DEF: Nexalin Tech Seeks Stockholder Approval for Share Issuance

Nexalin Technology is holding a special meeting on December 4, 2026, to seek stockholder approval for the issuance of shares under an agreement with Alumni Capital LP, which could exceed 20% of outstanding stock.

Summary

• Nexalin Technology is convening a Special Meeting of Stockholders on December 4, 2026, to vote on two proposals.
• Proposal 1 seeks approval to issue shares of common stock to Alumni Capital LP under an Any Market Purchase Agreement (AMPA), potentially exceeding 20% of outstanding shares, to comply with Nasdaq Listing Rule 5635(d).
• Proposal 2 seeks approval to adjourn the meeting if necessary to obtain sufficient votes for Proposal 1.
• The company has outstanding shares of 1,149,259 as of October 30, 2026, post a 1-for-30 reverse stock split.
• The AMPA allows Nexalin to sell up to $15,000,000 of common stock to Alumni Capital LP.
• The company has already issued 100,732 Commitment Shares to Alumni Capital LP on October 20, 2026.
• Stockholder approval is required because the potential issuance under the AMPA, combined with commitment shares, could exceed 20% of outstanding stock at a price below the minimum price set by Nasdaq rules.
• Failure to approve Proposal 1 would limit the company's ability to raise capital under the AMPA, potentially impacting its ability to continue as a going concern and meet Nasdaq listing requirements.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the significant dilution risk and the company's precarious financial position, despite the necessity of the proposed capital raise.

Positives

• The company is proactively seeking stockholder approval to comply with Nasdaq listing rules.
• The AMPA provides a potential source of up to $15,000,000 in capital, which is crucial given the company's going concern doubts.
• The company has regained compliance with the minimum bid price requirement for Nasdaq listing.
• The virtual meeting format is intended to increase stockholder participation.
• The Board of Directors unanimously recommends voting FOR both proposals.

Negatives

• The proposed share issuance under the AMPA, if approved, will result in significant dilution to existing stockholders, potentially reducing their voting power and economic rights.
• The company faces substantial doubt about its ability to continue as a going concern.
• The company must demonstrate compliance with a minimum stockholders' equity requirement of $2,500,000 by January 4, 2027, to maintain its Nasdaq listing.
• The purchase price for AMPA shares is based on market prices, which could be low, leading to a substantial increase in the number of shares issued and greater dilution.
• The company may need to seek alternative financing if Proposal 1 is not approved, which may not be available on advantageous terms.
• The company has an outstanding promissory note requiring prepayment upon debt or equity financing.

Risks

• Significant dilution to existing stockholders' ownership and voting power.
• Potential decline in stock price or increased price volatility due to the issuance and potential resale of shares by the investor.
• Inability to raise the full $15,000,000 under the AMPA if Proposal 1 is not approved, impacting the company's ability to continue as a going concern.
• Failure to meet Nasdaq's minimum stockholders' equity requirement by January 4, 2027, could lead to delisting.
• The company may need to pay additional consideration to the investor for consent to future financings.
• The investor may resell a significant number of shares, potentially depressing the stock price.

Future Outlook

The company is seeking stockholder approval to issue shares under the AMPA to secure capital for working capital and general corporate purposes, which is critical given substantial doubt about its ability to continue as a going concern and the need to meet Nasdaq listing requirements.

Management Comments

• The Board of Directors has determined that the AMPA, and the ability to issue shares of Common Stock thereunder in excess of the Exchange Cap, are in the best interests of the Company and our stockholders because the right to sell AMPA Shares to the Investor provides us with a reliable source of capital for working capital and general corporate purposes.
• The Board of Directors unanimously recommends a vote FOR Proposal No. 1 and FOR Proposal No. 2.

Industry Context

StockSavvy.ai notes that companies facing going concern issues and potential delisting often resort to equity financing agreements like the AMPA. The need for stockholder approval for issuances exceeding 20% under Nasdaq rules is a common hurdle, highlighting the regulatory environment for listed companies seeking capital under challenging circumstances.

Related Party Transactions

• The filing details the Any Market Purchase Agreement (AMPA) with Alumni Capital LP, an investor.
• Commitment Shares were issued to Alumni Capital LP as a commitment fee.
• The company paid Alumni Capital LP approximately $189,000 as consideration for consenting to certain at-the-market offerings.

Stakeholder Impact

• Existing stockholders face significant dilution of their ownership percentage and voting power.
• The company's ability to continue as a going concern and maintain its Nasdaq listing is critical for all stakeholders.
• Employees' job security is indirectly impacted by the company's financial health and ability to operate.
• Creditors may be concerned about the company's ability to meet its obligations, including the promissory note.

Next Steps

• Stockholders will vote on Proposal 1 (share issuance approval) and Proposal 2 (adjournment approval) at the Special Meeting on December 4, 2026.
• If Proposal 1 is approved, the company can utilize the AMPA to raise capital, subject to market conditions and beneficial ownership limitations.
• If Proposal 1 is not approved, the company will be unable to issue shares in excess of the Exchange Cap under the AMPA and will need to seek alternative financing.
• The company must demonstrate compliance with Nasdaq's minimum stockholders' equity requirement of $2,500,000 by January 4, 2027.
• Final voting results will be published in a Form 8-K within four business days after the Special Meeting.

Key Dates

Recommendation

StockSavvy.ai recommends a 'hold' rating. While the capital raise is essential for survival and meeting Nasdaq listing requirements, the significant dilution risk and the company's precarious financial position (going concern doubts) present substantial headwinds. Investors should monitor the company's ability to execute its business plan and improve its financial standing post-financing.

Keywords

Proxy Statement, Special Meeting, Share Issuance, Nasdaq Listing Rule, Capital Raise, Stockholder Approval, AMPA, Dilution