchase the number of shares of

common stock equal to 10% of the number of shares of common stock issued to the Investors, for such services rendered.

Alere’s warrants

are to be in a customary form reasonably acceptable to Alere, exercisable for 3 years at an exercise price equal to $0.04.

the Company’s Chief Executive Officer and Chief Financial Officer, is affiliated with Alere but has waived any portion of such fee

received by Alere to which he is entitled as an affiliate of Alere.

On May 29, 2020, the Company entered into

a Membership Interest Purchase Agreement whereby the Company purchased all of the outstanding equity securities of Sport Defense LLC,

a Delaware limited liability company (“Sports Defense”), from the members of Sport Defense for an aggregate of $375,000 which

was paid by the Company through the issuance of an aggregate of 9,375,000 shares of the Company’s common stock, which equates to

a per share purchase price of $0.04.

Adam Levy, the Company’s Chief Executive Officer and Chief Financial Officer, and Nachum Stein,

a member of the Company’s Board of Directors (the “Board”), were each members of Sport Defense and part of the Sellers.

Levy received 1,546,875 of the shares and Mr.

Stein received 3,187,500 of the shares.

Due to the potential conflict of interest

that existed because of Messrs.

Levy and Stein’s partial ownership of Sport Defense, the Board obtained an independent investment

bank to prepare a valuation report with respect to Sport Defense.

This valuation report supported the purchase price.

recused himself from the vote of the Board regarding the approval to purchase Sport Defense.

From July 30, 2020 through August 17,

2020, the Company entered into Securities Purchase Agreements with certain accredited investors and issued an aggregate of 6,585,000 shares

of the Company’s common stock at a price per share equal to $0.06 for an aggregate purchase price of $395,100.

From October 13, 2020 through December 24,

2020, the Company entered into Securities Purchase Agreements with certain accredited investors whereby we sold 4,437,500 shares of our

common stock at a price per share equal to $0.08 for an aggregate purchase price of $355,000.

All of the shares issued and sold described above

were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state,

and were offered and sold in reliance on the exemption from registration under the Securities Act, provided by Section 4(a)(2) and

Regulation D (Rule 506) under the Securities Act.

Each investor represented that it was an accredited investor (as defined by Rule 501

under the Securities Act).

Issuer Repurchases of Securities during the Fiscal Year Ended

December 31, 2020

The Company did not repurchase any of its securities during the fiscal

year ended December 31, 2020.

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.”

As of March 21, 2022, there were over 1,176 shareholders of record and 5,572,234 shares of common stock outstanding.

On November 29, 2021, we effected a 1-for-35 reverse stock split of our issued and outstanding common stock (the “Reverse Stock Split”).

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.

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, 2021

On September 2, 2021, the Company conducted a closing of a private placement offering (the "September 2 Offering") with twenty accredited investors (the "September 2 Investors") whereby the Company entered into a securities purchase agreement (the "September Purchase Agreement") with the Investors pursuant to which the Company issued to the Investors subordinated secured convertible promissory notes in the aggregate principal amount of $1,620,000 (the "September 2 Notes").

The net proceeds received by the Company were $1,504,400.

The September 2, 2021 Notes are convertible into shares of common stock at $5.25 per shares.

In connection with the issuance of the September 2 Notes, the Investors were also issued five-year warrants to purchase up to an aggregate

of 308,572 shares of the Company's common stock at an exercise price of $5.25 per share.

Alere Financial, a division of Cova Capital Partners, LLC (“Alere”), served as the placement agent for the September 2 Notes and received, among other consideration, warrants to purchase up to 22,020 shares of the Company's common stock, with a term of five years, at a per share exercise price of $5.25.

On March 11, 2021, the Company entered into a securities purchase agreement (the “Auctus Purchase Agreement”) with Auctus Fund, LLC, a Delaware limited liability company (“Auctus”), pursuant to which the Company issued to Auctus a senior secured convertible promissory note in the principal amount of $1,500,000 (the “Auctus Note”).

The net proceeds received by the Company were $1,337,000 after deducting fees and expenses related to the transaction.

In connection with the issuance of the Auctus Note and Auctus Purchase Agreement, Auctus was also issued two five-year warrants as follows:

the first warrant was to purchase up to an aggregate of 171,429 shares of the Company’s common stock at an exercise price of $4.375 per share (the “First Auctus Warrant”) and the second warrant was to purchase up to an aggregate of 142,858 shares of the Company’s common stock at an exercise price of $5.25 per share (the “Second Auctus Warrant”).

The First Auctus Warrant and the Second Auctus Warrant are referred to herein as the “Auctus Warrants”.

The Auctus Note was fully repaid, including all principle and interest, on March 15, 2022.

On January 19, 2021, the Company entered into a Securities Purchase Agreement, pursuant to which the Company issued a $15,000 Secured Convertible Promissory Note which was convertible into shares of the Company’s common stock at a price per share of $1.05.

The Note was due on or before March 19, 2021 and fully repaid, including all principle and interest, on March 14, 2021.

From January 27, 2021 through March 1, 2021, the Company entered into Securities Purchase Agreements with certain accredited investors whereby we sold 101,800 shares of our common stock at a price per share equal to $2.80 for an aggregate purchase price of $285,000.

Proceeds from this private placement are expected to be used for working capital, new product development and testing, and general business operations.

All of the shares issued and sold described above were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration under the Securities Act, provided by Section 4(a)(2) and Regulation D (Rule 506) under the Securities Act.

Each investor represented that it was an accredited investor (as defined by Rule 501 under the Securities Act).

Issuer Repurchases of Securities during the Fiscal Year Ended December 31, 2021

The Company did not repurchase any of its securities during the fiscal year ended December 31, 2021.

Selected Financial Data

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.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

The following discussion and analysis is intended

to help prospective investors understand our business, financial condition, results of operations, liquidity and capital resources.

should read this discussion in conjunction with our financial statements and related notes thereto included elsewhere in this information

The statements in this discussion regarding

industry outlook, expectations regarding our future performance, liquidity and capital resources and other non-historical statements are

forward-looking statements.

These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited

to, the risks and uncertainties described in “Special Note Regarding Forward-Looking Statements.”

Actual results may differ

materially from those contained in any forward-looking statements.

The NexGel Financial Statements, discussed

below, reflect the NexGel financial condition, results of operations, and cash flows.

The financial information discussed below and included

in this information statement, however, may not necessarily reflect what the NexGel financial condition, results of operations, or cash

flows would have been had NexGel been operated as a separate, independent entity during the periods presented, or what the NexGel financial

condition, results of operations, and cash flows may be in the future.

We manufacture a high-water content, electron

beam cross-linked, aqueous polymer hydrogels, or gels, used for wound care, medical diagnostics, transdermal drug delivery and cosmetics.

We believe that we are one of the leading manufacturers of high-performance gels in the United States.

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.

Our contract manufacturing business provides custom hydrogels to the OEM market.

We have recently launched an initiative to produce and market consumer products based on our unique technology.

We believe there will

be significant interest for applications in beauty and cosmetics, foot care, and over the counter remedies.

Results of Operations

Year Ended December 31, 2020 Compared to the Year Ended

December 31, 2019

On June 21, 2019, AquaMed became an independent

company through the pro rata distribution (“Spin-Off”) by Adynxx, Inc.

(“Adynxx”

and the “Parent”)

in connection with the closing of a reverse merger between Adynxx, Inc.

and Alliqua BioMedical, Inc., of AquaMed’s common

stock for common stock of Parent.

was previously known as Alliqua BioMedical, Inc.

and subsequently changed its

name to Adynxx, Inc.

on May 3, 2019.

The terms and conditions of the Spin-Off provided that each record holder of Parent stock

as of April 22, 2019, received one share of AquaMed common stock in book-entry form and resulted in the distribution of 5,005,211

shares of common stock of AquaMed.

Following the distribution (“Capitalization”), all existing operations were distributed

to AquaMed with the exception of a corporate lease for property in Yardley, Pennsylvania which was retained by Adynxx, Inc.

Following the distribution (“Capitalization”),

all existing operations were distributed to AquaMed with the exception of a corporate lease for property in Yardley, Pennsylvania which

was retained by Adynxx, Inc.

Pursuant to the Spin-Off and in exchange for the

5,005,211 shares of common stock, NexGel assumed the following net liabilities from Parent as of June 21, 2019 ($ in thousands):

Accounts receivable, net

Prepaid expenses and other current assets

Property and equipment, net

Operating lease - right of use asset

Accounts payable

Accrued expenses and other current liabilities

Operating lease liability

Long-term operating lease liability

Total liabilities

Net liabilities assumed in Spin-Off on June 21, 2019

Basis of Presentation

The balance sheet as of December 31, 2020

and the statements of operations, stockholders’

equity, and cash flows for the year ended December 31, 2020 consists of the

balances of NexGel as prepared on a stand-alone basis.

The statements of operations, stockholders’

equity, and cash flows for the

year ended December 31, 2019 were prepared on a “carve-out”

basis for the periods and dates prior to the Spin-Off.

to the separation, these financial statements were derived from the consolidated financial statements and accounting records of Adynxx, Inc.

Prior to the Spin-Off, Adynxx used a centralized

approach to cash management and financing its operations, including the operations of the Company.

Accordingly, none of the cash of Adynxx

have been attributed to the Company in the financial statements.

Transactions between Adynxx and the Company were accounted for through

Parent’s Net Investment.

The expenses, including executive compensation, have been allocated

by management based either on specific attribution of those expenses or, where necessary and appropriate, based on management’s

best estimate of an appropriate proportional allocation.

Results of Operations

For the year ended December 31, 2020 revenues

were $674 thousand and decreased by $43 thousand when compared to $717 thousand for the year ended December 31, 2019.

in our overall revenues was due to the impact of the Covid-19, however, sales have begun to return to higher levels during the initial

part of 2021.

profit (loss) .

Our gross loss was $291 thousand for the year ended December 31, 2020 compared to a gross profit of $137

thousand for the year ended December 31, 2019.

The margin/loss recorded for the year ended December 31, 2020, as compared to

a loss recorded for the year ended December 31, 2019, was primarily due to the higher volume of contract manufacturing sales and

lower manufacturing labor costs.

Gross loss was approximately (43%) for the year ended December 31, 2020 compared to a gross loss

of (19%) for the year ended December 31, 2019.

The components of cost of revenues are as follows

for the years ended December 31, 2020 and 2019 ($ in thousands):

Year Ended December 31,

Cost of revenues

Materials and finished products

Share-based compensation

Compensation and benefits

Depreciation and amortization

Equipment, production and other expenses

Total cost of revenues

Cost of revenues increased by $111 thousand to

$965 thousand for the year ended December 31, 2020, as compared to $854 thousand for the year ended December 31, 2019.

in cost of revenues is primarily attributable to our fixed overhead and compensation and benefits costs as our facility is operating at

approximately 10% capacity.

general and administrative expenses .

The following table highlights selling, general and administrative expenses by type for

the years ended December 31, 2020 and 2019 ($ in thousands):

Year Ended December 31,

Selling, general and administrative expenses

Compensation and benefits

Share-based compensation

Depreciation and amortization

Other expenses and professional fees

Total selling, general and administrative expenses

Selling, general and administrative expenses increased

by $182 thousand to $1.97 million for the year ended December 31, 2020, as compared to $1.79 million for the year ended December 31,

The increase in selling, general and administrative expenses is primarily attributable to our costs for professional fees, executive

compensation, share-based compensation and other administrative expenses in the current period operating as a stand-alone entity.

Compensation and benefits increased by $103 thousand

to $462 thousand for the year ended December 31, 2020, as compared to $359 thousand for the year ended December 31, 2019.

number of employees increased compared to the prior period upon the spin-off as a stand-alone company.

Share-based compensation increased by $228 thousand

to $232 thousand for the year ended December 31, 2020, as compared to $4 thousand for the year ended December 31, 2019.

increase in share-based compensation related to the issuance of 12,705,949 stock options and the issuance of restricted awards to our

officers, employees and advisors.

Other Expenses and professional fees decreased

by $138 thousand to $1.3 million for the year ended December 31, 2020 from $1.4 million for the year ended December 31,

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.

We continued to incur legal, accounting and consulting fees associated

with public company governance requirements, however, the decrease in professional fees compared to the prior year period was the primary

result in the cost reduction.

Liquidity and Capital Resources

As of December 31, 2020, we had $32 thousand

of cash, compared to $261 thousand of cash at December 31, 2019.

Net cash used in operating activities was $1.80 million and $1.81

million for the years ended December 31, 2020 and 2019, respectively.

Net cash used in investing activities during the

years ended December 31, 2020 was $312 thousand.

No cash was used in investing activities during the year ended December 31,

Net cash provided by financing activities for

the year ended December 31, 2020 was $1,884,000 which is attributable to the issuance of common stock of $1,370,000 and proceeds

of a notes payable of $414,000 and convertible notes payable of $100,000.

For the year ended December 31, 2019 cash flows from financing

activities were $2,045,000 which is composed of $730,000 from the issuance of common stock and $1,345,000 of advances from our former

At December 31, 2020, current assets totaled $362,000 and current liabilities totaled $1,332,000, as compared to current

assets totaling $513,000 and current liabilities totaling $801,000 at December 31, 2019.

As a result, we had working capital deficit

of $970,000 at December 31, 2020, compared to a working capital deficit of $288,000 at December 31, 2019.

in the working capital deficit as of December 31, 2020 is primarily attributable to the decrease in accounts receivable offset by

an increase in inventory, an increase from the current portion of PPP notes payable and additional convertible notes payable due in June 2021.

On March 11, 2021, the Company entered into

a securities purchase agreement (the “Auctus Purchase Agreement”) with Auctus Fund, LLC, a Delaware limited liability company

(“Auctus”), pursuant to which the Company issued to Auctus a senior secured convertible promissory note in the principal amount

of $1,500,000 (the “Auctus Note”).

The net proceeds received by the Company were $1,337,000 after deducting fees and expenses

related to the transaction.

On March 4, 2021, the Company received a second PPP Loan

in the amount of $127 thousand under Phase II of the Paycheck Protection Program which commenced on January 13, 2021 and allowed

certain businesses that received an initial PPP Loan to seek a second draw PPP Loan.

From January 1, 2021 through March, 2021,

the Company entered into Securities Purchase Agreements with certain accredited investors whereby we sold 3,562,500 shares of our common

stock at a price per share equal to $0.08 for an aggregate purchase price of $285,000.

From October 13, 2020 through December 24,

2020, the Company entered into Securities Purchase Agreements with certain accredited investors whereby we sold 4,437,500 shares of our

common stock at a price per share equal to $0.08 for an aggregate purchase price of $355,000.

From July 30, 2020 through August 14,

2020, the Company entered into Securities Purchase Agreements with certain accredited investors whereby we sold 6,585,000 shares of our

common stock at a price per share equal to $0.06 for an aggregate purchase price of $395,100.

From February 6, 2020 through March 20,

2020, the Company entered into Securities Purchase Agreements with certain accredited investors whereby we sold 15,500,000 shares of our

common stock at a price per share equal to $0.04 for an aggregate purchase price of $620,000.

Proceeds from these offering are expected to be

used for working capital, new product development and testing, and general business operations.

We have never declared or paid any cash dividends

on our common stock.

For the foreseeable future, we anticipate that all available fund 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.

Any future determination related

to our dividend policy will be made at the discretion of our Board of Directors and will depend upon, among other factors, our results

of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factors our Board of

Directors may deem relevant.

The Company is in the process of expanding its

customer base to increase revenue in order to alleviate the current going concern.

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.

Moving forward, the Company we will be raising

additional capital and focusing on increasing revenues for the business to stabilize and become profitable.

The Company will maintain

and attempt to grow the existing contract manufacturing business.

The Company plans to continue building and developing its catalog of

consumer products for sale to branding partners.

Thirdly, we will use our in house capabilities to create and test market additional branded

These products will be target marketed and sold online through social media, television and online market places.

We expect to continue incurring losses for the

near-term future and may need to raise additional capital to support ongoing operations.

Our ability to continue to operate as a going

concern is dependent upon our ability to raise additional capital and to ultimately achieve profitable operations.

Management is evaluating

various options to raise capital to funds the Company’s working capital requirements through equity offerings.

There can be no assurances,

however, that management will be able to obtain sufficient additional funds when needed, or that such funds, if available, will be obtained

on terms satisfactory to us.

These factors raise substantial doubt as to our ability to continue as a going concern.

The financial statements

do not include any adjustments relating to the recoverability and classification of recorded assets and liabilities that might be necessary

should we be unable to continue as a going concern.

On January 30, 2020, the World Health Organization declared the

coronavirus outbreak a "Public Health Emergency of International Concern"

and on March 10, 2020, declared it to be a pandemic.

Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain

areas, and forced closures for certain types of public places and businesses.

The coronavirus and actions taken to mitigate it have had

and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical

area in which the Company operates.

While it is unknown how long these conditions will last and what the complete financial effect will

be to the Company, to date, the Company could experience declining revenue, labor and supply shortages, or difficulty in raising additional

Our concentrations with a few customers and one supplier make it reasonably possible that we are vulnerable to the risk of a

near-term severe impact.

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.

Off Balance Sheet Arrangements

As of December 31, 2020, 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.

Critical Accounting Policies and Estimates

The preparation of our Financial Statements in

accordance with generally accepted accounting principles is based on the selection and application of accounting policies that require

us to make significant estimates and assumptions about the effects of matters that are inherently uncertain.

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.

compensation –

We utilize share-based compensation in the form of incentive stock options.

The fair values of incentive

stock option award grants are estimated as of the date of grant using a Black-Scholes option valuation model.

Compensation expense is

recognized in the statements of operations on a straight-line basis over the requisite service period, which is generally the vesting

period required to obtain full vesting.

The expected term of the awards granted is estimated using the simplified method which computes

the expected term as the sum of the award’s vesting term plus the original contractual term divided by two.

Liability –

Warrants to purchase common stock were issued in connection with equity financing raises which occurred on

December 24, 2020, March 18, 2020, September 10, 2019 and November 6, 2019.

The fair values of the warrants are estimated

as of the date of issuance and again at each period end using a Black-Scholes option valuation model.

At issuance, the fair value of the

warrant is recognized as an equity issuance cost within additional paid-in-capital.

Fair value adjustments to the warrant liability are

recognized in other income (expense) in the statements of operations.

The expected term of the awards granted are based on the 3 year

contractual expiration date.

Scholes Inputs - The fair value of each stock option award and warrant issued was estimated on the date of grant using a Black-Scholes

option-valuation model, which requires management to make certain assumptions regarding:

(i) fair value of the common stock that

underlies the stock option;

(ii) the expected volatility in the market price of our common stock;

(iii) dividend yield;

(iv) risk-free

interest rates;

and (iv) the period of time employees are expected to hold the award prior to exercise (referred to as the expected

Under the Black-Scholes option-valuation model, entities typically estimate the expected volatility based on historical volatilities

of the entity’s own common stock.

Based on the lack of historical data of volatility for the Company’s common stock, the Company

based its estimate of expected volatility on a weighted average of the historical volatility of comparable public companies that manufacture

similar products and are similar in size, stage of life cycle, and financial leverage.

The fair value of the common stock that underlies

the stock option is estimated by the Company considering the price of the most recent issuance of the Company’s common stock.

dividend yield is based upon the assumption that the Company will not declare a dividend over the life of the options.

The risk-free interest

rate is based on the U.S.

Treasury yield curve in effect at the time of grant for bonds with maturities consistent with the expected term

of the related award.

Quantitative and Qualitative Disclosures About Market Risk

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.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity