Neuraxis, Inc. Form 8-K Summary
Reporting date: February 9, 2024, with subsequent disclosed events dated February 12, February 14, and February 15, 2024. The filing reports material financing transactions under Items 1.01 and 2.03. Neuraxis is an emerging growth company; its common stock trades on NYSE American under “NRXS.”
Financing Transactions and Key Terms
- On February 9 and February 14, 2024, Neuraxis entered into securities purchase agreements with two accredited investors for convertible promissory notes totaling $457,000.
- The notes bear interest at 8.5% annually, payable quarterly in cash or common stock at the applicable conversion price.
- The notes automatically convert into Series B Convertible Preferred Stock at $2.38 per share after stockholder approval of the preferred stock authorization and filing of the related certificate of designation.
- If the Series B Preferred Stock has not been authorized, investors may demand repayment beginning 12 months after the note date. The notes also become immediately due upon an event of default.
- The company received approximately $400,000 in net proceeds after paying Alexander Capital L.P. a placement-agent fee equal to 10% of gross proceeds. Proceeds are intended for working capital and general corporate purposes.
- Investors received registration rights, including demand and piggyback rights. The company must prepare a resale registration statement within specified deadlines after a qualifying request.
Flagstaff International Amendment
- On February 12, 2024, Neuraxis amended its November 9, 2023 securities purchase agreement with Flagstaff International, LLC.
- Flagstaff is to fund $3 million through 15 monthly installments of $200,000. Amounts paid before the required corporate approvals will be evidenced by convertible promissory notes; later payments will result in Series B Preferred Stock issuance.
- All amounts are expected to convert into Series B Preferred Stock at $2.38 per share after stockholder approval and filing of the certificate of designation.
- Flagstaff had made one $200,000 payment as of the filing.
Material Conditions and Risks
- The Series B financing remains subject to stockholder approval and filing of a certificate of designation with the Delaware Secretary of State.
- As of the filing, the company had not yet sought stockholder approval.
- The Series B Preferred Stock would rank senior to common stock in liquidation, dissolution, or winding up and could result in substantial future equity dilution upon conversion.
- The notes create direct financial obligations, including 8.5% interest, potential repayment demands, and acceleration upon default.
- The filing does not provide revenue, profitability, cash-flow, margin, balance-sheet liquidity, or debt totals beyond the financing obligations described above.
Most Important Facts to Verify
- Whether stockholder approval was obtained and the Series B certificate of designation was filed.
- The total amount ultimately funded by Flagstaff and the two note investors.
- The number of common shares issuable upon conversion of the notes and Series B Preferred Stock.
- Whether the company can meet interest, maturity, and other payment obligations if conversion does not occur.
- The company’s subsequent liquidity, operating results, and use of the approximately $400,000 of net proceeds.
- The filing date and chronology should be reviewed because the report is dated February 9 but includes events through February 15, 2024.