NEXGEL Announces $1,110,000 Registered Direct Offering Led by Insiders

Rhea-AI Summary

NEXGEL (NASDAQ: NXGL) has announced a $1,110,000 registered direct offering led by company insiders. The offering includes the sale of 444,000 shares of common stock and warrants to purchase up to 222,000 additional shares. The combined purchase price is $2.50 per share, with warrants exercisable at $4.25 per share for five years. Notably, NEXGEL insiders, including management and board members, participated in the offering and are subject to a six-month lock-up period. CEO Adam Levy stated that the capital will support operations and strengthen the balance sheet as the company approaches significant growth opportunities, particularly following the acquisition of Silly George and increased demand for its products.

Positive

• Insider participation in the offering demonstrates management confidence
• Additional working capital to support inventory and marketing for Silly George brand
• Strengthened balance sheet to support growth opportunities
• Six-month lock-up period for insiders, aligning their interests with shareholders

Negative

• Potential dilution of existing shareholders due to new share issuance
• Warrants may lead to further dilution if exercised in the future
• The offering price of $2.50 per share may be below current market price

Insights

Financial Analyst

NEXGEL's $1.11 million registered direct offering, led by insiders, signals both confidence and potential cash flow concerns. The $2.50 per share price and $4.25 warrant exercise price suggest management's optimism about future growth. However, the need for additional working capital, despite the recent Silly George acquisition, raises questions about the company's financial planning and cash burn rate.

The six-month lock-up period for insiders is a positive sign, aligning their interests with long-term shareholders. Yet, the dilutive nature of the offering (444,000 new shares plus potential 222,000 from warrants) may pressure the stock price in the short term. Investors should closely monitor NEXGEL's ability to leverage this capital for promised growth opportunities in the coming months.

Market Research Analyst

The strategic acquisition of Silly George and the subsequent need for additional inventory and marketing funds indicate a potentially underestimated market demand for NEXGEL's products. This could be a positive sign for the company's growth trajectory, particularly in the beauty sector. However, the quick follow-up capital raise suggests possible gaps in initial market research or financial projections.

Investors should watch for:

• Concrete metrics on Silly George's performance post-acquisition
• Evidence of NEXGEL's ability to scale operations efficiently
• Signs of market penetration in both medical and OTC segments

The company's ability to capitalize on these "significant growth opportunities" in the remainder of the year will be important in justifying this capital raise and maintaining investor confidence.

LANGHORNE, Pa., Aug. 12, 2024 (GLOBE NEWSWIRE) -- NEXGEL, Inc. (“NEXGEL” or the “Company”) (NASDAQ: NXGL), a leading provider of medical and over-the-counter (OTC) products including ultra-gentle, high-water-content hydrogels for healthcare and consumer applications, today announced it has entered into definitive agreements for the issuance and sale of an aggregate of 444,000 of its shares of common stock and the issuance of warrants to purchase up to an aggregate of 222,000 shares of common stock for a combined offering purchase price of $2.50 per share of common stock in a registered direct offering priced. The warrants will have an exercise price of $4.25 per share and be exercisable immediately upon issuance and have a term of five years from the date of issuance.

NEXGEL insiders, including members of the management team and Board of Directors, participated in the offering. Insiders are subject to a six-month lock-up period from the date of closing. The gross proceeds from the offering are approximately $1,110,000, before deducting offering expenses.

Adam Levy, CEO of NEXGEL, commented, “After the strategic acquisition of international beauty brand, Silly George, and the immediate requirement for additional inventory and marketing to meet the higher than expected demand for its products, management and the Board agreed to provide additional working capital to the Company along with existing and new investors. We believe this capital will allow us to comfortably continue to operate the business and strengthens our balance sheet as we approach significant growth opportunities in the remainder of this year.”

Alere Financial Partners, LLC, a division of Cova Capital Partners, LLC acted as the exclusive placement agent for the offering.

This offering is being made pursuant to the Company's shelf registration statement on Form S-3 (File No. 333-264282) previously filed with the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended, which was declared effective by the SEC on June 7, 2023. A prospectus supplement describing the terms of the proposed offering will be filed with the SEC and will be available on the SEC's website located at http://www.sec.gov. Electronic copies of the prospectus supplement may be obtained, when available, from Cova Capital Partners LLC, 6851 Jericho Turnpike, Suite 205, Syosset, New York 11791, or by telephone at (866) 772-8081.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About NEXGEL, Inc.

NEXGEL is a leading provider of healthcare, beauty, and over-the-counter (OTC) products including ultra-gentle, high-water-content hydrogels. Based in Langhorne, Pa., the Company has developed and manufactured electron-beam, cross-linked hydrogels for over two decades. NEXGEL brands include Silverseal^®, Hexagels^®, Turfguard^®, Kenkoderm^® and Silly George^®. Additionally, NEXGEL has strategic contract manufacturing relationships with leading consumer healthcare companies.

Forward-Looking Statement

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “prospects,” “outlook,” and similar words or expressions, or future or conditional verbs, such as “will,” “should,” “would,” “may,” and “could,” are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance, or achievements to be materially different from any anticipated results, performance, or achievements for many reasons. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company's forward-looking statements, please see the Company's Annual Report on Form 10-K for the year ended December 31, 2022, including but not limited to the discussion under “Risk Factors” therein, which the Company filed with the SEC and which may be viewed at http://www.sec.gov/.

Investor Contact:
Valter Pinto, Managing Director
KCSA Strategic Communications
212.896.1254
Valter@KCSA.com

FAQ

What is the size of NEXGEL's recent registered direct offering?

NEXGEL (NXGL) announced a registered direct offering of approximately $1,110,000.

How many shares and warrants are included in NEXGEL's offering?

The offering includes 444,000 shares of common stock and warrants to purchase up to 222,000 additional shares.

What is the purchase price and warrant exercise price in NEXGEL's offering?

The combined purchase price is $2.50 per share, with warrants exercisable at $4.25 per share.

Who participated in NEXGEL's registered direct offering?

The offering was led by company insiders, including members of the management team and Board of Directors.

What is the purpose of NEXGEL's recent capital raise?

The capital will provide additional working capital, support inventory and marketing for the Silly George brand, and strengthen the company's balance sheet for future growth opportunities.