Nexgel Inc

This proposal asks stockholders to approve, under Nasdaq Listing Rule 5635(d), the potential issuance of shares in excess of Nasdaq’s 19.99% Exchange Cap upon conversion of convertible promissory notes and exercise of related warrants issued in two related private placements in April and May 2026. Management is seeking shareholder approval because the Notes/Warrants include features (initial $0.60 conversion price, $0.80 warrant exercise price, full-ratchet anti-dilution protections, conversion-price reset dates and the ability for holders to receive interest paid in shares) that could cause issuances to exceed the 19.99% threshold and because Nasdaq rules require pre-approval for such potential issuances. The Board frames the Financings as bona fide capital-raising transactions necessary to fund working capital and to satisfy obligations under the Celularity License Agreement and has sought to aggregate the April and May financings as a series for approval. The proposal’s material risks include the absence of a floor on the conversion price, full-ratchet anti-dilution protection and reset mechanics, each of which could, singly or together, produce very large — potentially uncapped — dilution to existing stockholders; management discloses illustrative scenarios showing dilution rising dramatically as the Conversion Price falls. Several directors and related parties participated in the Financings on the same terms as unaffiliated investors; the Board says these were arm’s-length and approved by disinterested directors where appropriate. If approved, the Exchange Cap will not limit conversion/exercise and the Company could be required to issue substantial shares; if not approved, conversion/exercise would remain capped at 19.99%, which could constrain holders and lead to repeated shareholder meetings until approval is obtained (per the Purchase Agreements), and might hamper future financings or contract performance. The Board recommends approval to preserve financing flexibility, comply with contractual obligations, and avoid events of default and other adverse consequences, while acknowledging significant dilution risk and explaining the business purpose of the Financings.

Proposal 3 requests stockholder approval to convert the Company’s domicile from Delaware to Nevada via a plan of conversion, adopting Nevada Articles and Bylaws (Annexes A–C). Management’s stated reasons include modest recurring cost savings (Nevada franchise fees materially lower than Delaware for the Company’s size), and material governance advantages for management such as Nevada’s NRS 78.207, which allows the board to effect proportional recapitalization actions (e.g., a reverse stock split coupled with a proportional authorized-share adjustment) without a stockholder vote — a feature management says offers agility for addressing Nasdaq minimum bid-price deficiencies. The Nevada charter also extends officer exculpation consistent with Nevada law; management contends this will aid in recruiting and retaining officers. The proxy discloses substantive tradeoffs: Nevada’s statutory fiduciary duty and exculpation standards can be more protective of directors and officers and less protective of stockholders than Delaware law; removal of directors may require a two-thirds vote under Nevada law; derivative litigation and appraisal rights differ; Nevada has a less developed body of corporate case law than Delaware; and certain Nevada anti-takeover statutes would apply unless opted out (the Nevada Articles do not opt out). Importantly, the Nevada Articles bundled into this proposal include the 100,000,000 authorized common shares and authority for a discretionary reverse split; those provisions would take effect automatically on the Effective Time if the conversion is completed, irrespective of separate votes on Proposals 4 and 5. The Board recommends approval on balance because it believes the cost savings, statutory flexibility and recruiting/retention benefits outweigh the governance changes, but it discloses the material legal and stockholder-protection differences so that investors can weigh the tradeoffs.

Proposal 4 asks stockholders to approve, as a Delaware fallback, an amendment increasing authorized common shares from 25 million to 100 million so that the Company can reserve sufficient authorized but unissued shares to satisfy conversion and exercise obligations (notably under the convertible notes and warrants described in Proposal 2) and to provide capacity for future financings, equity awards and strategic transactions. Management emphasizes that due to the conversion-price reset mechanics and full-ratchet anti-dilution in the Notes, the number of shares that may become issuable could materially exceed current reservations; absent additional authorized shares the Company risks breaching its covenants and potentially triggering events of default. The Board notes the authority would be exercisable by filing an amendment within one year if Proposal 3 is not approved, but if Proposal 3 is approved the increase is already embedded in the Nevada Articles and would take effect automatically. The company explains the Board may delay filing the Delaware amendment to defer Delaware franchise taxes until additional capacity is needed but the Board retains discretion to file earlier if contractual obligations require it. The proxy cautions that increasing authorized shares can be dilutive and could be used in ways that deter or frustrate change-of-control attempts, though the Board disclaims any current takeover-defense plan. The Board recommends FOR to maintain operational and financing flexibility and to avoid contractual and default risk, while disclosing potential anti‑takeover consequences and dilution implications for stockholders.

Proposal 5 seeks authorization for the Board to implement, on one occasion and within one year, a reverse stock split at a ratio between 1-for-2 and 1-for-10, primarily to give the Board a mechanism to regain compliance with Nasdaq’s $1.00 minimum bid price requirement after the Company received a deficiency notice. The Board will have discretion whether to effect the split and to choose the precise ratio in the approved range, allowing it to tailor the action to market conditions; fractional shares would be rounded up to a whole share, meaning small holders would not be cashed out. Approval is presented as a Delaware fallback because identical authority is included in the Nevada Articles if Proposal 3 is approved; in that case this Proposal 5 would be legally redundant. The proxy describes benefits management expects (improved institutional interest, marketability and potential to cure Nasdaq deficiency) but cautions there is no guarantee the split will raise market capitalization proportionally or maintain compliance. The reverse split will reduce outstanding shares and increase authorized-but-unissued shares proportionately (or relatively if Proposal 4 is not approved), which can increase the Company’s capacity to issue additional shares and thus raise the prospect of further dilution. The Board notes potential tax and accounting effects, the adjustment mechanics for equity awards and securities, and that no appraisal rights are available. The Board recommends FOR to preserve a flexible, time-sensitive tool to address listing compliance risk while acknowledging tradeoffs including dilution and uncertain market response.

Proposal 6 is the advisory (non‑binding) say‑on‑pay vote asking stockholders to approve the compensation of the Company’s named executive officers for fiscal 2025 as disclosed in the proxy materials. Management explains its compensation philosophy: pay competitive base salaries plus incentive opportunities (cash and equity) tied to corporate and individual performance to align management with stockholder interests; the Compensation Committee reviews and approves executive pay and uses equity incentives for recruitment and retention. The Company previously held a separate advisory vote on the frequency of say‑on‑pay votes and has elected to hold an annual advisory vote consistent with stockholder feedback. Although non‑binding, the Board and Compensation Committee state they will consider the outcome and any substantive vote against pay when assessing future compensation practices and make adjustments if stockholder concern is significant. The proposal requests a simple majority of votes cast for approval, and abstentions and broker non‑votes will not affect the outcome. The Board recommends a vote FOR the advisory approval, viewing it as a gauge of stockholder support for pay programs and a basis for potential future adjustments. The Company discloses relevant details in the executive compensation sections to inform stockholders’ assessment.