NexGel(NXGL) - 2024 Q3 - Quarterly Report

Revenue Growth - Revenues for the three months ended September 30, 2024 increased by 140.8% to $2,940 thousand compared to$ 1,221 thousand in the same period in 2023, driven by growth in branded consumer products, including $1,373 thousand from Silly George[168] - Revenues for the nine months ended September 30, 2024 increased by 87.8% to$ 5,647 thousand compared to $3,007 thousand in the same period in 2023, with$ 1,753 thousand contributed by Silly George since its acquisition on May 15, 2024[184] Gross Profit and Margin - Gross profit for the three months ended September 30, 2024 increased to $1,282 thousand, up from$ 344 thousand in the same period in 2023, with gross profit margin improving to 43.6% from 28.2%[174] - Gross profit increased by $1,508 million to$ 1,969 million for the nine months ended September 30, 2024, compared to $461 million for the same period in 2023, driven by branded consumer products[185] - Gross profit margin improved to 34.9% for the nine months ended September 30, 2024, up from 15.3% in the same period in 2023[185] Cost of Revenues - Cost of revenues for the three months ended September 30, 2024 increased by 89.1% to$ 1,658 thousand, primarily due to higher sales of branded consumer products, including Silly George and Kenkoderm[175] - Cost of revenues increased by $1,132 million (44.5%) to$ 3,678 million for the nine months ended September 30, 2024, primarily due to higher materials and finished products costs[187] Selling, General, and Administrative Expenses - Selling, general and administrative expenses for the three months ended September 30, 2024 increased by 117.9% to $2,070 thousand, driven by higher advertising, marketing, and Amazon fees, which increased by 460.1% to$ 997 thousand[177][180] - Selling, general, and administrative expenses increased by $1,975 million (75.1%) to$ 4,604 million for the nine months ended September 30, 2024, driven by higher advertising, marketing, and Amazon fees[188] - Advertising, marketing, and Amazon fees increased by $1,255 million (286.5%) to$ 1,693 million for the nine months ended September 30, 2024, due to promoting Kenkoderm and Silly George[191] Research and Development Expenses - Research and development expenses decreased to $0 for the three months ended September 30, 2024, compared to$ 6 thousand in the same period in 2023, as the company focused on existing products[184] - Research and development expenses decreased by $12 million (13.3%) to$ 78 million for the nine months ended September 30, 2024[196] Acquisitions and Joint Ventures - The company expanded its product portfolio in December 2023 with the acquisition of Kenkoderm, a skincare line focused on psoriasis, marking its first venture into products unrelated to its core gel technology[164] - In May 2024, the company acquired Silly George, a beauty and cosmetics brand, further diversifying its retail sales presence beyond its core gel technology[165] - The company formed a joint venture on March 1, 2023, acquiring a 50% interest in a converting and packaging business, expanding its capacity to offer a variety of gel shapes and sizes[163][166] - The company entered into another joint venture on January 6, 2023, acquiring a 50% interest to pursue branded consumer product retail opportunities and develop new patch products[166] Cash Flow and Financial Position - Net cash used in operating activities was $3,008 million for the nine months ended September 30, 2024, compared to$ 2,649 million for the same period in 2023[197] - The company had $1,059 million in cash and cash equivalents as of September 30, 2024, down from$ 2,700 million at December 31, 2023[197] Future Plans and Expectations - The company plans to explore new product channel sales in consumer products, such as cosmetics, athletic products, and proprietary medical devices[202] - The company expects to continue incurring losses in the near-term future and may consider raising capital through equity or debt offerings to fund potential acquisitions[204]