Nexgel Inc

This proposal asks stockholders to approve the removal of the 19.99% Exchange Cap under Nasdaq Rule 5635(d) so that common stock may be issued upon conversion of convertible promissory notes and exercise of warrants issued in the April and May 2026 private placements. Management is seeking approval because, under Nasdaq rules, stockholder approval is required when the potential issuances could equal 20% or more of outstanding shares and because the notes and warrants were issued at conversion/exercise pricing below the applicable Nasdaq minimum. The Financings include features—an initial conversion price of $0.60, a conversion-price reset to recent VWAPs at 12 months and maturity, full-ratchet anti-dilution protection, and interest payable in shares—that mean the actual number of shares issuable is uncapped and can materially exceed initial illustrative figures, creating meaningful dilution risk for existing holders. The proposal aggregates the April and May transactions as related and seeks approval sufficient for both financings; the Board also represents that some directors and affiliated entities participated on the same terms and that disinterested directors reviewed conflicted transactions. If approved, holders may convert and exercise without the 19.99% cap, which avoids potential breaches of registration/reservation covenants and the need for repeated special meetings; if not approved, conversions and exercises would be limited to 19.99% and the company has covenanted to call additional meetings every 60 days until approval is obtained, which could be operationally disruptive. The Board recommends approval to preserve contractual expectations, facilitate capital raising, and permit the financing economics to operate as negotiated, while cautioning stockholders about significant and potentially unlimited dilution arising from resets, full-ratchet protection, and stock-settled interest. Analysts evaluating the vote should weigh the company’s immediate financing needs and contractual obligations against the long-term dilution risk to shareholders, the participation of related parties (Sequence, certain directors), and the potential narrowing of future financing options due to “variable rate transaction” and most-favored-nations restrictions in the purchase agreements. Overall, the proposal is transaction-specific, driven by short-term liquidity and license-payment needs (including the Celularity agreement), but it carries substantial dilution and governance implications that investors should carefully evaluate.

This proposal asks stockholders to approve a corporate conversion that would change the Company’s governing law from Delaware to Nevada by adopting a Plan of Conversion and the proposed Nevada Articles and Bylaws. Management frames the change as driven by several corporate-management and cost considerations: lower ongoing franchise taxes and filing fees in Nevada versus Delaware, statutory flexibility under Nevada law (notably NRS 78.207) that permits the board to effect proportional recapitalizations such as splits or proportional reverse splits without further stockholder approval, the ability under Nevada law to extend officer exculpation comparable to director exculpation, and elimination of a 66 2/3% Delaware charter supermajority entrenchment—changes the Board considers beneficial. The proposal bundles into the Nevada charter an increase in authorized common stock to 100,000,000 and confers on the Board authority to effect a discretionary reverse stock split (1-for-2 to 1-for-10) within one year, meaning those changes become effective if the conversion is approved regardless of separate votes on Delaware fallbacks. Countervailing considerations the Proxy highlights include that Nevada law is generally viewed as more management-friendly: higher hurdles for stockholder removal of directors (two-thirds vote), statutory standards that make officer/director liability harder to establish, potentially more difficult derivative litigation, less-developed precedent compared with Delaware’s Court of Chancery, and Nevada anti-takeover statutes that the company does not opt out of—each of which could reduce stockholder protections. From a transaction perspective, the Board believes the benefits (cost savings, flexibility to address Nasdaq listing issues more quickly, and governance streamlining) outweigh the risks, but stockholders should weigh the reduced predictability of case law and potentially stronger director/officer protections against those benefits. If stockholders approve the conversion, it will be consummated by filing the requisite certificates and the Nevada Articles and Bylaws will take effect as the Company’s charter and bylaws; if not approved, the Company remains a Delaware entity and the separate Delaware-law fallback proposals (4 and 5) would govern any authorized-share increase or reverse split. For a sophisticated assessment, the conversion should be evaluated in light of the Board’s motivations to preserve operational flexibility (e.g., faster response to Nasdaq minimum bid price issues), the specific charter changes included in the Nevada Articles, and the longer-term governance tradeoffs in moving from Delaware to Nevada law.

Proposal 4 requests stockholder authority to increase the Company’s authorized common stock from 25 million to 100 million shares under Delaware law as a fallback if the proposed Nevada reincorporation is not completed. Management’s primary stated rationale is operational and contractual: the Company currently lacks sufficient authorized shares to satisfy reservation obligations for outstanding convertible notes and warrants (including those from the April and May 2026 financings) under certain conversion/reset scenarios, and approval would avoid potential breaches that could trigger defaults, accelerate obligations, or hinder financings. The increase also provides headroom for future capital raises, equity compensation grants and strategic transactions without the delay and cost of additional stockholder votes. The Proxy discloses illustrative share-reserve and shortfall calculations and warns that because the notes contain conversion-price resets and full-ratchet anti-dilution features the number of shares potentially issuable is uncapped and could materially exceed current estimates, supporting management’s urgency. Opposing considerations include clear dilution to existing holders and potential anti-takeover effects of additional authorized but unissued shares; management emphasizes it is not proposing any immediate issuances and will retain discretion over timing of filing the charter amendment to manage franchise tax consequences. The Board plans to exercise discretion on the timing of filing (within one year) based on capital needs, but stockholders should consider that delaying filing could temporarily constrain the Company’s ability to satisfy contractual reservation obligations. For investment analysis, this proposal is pragmatic and remedial—designed to preserve financing and contractual stability—but materially increases the company’s capacity to dilute current holders and therefore should be judged against the company’s near-term obligations, its financing alternatives, and governance implications of a larger authorized share pool.

This proposal seeks a stockholder grant of authority for the Board to effect, at its sole discretion and within one year, a single reverse stock split at any ratio between 1-for-2 and 1-for-10 as a tool to address the Company’s Nasdaq minimum bid price deficiency (the Company received a Nasdaq deficiency notice for a closing bid below $1.00). Management argues the split gives the Board tactical flexibility to select timing and ratio based on market conditions in an effort to regain and maintain Nasdaq compliance, potentially broaden investor interest and improve perceived marketability. The Proxy makes clear that fractional shares will be rounded up to whole shares—a beneficiary-friendly treatment that slightly increases outstanding shares relative to a pure mathematical split—and that the split would not change authorized shares (unless Proposal 4 is approved) and would therefore increase the pool of authorized-but-unissued shares proportionately, raising future dilution potential. The Board retains discretion to abandon the split prior to effectiveness, and to choose not to effect any split even if approved; the approval would only authorize a single split within the approved ratio range. Opposing considerations include uncertain market reaction (no guarantee that a reverse split will yield proportional price appreciation or sustained compliance) and the dilution/authorization mechanics that can make future issuance easier. For an analyst, this vote is pragmatic to regain listing compliance and preserve optionality, but it should be weighed against the non-binding economic outcome for shareholders and the potential increase in available authorized shares for future issuance that may follow a split.

Proposal 6 is a routine, non-binding advisory (“say-on-pay”) vote asking stockholders to approve the disclosed compensation arrangements for the Company’s named executive officers for 2025. Management states its compensation philosophy is to attract, retain and motivate executives through a mix of base salary, cash incentives and equity-based awards tied to individual and corporate performance; the Compensation Committee uses benchmarking and may consult advisors in designing pay programs. The Board has committed to hold this advisory vote annually in accordance with the stockholders’ prior advisory choice on frequency and will consider the results in future compensation design—significant negative votes would prompt the Compensation Committee to review and potentially adjust pay practices. From a governance perspective, the vote does not bind the Board but provides a signal of stockholder sentiment regarding pay-for-performance alignment, grant sizes, and contract terms; the Proxy highlights specific recent grants and employment agreements (e.g., CEO and CFO arrangements) that underlie the disclosure. Analysts should map the disclosed pay elements and vesting/termination features against company performance and peer practice, and treat the advisory vote as an input into shareholder stewardship decisions rather than a determinative outcome. Given the small company context and recent hiring/financing events, stockholders may weigh retention-driven grants against dilution and overall alignment with long-term shareholder value creation. The Board’s recommendation to vote FOR reflects its view that the program is competitive and appropriately tied to performance while being mindful of investor feedback.