NASDAQ: NXGL

Contract
Manufacturing Business

As
described above, we serve 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 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.

●
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.

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, Inc.).

Facilities

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. 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.

Consumer
Products

Our branded consumer products
are marketed under a diverse portfolio of brands, including our Medagel family of products (SilverSeal, Hexagels, Turfguard), Kenkoderm,
and Silly George. These products are distributed through a multi-channel strategy that includes direct-to-consumer e-commerce, brick-and-mortar
retail partnerships, and specialized medical office channels.

The products we sell under our MedaGel brand primarily relate to
healthcare over-the-counter (“OTC”) remedy solutions, such as blister and pain applications and the Kenkoderm skincare line
provides gentle to the skin products for consumer with psoriasis. In May 2024, we added the Silly George brand, 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” strategy.

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

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

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. 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.

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
air bubbles; and (iv) 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.

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. We
believe NEXDerm, if successfully developed, will offer the following advantages over Tegaderm™: (i) ability to easily reposition
the adhesive tape; (ii) pain-free removal; (iii) gentle to the skin; and (iv) increased infection prevention. 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.

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

Medical
Devices. 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.

Competition

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 Devices. As we expand our consumer products and medical device business, we will face a number of competitors.
Our competitors include numerous manufacturers; distributors; marketers; 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. Therefore, a strategic partnership will be critical to our success in the medical device business. 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 us.

Sources
and Availability of Raw Materials; Principal Suppliers

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.

Customers

During
the year ended December 31, 2025 and 2024, no customers accounted for 10% of our revenue.

Patents,
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. 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. Neither of these patent rights are material to our current business and prospects.
These licensed patent rights are expected to expire in April 2032.

Government
Regulation

Product
Regulation. 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.

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 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
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. We believe
that we are currently compliant with applicable environmental, health and safety requirements in all material respects. However, we cannot
assure you that current or future regulatory, governmental, or private action will not have a material adverse effect on our performance,
results or financial condition.

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 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.

Research
and Development Costs

For
the years ended December 31, 2025 and 2024, we incurred approximately $2 thousand and $78 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.

Human
Capital

As
of December 31, 2025, we had 19 full-time employees. 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.

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.

Properties

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.

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. We are 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

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 this item.