CARMEL, IN - Neuraxis, Inc. (NYSE American: NRXS), a company in the electromedical apparatus sector, announced on Monday the issuance of Series B Convertible Preferred Stock following the receipt of stockholder approval. The Preferred Stock was issued to several accredited investors, including Flagstaff International, LLC, in a series of transactions exempt from registration under the Securities Act of 1933.
The transactions, which took place over several months, involved the conversion of previously issued convertible promissory notes into 2,073,524 shares of Series B Preferred Stock. The notes, amounting to $4,935,001.90 in principal, were converted on September 9, 2024, at a conversion price of $2.38 per share.
Neuraxis had entered into agreements with Flagstaff International and other accredited investors between November 2023 and May 2024. These agreements included the issuance of convertible notes, which were to be automatically converted into Series B Preferred Stock upon stockholder approval and the filing of the Certificate of Designation with the State of Delaware. The stockholder approval was obtained on August 15, 2024.
The Series B Preferred Stock ranks senior to common stock regarding liquidation payments. This strategic move allows Neuraxis to raise capital while providing investors with a potential upside through conversion into common stock.
The issuance of the Preferred Stock is considered exempt from registration under Section 4(a)(2) of the Securities Act, as it did not involve a public offering and the securities were taken for investment purposes. The investors are accredited, and the securities are subject to transfer restrictions.
In other recent news, Neuraxis, Inc. has been active with several significant developments. In their recent annual meeting, shareholders voted on key proposals including the election of directors, the appointment of Rosenberg Rich Baker Berman, P.A. as the company's independent registered public accounting firm, and amendments to the Neuraxis, Inc. 2022 Omnibus Securities and Incentive Plan.
All proposals received favorable votes, including 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.
Additionally, Neuraxis has 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 move is in line 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
In the context of Neuraxis's recent financial maneuvers, real-time data from InvestingPro provides a snapshot of the company's financial health and market performance. As of the last twelve months leading up to Q2 2024, Neuraxis boasts a substantial gross profit margin of 87.29%, indicating a strong ability to control costs relative to sales. This is particularly impressive and relevant for investors considering the recent issuance of Series B Convertible Preferred Stock, as it may reflect the company's underlying financial efficiency.
However, the data also reveals some challenges. Neuraxis's revenue has contracted by 15.5% over the same period, and the company has not been profitable over the last twelve months, with a reported operating income margin of -383.3%. Additionally, the company's short-term obligations surpass its liquid assets, which could raise concerns about its ability to meet immediate financial obligations without relying on new capital infusions or restructuring of debt.
InvestingPro Tips highlight that analysts do not expect Neuraxis to be profitable this year, which aligns with the company's strategy of raising capital through the issuance of convertible preferred stock. Moreover, Neuraxis does not pay a dividend, which may impact investor expectations regarding short-term returns. For those interested in a deeper dive into Neuraxis's financial outlook, InvestingPro offers additional tips on its platform.
With a market capitalization of $21.21 million and a negative price-to-earnings (P/E) ratio, Neuraxis's stock price performance has been volatile, reflecting investor sentiment and market conditions. The company's stock price is currently at 58.78% of its 52-week high, which may offer a point of entry for investors seeking to capitalize on potential future growth, as suggested by the fair value estimates ranging from $2.43 to $7.5.
For investors and stakeholders considering Neuraxis's financial strategy, these metrics and insights from InvestingPro could provide valuable context for assessing the company's position and future prospects.
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