UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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| Item 1.01. | Entry into a Material Definitive Agreement. |
SPAs and Convertible Promissory Notes
As previously disclosed, on November 9, 2023, Neuraxis, Inc. (the “Company”) entered into a securities purchase agreement (the “November SPA”) with Flagstaff International, LLC (“Flagstaff International”) for the issuance and purchase of the Company’s Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), at price per share of $2.38. The aggregate purchase price is $3 million, to be paid in 15 monthly installments of $200,000 each, commencing on the later of January 10, 2024 or a date after stockholders approve of an amendment to the Company’s Certificate of Incorporation to authorize the creation of the Series B Preferred Stock (the “Stockholder Approval”). The Series B Preferred Stock is convertible at any time into shares of common stock of the Company without any further consideration. The closing of this transaction is subject to the Stockholder Approval following which the Company will file the Series B Preferred Stock Certificate of Designation with the Secretary of State of the State of Delaware. Following the issuance of the Series B Preferred Stock, it will rank senior to the common stock with respect to payments upon the liquidation, dissolution and winding up of the Company.
As of the date of this filing, the Company has not yet sought the Stockholder Approval.
On each of February 9, 2024 and February 14, 2024, the Company entered into securities purchase agreements (the “SPAs”) with a total of two accredited investors (the “Investors”) for the issuance and purchase of convertible promissory notes (the “Notes”) for an aggregate purchase price of $457,000. The Notes bear an interest rate of 8.5% per annum, which shall be payable quarterly by the Company in cash or in shares of the Company’s common stock at the conversion price as defined in the form of the Certificate of Designation of the Series B Convertible Preferred Stock attached as an exhibit to the SPAs.
The maturity date of the Notes shall be on the earlier of (i) upon written demand of the Investors occurring on or after twelve (12) months from the date of the Notes in the event that the Series B Preferred Stock has not been duly authorized or (ii) immediately upon the occurrence of an event of default. The Notes will be automatically converted into shares of Series B Preferred Stock (at a conversion price of $2.38 per share) following the date of the Stockholder Approval and the filing of the Certificate of Designation.
In connection with the SPAs and the issuance of the Notes, on the same day, the Company and Investors entered into Registration Rights Agreements (the “Registration Rights Agreements”). Pursuant to the Registration Rights Agreements, the holders of the majority of the Registrable Securities (as defined in the Registration Rights Agreements) then outstanding may request registration of all or any portion of their Registrable Securities, and the Company is required to deliver notice of such request to all other holders of Registrable Securities and prepare and file (i) a resale registration statement on Form S-1 with the SEC within 60 days after the date of the initial request, or (ii) a registration statement on Form S-3 within 30 days after the date of the initial request, and use its best efforts to cause such registration statement to be declared effective by the SEC. The Registration Rights Agreements also provides the Investors with certain piggyback registration rights.
Alexander Capital L.P. acted as placement agent (the “Placement Agent”) in the private offering, and the Company paid the Placement Agent a cash fee of ten percent (10%) of the gross proceeds therefrom. The Company received approximately $400,000 in net proceeds from the initial closings, after deducting the fee payable to the Placement Agent. The Company intends to use the proceeds for working capital and general corporate purposes.
Flagstaff International Amended SPA
On February 12, 2024, the Company and Flagstaff International entered into a First Amendment to Securities Purchase Agreement (the “First Amendment”). The First Amendment provides for the issuance and purchase of a convertible promissory note with substantially the same terms as the Notes. In conformity with the original securities purchase agreement entered into by the parties in November 2023, Flagstaff International will pay $3 million in 15 monthly installments of $200,000. Following the date of the Stockholder Approval and the filing of the Certificate of Designation, any amounts paid by Flagstaff International to purchase convertible promissory notes will be converted into shares of Series B Preferred Stock at a conversion price of $2.38 per share. In addition, following the date of the Stockholder Approval and the filing of the Certificate of Designation, all monthly payments will result in the issuance of shares of Series B Preferred Stock rather than the issuance of a convertible promissory note. As of the date of this filing, Flagstaff International has made one payment of $200,000 to the Company.
The foregoing description of the SPAs, the Notes, the Registration Rights Agreements, and the First Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of the form SPA, the form Note, the form Registration Rights Agreement, and the First Amendment, copies of which are filed with this current report on Form 8-K as Exhibits 10.1, 10.2, 10.3, and 10.4 hereto, respectively, and are hereby incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement |
The disclosure regarding the Notes required by this Item 2.03 is set forth in Item 1.01 above and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
| Exhibit Number |
Description | |
| 10.1 | Form of Securities Purchase Agreement | |
| 10.2 | Form of Convertible Promissory Note | |
| 10.3 | Form of Registration Rights Agreement | |
| 10.4 | First Amendment to Securities Purchase Agreement, dated February 12, 2024, between the Company and Flagstaff International | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: February 15, 2024 | NEURAXIS, INC. | |
| By: | /s/ Brian Carrico | |
| Name: | Brian Carrico | |
| Title: | President and Chief Executive Officer | |