What changed in this filing

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Item 1. Business

2025-03-27 compared with 2024-04-10 · 365 added, 306 removed, 20 unchanged (97% of the section changed)

We were incorporated in Delaware on January 13, 2009.

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.

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.

Manufacturing Business

described above, we have historically served as a contract manufacturer, supplying our gels to third parties who incorporate them into

their own products.

Our hydrogels are currently being marketed in the U.S.

and abroad by our customers for the following applications:

We believe delivering medication through hydrogel patches has important advantages over traditional methods of drug

Hydrogel patches are less intrusive, painless, allow for pre-planned medication time periods, can potentially release medication

in a manner consistent with the body’s own glandular activity (by avoiding dosage spikes and/or digestive alteration), and

minimize side effects related to the medication via injection or ingestion.

Medical Applications .

Hydrogel patches are being used for transdermal applications such as hormone replacement therapy and contraception,

treatment of acne, shingles, diabetes, motion sickness, treatment of angina with nitroglycerin and treatment of smoking addiction

using nicotine and palliatives (i.e., pain relievers).

Non-Prescription

Therapeutic Applications .

Hydrogel patches are also used in the medical community and are also directly marketed to consumers

for topical application of over the counter (“OTC”) drugs such as non-prescription acne treatments, pain relievers, diet

preparations, cough suppressants, treatment of warts, calluses and corns, and pain relief.

Wound and Burn Dressings .

Hydrogel dressings have long been used for treating wounds and burns.

Clinical trials have demonstrated

the benefits of moist wound healing versus traditional dressings.

Some of these benefits include immediate anti-inflammatory effects,

allowing for freer cell flow and less scarring, increased absorption of exudate, and accelerated healing.

of Medical Devices .

Several medical devices utilize hydrogels as components.

These devices include active drug delivery systems

such as iontophoresis, warming and cooling devices, medical electrodes and various medical products for sensitive skin.

Applications .

Hydrogel patches and applications allow for delivery systems of cosmetic skin care products to consumers and skin

care providers for uses that include moisturizers, face masks, cooling masks and applicators.

believe our competitive advantage in each of the general hydrogel patch applications described above is that our hydrogel patches are

gentler to the skin because we do not use chemical cross-linking agents which are incorporated into other hydrogel patches.

gels are manufactured according to a customer’s specifications, the gels are generally shipped to the customer via a contract carrier

(e.g., United Parcel Service, Inc.).

manufacture our hydrogels at what we believe to be one of only two facilities that can produce state-of-the–art hydrogel

transdermal products and we have successfully used over two hundred active ingredients combinations in our hydrogels to date.

facility consists of 13,500 square feet of manufacturing space, which we currently operate at approximately 10% capacity.

significant unused capacity, we can expand rapidly to meet increased demand, including for our healthcare and consumer product lines

as described in more detail below.

At full capacity, we estimate our existing facility would produce approximately 1.4 billion

square inches of product annually.

In addition, we sublease approximately 6,200 square feet of a 12,000 square foot combined office

and manufacturing facility in Granbury, Texas, for our joint venture CG Converting and Packaging, LLC (“JV”).

Our facilities are subject

to stringent FDA compliance requirements.

We also believe our hydrogel facility creates a high barrier to entry into our hydrogel

and consumer product business.

in the third quarter of 2020, we began selling our own branded products using our hydrogel technology on the Amazon marketplace.

we expanded access to our products by launching our own direct to consumer website, Medagel.com.

Our hydrogel consumer products are marketed

under the brand names MedaGel and LumaGel Beauty.

The products we sell under our MedaGel brand primarily relate to over-the-counter (“OTC”)

remedy solutions, such as blister and pain applications;

while the products we sell under our LumaGel Beauty brand primarily relate to

beauty and cosmetic solutions, such as wrinkle and skin cream applications.

In December 2023 we added a third consumer product brand

when we completed the purchase of the Kenkoderm brand.

The Kenkoderm skincare line was originally developed by a dermatologist to provide

alternative treatments for psoriasis that did not use steroids or biologics that often have side effects.

We were incorporated in Delaware

on January 13, 2009.

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 several more products in our development pipeline.

We intend for these products to address various market opportunities

including the OTC pharmaceutical drug delivery market, pain management, beauty and cosmetics, sports related applications,

cannabinoids (“CBD” and/or “THC”) and general podiatry.

and White Label Opportunities

are leveraging our hydrogel products and technologies by allowing other OTC brands to incorporate them into their products.

our hydrogels, which do not use chemical cross-linking agents and can be made in paraben free formulations, will be attractive to other

OTC brands, especially in the beauty and cosmetics industry, and their customers.

We believe these white labeling opportunities will

increase the markets’ awareness of us as a consumer-friendly and reliable supplier of customizable patches.

Additionally, we created

a process where customers have the ability to create their own custom hydrogel products.

Customers pay a development fee, eliminating

our financial risk in the success or failure of the custom product.

As opposed to our contract manufacturing business, where we provide

bulk sale of roll stock hydrogel to our customers who then use it as one component in their products which they themselves then manufacture,

test, market and sell, our custom and white label business will provide customers with a finished product which they will then brand

entered into the medical device development sector which a focus on analyzing, creating and developing devices and solutions that reduce

skin pain and irritation, improve and maintain skin integrity and provide greater comfort and safety for patients at the site of which

a medical device interfaces with the human body.

conducted proof of concept studies for the development of our first medical device, which we call NEXDrape and have filed for a patent

on this device under the Patent Cooperation Treaty which provides patent protection in the nations who are members of the treaty.

NEXDrape device is an incise surgical drape designed for patients with impaired skin.

The elderly, diabetics, trauma patients and those

with an adhesive sensitivity can have adverse events from the removal of adhesive drapes.

Additionally, patients taking certain medications,

such as ELIQUIS ® and steroids, may experience impaired skin as well.

These groups represent a sizable percentage of the

incise surgical drape market, a market we believe to be significant and growing.

The incise surgical drape market is currently fragmented

with 3M Healthcare being the market leader.

Skin tears, infections, rashes, and post-surgical site pain are some of the problems that

can occur as a result of the removal of adhesive drapes, and have been reported with other currently available surgical drapes.

have conducted one animal and two human cadaver proof of concept studies with respect to NEXDrape.

As a result of these studies, we believe

NEXDrape will represent a gentle to the skin alternative to the current adhesive based standard of care and will provide a unique solution

for patients with fragile or compromised skin.

Additionally, we believe NEXDrape offers the following benefits over the current incise

surgical drape products:

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.

Contract Manufacturing Business

As described above, we have historically

served as a contract manufacturer, supplying our gels to third parties who incorporate them into their own products.

Our hydrogels are

currently being marketed in the U.S.

and abroad by our customers for the following applications:

Drug Delivery .

We believe delivering medication through hydrogel

patches has important advantages over traditional methods of drug delivery.

Hydrogel patches are less intrusive, painless, allow

for pre-planned medication time periods, can potentially release medication in a manner consistent with the body’s own glandular

activity (by avoiding dosage spikes and/or digestive alteration), and minimize side effects related to the medication via injection

or ingestion.

Other Medical Applications .

Hydrogel patches are being used

for transdermal applications such as hormone replacement therapy and contraception, treatment of acne, shingles, diabetes, motion

sickness, treatment of angina with nitroglycerin and treatment of smoking addiction using nicotine and palliatives (i.e., pain relievers).

Non-Prescription Therapeutic Applications .

Hydrogel patches

are also used in the medical community and are also directly marketed to consumers for topical application of over the counter (“OTC”)

drugs such as non-prescription acne treatments, pain relievers, diet preparations, cough suppressants, treatment of warts, calluses

and corns, and pain relief.

Moist Wound and Burn Dressings .

Hydrogel dressings have long

been used for treating wounds and burns.

Clinical trials have demonstrated the benefits of moist wound healing versus traditional

Some of these benefits include immediate anti-inflammatory effects, allowing for freer cell flow and less scarring, increased

absorption of exudate, and accelerated healing.

Components of Medical Devices .

Several medical devices utilize

hydrogels as components.

These devices include active drug delivery systems such as iontophoresis, warming and cooling devices, medical

electrodes and various medical products for sensitive skin.

Cosmetic Applications .

Hydrogel patches and applications allow

for delivery systems of cosmetic skin care products to consumers and skin care providers for uses that include moisturizers, face

masks, cooling masks and applicators.

We believe our competitive advantage

in each of the general hydrogel patch applications described above is that our hydrogel patches are gentler to the skin because we do

not use chemical cross-linking agents which are incorporated into other hydrogel patches.

Once the gels are manufactured according to

a customer’s specifications, the gels are generally shipped to the customer via a contract carrier (e.g., United Parcel Service,

Our Facilities

We manufacture our hydrogels

at what we believe to be one of only two facilities that can produce state-of-the–art hydrogel transdermal products and we have

successfully used over two hundred active ingredients combinations in our hydrogels to date.

Our facility consists of 13,500 square feet

of manufacturing space, which we currently operate at approximately 15% to 20% capacity.

Given the significant unused capacity, we can

expand rapidly to meet increased demand, including for our healthcare and consumer product lines as described in more detail below.

full capacity, we estimate our existing facility would produce approximately 1.4 billion square inches of product annually.

we sublease approximately 6,200 square feet of a 12,000 square foot combined office and manufacturing facility in Granbury, Texas, for

our joint venture CG Converting and Packaging, LLC (“JV”).

Our facilities are subject to stringent FDA compliance requirements.

We also believe our hydrogel facility creates a high barrier to entry into our hydrogel and consumer product business.

Consumer Products

Beginning in the third quarter

of 2020, we began selling our own branded products using our hydrogel technology on the Amazon marketplace.

In 2022 we expanded access

to our products by launching our own direct to consumer website, Medagel.com.

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”

Additionally, we have several

more products in our development pipeline.

We intend for these products to address various market opportunities including the OTC pharmaceutical

drug delivery market, pain management, beauty and cosmetics, sports related applications, cannabinoids (“CBD” and/or “THC”)

and general podiatry.

Custom and White Label Opportunities

We are leveraging our hydrogel

products and technologies by allowing other OTC brands to incorporate them into their products.

We believe our hydrogels, which do not

use chemical cross-linking agents and can be made in paraben free formulations, will be attractive to other OTC brands, especially in

the beauty and cosmetics industry, and their customers.

We believe these white labeling opportunities will increase the markets’

awareness of us as a consumer-friendly and reliable supplier of customizable patches.

Additionally, we created a process where customers

have the ability to create their own custom hydrogel products.

Customers pay a development fee, eliminating our financial risk in the

success or failure of the custom product.

As opposed to our contract manufacturing business, where we provide bulk sale of roll stock

hydrogel to our customers who then use it as one component in their products which they themselves then manufacture, test, market and

sell, our custom and white label business will provide customers with a finished product which they will then brand and re-sell.

Medical Devices

We entered into the medical device

development sector which a focus on analyzing, creating and developing devices and solutions that reduce skin pain and irritation, improve

and maintain skin integrity and provide greater comfort and safety for patients at the site of which a medical device interfaces with

the human body.

We conducted proof of concept

studies for the development of our first medical device, which we call NEXDrape and have filed for a patent on this device under the

Patent Cooperation Treaty which provides patent protection in the nations who are members of the treaty.

The NEXDrape device is an incise

surgical drape designed for patients with impaired skin.

The elderly, diabetics, trauma patients and those with an adhesive sensitivity

can have adverse events from the removal of adhesive drapes.

Additionally, patients taking certain medications, such as ELIQUIS ®

and steroids, may experience impaired skin as well.

These groups represent a sizable percentage of the incise surgical drape market,

a market we believe to be significant and growing.

The incise surgical drape market is currently fragmented with 3M Healthcare being

the market leader.

Skin tears, infections, rashes, and post-surgical site pain are some of the problems that can occur as a result of

the removal of adhesive drapes, and have been reported with other currently available surgical drapes.

We have conducted one animal

and two human cadaver proof of concept studies with respect to NEXDrape.

As a result of these studies, we believe NEXDrape will represent

a gentle to the skin alternative to the current adhesive based standard of care and will provide a unique solution for patients with

fragile or compromised skin.

Additionally, we believe NEXDrape offers the following benefits over the current incise surgical drape products:

(i) no skin irritation;

(ii) able to deliver a wide range of antiseptic and antibiotic agents;

(iii) eliminates

and (iv) prevents dermis removal post-surgery, which reduces the risk of patient infection and discomfort.

file a 510(k) premarket submission with the Food and Drug Administration (“FDA”), which is an application to demonstrate that NEXDrape

is as safe and effective (or substantially equivalent to) a legally marketed surgical drape device.

There can be no guarantee that the

FDA approves our application, if submitted.

are also in the process of developing a product we call NEXDerm which will be an adhesive tape designed to secure central lines and intravenous

tubes and devices to patients before, during and after medical treatment.

We believe NEXDerm will be an attractive alternative to Tegaderm™,

a 3M Healthcare product.

Based on our discussion with medical professionals, Tegaderm™ is often difficult and painful to remove

after adhesion, particularly for comprised skin patients.

NEXDerm, which will incorporate exclusively licensed technology owned by Noble

Fiber, is designed to create a gentle to skin surgical tape impregnated with antimicrobial X-Static ® silver fiber.

believe NEXDerm, if successfully developed, will offer the following advantages over Tegaderm™:

(i) ability to easily reposition

the adhesive tape;

(iii) eliminates air bubbles;

prevents dermis removal post-surgery, which reduces the risk of patient infection and discomfort.

We intend to file a 510(k) premarket

submission with the Food and Drug Administration (“FDA”), which is an application to demonstrate that NEXDrape is as safe

and effective (or substantially equivalent to) a legally marketed surgical drape device.

There can be no guarantee that the FDA approves

our application, if submitted.

We are also in the process of

developing a product we call NEXDerm which will be an adhesive tape designed to secure central lines and intravenous tubes and devices

to patients before, during and after medical treatment.

We believe NEXDerm will be an attractive alternative to Tegaderm™, a 3M

Healthcare product.

Based on our discussion with medical professionals, Tegaderm™ is often difficult and painful to remove after

adhesion, particularly for comprised skin patients.

NEXDerm, which will incorporate exclusively licensed technology owned by Noble Fiber,

is designed to create a gentle to skin surgical tape impregnated with antimicrobial X-Static ® silver fiber.

NEXDerm, if successfully developed, will offer the following advantages over Tegaderm™:

(i) ability to easily reposition the adhesive

(ii) pain-free removal;

1 unchanged sentence

and (iv) increased infection prevention.

As with NEXDrape, we intend

to file a 510(k) premarket submission with the FDA to demonstrate that NEXDrape is as safe and effective (or substantially equivalent

to) a legally marketed surgical drape device.

As with NEXDrape, we intend to file

a 510(k) premarket submission with the FDA to demonstrate that NEXDerm is as safe and effective (or substantially equivalent to) a legally

marketed surgical drape device.

There can be no guarantee that the FDA approves our application, if submitted.

current intent with any medical devices will not be to commercialize due to the expense required but to potentially prepare them to go

to market and to identify and pursue licensing and partnering arrangements with third parties possessing the necessary resources and

capabilities to bring the devices to market.

and Marketing

Manufacturing, Consumer Products and Customer and White Label Offerings .

We continue to focus on sales and marketing efforts in the

United States.

We use commission-based, fractional sales personnel to supplement our in-house efforts.

We do not intend to spend efforts or resources on selling or marketing our medical device business.

Our current intent with

any medical devices will not be to commercialize due to the expense required but to identify and pursue licensing arrangements with third

parties possessing the necessary resources and capabilities to bring the devices to market.

Manufacturing .

To our knowledge, NexGel is one of two manufacturers using electron beam technology for high performance hydrogels

for the wound care, cosmetic and drug delivery industries.

Products and Medical Devices.

Our current intent with any medical

devices will not be to commercialize due to the expense required but to potentially prepare them to go to market and to identify and

pursue licensing and partnering arrangements with third parties possessing the necessary resources and capabilities to bring the devices

Sales and Marketing

Contract Manufacturing, Consumer

Products and Customer and White Label Offerings .

We continue to focus on sales and marketing efforts in the United States.

commission-based, fractional sales personnel to supplement our in-house efforts.

Medical Devices .

not intend to spend efforts or resources on selling or marketing our medical device business.

Our current intent with any medical devices

will not be to commercialize due to the expense required but to identify and pursue licensing arrangements with third parties possessing

the necessary resources and capabilities to bring the devices to market.

Contract Manufacturing .

To our knowledge, NexGel is one of two manufacturers using electron beam technology for high performance hydrogels for the wound care,

cosmetic and drug delivery industries.

However, the other manufacture does not currently offer its products to the outside consumer market

and, as such, does not currently compete with us directly.

Consumer Products and Medical

As we expand our consumer products and medical device business, we will face a number of competitors.

Our competitors include numerous manufacturers;

Our competitors include

numerous manufacturers;

distributors;

online, specialty, mass, and other retailers;

and physicians

that actively compete for the business of consumers both in the United States and abroad, including companies such as Johnson & Johnson,

Pfizer Consumer Healthcare and Procter & Gamble.

Most of our competitors have longer operating histories, significantly greater resources,

better developed and more innovative sales and distribution channels and platforms, greater name recognition, and larger established

customer bases than we do.

and physicians that actively compete for

the business of consumers both in the United States and abroad, including companies such as Johnson & Johnson, Pfizer Consumer Healthcare

and Procter & Gamble.

Most of our competitors have longer operating histories, significantly greater resources, better developed

and more innovative sales and distribution channels and platforms, greater name recognition, and larger established customer bases than

Therefore, a strategic partnership will be critical to our success in the medical device business.

face similar challenges with our own consumer branded products and may pursue similar strategic partnerships, though direct to consumer

marketing and selling is more feasible.

and White Label Offerings .

As our custom and white label offering business will provide customers with a finished product which they

will then brand and re-sell, the competition will depend, to a great deal, on the type of product the customer request and will not result

in direct competition to us.

and Availability of Raw Materials;

We also face similar challenges

with our own consumer branded products and may pursue similar strategic partnerships, though direct to consumer marketing and selling

is more feasible.

Custom and White Label Offerings .

As our custom and white label offering business will provide customers with a finished product which they will then brand and re-sell,

the competition will depend, to a great deal, on the type of product the customer request and will not result in direct competition to

Sources and Availability of Raw Materials;

Principal Suppliers

general, raw materials essential to our business are readily available from multiple sources.

For reasons of quality assurance, availability,

or cost effectiveness, certain components and raw materials are available only from a sole supplier.

The principal suppliers for our

raw materials are Berry Global, Inc., DeWolf Chemical, Inc., and Univar, Inc.

Our policy is to maintain sufficient inventory of components

and raw materials so that our production will not be significantly disrupted even if a particular component or material is not available

for a period of time.

we have no direct control over these suppliers, interruptions or delays in the products and services provided by these parties may be

difficult to remedy in a timely fashion.

In addition, if such suppliers are unable or unwilling to deliver the necessary components or

raw materials, we may be unable to redesign or adapt our technology to work without such components or raw materials or find alternative

suppliers or manufacturers.

In such events, we could experience interruptions, delays, increased costs, quality control problems, and

or be unable to sell the applicable products, all of which could have a significant adverse impact on our revenue.

than as discussed above, we believe that, due to the size and scale of production of our suppliers, there should be an adequate supply

of components and raw materials from our other suppliers.

the year ended December 31, 2023, one major customer accounted for approximately 20%.

During the year ended December 31, 2022 one major

customer accounted for approximately 29% of our revenue.

We cannot be certain as to this customer’s intentions to use our services

during and beyond the fiscal year ended December 31, 2023 since we do not currently have a contract with this customer.

However, we have

been supplying this customer for more than 15 years and have no reason to anticipate any change.

Our contract manufacturing business,

including with respect to this customer, operates on a purchase order basis.

Proprietary Rights and Trademarks

own or license trademarks covering our company and our products.

We filed for a patent on NEXDrape under the Patent Cooperation Treaty

which provides patent protection in the nations who are members of the treaty.

We also rely upon trade secrets and continuing technological

innovations to develop and maintain our competitive position.

We also hold certain intellectual property that is not material to our

current business and prospects, including patent rights to one patent in Europe, which covers the use of lignin for inhibiting restenosis

and thrombosis formation, and coated medical devices where the coating includes lignin.

This patent is set to expire in the near future,

however we believe the expiration of these patents will not have an adverse impact on our overall business.

We hold an exclusive license

with right to sub-license from Specialty Pharmaceutical Products, L.L.C.

(which was held by our former parent, Adynxx, Inc.) to two issued

patents, one in the U.S.

In general, raw materials essential

to our business are readily available from multiple sources.

For reasons of quality assurance, availability, or cost effectiveness, certain

components and raw materials are available only from a sole supplier.

The principal suppliers for our raw materials are Berry Global,

Inc., DeWolf Chemical, Inc., and Univar, Inc.

Our policy is to maintain sufficient inventory of components and raw materials so that

our production will not be significantly disrupted even if a particular component or material is not available for a period of time.

Because we have no direct control

over these suppliers, interruptions or delays in the products and services provided by these parties may be difficult to remedy in a

timely fashion.

In addition, if such suppliers are unable or unwilling to deliver the necessary components or raw materials, we may be

unable to redesign or adapt our technology to work without such components or raw materials or find alternative suppliers or manufacturers.

In such events, we could experience interruptions, delays, increased costs, quality control problems, and or be unable to sell the applicable

products, all of which could have a significant adverse impact on our revenue.

Other than as discussed above,

we believe that, due to the size and scale of production of our suppliers, there should be an adequate supply of components and raw materials

from our other suppliers.

During the year ended December

31, 2024, no customers accounted for 10% of our revenue.

During the year ended December 31, 2023 one major customer accounted for approximately

20% of our revenue.

We cannot be certain as to this customer’s intentions to use our services during and beyond the fiscal year

ended December 31, 2024 since we do not currently have a contract with this customer.

However, we have been supplying this customer for

more than 15 years and have no reason to anticipate any change.

Our contract manufacturing business, including with respect to this customer,

operates on a purchase order basis.

Patents, Proprietary Rights and Trademarks

We own or license trademarks

covering our company and our products.

We filed for a patent on NEXDrape under the Patent Cooperation Treaty which provides patent protection

in the nations who are members of the treaty.

We also rely upon trade secrets and continuing technological innovations to develop and

maintain our competitive position.

We also hold certain intellectual property that is not material to our current business and prospects,

including patent rights to one patent in Europe, which covers the use of lignin for inhibiting restenosis and thrombosis formation, and

coated medical devices where the coating includes lignin.

This patent is set to expire in the near future, however we believe the expiration

of these patents will not have an adverse impact on our overall business.

We hold an exclusive license with right to sub-license from

Specialty Pharmaceutical Products, L.L.C.

(which was held by our former parent, Adynxx, Inc.) to two issued patents, one in the U.S.

and one in Europe, which cover technology relating to a transdermal patch containing transcutol.

The transdermal

patch is effective to deliver lidocaine to a patient.

The transdermal patch is effective to

deliver lidocaine to a patient.

Neither of these patent rights are material to our current business and prospects.

These licensed patent rights are expected to expire in April 2032.

Under the Federal Food, Drug and Cosmetic Act, medical devices are classified by the FDA into one of three classes - Class

I, Class II or Class III - depending on the degree of risk associated with each medical device and the extent of control

needed to ensure safety and effectiveness.

While some applications of hydrogels fall under the jurisdiction of the FDA, hydrogels are

generally classified as Class I exempt devices and the majority of the hydrogel products that we manufacture are thereby exempt from

the FDA filing of any regulatory submissions and/or pre-market notification requirements.

To the extent that any FDA regulatory submissions

are required, we will be required to file these submissions and maintain all appropriate documentation.

With respect to registering the

manufacturing facility with the FDA under the Code of Federal Regulations, 21 CFR 820.1, Scope:

Part A, it is stated that the regulation

does not apply to manufacturers of component parts of finished devices.

Currently, hydrogels are sold as component parts to various medical

device/cosmetic manufacturers.

Assurance Requirements .

The FDA enforces regulations to ensure that the methods used in, and the facilities and controls used

for, the manufacture, processing, packing and holding of drugs and medical devices conform with current good manufacturing practice

The cGMP regulations enforced by the FDA are comprehensive and cover all aspects of manufacturing operations,

from receipt of raw materials to finished product distribution, insofar as they bear upon whether drugs meet all the identity,

strength, quality and purity characteristics required of them.

The cGMP regulations for devices, called the Quality System

Regulation, are also comprehensive and cover all aspects of device manufacture, from pre-production design validation to

installation and servicing, insofar as they bear upon the safe and effective use of the device and whether the device otherwise

meets the requirements of the Federal Food, Drug and Cosmetic Act.

To assure compliance requires a continuous commitment of time,

money and effort in all operational areas.

FDA also conducts periodic inspections of drug and device registered facilities to assess their current cGMP status.

If the FDA were

to find serious non-compliant manufacturing or processing practices during such an inspection, it could take regulatory actions that

could adversely affect our business, results of operations, financial condition and cash flows.

With respect to domestic

establishments, the FDA could initiate product seizures or in some instances require product recalls and seek to enjoin a

product’s manufacture and distribution.

In certain circumstances, violations could support civil penalties and criminal

prosecutions.

In addition, if the FDA concludes that a company is not in compliance with cGMP requirements, sanctions may be imposed

that include preventing that company from receiving the necessary licenses to export its products and classifying that company as an

“unacceptable supplier”, thereby disqualifying that company from selling products to federal agencies.

conduct audits of our outside manufacturers and believe that we and our suppliers and outside manufacturers are currently in

compliance with cGMP requirements.

We are currently registered as a device manufacturer and distributor with the FDA and we intend

to register as a drug facility with the FDA when we are required to do so.

Environmental

We are subject to various laws and governmental regulations concerning environmental matters and employee safety and

health in the U.S.

These licensed patent

rights are expected to expire in April 2032.

Government Regulation

Product Regulation .

the Federal Food, Drug and Cosmetic Act, medical devices are classified by the FDA into one of three classes - Class I,

Class II or Class III - depending on the degree of risk associated with each medical device and the extent of control needed

to ensure safety and effectiveness.

While some applications of hydrogels fall under the jurisdiction of the FDA, hydrogels are generally

classified as Class I exempt devices and the majority of the hydrogel products that we manufacture are thereby exempt from the FDA filing

of any regulatory submissions and/or pre-market notification requirements.

To the extent that any FDA regulatory submissions are required,

we will be required to file these submissions and maintain all appropriate documentation.

With respect to registering the manufacturing

facility with the FDA under the Code of Federal Regulations, 21 CFR 820.1, Scope:

Part A, it is stated that the regulation does not apply

to manufacturers of component parts of finished devices.

Currently, hydrogels are sold as component parts to various medical device/cosmetic

manufacturers.

Quality Assurance Requirements .

The FDA enforces regulations to ensure that the methods used in, and the facilities and controls used for, the manufacture, processing,

packing and holding of drugs and medical devices conform with current good manufacturing practice (“cGMP”).

The cGMP regulations

enforced by the FDA are comprehensive and cover all aspects of manufacturing operations, from receipt of raw materials to finished product

distribution, insofar as they bear upon whether drugs meet all the identity, strength, quality and purity characteristics required of

The cGMP regulations for devices, called the Quality System Regulation, are also comprehensive and cover all aspects of device

manufacture, from pre-production design validation to installation and servicing, insofar as they bear upon the safe and effective use

of the device and whether the device otherwise meets the requirements of the Federal Food, Drug and Cosmetic Act.

To assure compliance

requires a continuous commitment of time, money and effort in all operational areas.

The FDA also conducts periodic

inspections of drug and device registered facilities to assess their current cGMP status.

If the FDA were to find serious non-compliant

manufacturing or processing practices during such an inspection, it could take regulatory actions that could adversely affect our business,

results of operations, financial condition and cash flows.

With respect to domestic establishments, the FDA could initiate product seizures

or in some instances require product recalls and seek to enjoin a product’s manufacture and distribution.

In certain circumstances,

violations could support civil penalties and criminal prosecutions.

In addition, if the FDA concludes that a company is not in compliance

with cGMP requirements, sanctions may be imposed that include preventing that company from receiving the necessary licenses to export

its products and classifying that company as an “unacceptable supplier”, thereby disqualifying that company from selling

products to federal agencies.

We conduct audits of our outside

manufacturers and believe that we and our suppliers and outside manufacturers are currently in compliance with cGMP requirements.

are currently registered as a device manufacturer and distributor with the FDA and we intend to register as a drug facility with the

FDA when we are required to do so.

Environmental Regulation .

We are subject to various laws and governmental regulations concerning environmental matters and employee safety and health in the U.S.

and other countries.

We have made, and continue to make, significant investments to comply with these laws and regulations.

We cannot predict the future capital expenditures or operating costs required to comply with environmental laws and regulations.

that we are currently compliant with applicable environmental, health and safety requirements in all material respects.

predict the future capital expenditures or operating costs required to comply with environmental laws and regulations.

We believe that

we are currently compliant with applicable environmental, health and safety requirements in all material respects.

However, we cannot

1 unchanged sentence

results or financial condition.

the future, if a loss contingency related to environmental matters, employee safety, health or conditional asset retirement obligations

is recognized, we would record a liability for the obligation and it may result in a material impact on net income for the annual or

interim period during which the liability is recorded.

The investigation and remediation of environmental obligations generally occur

over an extended period of time, and therefore we do not know if these events would have a material adverse effect on our financial condition,

liquidity, or cash flow, nor can we assure you that such liabilities would not have a material adverse effect on our performance, results

or financial condition.

and State Anti-kickback, Self-referral, False Claims and Similar Laws .

Our relationships with physicians, hospitals and the marketers

of our products are subject to scrutiny under various federal anti-kickback, self-referral, false claims and similar laws, often referred

to collectively as healthcare fraud and abuse laws.

Healthcare fraud and abuse laws are complex, and even minor, inadvertent violations

can give rise to claims that the relevant law has been violated.

Certain states have similar fraud and abuse laws, imposing substantial

penalties for violations.

Any government investigation or a finding of a violation of these laws would likely result in a material adverse

effect on the market price of our common stock, as well as our business, financial condition and results of operations.

We believe that

we are currently compliant with applicable anti-kickback, self-referral, false claims in all material respects.

and Development Costs

the years ended December 31, 2023 and 2022, we incurred approximately $103 thousand and $367 thousand, respectively, in research and

development costs.

We expect to incur increased costs in the future for our medical device business.

Research and development will be

an important component in the growth of our business.

of December 31, 2023, we had 19 full-time employees.

Of these employees, five are involved with finance, sales, marketing, and administration

and 14 are involved with manufacturing and regulatory matters.

Our employees are not represented by a labor union or other collective

bargaining groups, and we consider relations with our employees to be good.

We currently plan to retain and utilize the services of outside

consultants for additional research, testing, regulatory, accounting and tax services, legal compliance, and other services on an as

needed basis.

maintain a combined corporate office and manufacturing facility in Langhorne, Pennsylvania, where we lease approximately 16,500

square feet of office and manufacturing space which expires on January 31, 2031.

In addition, we sublease approximately 6,200 square

feet of a 12,000 square foot combined office and manufacturing facility in Granbury, Texas, for our JV.

In the future, if a loss contingency

related to environmental matters, employee safety, health or conditional asset retirement obligations is recognized, we would record

a liability for the obligation and it may result in a material impact on net income for the annual or interim period during which the

liability is recorded.

The investigation and remediation of environmental obligations generally occur over an extended period of time,

and therefore we do not know if these events would have a material adverse effect on our financial condition, liquidity, or cash flow,

nor can we assure you that such liabilities would not have a material adverse effect on our performance, results or financial condition.

Federal and State Anti-kickback,

Self-referral, False Claims and Similar Laws .

Our relationships with physicians, hospitals and the marketers of our products are

subject to scrutiny under various federal anti-kickback, self-referral, false claims and similar laws, often referred to collectively

as healthcare fraud and abuse laws.

Healthcare fraud and abuse laws are complex, and even minor, inadvertent violations can give rise

to claims that the relevant law has been violated.

Certain states have similar fraud and abuse laws, imposing substantial penalties for

Any government investigation or a finding of a violation of these laws would likely result in a material adverse effect on

the market price of our common stock, as well as our business, financial condition and results of operations.

We believe that we are

currently compliant with applicable anti-kickback, self-referral, false claims in all material respects.

Research and Development Costs

For the years ended December

31, 2024 and 2023, we incurred approximately $78 thousand and $103 thousand, respectively, in research and development costs.

to incur increased costs in the future for our medical device business.

Research and development will be an important component in the

growth of our business.

Human Capital

As of December 31, 2024, we had

19 full-time employees.

Of these employees, five are involved with finance, sales, marketing, and administration and 14 are involved

with manufacturing and regulatory matters.

Our employees are not represented by a labor union or other collective bargaining groups,

and we consider relations with our employees to be good.

We currently plan to retain and utilize the services of outside consultants

for additional research, testing, regulatory, accounting and tax services, legal compliance, and other services on an as needed basis.

We recognize and value our people as our most important

asset in achieving our strategic goals.

We are continually working on a human

resources strategy that helps drive the right culture, leadership, talent management, performance, reward and recognition, personal development,

and ways of working to ensure we achieve our strategic goals while our people benefit from an exceptional experience.

Our efforts in

creating a working environment that draws out the best in our employees and allows them to fulfil their potential and support our goals

focus on the following:

· Attract, identify, develop

and retain high-performing employees across all areas.

· Develop and support

the growth of management and leadership.

· Enable the development

of a high-performance culture in which staff performance can be supported, rewarded, enhanced

and managed effectively.

· Foster a values-based

culture focused on diversity, equity, inclusion, well-being, and positive staff engagement.

· Develop a total reward

approach which is valued by staff and facilitates company objectives.

We maintain a combined corporate

office and manufacturing facility in Langhorne, Pennsylvania, where we lease approximately 16,500 square feet of office and manufacturing

space which expires on January 31, 2031.

In addition, we sublease approximately 6,200 square feet of a 12,000 square foot combined office

and manufacturing facility in Granbury, Texas, for our JV.

The lease expires in March 2028.

believe that our facilities are well maintained and are suitable and adequate for our current needs.

time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.

litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may

harm our business.

We are currently not aware of any such legal proceedings or claims.

are no material proceedings in which any of our directors, officers or affiliates or any registered or beneficial shareholder of more

than 5% of our common stock is an adverse party or has a material interest adverse to our interest.

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.

We believe that our facilities

are well maintained and are suitable and adequate for our current needs.

Legal Proceedings

From time to time, we may become

involved in various lawsuits and legal proceedings which arise in the ordinary course of business.

However, litigation is subject to

inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

currently not aware of any such legal proceedings or claims.

There are no material proceedings

in which any of our directors, officers or affiliates or any registered or beneficial shareholder of more than 5% of our common stock

is an adverse party or has a material interest adverse to our interest.

Contractual Obligations

The Company is a smaller reporting

company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and is not required to provide the information under

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What changed 10-K

Item 1. Business