Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
As of December 31, 2024, we conducted an evaluation
of the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”), as defined by Rules
13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Disclosure Controls
evaluation was done under the supervision and with the participation of management, including our chief executive officer and chief financial
officer. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective
disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Our management, with the participation of our Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024. Based on that
evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of December 31, 2024, due to
material weaknesses in our internal control over financial reporting, which are described below in “Management’s Annual Report
on Internal Control over Financial Reporting”.
Management’s
Annual Report on Internal Control over Financial Reporting and Attestation Report of the Registered Accounting Firm
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f)
under the Exchange Act). Management conducted an assessment of the effectiveness of our internal control over financial reporting based
on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework). Because of its inherent limitations, internal control over financial reporting is not intended to provide
absolute assurance that a misstatement of our financial statements would be prevented or detected. Based on that assessment, management
has concluded that its internal control over financial reporting was not effective as of December 31, 2024 to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America due to the following: (i) we have not designed controls to ensure all accounting
journals entries are reviewed and approved and (ii) we identified one individual in our accounting department who has “super user”
access and security administration rights to the financial reporting systems. To remediate these material weaknesses, we are working
to do the following: (i) implementing appropriate controls for accounting journal entry approvals, including the approval of our Chief
Financial Officer, and (ii) either actively monitoring any accounting user with elevated rights or assigning another employee outside
of an accounting and reporting role with elevated access.
Given we are neither an
accelerated filer nor a large accelerated filer, we are not required to include an attestation report regarding the effectiveness of
our internal controls over financial reporting of our independent registered public accounting firm in our Annual Report.
Financial Reporting Process
We have not designed controls to ensure the financial reporting process is operating effectively. We noted
improper fair value adjustments to contingent consideration, failure to record adequate inventory reserves and various balance sheet accounts
not being properly reconciled. We intend to design controls to ensure the financial information is accurate, complete, and recorded in
the correct period.
Change in Internal Control over Financial Reporting
There have been no changes in our internal control
over financial reporting during the fiscal year ended December 31, 2024 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Item 9B. Other Information
Rule 10b5-1 Trading Plans .
During the three months ended December 31, 2024,
no director or officer of the Company adopted , modified or terminated a “Rule 10b5-1 trading arrangement”
or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections
Not applicable.
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Part III.
Item 10. Directors, Executive Officers and Corporate
Governance.
The information required
by this Item is set forth under the headings “Directors, Executive Officers and Corporate Governance” and “Section
16(a) Beneficial Ownership Reporting Compliance” in the Company’s 2025 Proxy Statement to be filed with the SEC within 120
days after December 31, 2024 in connection with the solicitation of proxies for the Company’s 2025 annual meeting of shareholders
and is incorporated herein by reference. The Company has adopted an insider trading policy which governs transactions in our
securities by the Company and its directors, officers, employees, any applicable consultants and contractors (as determined by the Company),
and each of their respective family members, and is designed to promote compliance with insider trading laws, rules and regulations applicable
to the Company. A copy of our insider trading policy is filed with this Annual Report on Form 10-K as Exhibit 19.1.
The Company has adopted
a Code of Business Conduct and Ethics applicable to all officers, directors and employees, which is available on the Company’s
website (https://ir.nexgel.com/corporate-governance/governance-documents) under “Governance Documents.” The Company intends
to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of its Code
of Conduct by posting such information on the website address and location specified above.
Item 11. Executive Compensation
The information required by this
Item is set forth under the heading “Executive Compensation” and under the subheadings “Board Oversight of Risk Management,”
“Compensation of Directors,” “Director Compensation-2024” and “Compensation Committee Interlocks and Insider
Participation” under the heading “Directors, Executive Officers and Corporate Governance” in the Company’s 2025
Proxy Statement to be filed with the SEC within 120 days after December 31, 2024 and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters
The information required by this
Item is set forth under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation
Plan Information” in the Company’s 2025 Proxy Statement to be filed with the SEC within 120 days after December 31, 2024
and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
and Director Independence
The information required by this
Item is set forth under the heading “Review, Approval or Ratification of Transactions with Related Persons” and under the
subheading “Board Committees” under the heading “Directors, Executive Officers and Corporate Governance” in the
Company’s 2025 Proxy Statement to be filed with the SEC within 120 days after December 31, 2024 and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
Our independent public accounting
firm is Turner Stone & Company, L.L.P., Dallas, Texas, PCAOB Auditor ID 76.
The information required by this
Item is set forth under the subheadings “Fees Paid to Auditors” and “Policy on Audit Committee Pre-Approval of Audit
and Non-Audit Services Performed by the Independent Registered Public Accounting Firm” under the proposal “Ratification of
Appointment of Independent Registered Public Accounting Firm” in the Company’s 2025 Proxy Statement to be filed with the
SEC within 120 days after December 31, 2024 and is incorporated herein by reference.
25
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Part IV.
Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as part of this
report:
(1) Financial Statements
The following financial statements are included herein:
Report of Independent Registered Public Accounting Firm (PCAOB
ID: 76)
F-2
Consolidated Balance Sheets as of December 31, 2024 and
202 3
F-3
Consolidated Statements of Operations for the years ended December 31, 2024 and 202 3
F-4
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024 and 202 3
F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 202 3
F-6
Notes to Consolidated Financial Statements
F-7
(2) Financial Statement Schedules
None.
(3) Exhibits
3.1
Certificate of Incorporation of AquaMed Technologies, Inc. (incorporated by reference to Exhibit 3.1 to Form S-1, filed with the SEC on January 9, 2019).
3.2
Certificate
of Amendment to Certificate of Incorporation of AquaMed Technologies, Inc. (incorporated by reference to Exhibit 3.2 to Form S-1,
filed with the SEC on January 9, 2019).
3.3
Amended
and Restated Certificate of Incorporation of AquaMed Technologies, Inc. (incorporated by reference to Exhibit 3.3 to Amendment No.
1 to Form S-1, filed with the SEC on March 11, 2019).
3.4
Certificate
of Amendment to the Amended and Restated Certificate of Incorporation of AquaMed Technologies, Inc. (incorporated by reference to
Exhibit 3.1 to the Current Report on Form 8-K, filed with the SEC on November 14, 2019).
3.5
Certificate
of Amendment to the Amended and Restated Certificate of Incorporation of NexGel, Inc. (incorporated by reference to Exhibit 3.1 to
the Current Report on Form 8-K, filed with the SEC on May 29, 2020).
3.6
Certificate
of Amendment to the Amended and Restated Certificate of Incorporation of NexGel, Inc. (incorporated by reference to Exhibit 3.6 to
Form S-1, filed with the SEC on December 2, 2021)
3.7
Amended
and Restated Bylaws of AquaMed Technologies, Inc. (incorporated by reference to Exhibit 3.5 to Amendment No. 1 to Form S-1, filed
with the SEC on March 11, 2019).
4.
First
Common Stock Purchase Warrant, dated March 11, 2021, issued to Auctus Fund, LLC (incorporated by reference to Exhibit 4.2 to the
Current Report on Form 8-K filed with the SEC on March 17, 2021).
4.3
Second
Common Stock Purchase Warrant, dated March 11, 2021, issued to Auctus Fund, LLC (incorporated by reference to Exhibit 4.3 to the
Current Report on Form 8-K filed with the SEC on March 17, 2021).
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4.4
Form
of Common Stock Purchase Warrant, dated September 2, 2021 (incorporated by reference to Exhibit 4.2 to the Current Report on Form
8-K filed with the SEC on September 8, 2021)
4.5
Warrant
Agency Agreement (including form of Common Warrant) dated December 27, 2021 by and between NexGel, Inc. and Continental Stock Transfer
& Trust Company (incorporated by reference to Exhibit 10.1 to Form 8-K, filed with the SEC on December 27, 2021).
4.6
Form
of February 2024 Warrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on February
21, 2024).
4.7
Form of August 2024 Warrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on August 13, 2024).
4.8
Form of November 2024 Warrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on November 12, 2024).
10.1
Assignment
and Amended and Restated Lease, dated as of January 25, 2002, by and between 2150 Cabot LLC, Embryo Development Corporation and Hydrogel
Design Systems, Inc. (incorporated by reference to Exhibit 10.1 to Form S-1, filed with the SEC on January 9, 2019).
10.2
Amendment
to Lease, dated as of February 23, 2007, by and between 2150 Cabot LLC and Hydrogel Design Systems, Inc. (incorporated by reference
to Exhibit 10.2 to Form S-1, filed with the SEC on January 9, 2019).
10.3
Third
Amendment to Lease, dated as of February 27, 2009, by and between Exeter 2150 Cabot, L.P and Hydrogel Design Systems, Inc. (incorporated
by reference to Exhibit 10.3 to Form S-1, filed with the SEC on January 9, 2019).
10.4
Assignment
and Assumption of Lease Agreement, dated as of February 27, 2009, by and among Exeter 2150 Cabot, L.P, Hydrogel Design Systems, Inc.
and Aquamed Technologies, Inc. (incorporated by reference to Exhibit 10.4 to Form S-1, filed with the SEC on January 9, 2019).
10.5
Fourth
Amendment to Lease, dated as of July 24, 2013, by and between Exeter 2150 Cabot, L.P and Aquamed Technologies, Inc. (incorporated
by reference to Exhibit 10.5 to Form S-1, filed with the SEC on January 9, 2019).
10.6
Form
of 2019 Incentive Plan (incorporated by reference to Exhibit 10.22 to Amendment No. 3 to Form S-1, filed with the SEC on April 19,
2019).
10.7
Form
of Incentive Option Agreement under 2019 Incentive Plan (incorporated by reference to Exhibit 10.23 to Amendment No. 3 to Form S-1,
filed with the SEC on April 19, 2019).
10.8
Form
of Nonqualified Stock Option Agreement under 2019 Incentive Plan (incorporated by reference to Exhibit 10.24 to Amendment No. 3 to
Form S-1, filed with the SEC on April 19, 2019).
10.9
Securities
Purchase Agreement, dated March 11, 2021, between NexGel, Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 10.1 to
the Current Report on Form 8-K filed with the SEC on March 17, 2021).
10.10
Registration
Rights Agreement, dated March 11, 2021, between NexGel, Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 10.3 to the
Current Report on Form 8-K filed with the SEC on March 17, 2021).
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Table of Contents
10.11
First
Amendment to the Senior Secured Promissory Note, Warrants, and Securities Purchase Agreement (March 11, 2021) dated August 13, 2021
by and between NexGel. Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 10.1 to the Quarterly Report on
Form 10-Q filed with the SEC on August 16, 2021).
10.12
Form
of Securities Purchase Agreement, dated September 2, 2021 (incorporated by reference to Exhibit 10.1 to the Current Report on Form
8-K filed with the SEC on September 8, 2021).
10.13
Form
of Registration Rights Agreement, dated September 2, 2021 (incorporated by reference to Exhibit 10.4 to the Current Report on Form
8-K filed with the SEC on September 8, 2021).
10.14
Second
Amendment to the Senior Secured Promissory Note, Warrants, and Securities Purchase Agreement (March 11, 2021) dated October 28, 2021
by and between NexGel. Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed
with the SEC on November 3, 2021).
10.15
Third
Amendment to the Senior Secured Promissory Note, Warrants, and Securities Purchase Agreement (March 11, 2021) dated December 10,
2021 by and between NexGel. Inc. and Auctus Fund, LLC (incorporated by reference to Exhibit 10.23 to Form S-1, filed with the SEC
on December 10, 2021).
10.16
Asset
Purchase Agreement dated November 30, 2023 between NexGel, Inc. and Olympus Trading Company, LLC (incorporated by reference to Exhibit
10.1 to the Current Report on Form 8-K filed with the SEC on December 5, 2023).
10.17
Asset
Purchase Agreement dated May 15, 2024 between NexGel, Inc. and Semmens Online Pty Ltd as Trustee for Semmens Business Trust (incorporated
by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on May 20, 2024).
10.18
2025 Executive Employment Agreement dated December 30, 2024 between NexGel, Inc. and Joseph F. McGuire (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on January 6, 2025).
10.19
2025 Executive Employment Agreement dated December 30, 2024 between NexGel, Inc. and Adam Levy (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on January 6, 2025).
19.1*
NexGel, Inc.’s Insider Trading Policy
21.1*
Subsidiaries
23.1*
Consent of Turner, Stone & Company, L.L.P.
31.1*
Rule 13a-14(a) Certification of Principal Executive Officer
31.2*
Rule 13a-14(a) Certification of Principal Financial Officer
32.1**
Section 1350 Certification of Principal Executive Officer
32.2**
Section 1350 Certification of Principal Financial Officer
97
NexGel, Inc. Policy for the Recovery of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97 to the Annual Report on Form 10-K filed with the SEC on April 10, 2024).
101.INS*
Inline XBRL Instance Document - the instance document does not appear
in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*
Inline XBRL Taxonomy Extension Schema Document
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Filed herewith.
** Furnished herewith.
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Table of Contents
Signatures
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
NexGel, Inc.
Date: March 27, 2025
By:
/s/ Adam Levy
Adam Levy
Chief Executive Officer and President
Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in
the capacities indicated as of the dates set forth below.
Signature
Date
Title
/s/ Adam Levy
March 27, 2025
Chief Executive Officer and President (Principal Executive Officer)
and Director
Adam Levy
/s/ Joseph F. McGuire
March 27, 2025
Chief Financial Officer (Principal Accounting and Financial Officer)
Joseph F. McGuire
/s/ Steven Glassman
March 27, 2025
Director
Steven Glassman
/s/ Scott Henry
March 27, 2025
Director
Scott Henry
/s/ Nachum Stein
March 27, 2025
Director
Nachum Stein
/s/ Jerome B. Zeldis
March 27, 2025
Director
Jerome B. Zeldis
29