Neuraxis, Inc. (NYSE American:NRXS), a company specializing in electromedical and electrotherapeutic apparatus, has entered into a fourth amendment to its existing securities purchase agreement with Flagstaff International, LLC, according to an 8-K filing with the Securities and Exchange Commission. The amendment, dated October 12, 2024, revises the total investment amount to $1.8 million, down from the previously increased amount of $5 million.
Under the terms of the revised agreement, Flagstaff International will acquire up to an additional 420,168 shares of Neuraxis's Series B Convertible Preferred Stock. The investment is structured in three payments: $800,000 received prior to April 30, 2024, $500,000 due by November 27, 2024, and the final $500,000 scheduled before December 31, 2024.
The agreement stipulates conditions for termination, which include the completion of the transaction, mutual consent, or failure to cure a breach of obligations by either party by January 9, 2025. Additionally, if Flagstaff International does not make scheduled payments within nine calendar days of the due date, Neuraxis has the right to terminate the agreement.
In a related development on October 16, 2024, Neuraxis signed separate securities purchase agreements with various investors for the sale of 60,924 shares of Series B Preferred Stock, totaling approximately $145,000. The shares of Series B Preferred Stock are convertible into common stock and carry seniority over common shares regarding liquidation payments.
Accompanying these transactions, Neuraxis and the investors also entered into Registration Rights Agreements, obligating the company to file a resale registration statement with the SEC within 30 days and to seek its prompt approval. These agreements grant investors certain piggyback registration rights as well.
In other recent news, Neuraxis, Inc. has been active with several significant developments. The company recently issued Series B Convertible Preferred Stock to accredited investors, including Flagstaff International, LLC, following stockholder approval. This issuance involved the conversion of previously issued convertible promissory notes into shares, a strategic move that allows Neuraxis to raise capital while providing investors with a potential upside.
In addition to this, at their recent annual meeting, shareholders approved key proposals, including the election of directors and the appointment of Rosenberg Rich Baker Berman, P.A. as the company's independent registered public accounting firm. The authorization of "blank check" preferred stock and 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. This aligns with Neuraxis's strategy to align the interests of its directors with those of the shareholders. These are the recent developments for Neuraxis, Inc. as disclosed in their SEC filings.
InvestingPro Insights
Neuraxis's recent financial maneuvers, as detailed in the 8-K filing, can be better understood in light of some key financial metrics and insights from InvestingPro. The company's market capitalization stands at a modest $20.18 million, reflecting its small-cap status. This context is crucial when considering the revised investment agreement with Flagstaff International and the additional securities purchase agreements with other investors.
InvestingPro data reveals that Neuraxis has a gross profit margin of 87.29% for the last twelve months as of Q2 2024, which aligns with one of the InvestingPro Tips highlighting the company's "impressive gross profit margins." This strong margin could be a factor attracting investor interest despite the company's current challenges.
However, investors should note that Neuraxis is "quickly burning through cash" and its "short-term obligations exceed liquid assets," according to InvestingPro Tips. These factors may explain the company's need for additional funding through the agreements described in the article. The revised investment structure and the sale of Series B Preferred Stock could be attempts to address these liquidity concerns.
For those seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Neuraxis, providing a deeper understanding of the company's financial position and prospects.
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