Neuraxis, INC 10-Q

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Initial Public Offering On August 11, 2023, the Company consummated its IPO, conducted on a firm commitment basis, pursuant to which it sold 1,098,667 shares of its common stock at a price of $6.00 per share, resulting in gross proceeds to the Company of approximately $6.6 million. Net proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses paid by the Company, were approximately $6.1 million. Alexander acted as sole book-running manager for the offering and Spartan Capital Securities, LLC acted as co-manager for the offering. The underwriters did not exercise their option to purchase up to an additional 164,801 shares of common stock. All shares sold in our IPO were registered pursuant to the Registration Statement, declared effective by the SEC on August 8, 2023. The offering terminated after the sale of all securities registered pursuant to the Registration Statement. On May 4, 2023, the Company amended the Executive Employment Agreements dated August 9, 2022 to state that the deferred bonuses and one-time incentive bonuses will be contingent upon the public offering. As such, upon closing of the IPO, the one-time inventive payments totaling $1.1 million became due immediately. The closing of the initial public offering also triggered the deferred bonus program to exercise stock options granted in the past. The Company will give each employee a cash reimbursement to exercise their options. The cash reimbursement will be in an amount equal to (i) the aggregate of the strike price or exercise price of all Stock Options, as defined hereinafter plus (ii) a tax gross-up payment on the Aggregate Strike Price reasonably calculated by the Company at the highest marginal rates so that after payment of all ordinary income taxes on such Aggregate Strike Price, there remains an amount sufficient to pay such ordinary income taxes. The cash reimbursement will be issued 20% equally during the years 2024 – 2028. The employee must exercise the options on or before the annual deferral bonus payment date to receive the bonus. There are a total of 1,238,712 options pertaining to these agreements with an exercise price of $6.94. There has been no material change in the planned use of proceeds from the IPO as described in the Prospectus. Unregistered Sales of Equity Securities From March through July 2023, we entered into Securities Purchase Agreements (the “2023 SPAs”) which provide for advances of up to $6 million in proceeds to us, subject to our satisfaction of certain conditions (“2023 Private Placement”). Pursuant to the 2023 SPAs, from March through July of 2023, we issued Senior Secured Convertible Promissory Notes (“Notes”) with an aggregate principal amount of $6,066,667, which amount included an original issue discount (“OID”) of $606,667, and underwriter fees for $464,250, resulting in advance proceeds to us of $5.0 million. The notes automatically converted into Common Stock at an initial public offering on a primary exchange. As a result of the $6 price of the shares sold in the IPO, the Conversion Price was set at $4.20 per share. The Company issued 1,498,332 shares of common stock following the IPO. In connection with the issuance of the Notes, we also issued five-year warrants exercisable for an aggregate of 505,570 shares of common stock with a strike price at a 25% premium to the Conversion Price or $5.25 per share subject to anti-dilution, issuable on a pro rata basis at each funding. Unless otherwise stated above, the issuances of these securities were made in reliance upon exemptions provided by Section 4(a)(2) of the Securities Act, Regulation D promulgated thereunder, or Securities Act Rule 701 for the offer and sale of securities not involving a public offering. ITEM 3: DEFAULTS UPON SENIOR SECURITIES. None.