CARMEL, IN – Neuraxis, Inc. (NYSE American: NRXS), a medical device company specializing in electromedical and electrotherapeutic apparatus, has entered into a material definitive agreement resulting in the sale of equity securities. On November 9, 2024, the company signed securities purchase agreements with a group of related investors for the sale of 2,100,840 shares of Series B Convertible Preferred Stock. This transaction will provide Neuraxis with an aggregate purchase price of approximately $5 million.
To facilitate the sale, Neuraxis will file an amendment to the Certificate of Designation with the State of Delaware to increase the authorized Series B Preferred Stock from 4 million to 5 million shares. Additionally, the dividend rights associated with these shares have been extended from June 30, 2025, to December 31, 2026.
The transaction successfully closed on Tuesday. The Series B Preferred Stock, with a stated value of $2.38 per share, is convertible into common stock at any time without further consideration and is senior to common stock regarding liquidation preferences.
In conjunction with the sale, Neuraxis is expected to enter into Registration Rights Agreements with the investors. These agreements mandate the filing of a resale registration statement within 30 days post-closing and require the statement to be declared effective within 60 days, or 90 days if subject to full review by the SEC.
Failure to meet these deadlines will result in liquidated damages payable to the investors, amounting to 1% of the subscription amount for each month of delay, capped at 6%. Unpaid damages will accrue interest at an annual rate of 18%.
In other recent news, Neuraxis, Inc. has been active with several significant developments. The company has revised its securities purchase agreement with Flagstaff International, LLC, reducing the total investment amount to $1.8 million. The company also issued Series B Convertible Preferred Stock to accredited investors, following stockholder approval. This strategic move allows Neuraxis to raise capital while providing investors a potential upside.
In addition to these financial developments, Neuraxis held an annual meeting where shareholders approved key proposals. These included the election of directors, the appointment of Rosenberg Rich Baker Berman, P.A. as the company's independent registered public accounting firm, and the authorization of "blank check" preferred stock. The issuance of 20% or more of the company's outstanding Common Stock upon the conversion of Series B Convertible Preferred Stock or certain convertible promissory notes also received favorable votes.
Furthermore, Neuraxis issued stock awards to its non-employee directors as part of its compensation program. These awards, the first under the company's 2022 Omnibus Securities and Incentive Plan, were fully vested and valued at $12,500 per quarter for a total of $50,000 annually. These recent developments for Neuraxis, Inc. have been disclosed in their SEC filings.
InvestingPro Insights
Neuraxis, Inc.'s recent equity sale aligns with its financial position as revealed by InvestingPro data. The company's market cap stands at $22.83 million, indicating its relatively small size in the medical device sector. This context makes the $5 million raised through the sale of Series B Convertible Preferred Stock a significant capital injection for Neuraxis.
InvestingPro Tips highlight that Neuraxis is "quickly burning through cash" and "not profitable over the last twelve months." These factors likely contributed to the company's decision to raise additional capital through the preferred stock sale. The impressive gross profit margin of 86.59% suggests that while Neuraxis has strong product economics, it may be struggling with other operational costs.
Interestingly, Neuraxis has seen a "significant return over the last week" and a "strong return over the last month," with 1-week and 1-month price total returns of 36.25% and 12.76% respectively. This recent stock performance might have created a favorable environment for the company to attract investors for the preferred stock offering.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Neuraxis, providing a deeper understanding of the company's financial health and market position.
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