NEXGEL (NXGL) investor relations material

Strategic review and proposed reorganization

• A comprehensive strategic review identified misalignment between legacy hydrogel operations and consumer product lines, leading to underperformance and unsustainable cost structures.

• The proposed reorganization aims to shift focus from consumer products to medical devices and biomedical innovation, leveraging assets acquired from Celularity and integrating with Fountainhead Life Sciences.

• The plan includes consolidating management, manufacturing, and commercialization under a single public company platform, with Fountainhead contributing significant operating assets and expertise.

• The reorganization is expected to provide new capital, recapitalize the balance sheet, and position the company for future financing and growth.

• An independent governance process, including special committee review and independent valuation, will be followed before any transaction is finalized.

Financial outlook and operational changes

• Standalone revenue forecasts for the next two years are $11 million and $13 million, with operating losses projected.

• The combined entity is projected to generate $21 million in revenue and $15 million gross profit in the first year post-reorganization, with a gross margin of 73%.

• In the second year, revenue is forecasted at $31 million, gross profit at $23 million, and operating profit at $4.4 million.

• Approximately $5 million in new capital is required, allocated to operations, growth, integration, and transaction costs.

• The recapitalization will significantly dilute existing shareholders, reducing their ownership from 21% to about 5%, but aims to create a stronger, more diversified company.

Asset divestiture and business focus

• Consumer product lines, which have been unprofitable and eroding in revenue, are being divested, with an estimated $5 million in revenue to be removed.

• The hydrogel business will be retained and optimized for efficiency and growth, particularly in surgical and hospital settings.

• Fountainhead's contributions include $10 million in revenue, manufacturing capabilities, regulatory infrastructure, and a robust product development platform.

• The company is exploring international opportunities for hydrogels but has not included them in current forecasts.