DEF: Nexalin Technology Annual Meeting Agenda

Nexalin Technology announces its 2026 Annual Meeting of Stockholders, detailing proposals including director elections, equity plan approval, reverse stock split, preferred stock authorization, officer exculpation, and auditor ratification.

Summary

• Nexalin Technology, Inc. is holding its Annual Meeting of Stockholders virtually on August 11, 2026, at 10:00 a.m. Eastern Standard Time.
• Key proposals for consideration include the election of five directors, approval of the 2026 Equity Incentive Plan, and amendments to the Certificate of Incorporation.
• These amendments aim to authorize 10 million shares of preferred stock and to effect one or more reverse stock splits of common stock at ratios ranging from 1-for-2 to 1-for-100, with an aggregate limit of 1-for-250.
• Additionally, the meeting will address providing officer exculpation and ratifying the appointment of CBIZ CPAs P.C. as the independent auditors for the fiscal year ending December 31, 2026.
• The record date for determining stockholders entitled to vote is July 6, 2026.
• The company is also seeking approval for a new 2026 Equity Incentive Plan, which would replace the 2023 Plan and authorize 7,000,000 shares for awards.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this filing as neutral to slightly positive, as it outlines necessary corporate actions for governance and potential future growth, but also highlights significant risks related to stock price, dilution, and the need for capital.

Positives

• The company is seeking to implement an officer exculpation provision, aligning with recent changes in Delaware law, which may help attract and retain qualified officers by limiting their personal liability for certain direct claims.
• The proposed 2026 Equity Incentive Plan aims to attract, retain, and motivate key employees and directors by providing equity-based compensation, which is considered critical for long-term success and aligning interests with stockholders.
• The company is seeking to authorize preferred stock, providing flexibility for future capital raising, mergers, acquisitions, and other corporate purposes.
• The proposed reverse stock split aims to potentially increase the per-share market price of the common stock, which could help avoid delisting from Nasdaq, attract investors and brokerage firms, and potentially increase trading volume.

Negatives

• The proposed reverse stock split carries risks, including the possibility that it may not increase the per-share price, may not attract the desired investors, or could lead to a greater percentage decline in market price if the stock price falls.
• The authorization of 10 million shares of preferred stock, while providing flexibility, could lead to the issuance of preferred stock with rights superior to common stock, potentially adversely affecting common stockholders' rights in liquidation, dividends, and voting.
• The proposed 2026 Equity Incentive Plan, if approved, would increase the fully diluted overhang to approximately 34%, potentially diluting existing stockholders.
• The company's stock price has been trading at $0.35 as of July 6, 2026, indicating a low valuation and potential challenges in meeting Nasdaq's minimum bid price requirement.

Risks

• The company's common stock is listed on The Nasdaq Capital Market and is subject to the minimum bid price requirement of $1.00 per share for continued listing. A reverse stock split is proposed to mitigate the risk of delisting.
• The history of reverse stock splits is varied, and there is no assurance that the market price per share will rise in proportion to the reduction in outstanding shares, or that it will attract brokers and investors who do not trade in lower-priced stocks.
• The issuance of preferred stock could dilute the voting power and economic interest of common stockholders, and could adversely affect common stockholders in the event of liquidation or dividend distributions.
• The company's financial statements for the years ended December 31, 2025 and 2024, contained an explanatory paragraph relating to substantial doubt about the company's ability to continue as a going concern.
• The company has a history of stock options being a significant part of executive compensation, which can lead to dilution for existing shareholders.

Future Outlook

The company is seeking stockholder approval for several proposals that will shape its future corporate structure and compensation strategy, including a reverse stock split to potentially improve its stock price and Nasdaq listing status, the authorization of preferred stock for future financing flexibility, and a new equity incentive plan to retain talent. The success of these proposals will significantly influence the company's ability to attract capital and maintain its market presence.

Management Comments

• The Board believes that holding a virtual meeting will enable more stockholders to attend and participate, providing expanded access, improved communication, and cost savings.
• Management believes that limiting the economic impact of litigation on the company would empower officers to best exercise their business judgment in furtherance of stockholder interests.
• The company believes that the ability to provide equity-based and incentive-based awards under the 2026 Plan is critical to attracting, motivating, and retaining high-quality employees, consultants, and directors.
• The Board believes that effecting one or more reverse stock splits may be an effective means of avoiding a delisting of the Company's Common Stock from Nasdaq in the future.
• The Board believes that approval of the Blank Check Preferred Stock Authorization will provide the flexibility to take advantage of opportunities as they arise and will improve the Company's ability to attract investment capital.

Industry Context

StockSavvy.ai notes that Nexalin Technology's proposals, particularly the reverse stock split and the creation of blank-check preferred stock, are common strategies employed by smaller, publicly traded companies facing challenges with low stock prices and Nasdaq listing requirements. The focus on equity incentives also aligns with industry practices for talent retention in the competitive biotech/medtech sector.

Comparison to Industry Standards

• The proposed 2026 Equity Incentive Plan, authorizing 7,000,000 shares, represents a significant portion of the company's current outstanding shares (22,011,302 as of July 6, 2026), leading to a potential fully diluted overhang of approximately 34%. This level of potential dilution is higher than typically seen in more established companies but can be common in early-stage or turnaround situations where equity is used heavily for compensation and capital preservation.
• The company's historical burn rate, averaging 11.41% over the last three fiscal years (2023-2025), is relatively high, indicating substantial cash expenditure relative to its equity base. This is partly attributed to management's strategy of conserving cash by accepting stock options in lieu of market-rate salaries.
• The proposed reverse stock split range (1-for-2 to 1-for-100, aggregate up to 1-for-250) is broad, offering significant flexibility. Many companies undertaking reverse splits aim for ratios that will bring their stock price above the $1.00 minimum for Nasdaq listing, often in the 1-for-10 to 1-for-50 range, depending on the current trading price.

Corporate Governance

Related Party Transactions

• The company formalized a joint venture with Wider Come Limited (Wider) for the development, marketing, sale, and distribution of Nexalin's second-generation tACS devices in China and the region. Wider owns 52% and Nexalin owns 48%. Wider funded initial operations, and future funding is planned jointly. The company recognized revenue from this JV.
• The company has a five-year consulting agreement with U.S. Asian Consulting Group, LLC (U.S. Asian), extended for eight years. Two members of U.S. Asian are stockholders, including Marilyn Elson, Nexalin's Controller. The agreement was amended to expand services, increasing monthly fees and including stock grants.
• The company has a sub-lease for its principal executive office space with IIcom Strategic Inc., an entity controlled and owned by the CEO, Mark White. The company pays third-party landlord rent directly, with no additional payments made to the CEO or his entity. The sub-lease expired in January 2024, and the company is now month-to-month.

Stakeholder Impact

• Shareholders: Potential dilution from the new equity incentive plan and preferred stock authorization. Potential benefit from a reverse stock split if it increases share price and avoids delisting. Potential adverse impact from preferred stock issuance if it has superior rights.
• Employees: Potential benefit from equity awards under the new incentive plan. Potential benefit from officer exculpation if they are officers.
• Management: Potential benefit from equity awards and officer exculpation. CEO and CMO have significant stock options contingent on plan approval.
• Directors: Potential benefit from equity awards. Non-employee directors have annual compensation limits for equity awards.

Next Steps

• Stockholders to vote on the proposed items at the Annual Meeting on August 11, 2026.
• If approved, the Board will have the discretion to implement one or more reverse stock splits.
• If approved, the Board will have the authority to issue up to 10 million shares of preferred stock.
• If approved, amendments to the Certificate of Incorporation to provide for officer exculpation will become effective upon filing with the Secretary of State of Delaware.
• The company will file a registration statement on Form S-8 for shares issuable under the 2026 Equity Incentive Plan, if approved.

Key Dates

Recommendation

The filing outlines several critical proposals for Nexalin Technology's future, including a reverse stock split to address Nasdaq listing requirements and the authorization of preferred stock for capital flexibility. While these actions aim to improve the company's standing, the significant potential dilution from the equity plan, the inherent risks of a reverse stock split, and the potential negative impact of preferred stock issuance on common shareholders warrant a cautious approach. The company's ability to continue as a going concern remains a key concern, as indicated by auditor's reports. Therefore, a 'hold' recommendation is appropriate pending further clarity on the execution and impact of these proposals and the company's operational performance.

Keywords

Nexalin Technology, DEF 14A, Proxy Statement, Annual Meeting, Stockholders Meeting, Director Election, Equity Incentive Plan, Reverse Stock Split, Preferred Stock, Officer Exculpation, Independent Auditors, SEC Filing