What changed in this filing

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Item 1. Financial Statements

2023-11-13 compared with 2023-08-14 · 192 added, 155 removed, 625 unchanged (36% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

OF JUNE 30, 2023 AND DECEMBER 31, 2022

OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022

thousands, except share and per share data)

September 30,

Current Assets:

10 unchanged sentences

Accrued expenses and other current liabilities

Deferred revenue

Current portion of note payable

9 unchanged sentences

Common stock, par value $ 0.001 per share, 25,000,000 shares authorized;

5,696,064 and 5,577,916 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

5,717,629 and 5,577,916 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

6 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

thousands, except share and per share data)

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Revenues, net

9 unchanged sentences

Loss on debt extinguishment

Warrant modification expense

Gain on investments

3 unchanged sentences

Income tax expense

Income attributable to non-controlling interest in joint venture

(Income) loss attributable to non-controlling interest in joint venture

Net loss attributable to NexGel stockholders

5 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

thousands, except share data)

10 unchanged sentences

Balance, June 30, 2023

Stock-based compensation

Balance, September 30, 2023

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

thousands, except share data)

Stockholders’

5 unchanged sentences

Balance, June 30, 2022

Stock-based compensation

Restricted stock vesting

Net income (loss)

Balance, September 30, 2022

accompanying notes are an integral part of these condensed consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Six Months Ended June 30,

THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Nine Months Ended September 30,

Operating Activities

7 unchanged sentences

Amortization of deferred financing costs

Warrant modification expense

Loss on extinguishment of debt

4 unchanged sentences

Accrued expenses and other current liabilities

Deferred revenue

Net Cash Used in Operating Activities

3 unchanged sentences

Capital expenditures

Net Cash Provided by Investing Activities

Net Cash Provided by (Used in) Investing Activities

Financing Activities

Proceeds from margin line of credit

Principle payments of notes payable

Net Cash Used in Financing Activities

Net Decrease in Cash

Net Cash Provided by (Used in) Financing Activities

Net Increase (Decrease) in Cash

Cash – Beginning of period

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(“CG Labs”) for its converting and packaging business.

The agreement is effective March 1, 2023.

The JV is effective March 1, 2023.

As a result of this transaction, the Company owns 50 % of the JV, with the remaining 50 % held by

of Presentation

accompanying interim unaudited condensed consolidated financial statements and footnotes of NexGel have been prepared in accordance with

generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the

instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”).

Accordingly, they do

not include all of the information and footnotes required by GAAP for complete financial statements.

In the opinion of management,

these unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered

necessary for a fair presentation of the results of the interim periods, but are not necessarily indicative of the results of

operations to be anticipated for the full year ending December 31, 2023 .

These condensed consolidated financial statements should

be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form

10-K for the year ended December 31, 2022.

Principles of Consolidation

accompanying interim unaudited condensed consolidated financial statements and footnotes of NexGel have been prepared in accordance

with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information

and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”).

they do not include all of the information and footnotes required by GAAP for complete financial statements.

In the opinion

of management, these unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring

adjustments, considered necessary for a fair presentation of the results of the interim periods, but are not necessarily

indicative of the results of operations to be anticipated for the full year ending December 31, 2023 .

These condensed

consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes

thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

of Consolidation

accompanying condensed consolidated financial statements include the accounts of the Company and its consolidated wholly-owned subsidiary,

2 unchanged sentences

Going Concern

of June 30, 2023, the Company had a cash balance of $ 3.7 million (including cash equivalents) and $ 612 thousand of marketable securities

(see Note 3 for details of our marketable securities).

For the six months ended June 30, 2023, the Company incurred a net loss of $ 1.5

million and had a net usage of cash in operating activities of $ 1.9 million.

In addition, the Company had a working capital of $ 5.0 million

as of June 30, 2023.

We believe we have sufficient cash and marketable securities to operate our business plan through 2025.

of September 30, 2023, the Company had a cash balance of $ 3.3 million (including cash equivalents).

For the nine months ended September

30, 2023, the Company incurred a net loss of $ 2.1 million and had a net usage of cash in operating activities of $ 2.6 million.

In addition, the Company had a working capital of $ 4.2 million as of September 30, 2023.

We believe we have sufficient cash and marketable

securities to operate our business plan through 2024.

is exploring new product channel sales in adjacent industries, such as cosmetics, athletic products, and proprietary medical devices.

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the consolidated statement of operations of the period in which such change occurs.

Company had the following marketable securities as of June 30, 2023 and December 31, 2022:

Company had the following marketable securities as of September 30, 2023 and December 31, 2022:

of Marketable Securities

September 30,

Marketable Securities

4 unchanged sentences

United States treasury bills (due August 10, 2023)

Line of Credit

have a brokerage account through which we buy and sell U.S.

treasury bills.

The provisions of the account allow us to borrow on

certain securities held in the account and to purchase additional securities based on the account equity (including cash).

borrowed are collateralized by the securities held in the account and bear interest at a negotiated rate payable monthly.

pledged to secure margin balances cannot be specifically identified as a portion of all securities held in a brokerage account are

used as collateral.

As of September 30, 2023, there was $ 89

thousand outstanding under this short-term credit line which is included in accrued expenses and other current liabilities

within the accompanying consolidated balance sheet.

The short-term credit line will be repaid upon the maturity of U.S.

million with an original maturity of three months or less which are included in cash within the accompanying consolidated balance

sheet (see Note 8).

Receivable, net

7 unchanged sentences

when it is probable that the receivable will not be recovered.

The allowance for doubtful accounts was $ 17 thousand as of June 30, 2023,

The allowance for doubtful accounts was $ 17 thousand as of September 30,

2023, and $ 9 thousand as of December 31, 2022.

63 unchanged sentences

expenses and other current assets are recorded at historical cost and is primarily made up of $ 77 thousand and $ 63 thousand of prepaid

insurance, and $ 270 thousand and $ 109 thousand general prepaid expenses and other current assets as of June 30, 2023, and December 31,

2022, respectively.

assets are recorded at historical costs, and as of June 30, 2023, and December 31, 2022, the balance is primarily comprised of spare

insurance, and $ 290 thousand and $ 109 thousand general prepaid expenses as of September 30, 2023, and December 31, 2022, respectively.

assets are recorded at historical costs, and as of September 30, 2023, and December 31, 2022, the balance is primarily comprised of spare

parts for manufacturing equipment.

Other assets are not subject to depreciation until such time that they are placed into service and

Spare parts are not subject to depreciation until such time that they are placed into service and

the part that is being replaced is disposed.

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of Fair Value of Financial Assets

June 30, 2023

September 30, 2023

Marketable securities:

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Three months ended

September 30,

Contract manufacturing

1 unchanged sentence

NexGel branded consumer products

Six months ended

Nine months ended

September 30,

Contract manufacturing

1 unchanged sentence

NexGel branded consumer products

of June 30, 2023, and December 31, 2022, the Company did not have any contract assets or contract liabilities from contracts with customers.

As of June 30, 2023, and December 31, 2022, there were no remaining performance obligations that the Company had not satisfied.

of September 30, 2023, and December 31, 2022, the Company did not have any contract assets or contract liabilities from contracts

with customers.

As of September, 2023, and December 31, 2022, there were no

remaining performance obligations that the Company had not satisfied except for deferred revenue of $ 34 thousand and $ 0 that the

Company had not satisfied as of the end of the period.

Company has four distinct lines of business;

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Forfeitures are accounted for when

June 2018, FASB issued Accounting Standards Update (“ASU”) No.

Compensation - Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting .

These amendments expand

the scope of Topic 718, Compensation - Stock Compensation , to include share-based payments issued to non-employees for goods or

Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned.

standard was effective for the Company on January 1, 2020.

The Company adopted this new standard early in the third quarter of 2019 and

it did not have a material impact to its condensed consolidated financial statements.

June 2018, the FASB issued Accounting Standards Update (“ASU”) No.

2018-07, Compensation - Stock Compensation (Topic

718) - Improvements to Nonemployee Share-Based Payment Accounting .

These amendments expand the scope of Topic 718, Compensation

- Stock Compensation , to include share-based payments issued to non-employees for goods or services.

Consequently, the

accounting for share-based payments to nonemployees and employees will be substantially aligned.

This new standard was effective for

the Company on January 1, 2020.

The Company adopted this new standard early in the third quarter of 2019 and it did not have a

material impact to its condensed consolidated financial statements.

taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for

12 unchanged sentences

event the uncertain tax position is disallowed.

842, Leases, requires recognition of leases on the condensed consolidated balance sheets as right-of-use (“ROU”) assets and lease

ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent

the Company’s obligation to make lease payments arising from the leases.

Operating lease ROU assets and operating lease liabilities

are recognized based on the present value and future minimum lease payments over the lease term at commencement date.

As the Company’s

leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available

at commencement date in determining the present value of lease payments.

A number of the lease agreements contain options to renew and

options to terminate the leases early.

The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination

options that are deemed reasonably certain to be exercised.

Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing

operating leases longer than twelve months.

The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances

of accrued and prepaid rent, and unamortized lease incentives provided by lessors.

Operating lease cost is recognized as a single lease

cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses.

Variable lease payments

for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in

facts and circumstances on which the variable lease payments are based occur.

The Company has elected not to separate lease and non-lease

components for all property leases for the purposes of calculating ROU assets and lease liabilities.

842, Leases , requires recognition of leases on the condensed consolidated balance sheets as right-of-use (“ROU”) assets

and lease liabilities.

ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities

represent the Company’s obligation to make lease payments arising from the leases.

Operating lease ROU assets and operating lease

liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date.

the Company’s leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information

available at commencement date in determining the present value of lease payments.

A number of the lease agreements contain options to

renew and options to terminate the leases early.

The lease term used to calculate ROU assets and lease liabilities only includes renewal

and termination options that are deemed reasonably certain to be exercised.

Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for

existing operating leases longer than twelve months.

The ROU assets were adjusted per ASC 842 transition guidance for existing

lease-related balances of accrued and prepaid rent, and unamortized lease incentives provided by lessors.

Operating lease cost is

recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and

administrative expenses.

Variable lease payments for common area maintenance, property taxes and other operating expenses are

recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based

The Company has elected not to separate lease and non-lease components for all property leases for the purposes of

calculating ROU assets and lease liabilities.

Company operates in one business segment as a contract manufacturer of aqueous polymer hydrogels.

2 unchanged sentences

Issued Accounting Standards

time to time, new accounting pronouncements are issued by FASB, or other standard setting bodies and adopted by us as of the specified

effective date.

Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material

impact on our financial position or results of operations upon adoption.

June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments.

ASU 2016-13 will require

immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally

result in earlier recognition of allowances for credit losses on loans and other financial instruments.

ASU 2016-13 is effective for

the Company’s fiscal year beginning January 1, 2023 and subsequent interim periods.

The Company is currently evaluating the impact

the adoption of ASU 2016-13 will have on the Company’s condensed consolidated financial statements.

time to time, new accounting pronouncements are issued by the FASB, or other standard setting bodies and adopted by us as of the

specified effective date.

Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not

have a material impact on our financial position or results of operations upon adoption.

June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on

Financial Instruments .

ASU 2016-13 significantly changes the impairment model for most financial assets and certain other

ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of

many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other

financial instruments.

ASU 2016-13 is effective for the Company’s fiscal year beginning January 1, 2023 and subsequent interim

The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on the Company’s condensed

consolidated financial statements.

Company has one operating lease for a commercial manufacturing facility and administrative offices located in Langhorne, Pennsylvania

4 unchanged sentences

following table presents information about the amount and timing of the liability arising from the Company’s operating lease as

of June 30, 2023 ($ in thousands):

of September 30, 2023 ($ in thousands):

of Future Minimum Lease Payments

5 unchanged sentences

Weighted average discount rate

operating lease expense for the six months ended June 30, 2023, and 2022, was $ 136 thousand and $ 103 thousand, respectively, and is

recorded in cost of goods sold and selling, general, and administrative expenses in the accompanying condensed consolidated statement

operating lease expense for the nine months ended September 30, 2023, and 2022, was $ 197 thousand and $ 155 thousand, respectively, and

is recorded in cost of goods sold and selling, general, and administrative expenses in the accompanying condensed consolidated statements

of operations.

2 unchanged sentences

Cash Flows Information Related to Leases

September 30,

Cash paid for amounts included in the measurement of lease liability:

1 unchanged sentence

consists of the following ($ in thousands):

September 30,

Raw materials

9 unchanged sentences

and Equipment

September 30,

Machinery and equipment

5 unchanged sentences

Property and equipment, net

expense for the six months ended June 30, 2023, and 2022 was $ 61 thousand and $ 49 thousand, respectively.

expense for the nine months ended September 30, 2023, and 2022 was $ 95 thousand and $ 74 thousand, respectively.

Intangible Assets

following provides a breakdown of identifiable intangible assets as of June 30, 2023 and December 31, 2022:

following provides a breakdown of identifiable intangible assets as of September 30, 2023 and December 31, 2022 ($ in thousands):

of Breakdown of Identifiable Intangible Assets

September 30,

Product/Technology Related

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These assets are being amortized on a straight-line basis over their weighted average

estimated useful life of 5.7 years and amortization expense amounted to $ 7 thousand for the six months ended June 30, 2023, and 2022,

respectively.

of June 30, 2023, the estimated annual amortization expense for each of the next five fiscal years is as follows:

estimated useful life of 5.7 years and amortization expense amounted to $ 8 thousand and $ 10 thousand for the nine months ended September

30, 2023, and 2022, respectively.

of September 30, 2023, the estimated annual amortization expense for each of the next five fiscal years is as follows:

of Estimated Annual Amortization Expense

3 unchanged sentences

Expenses and Other Current Liabilities

September 30,

Salaries, benefits, and incentive compensation

Franchise tax accrual

Margin line of credit

Total accrued expenses and other current liabilities

June 30, 2023, the Company has reserved common stock for issued securities in relation to the following:

September 30, 2023, the Company has reserved common stock for issued securities in relation to the following:

of Reserved Common Stock For Issued Securities in Relation

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This option award vests over a period of 12 months.

following table contains information about the 2019 Plan as of June 30, 2023:

August 17, 2023, the Company granted options to purchase up to 90,000 shares of the Company’s common stock at a per share exercise

price of $ 2.05 to members of the Board of Directors, all of which vests over a period of one year with 25% vested upon issuance.

following table contains information about the 2019 Plan as of September 30, 2023:

of Information about Incentive Plan

5 unchanged sentences

shares of restricted common stock granted outside of the 2019 Plan to our Chief Executive Officer, Adam Levy.

following table summarizes the Company’s incentive stock option activity and related information for the period ended June 30,

following table summarizes the Company’s incentive stock option activity and related information for the period ended September

of Incentive Stock Option Activity

Outstanding at January 1, 2023

Outstanding at June 30, 2023

Exercisable at June 30, 2023

of June 30, 2023, vested outstanding stock options had $ 129 thousand intrinsic value as the exercise price is greater than the estimated

Outstanding at September 30, 2023

Exercisable at September 30, 2023

of September 30, 2023, vested outstanding stock options had $ 469 thousand intrinsic value as the exercise price is greater than the estimated

fair value of the underlying common stock, respectively.

As of June 30, 2023, there was approximately $ 17 thousand of total unrecognized

share-based compensation related to unvested stock options, which the Company expects to recognize over the next 11 months excluding

options fully contingent upon certain sales-based milestones being achieved within 18 to 36 months of commercial release.

As of September 30, 2023, there was no unrecognized share-based compensation

related to unvested stock options, excluding options fully contingent upon certain sales-based milestones being achieved within 18 to

36 months of commercial release.

Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award.

1 unchanged sentence

The following assumptions were used to calculate share-based compensation expense

for the period ended June 30, 2023:

for the period ended September 30, 2023:

of Assumptions used in Share-based Compensation

257.64 - 258.01 %

Risk-free interest rate

4.21 - 4.42 %

Dividend yield

Expected term

5 - 5.50 years

Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting

7 unchanged sentences

size, stage of life cycle, and financial leverage.

as of August 1, 2022, the Company granted a restricted stock award of 84,750 shares

of the Company’s common stock to certain officers and employees, all of which shares vest in four equal installments on each

of January 1, 2023, January 1, 2024, January 1, 2025 and January 1, 2026.

Under ASC 718, the Company has measured the value of the 84,750 shares

granted based on a closing price of the closing price of the Company’s stock at the grant date of the RSU Grant ($ 1.82 per

as of August 1, 2022, the Company granted a restricted stock award of 84,750 shares of the Company’s common stock to certain officers

and employees, all of which shares vest in four equal installments on each of January 1, 2023, January 1, 2024, January 1, 2025 and January

Under ASC 718, the Company has measured the value of the 84,750 shares granted based on a closing price of the closing price

of the Company’s stock at the grant date of the RSU Grant ($ 1.82 per share).

as of January 1, 2022, the Company granted a restricted stock award of 11,364 shares of the Company’s common stock to Adam Levy

11 unchanged sentences

Exercised and converted to common shares

Outstanding at June 30, 2023

Exercisable at June 30, 2023

Outstanding at September 30, 2023

Exercisable at September 30, 2023

expense will be recognized ratably over the total vesting schedule.

1 unchanged sentence

expense for forfeited awards.

As of June 30, 2023, there was $ 121 thousand

unrecognized share-based compensation related to unvested RSUs, which the Company expects to recognize over the next 3

Stock based compensation and restricted stock vesting of $ 53 thousand and $ 134 thousand has been recorded for the

six months ended June 30, 2023, and 2022, respectively.

following table shows a summary of common stock warrants through June 30, 2023:

As of September 30, 2023, there was $ 99 thousand unrecognized share-based compensation related to unvested

RSUs, which the Company expects to recognize through December 2026.

based compensation and restricted stock vesting of $ 120 thousand and $ 231 thousand has been recorded for the nine months ended September

30, 2023, and 2022, respectively.

following table shows a summary of common stock warrants through September 30, 2023:

of Common Stock Warrants

1 unchanged sentence

Outstanding at January 1, 2023

Outstanding at June 30, 2023

Exercisable at June 30, 2023

of June 30, 2023, vested outstanding warrants had $ 0 intrinsic value as the exercise price is greater than the estimated fair value of

the underlying common stock.

Outstanding at September 30, 2023

Exercisable at September 30, 2023

of September 30, 2023, vested outstanding warrants had $ 0 intrinsic value as the exercise price is greater than the estimated fair value

of the underlying common stock.

Noncontrolling Interest in Joint Venture

March 1, 2023, the Company acquired a 50 %

interest in a JV, named CG Converting and Packaging, LLC, with C.G.

Laboratories Inc.

(“CG Labs”) for its converting and

packaging business (see Note 1).

The JV is owned 50 %

by the Company and 50 %

CG Labs contributed its existing converting and packaging division to the JV, including, but not limited to, its

facilities, equipment, employees, and customers.

The Company will contribute $ 500,000

to the JV, on a schedule to be determined, to be used for equipment and facility upgrades as well as general corporate purposes for JV.

of June 30, 2023, the Company has contributed $ 350,000

of its $ 500,000

March 1, 2023, the Company acquired a 50 % interest in

the JV (see Note 1).

The JV is owned 50 % by the Company and 50 % by CG Labs.

CG Labs contributed its existing converting and packaging division

to the JV, including, but not limited to, its facilities, equipment, employees, and customers.

The Company will contribute $ 500,000 to

the JV, on a schedule to be determined, to be used for equipment and facility upgrades as well as general corporate purposes for JV.

As of September 30, 2023, the Company has contributed its full $ 500,000 commitment.

JV is considered to be a variable interest entity (“VIE”), as defined by authoritative accounting guidance.

19 unchanged sentences

In connection therewith, the Company received an $ 8,000 advance, which does not have to be repaid.

of the principal and accrued interest amounted to $ 280 thousand and $ 283 thousand as of June 30, 2023 and December 31, 2022, respectively.

future annual principal amounts and accrued interest to be paid as of June 30, 2023 are as follows:

of the principal and accrued interest amounted to $ 279 thousand and $ 283 thousand as of September 30, 2023 and December 31, 2022, respectively.

future annual principal amounts and accrued interest to be paid as of September 30, 2023 are as follows:

of Debt Instruments

17 unchanged sentences

thousand was written off and both amounts were recorded as a loss on extinguishment of debt of $ 150

thousand in accompany condensed consolidated statement of operations during 2022.

thousand in the accompanying condensed consolidated statement of operations during 2022.

The repayment extinguished the note in its

14 unchanged sentences

measured at their inception date fair value and subsequently re-measured at each reporting period with changes being recorded as a component

of other income in the statement of operations.

of other income in the accompanying statement of operations.

warrants outstanding and fair values at each of the respective valuation dates are summarized below:

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Company’s revenues are concentrated in a small group of customers with some individually having more than 10% of total revenues.

from two customers that exceeded 10% of total revenues for the six months ended June 30, 2023, were 40 % and 14 %.

The accounts receivable

from those top two customers were 0 % and 22 % as well as 13 %, 15 %, and 16 % from three other customers of the total accounts receivable

as of June 30, 2023.

from two customers that exceeded 10% of total revenues for the six months ended June 30, 2022, were 40 % and 25 %.

from three customers that exceeded 10% of total revenues for the nine months ended September 30, 2023, were 20 %, 11 %, and 10 %.

receivable from those top three customers were 0 %, 23 %, and 0 % as well as 15 %, 18 %, and 13 % from three other customers of the total accounts

receivable as of September 30, 2023.

from two customers that exceeded 10% of total revenues for the nine months ended September 30, 2022, were 39 % and 27 %.

The accounts receivable

from those top two customers by revenue were 6 % and 53 % as well as 17 % and 19 % from two other customers of the total accounts receivable

as of June 30, 2022.

as of September 30, 2022.

Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash, cash equivalents and

5 unchanged sentences

limit of $ 250 thousand.

As of June 30, 2023, the total amount exceeding such limit was $ 3 million.

The Company has not experienced any

credit losses associated with its cash balances in the past.

As of September 30, 2023, there was no amount exceeding such limit.

The Company has not experienced any credit

losses associated with its cash balances in the past.

The Company invests its cash equivalents in U.S.

treasury bills with original

maturities of three months or less.

treasury bills with original maturities

of three months or less.

securities are comprised of U.S.

12 unchanged sentences

The notes were repaid in full in 2022.

Jerome Zeldis, a member of the Company board of directors, has an outstanding balance due of $ 25,000 for services as of June 30, 2023

Jerome Zeldis, a member of the Company board of directors, has an outstanding balance due of $ 25,000 for services as of September 30,

2023 and $ 40,000 as of December 31, 2022, included in accounts payable in the accompanying condensed consolidated balance sheets.

2 unchanged sentences

if there were any such events or transactions requiring adjustment to or disclosure in the accompanying condensed consolidated financial

statements and has noted none except as follows.

July 2023, the Company announced a new strategic relationship with Enigma Health, a new joint venture company, for retail distribution

and marketing services in North America.

In addition to the Company, Enigma Health will also be providing services for Moiety, Inc.,

a topical lotion and creams manufacturer.

statements and has noted no such events or transactions.

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-Q

Item 1. Financial Statements