DEF 14A: Neuraxis, Inc. Seeks Stockholder Approval for Key Proposals at Upcoming Annual Meeting

Neuraxis, Inc. is holding its annual meeting on August 15, 2024, seeking stockholder approval on several key proposals, including director elections, auditor ratification, and amendments to the company's incentive plan and certificate of incorporation.

Summary

• Neuraxis, Inc. will hold its 2024 Annual Meeting of Stockholders on August 15, 2024, at 9:00 a.m. Eastern Time.
• Stockholders of record as of June 17, 2024, are entitled to vote.
• The meeting's agenda includes the election of five directors, ratification of the appointment of Rosenberg Rich Baker Berman, P.A. as the independent auditor, and approval of amendments to the 2022 Omnibus Securities and Incentive Plan.
• The company is also seeking approval for an amendment to the Certificate of Incorporation to authorize blank check preferred stock.
• Stockholders will vote on the issuance of 20% or more of the company's common stock upon conversion of the Series B Convertible Preferred Stock.
• There will be advisory votes on executive compensation and the frequency of future shareholder advisory votes on executive compensation.
• The board recommends voting in favor of all proposals.
• As of the record date, there were 6,647,960 shares of Common Stock outstanding and entitled to vote at the Annual Meeting.

Sentiment

Score: 6

Explanation: The document is neutral in tone, presenting factual information about the upcoming annual meeting and proposals for stockholder vote. The potential dilution from the conversion of Series B Preferred Stock and the authorization of blank check preferred stock introduce some uncertainty.

Positives

• The company is proactively seeking stockholder input on key governance and compensation matters.
• The proposed amendment to the 2022 Omnibus Securities and Incentive Plan aims to attract, retain, and incentivize key personnel.
• The authorization of blank check preferred stock provides the board with flexibility for future financing and strategic opportunities.
• The company is providing multiple avenues for stockholders to vote, including internet, telephone, and mail.

Negatives

• The potential issuance of a significant number of shares upon conversion of the Series B Preferred Stock could dilute existing stockholders' ownership.
• The authorization of blank check preferred stock could potentially be used in ways that are not aligned with the interests of all stockholders.
• The company has loans payable to Christopher Robin Brown, one of our founders and a member of our board of directors, related to funding needs for operations with original principal amounts of $55,000 and $50,000 each bearing interest at 15% per annum.

Risks

• Failure to obtain stockholder approval for key proposals could hinder the company's strategic plans.
• The potential dilution from the conversion of Series B Preferred Stock could negatively impact the stock price.
• Uncertainty surrounding the future use of authorized blank check preferred stock could create investor concern.
• The company has two demand notes receivable from its two founding shareholders, Christopher Robin Brown and Gary Peterson, related to the sale of common stock on January 1, 2016. The initial balances of both notes were $506,400, with interest calculated monthly based on applicable federal rates. No payments have been received on the notes. As of December 31, 2023, the balances of both notes were $506,400. The entire $1,012,800 balance has been fully reserved as of December 31, 2023.

Future Outlook

The company is seeking stockholder approval for several proposals that will impact its future operations and financial flexibility.

Management Comments

• Brian Carrico, Chief Executive Officer: 'We urge you to review the accompanying materials carefully and to vote as promptly as possible.'
• The Board recommends that you vote as follows: FOR the election of the Board nominees as directors; FOR the ratification of the appointment of Rosenberg Rich Baker Berman, P.A. as our independent registered public accounting firm for the fiscal year ending December 31, 2024; FOR the approval of the amendment to Neuraxis, Inc. 2022 Omnibus Securities and Incentive Plan (the 2022 Plan) to increase the number of shares available for issuance by 300,000 shares and to insert an evergreen provision that allows for an annual increase in the number of shares available for issuance under the 2022 Plan to be added on the first day of each fiscal year through and including 2031 in an amount equal to 5% of the number of shares of our common stock outstanding on the immediately preceding December 31 or such lesser amount determined by our Board or the compensation committee; FOR the approval of the amendment to the Certificate of Incorporation to authorize the blank check preferred stock that could be issued by the Board; FOR the approval of the issuance of 20% or more of the outstanding shares of Common Stock, upon the conversion of the Series B Preferred Stock, into up to 3,838,235 shares of Common Stock in accordance with NYSE American Rule 713(a); and FOR the approval, on an advisory basis, of the compensation paid to our named executive officers; FOR the approval, on an advisory basis, of the frequency of three (3) years for future shareholder advisory votes on the compensation of our named executive officers; FOR the approval of the adjournment of the Annual Meeting, if necessary or advisable, to solicit additional proxies in favor of the foregoing proposals if there are not sufficient votes to approve the foregoing proposals.

Industry Context

Proxy statements are a standard part of corporate governance, providing stockholders with information and the opportunity to vote on important company matters.

Comparison to Industry Standards

• The proposals outlined in the proxy statement are typical for publicly traded companies, including director elections, auditor ratification, and executive compensation.
• The request to authorize blank check preferred stock is a more specific action that is not uncommon, but requires careful consideration by stockholders due to its potential impact on company control and capital structure.
• The proposed amendment to the 2022 Omnibus Securities and Incentive Plan is in line with industry practices to attract, retain, and incentivize key management employees and non-employee directors of, and non-employee consultants to, the Company and its affiliates, and to align the interests of such employees, non-employee directors and non-employee consultants with those of the Companys stockholders.

Management Changes

Corporate Governance

Related Party Transactions

• The Company has two demand notes receivable from its two founding shareholders, Christopher Robin Brown and Gary Peterson, related to the sale of common stock on January 1, 2016.
• The Company has loans payable to Christopher Robin Brown, one of our founders and a member of our board of directors, related to funding needs for operations with original principal amounts of $55,000 and $50,000 each bearing interest at 15% per annum.
• Mr. Watkins, Director, provided certain sales, marketing and commercialization consulting services to the Company prior to his appointment to the Board of Directors.
• John Seale, our former Chief Financial Officer, is also the managing partner of RBSK. Mr. Seale, through RBSK, has provided accounting services since 2017.

Stakeholder Impact

• Approval of the proposals will impact stockholders through potential dilution and changes in corporate governance.
• Employees may be affected by changes to the incentive plan.
• The company's financial flexibility and strategic direction could be influenced by the authorization of blank check preferred stock.

Next Steps

• Stockholders should review the proxy materials and vote on the proposals.
• The company will hold the Annual Meeting on August 15, 2024, and announce the voting results.
• The company will file a current report on Form 8-K with the SEC to disclose the voting results within four business days after the Annual Meeting.

Key Dates

Keywords

annual meeting, proxy statement, stockholders, directors, executive compensation, preferred stock, common stock, incentive plan, Rosenberg Rich Baker Berman, auditor