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Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
The aggregate market value
of the voting stock held by non-affiliates of the registrant as of June 30, 2021, the last business day of the registrant’s
second fiscal quarter, was approximately $5,675,244 based on the price at which the registrant last sold common equity.
Except as specifically stated
herein, this Amendment does not reflect events occurring after the filing of the Original Form 10-K and no attempt has been made
in this Amendment to modify or update other disclosures as presented in the Original Form 10-K.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Executive Officers and Directors
The following table and biographies
that follow sets forth the name, age, position and description of the business experience of individuals who serve as our executive officers
and directors as of the date of this prospectus and brief statements of those aspects of our directors’ backgrounds that led us
to conclude that they should serve as directors.
Name |
|
Age |
|
Position |
Executive Officers |
|
|
|
|
Adam Levy |
|
59 |
|
Chief Executive Officer, President and Director |
Adam E. Drapczuk III |
|
46 |
|
Chief Financial Officer |
Directors |
|
|
|
|
Steven Glassman |
|
57 |
|
Director |
Yaakov Spinrad |
|
32 |
|
Director |
David Stefansky |
|
49 |
|
Director |
Nachum Stein |
|
72 |
|
Director |
Miranda J. Toledano |
|
45 |
|
Director |
Dr. Jerome B. Zeldis, M.D., Ph.D. |
|
72 |
|
Director |
Executive Officers
Adam Levy, Chief Executive Officer, President and Director
Mr. Levy, 59, has served
as our Chief Executive Officer and President since September 10, 2019 and was our Chief Financial Officer from December 31,
2019 until June 1, 2021. Mr. Levy has also served on our Board since September 9, 2021. Mr. Levy is an
investment banker associated with Cova Capital and has been a capital markets specialist for the past six years. Prior to that, he was
the president and CEO of Warlock Records Inc. and its related companies from its inception in 1985. While at Warlock, he led the successful
turn-around of several financially distressed music companies as part of a roll up strategy. He has expertise in consumer products, marketing,
television/radio advertising and direct to consumer sales.
Adam E. Drapczuk, Chief Financial Officer
Mr. Drapczuk, 46, has
served as our Chief Financial Officer since June 1, 2021. Mr. Drapczuk served as Financial Controller for R-Pharm US, a private
fully integrated specialty pharmaceutical company focused on commercial opportunities to treat cancer and chronic immune diseases from
September 2016 to April 2020 and has remained in a consulting role with the company since then. He also served as Vice President
of Finance, CFO, for Inpellis, Inc.; Controller and Director of Finance for Tris Pharma; and Director of Finance for West-Ward Pharmaceuticals
Corp. Mr. Drapczuk began his career in accounting and finance at KPMG LLP, servicing the firm’s assurance clients. He received
his B.S. in accounting at Susquehanna University in Selinsgrove, PA.
Board of Directors
Steven Glassman, Director
Steven Glassman, 57, has served
on our Board of Director since March 8, 2021. Since January 2018, Mr. Glassman has served in the role of Global Business
Initiatives at Nephila Advisors, LLC, a Nashville, TN based firm focused on catastrophic reinsurance and weather risk transfer markets
in connection with the capital markets. From 2010 to 2017, Mr. Glassman served as the Chief Management Officer of Nephila Capital
Ltd. Mr. Glassman holds a Bachelor of Arts in Economics from Vanderbilt University.
Yaakov Spinrad, Director
Mr. Spinrad, 32, has
served on our Board of Directors since September 9, 2021. Mr. Spinrad is currently a Venture Partner at Cane Investment Partners,
a private investment firm located in Chicago, Illinois. Mr. Spinrad also serves as Chief Executive Officer of Vitae Health Systems,
a multi-specialty healthcare solutions private company headquartered in Chicago, Illinois. Mr. Spinrad currently serves on the
Board of Directors of Key Autism Services, Third Eye Health, Vitae Health Systems, Relief Mental Health and Hampton Social, all of which
are private companies. Prior to Cane Investment Partners’ founding, he worked at a single-family office, where he was both the director
of acquisitions, and responsible for numerous portfolio operating companies, and real estate investments.
David Stefansky, Director
Mr. Stefansky, 49, has
served on our Board of Directors since September 10, 2019. Mr. Stefansky
is a principal at Bezalel Partners, LLC, a private company engaged in principal investments and advisory services for early stage companies.
He previously served in senior roles at investment banks and in executive and corporate director roles for private and publicly traded
emerging growth companies in various sectors.
Nachum Stein, Director
Mr. Stein, 72, has served
on our Board of Directors since September 10, 2019. Mr. Stein is managing partner of HSI Partnership, an industrial and real
estate investment family partnership. Mr. Stein previously served as Co-Chairman of the Board of Directors of Coleman Cable Co.,
a publicly traded company until its sale in 2014 for more than $700 million. In 1987, he founded American European Group, a private insurance
holding company (“AEG”). Mr. Stein is Chairman and Chief Executive Officer of AEG. Mr. Stein and his family currently
own a majority of AEG. Mr. Stein is a former Chairman of the Board of Directors of Beth Jacob of Boro Park, the largest Jewish Community
School for girls in the United States, and also a former member of the Board of Directors of Machon Bais Yakov Hilda Birn High School,
and a member of the Board of Trustees of Agudath Israel of America as well as active in various community philanthropies, and committees
of Jewish institutions of higher studies.
Miranda J. Toledano, Director
Ms. Toledano, 45, has
served on our Board of Directors since September 9, 2021. Since its founding in 2018, Ms. Toledano has served as Chief Operating
Officer, Chief Financial Officer and Director at TRIGR Therapeutics, a private clinical stage immuno-oncology company focused on bispecific
antibodies which was acquired by Compass Therapeutics in June 2021. Ms. Toledano currently serves as a director of Compass Therapeutics
(OTC: CMPX), Entera Bio Ltd. (Nasdaq: ENTX), Journey Medical and Lipomedix. Additionally, Ms. Toledano served on the executive management
team of Sorrento Therapeutics (Nasdaq: SRNE) as EVP Corporate Development from September 2016 until August 2017. From 2012 to
2016, Ms. Toledano served as Head of Healthcare Investment Banking at MLV & Co. (acquired by B. Riley FBR & Co.),
where she completed equity capital market transactions totaling over $4 billion in aggregate value. Prior to joining MLV, from 2004 until
2010, Ms. Toledano served in the investment group of Royalty Pharma (Nasdaq: RPRX). From 1998 to 2003, Ms. Toledano led the
Life Sciences Corporate Finance group at Ernst & Young (Israel). Ms. Toledano holds a BA in Economics from Tufts University
and an MBA in Finance and Entrepreneurship from the NYU Stern School of Business.
Dr. Jerome
B. Zeldis, M.D., Ph.D., Director
Dr. Zeldis, 72, has served
on our Board of Directors since April 1, 2020. Since April 2020, Dr. Zeldis has been serving as the executive chairman
ViralClear Pharmaceuticals, Inc., a partially owned subsidiary of BioSig Technologies, Inc. (NASDAQ: BSGM), a company for which
Dr. Zeldis has also been a member of the Board of Directors since May 2019. From 2016 to March 2019, Dr. Zeldis served
as Chief Medical Officer and President of Clinical Research, Medical Affairs Drug Safety, Quality, and Regulatory at Sorrento Therapeutics, Inc.
From 2014 until 2016, Dr. Zeldis served as chief executive officer of Celgene Global Health and chief medical officer of Celgene
Corporation. Since June 2011, Dr. Zeldis has been a director of Soligenix, Inc. and PTC Therapeutics, Inc. He attended
Brown University for an AB, MS, followed by Yale University for an MPhil, MD, and PhD in Molecular Biophysics and Biochemistry. Dr. Zeldis
trained in Internal Medicine at the UCLA Center for the Health Sciences and in Gastroenterology at the Massachusetts General Hospital
and Harvard Medical School. He was Assistant Professor of Medicine at the Harvard Medical School, Associate Professor of Medicine at University
of California, Davis, Clinical Associate Professor of Medicine at Cornell Medical School and Professor of Clinical Medicine at the Robert
Wood Johnson Medical School in New Brunswick, New Jersey.
Family Relationships
There are no family relationships among any of
NexGel’s directors or executive officers except that Mr. Stefansky is the uncle of Mr. Spinrad.
Committees of the Board of Directors
Our board of directors has
established an audit committee, a compensation committee and a nominating and corporate governance committee, each of which has the composition
and responsibilities described below.
Audit Committee
Our audit committee is currently
comprised of Mr. Glassman, Ms. Toledano and Mr. Zeldis, each of whom our board has determined is financially literate and
qualifies as an independent director under Section 5605(a)(2) and Section 5605(c)(2) of the Nasdaq rules. Ms. Toledano
is the chairman of our audit committee and Ms. Toledano qualifies as an audit committee financial expert, as defined in Item 407(d)(5)(ii) of
Regulation S-K.
Our audit committee has adopted
a written audit committee charter, viewable at https://nexgel.com/corporategovernance, that provides that the functions of our audit committee
include, among other things:
|
● |
selecting a qualified firm to serve as the independent registered public accounting firm to audit our financial statements; |
|
● |
helping to ensure the independence and performance of the independent registered public accounting firm; |
|
● |
discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, our interim and year-end operating results; |
|
● |
developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters; |
|
● |
reviewing our policies on risk assessment and risk management; |
|
● |
reviewing and approving related party transactions; |
|
● |
obtaining and reviewing a report by the independent registered public accounting firm, at least annually, that describes our internal quality-control procedures, any material issues with such procedures, and any steps taken to deal with such issues when required by applicable law; and |
|
● |
approving (or, as permitted, pre-approving) all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm. |
Compensation Committee
Our compensation committee
is currently comprised of Mr. Glassman, Mr. Spinrad and Mr. Zeldis. Our board has determined that each of Mr. Glassman,
Mr. Spinrad and Mr. Zeldis qualifies as an independent director under Section 5605(a)(2) of the Nasdaq rules and
a “non-employee director” for purposes of Section 16b-3 under the Exchange Act and does not have a material relationship
with us that would affect his ability to be independent from management in connection with the duties of a compensation committee member,
as described in Section 5605(d)(2) of the Nasdaq rules. Mr. Glassman is the chairman of our compensation committee.
Our compensation committee
has adopted a written compensation committee charter, viewable at https://nexgel.com/corporategovernance, that provides that the functions
of our compensation committee include, among other things:
|
● |
reviewing and approving, or recommending to our board of directors for approval, the compensation of our executive officers and any compensatory arrangement with our executive officers; |
|
● |
reviewing and recommending to our board of directors for approval the compensation of our directors and any changes to their compensation; |
|
● |
reviewing and approving, or recommending to our board of directors for approval, and administering incentive compensation and equity incentive plans; and |
|
● |
reviewing and establishing general policies relating to compensation and benefits of our employees and reviewing our overall compensation philosophy. |
Nominating and Corporate Governance Committee
Our nominating and corporate
governance committee is currently comprised of Mr. Spinrad, Ms. Toledano and Mr. Zeldis. Our board has determined that
each of Mr. Spinrad, Ms. Toledano and Mr. Zeldis qualifies as an independent director under Section 5605(a)(2) of
the Nasdaq rules. Mr. Zeldis is the chairman of our nominating and corporate governance committee.
Our nominating and corporate
governance committee has adopted a written nominating and corporate governance committee charter, viewable at https://nexgel.com/corporategovernance,
that provides that the functions of our nominating and corporate governance committee include, among other things:
|
● |
identifying, evaluating and selecting, or making recommendations to our board of directors regarding, nominees for election to our board of directors and its committees; |
|
● |
overseeing the evaluation and the performance of our board of directors and of individual directors; |
|
● |
considering and making recommendations to our board of directors regarding the composition of our board of directors and its committees; |
|
● |
overseeing our corporate governance practices; |
|
● |
contributing to succession planning; and |
|
● |
developing and making recommendations to our board of directors regarding corporate governance guidelines and matters. |
Codes of Ethics
We are committed to high standards
of ethical conduct and professionalism and have adopted a Code of Ethics viewable at https://nexgel.com/corporategovernance.. The Code
of Ethics applies to all our directors, all our officers (including our principal executive officer, principal financial officer and principal
accounting officer) and employees and sets forth our policies and expectations on a number of topics including avoiding conflicts of interest,
confidentiality, insider trading, protection of NexGel and customer property and providing a proper and professional work environment.
Section 16(a): Beneficial Ownership Reporting Compliance
Section 16(a) of
the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and persons who beneficially own more than
ten percent of our common stock to file with the Securities and Exchange Commission reports showing ownership of and changes in ownership
of our common stock and other equity securities. On the basis of information submitted by our directors and executive officers, we believe
that our directors and executive officers timely filed all required Section 16(a) filings for fiscal year 2021.
ITEM 11. EXECUTIVE COMPENSATION.
Summary
The following table summarizes
all compensation received by our named executive officer December 31, 2021 and 2020:
Name and principal position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards ($) | | |
Option Awards ($) | | |
Nonequity Incentive Plan Compensation ($) | | |
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | |
All Other Compensation ($) | | |
Total ($) | |
Adam Levy, Chief Executive Officer (1) | |
| 2021 | | |
| 180,000 | | |
| 50,000 | | |
| - | | |
| 72,961 | (2) | |
| - | | |
| - | | |
| - | | |
| 302,961 | |
| |
| 2020 | | |
| 143,077 | | |
| - | | |
| 83,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 226,077 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Adam E. Drapczuk III, Chief Financial Officer (3) | |
| 2021 | | |
| 36,332 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 36,332 | |
| |
| 2020 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
|
(1) |
Mr. Levy was appointed as our Chief Executive Officer and President on September 10, 2019 and our Chief Financial Officer on December 31, 2019. On June 1, 2021, Adam E. Drapczuk was appointed to replace Mr. Levy as our Chief Financial Officer. |
|
(2) |
On September 9, 2021, the Company granted a stock option of 14,286 shares of the Company’s
common stock at a per share exercise price of $5.25 under the Company’s 2019 Long-Term Incentive Plan to Mr. Levy for his service
as a board of director. The shares vest equally over four quarters, from October 1, 2021 through July 1, 2022. |
|
(3) |
Mr. Drapczuk was appointed our Chief Financial Officer on June 1, 2021. Mr. Drapczuk does
not currently have an employment agreement with the Company. |
NexGel Employee Equity Plan
2019 Long-Term Incentive Plan
On March 8, 2019, our
stockholders approved the 2019 Long-Term Incentive Plan (the “2019 Plan”), which was adopted by our board of directors on
March 8, 2019. The 2019 Plan provides for the granting of incentive stock options, nonqualified stock options, restricted stock,
stock appreciation rights, restricted stock units, performance awards, dividend equivalent rights, and other awards, which may be granted
singly, in combination, or in tandem, and which may be paid in cash, shares of our common stock, or a combination of cash and shares of
our common stock. We initially reserved a total of 57,143 shares of our common stock for awards under the 2019 Plan. Effective as of May 26,
2020 and May 3, 2021, respectively, the Board approved an increase of the number of authorized shares of common stock reserved under
the 2019 Plan from 57,143 shares of common stock to 485,715 shares of common stock and from 485,715 shares of common stock to 571,429
shares of common stock, all of which may be delivered pursuant to incentive stock options. The maximum number of shares of common stock
that may be delivered pursuant to incentive stock options under the 2019 Plan is 571,429 shares and the maximum number of shares of common
stock with respect to which stock options or stock appreciation rights may be granted to an executive officer during any calendar year
is 14,286 shares of common stock.
The purpose of the 2019 Plan
is to provide an incentive to attract and retain the services of key employees, key contractors, and outside directors whose services
are considered valuable, to encourage a sense of proprietorship and to stimulate active interest of such persons in our development and
financial success. The 2019 Plan is intended to serve as an “umbrella” plan for us and our subsidiaries worldwide. Therefore,
if so required, appendices may be added to the 2019 Plan in order to accommodate local regulations in foreign countries that do not correspond
to the scope of the 2019 Plan.
Unless terminated earlier
by the board of directors, the 2019 Plan will expire on the tenth anniversary of its effective date. No award may be made under the 2019
Plan after its expiration date, but awards made prior thereto may extend beyond that date.
Employment Agreements
Prior to November 4,
2021, Mr. Levy, our Chief Executive Officer, did not have an employment agreement with us. However, on November 4, 2021,
we entered into an executive employment agreement with Mr. Levy which became effective upon our common stock being initially listed
for trading on any tier of the NASDAQ Capital Market on December 27, 2021 (the “Initial Public Offering”). The term of
the agreement is for one year from the Initial Public Offering.
Pursuant to the agreement,
Mr. Levy is paid a base salary of $300,000 per year. Additionally, Mr. Levy is eligible for cash bonuses as follows: (i) $33,000
in the event the we achieve net income for two consecutive fiscal calendar quarters for the period which is one year after the Initial
Public Offering (the “Net Income Bonus”) and (ii) $67,000 in the event the average closing price of our common stock
over any consecutive three month period during the first year subsequent to the Initial Public Offering equals or exceeds one hundred
and fifty percent (150%) the price per share at which our common stock is sold at the Initial Public Offering (the “Trading Price
Bonus”). Both the Net Income Bonus and the Trading Price Bonus may be earned if both thresholds are achieved or either the Net Income
Bonus or the Trading Price Bonus may be earned if only one of the thresholds is achieved. The Net Income Bonus and the Trading Price Bonus
survive the termination of Mr. Levy so long as the termination is not for cause (as defined in the agreement) and the applicable
thresholds are achieved within the one year period after the Initial Public Offering.
Mr. Levy is also entitled
receive a grant of shares of our common stock equal to $50,000 divided by the per share price at which our common stock is sold at the
Initial Public Offering (the “Equity Grant”). The Equity Grant vests in twelve equal monthly installments (subject to any
rounding adjustments) during the term of the agreement with the first installment vesting on the effective date. Mr. Levy is also
eligible to receive, from time to time, additional equity awards under our existing equity incentive plan, or any other equity incentive
plan we may adopt in the future, and the terms and conditions of such awards, if any, would be determined by our Board of Directors or
Compensation Committee, in their discretion. Mr. Levy is eligible to participate in any benefit plan or program we adopt.
Pursuant to Mr. Levy’s
agreement, if Mr. Levy’s employment is terminated upon his disability, Mr. Levy is entitled to receive, in addition to
other unpaid amounts owed to him (e.g., for base salary, accrued personal time and business expenses): (i) his then base salary for
a period of three months (in accordance with our general payroll policy) commencing on the first payroll period following the fifteenth
day after termination of employment and (ii) substantially similar coverage under our then-current medical, health and vision insurance
coverage for a period of three months. Additionally, if Mr. Levy’s employment is terminated for disability, the vesting of
any option grants would continue to vest pursuant to the schedule and terms previously established during the three month severance period.
Subsequent to the three month severance period the vesting of any option grants would immediately cease. The severance benefits described
above are collectively referred to in this registration statement as the “Severance Benefits”.
Pursuant to Mr. Levy’s
agreement and during the initial six months of the term of the agreement, if Mr. Levy resigns for good reason (as defined in the
agreement) or is terminated by us without cause (as defined in the agreement), Mr. Levy would be entitled to receive (i) his
then base salary (in accordance with our general payroll policy) commencing on the first payroll period following the fifteenth day after
termination of employment and (ii) substantially similar coverage under our then-current medical, health and vision insurance coverage
for a period of one year.
Pursuant to Mr. Levy’s
agreement and subsequent to the initial six months of the term of the agreement, if Mr. Levy resigns for good reason or is terminated
by us without cause or if we fail to enter into a new employment agreement with Mr. Levy at the end of term of the agreement after
bona fide and good faith negotiation between us and Mr. Levy, Mr. Levy would be entitled to receive Severance Benefits for a
period of one year less one month for each month (on a pro-rated basis) such termination or resignation occurs subsequent to the initial
six month anniversary of the term (the “Adjusted Severance Period”). For example, in the event Mr. Levy is terminated
without cause or resigns for good reason at the end of the eight month anniversary of the effective date, Mr. Levy would be entitled
to an Adjusted Severance Period of ten months.
If we terminate Mr. Levy’s
employment for cause or employment terminates as a result of Mr. Levy’s resignation (without good reason) or death, Mr. Levy
would only be entitled to any salary earned but unpaid prior to termination, all accrued but unused personal time, and any business expenses
that were incurred but not reimbursed as of the date of the termination. Vesting of any option grants would immediately cease.
Mr. Levy’s agreement
also contains certain non-competition, non-solicitation, confidentiality, and assignment of inventions provisions whereby Mr. Levy
is subject to non-competition and non-solicitation restrictions for a period of one year and two years following termination of his employment
respectively.
We do not have employment
agreements with Mr. Drapczuk, our Chief Financial Officer, or any of our other employees.
Director Compensation
During the period of December 31, 2021, non-employee
members of our board of directors were compensated as follows:
Name | |
Fees
earned or paid in cash | | |
Stock
Award | | |
Option
Awards | | |
Non-equity
Incentive Plan Compensation | | |
Nonqualified
Deferred Compensation Earnings | | |
All
other Compensation | | |
Total | |
Steve
Glassman(1) | |
$ | — | | |
$ | — | | |
$ | 37,818 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | 37,818 | |
Yaakov
Spinrad(3) | |
$ | — | | |
$ | — | | |
$ | 72,961 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | 72,961 | |
David Stefansky | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Nachum Stein | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Miranda
J Toledano(3) | |
$ | — | | |
$ | — | | |
$ | 72,961 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | 72,961 | |
Dr. Jerome
B. Zeldis(2) | |
$ | — | | |
$ | — | | |
$ | 50,424 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | 50,424 | |
(1) On
March 8, 2021, the Company appointed Steven Glassman to the Board of Directors to serve for a term expiring at the next annual meeting
of stockholders or until his successor is duly elected and qualified. On March 8, 2021 and in consideration for his appointment to
the board of directors, the Company granted Mr. Glassman an option to purchase up to 14,286 shares of common stock at a per share
exercise price of $2.80 under the Company’s 2019 Long-Term Incentive Plan. This option award fully vested as of the date of grant.
(2) On
March 8, 2021, the Company granted Dr. Jerome Zeldis, a member of the Company Board, an option to purchase up to 19,050 shares
of the Company’s common stock at a per share exercise price of $2.10 under the Company’s 2019 Long-Term Incentive Plan. This
option award fully vested as of the date of grant.
(3) On
September 2, 2021, the Company appointed Yaakov Spinrad and Miranda J. Toledano to the Board of Directors to serve for a term expiring
at the next annual meeting of stockholders or until his successor is duly elected and qualified. On September 9, 2021 and in consideration
for each person’s appointment to the board of directors, the Company granted each of Mr. Spinrad and Ms. Toledano an option
to purchase up to 14,286 shares of common stock at a per share exercise price of $5.25 under the Company’s 2019 Long-Term Incentive
Plan. This option award vests in four equal calendar quarter installments beginning on October 1, 2021.
Equity Compensation
For fiscal 2022, we have not
yet determined the compensation level for our non-employee members of the Board of Directors.
Indemnification of Directors and Officers
Our Certificate of Incorporation
allows us to indemnify our present and former officers and directors and other personnel against liabilities and expenses arising from
their service to the full extent permitted by Delaware law. The persons indemnified include our (i) present or former directors or
officers, (ii) any person who while serving in any of the capacities referred to in clause (i) who served at our request as
a director, officer, partner, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, and (iii) any person nominated or designated by (or
pursuant to authority granted by) our Board of Directors or any committee thereof to serve in any of the capacities referred to in clauses
(i) or (ii).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS.
The following table sets forth
information about beneficial ownership of our common stock as of May 2, 2022, (unless otherwise noted) by (i) each stockholder
that has indicated in public filings that the stockholder beneficially owns more than five percent of the common stock, (ii) each
of the Company’s directors and named officers and (iii) all directors and officers as a group. Except as otherwise noted, each
person listed below, either alone or together with members of the person’s family sharing the same household, had, to our knowledge,
sole voting and investment power with respect to the shares listed next to the person’s name.
Name and address(1) |
|
Number of shares
beneficially
owned |
|
|
Percentage
of
ownership
(2) |
|
5% stockholders |
|
|
|
|
|
|
|
|
None |
|
|
- |
|
|
|
- |
|
Directors and officers |
|
|
|
|
|
|
|
|
Steven Glassman |
|
|
129,378 |
(3) |
|
|
2.32 |
% |
Yaakov Spinrad |
|
|
14,286 |
(4) |
|
|
* |
|
David Stefansky (5) |
|
|
288,344 |
(6) |
|
|
5.08 |
% |
Nachum Stein |
|
|
586,504 |
(7) |
|
|
10.33 |
% |
Miranda J. Toledano |
|
|
3,572 |
(8) |
|
|
* |
|
Dr. Jerome Zeldis |
|
|
116,600 |
(9) |
|
|
2.08 |
% |
Adam Levy |
|
|
309,694 |
(10) |
|
|
5.54 |
% |
Adam E. Drapczuk |
|
|
- |
|
|
|
- |
|
(All Directors and officers as a group 8 persons) |
|
|
1,460,911 |
(11) |
|
|
24.91 |
% |
* Less than 1%.
(1) |
Except as indicated, the address of the person named in the table is c/o NexGel, Inc., 2150 Cabot Boulevard West, Suite B, Langhorne, PA 19667. |
(2) |
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of the common stock subject to options or warrants held by that person that are currently exercisable or will become exercisable within 60 days after May 2, 2022, are deemed outstanding, while the shares are not deemed outstanding for purposes of computing percentage ownership of any other person. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of the common stock held by them. Applicable percentage ownership is based on 5,572,234 shares of the common stock outstanding as of May 2, 2022. The inclusion in the table above of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares. |
(3) |
Consists of (i) 115,092 shares of common stock and (ii) options to purchase 14,286 shares of common stock which are currently exercisable. |
(4) |
Consists entirely of options that are either exercisable or will become exercisable within 60 days of May 2, 2022. |
(5) |
Mr. Stefansky is the spouse of Esther Friedman, who owns 178,572 shares of the Company’s common stock. Ms. Stefansky disclaims beneficial ownership of all shares held by Ms. Friedman. |
(6) |
Consists of (i) 187,663 shares of common stock held through Bezalel Partners LLC, which is solely owned and managed by Mr. Stefansky and (ii) options to purchase 100,681 shares of common stock that are currently exercisable. |
(7) |
Consists of (i) 481,358 shares of common stock and (ii) options or warrants to purchase 105,146 shares of common stock that are currently exercisable. |
(8) |
Consists of (i) 1,819 shares of common stock and (ii) options to purchase 14,286 that are either exercisable or will become exercisable within 60 days of May 2, 2022. |
(9) |
Consists of (i) 88,028 shares of common stock and (ii) options to purchase 26,191 shares of common stock which are currently exercisable. |
(10) |
Consists of (i) 295,408 shares of common stock and (ii) options
to purchase 14,286 that are either exercisable or will become exercisable within 60 days of May 2, 2022. |
(11) |
Consists of (i) 1,169,368 shares of common stock and (ii) options or warrants to purchase
291,543 shares of common stock that are either exercisable or will become exercisable within 60 days of May 2, 2022. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
In addition to the compensation
arrangements with our directors and executive officers, including those discussed in the sections titled “Management” and
“Executive Compensation,” the following is a description of each transaction since January 1, 2019 and each currently
proposed transaction in which:
|
• |
we have been or are to be a participant; |
|
|
|
|
• |
the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years (which was approximately $20,274); and |
|
|
|
|
• |
any of our directors, executive officers or holders of more than 5% of our outstanding capital stock, or any immediate family member of, or person sharing the household with, any of these individuals or entities, had or will have a direct or indirect material interest. |
On May 29, 2020 (the
“Closing Date”), we entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) whereby we
purchased all of the outstanding equity securities of Sport Defense LLC, a Delaware limited liability company (“Sports Defense”),
from the members of Sport Defense (the “Sellers”). Subsequent to the Closing Date, Sport Defense is a wholly-owned subsidiary
of the Company. Sport Defense is a marketing and distribution company that leverages the unique benefits of ultra-gentle, high-water content
hydrogels, manufactured by the Company, to build brands that treat various ailments of the skin caused by athletic training, such as blisters,
turf burns, scrapes and skin irritations.
Under the terms of the Purchase
Agreement, the purchase price paid to the Sellers was an aggregate of $375 thousand (the “Purchase Price”) which was paid
by the Company through the issuance of an aggregate of 267,858 shares of the Company’s common stock, par value $0.001 (the “Shares”),
which equates to a per share purchase price of $1.40. The Shares are “restricted securities” as such term is defined by Rule 144
promulgated under the Securities Act of 1933, as amended.
Adam Levy, the Company’s
Chief Executive Officer and Chief Financial Officer, and Nachum Stein, a member of the Company’s Board of Directors (the “Board”),
were each members of Sport Defense and part of the Sellers. Mr. Levy received 44,197 of the Shares and Mr. Stein received 91,072
of the Shares. Due to the potential conflict of interest that existed because of Messrs. Levy and Stein’s partial ownership
of Sport Defense, the Board obtained an independent investment bank to prepare a valuation report with respect to Sport Defense. This
valuation report supported the Purchase Price. Also, Mr. Stein recused himself from the vote of the Board regarding the approval
to purchase Sport Defense.
Related-Party Transaction Policy
Our audit committee charter
that gives our audit committee the primary responsibility for reviewing and approving or disapproving “related-party transactions,”
which are generally transactions between us and related persons in which the aggregate amount involved exceeds or may be expected to exceed
$120,000 and in which a related person has or will have a direct or indirect material interest. The written charter of our audit committee
provides that our audit committee shall review and approve in advance any related-party transaction.
In approving or rejecting
any related party transactions, our audit committee cosinders the relevant facts and circumstances available and deemed relevant to our
audit committee, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third
party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
Prior to the formation of
our audit committee, our entire board of directors has been responsible for approving related-party transactions. The transactions described
above were approved by our board of directors.
Director Independence
Our common stock and the warrants
trade on The Nasdaq Capital Market under the symbols “NXGL” and “NXGLW,” respectively. Under the rules of
Nasdaq, independent directors must comprise a majority of a listed company’s board of directors, subject to certain phase-in periods
available to companies that do not yet have a class of common stock registered under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s
audit, compensation and corporate governance and nominating committees be independent.
Our board of directors has
undertaken a review of the composition of our board of directors, our committees and the independence of each director. Based upon information
requested from and provided by each director concerning their background, employment and affiliations, including family relationships,
the board of directors has determined that Messrs. Glassman, Spinrad and Zeldis and Ms. Toledano are “independent”
as that term is defined under applicable Nasdaq rules.
In making these determinations,
the board of directors considered the current and prior relationships that that Messrs. Glassman, Spinrad and Zeldis and Ms. Toledano
has with us and all other facts and circumstances the board of directors deemed relevant in determining his independence, including the
beneficial ownership of capital stock by that Messrs. Glassman, Spinrad and Zeldis and Ms. Toledano.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Independent Auditor’s Fees
Since 2019, Turner,
Stone & Company, L.L.P., Dallas, Texas (PCAOB ID 76), has acted as our independent registered public accounting firm. For the
years ended December 31, 2021 and 2020, Turner, Stone & Company, L.L.P. billed us the fees set forth below, including
expenses, in connection with services rendered by that firm to us.
| |
Year Ended December 31, | |
| |
2021 | | |
2020 | |
Audit Fees | |
$ | 75,745 | | |
$ | 49,107 | |
Audit-Related Fees | |
| 46,200 | | |
| - | |
Tax Fees | |
$ | - | | |
| | |
All Other Fees | |
| - | | |
| | |
TOTAL | |
$ | 121,945 | | |
$ | 49,107 | |
“Audit Fees” consisted of fees
billed for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the
financial statements included in our Forms 10-K and 10-Q or services that are normally provided by the accountant in connection with statutory
and regulatory filings or engagements.
“Audit-Related Fees” consisted
of fees billed for assurance and related services by the principal accountant that were reasonably related to the performance of the audit
or review of our financial statements and are not reported under the paragraph captioned “Audit Fees” above. During our fiscal
year ended December 31, 2021, Tuner, Stone & Company, L.L.P. billed us $30,000 for services related to consent procedures
for the use of its audit opinion in the Company’s filing of a Registration Statement on Form S-1 (including all amendments)
that incorporated by reference the Company’s audited financial statements for the fiscal years ended December 31, 2020 and
2019 and also billed us $16,200 related to a underwriter “comfort” letter relating to the same Registration Statement. During
our fiscal year ended 2020, there were no such fees billed by Tuner, Stone & Company, L.L.P.
“Tax Fees” consisted of fees
billed for professional services rendered by the principal accountant for tax returns preparation. During our fiscal years ended December 31,
2021 and 2020, there were no such fees billed by Tuner, Stone & Company, L.L.P.
“All Other Fees” consisted
of fees billed for products and services provided by the principal accountant, other than the services reported above under other captions
of this Item 14. During our fiscal years ended December 31, 2021 and 2020, there were no such fees billed by Tuner, Stone &
Company, L.L.P.
Pre-Approval Policies and Procedures
The audit committee's policy
is that all audit and non-audit services provided by its independent registered public accounting firm shall either be approved before
the independent registered public accounting firm is engaged for the particular services or shall be rendered pursuant to pre-approval
procedures established by the Audit Committee. These services may include audit services and permissible audit-related services, tax services
and other services. Pre-approval spending limits for audit services are established on an annual basis, detailed as to the particular
service or category of services to be performed and implemented by our financial officers. Any audit or non-audit service fees that may
be incurred by us during a quarter that fall outside the limits pre-approved by the Audit Committee for a particular service or category
of services must be reviewed and approved by the Chairperson of the Audit Committee prior to the performance of services. On an annual
basis, the Audit Committee reviews and itemizes all fees paid to its independent registered public accounting firm in the prior quarter
(including fees approved by the Chairperson of the Audit Committee between regularly scheduled meetings and fees approved by our financial
officers pursuant to the pre-approval policies described above) and further reviews and itemizes all fees expected to be paid in the upcoming
quarter. The Audit Committee may revise its pre-approval spending limits and policies at any time. None of the fees paid to the independent
registered public accounting firm were approved by the Audit Committee after the services were rendered pursuant to the "de minimis"
exception established by the SEC for the provision of non-audit services.