NextNRG Announces $7 Million Debt Swap for Preferred Stock Amid Nasdaq Pressure
Key Facts
On November 3, NextNRG announced a swap of $7,000,000 in obligations owed to CEO Michael Farkas for newly issued preferred stock, a move the company said would reduce debt and strengthen stockholders’ equity as it works to regain compliance with Nasdaq listing requirements. The obligations include $3,629,924 in principal, $2,749,169 in accrued interest and $620,907 in accrued personal guarantee fees. The company said these amounts will be canceled in full upon completion of the exchange and issuance of the shares. The announcement places the debt resolution in the context of the company’s efforts to address Nasdaq requirements, amid hearing proceedings that are still awaiting a written decision. The company emphasized that the swap alone does not meet the stockholders’ equity requirement and will therefore be part of a broader compliance plan.
Under the deal, the company will issue 7,000 shares of Series D convertible voting preferred stock, with an initial stated value of $1,000 per share. The aggregate stated value of the announced shares equals the value of the obligations to be exchanged, or $7,000,000. The proposed structure shifts the obligations from debt to convertible equity, with the shares retaining voting rights, according to the company. The information disclosed here does not include further details on the conversion terms or timing. The intended effect, according to the company, is to remove the relevant debt and strengthen stockholders’ equity, but meeting regulatory requirements remains tied to the rest of the compliance plan.
The transaction involves a related party, as Farkas is the creditor benefiting from the debt exchange. The company said its audit committee, comprising independent and disinterested members, reviewed and approved the deal. The board of directors also approved the exchange, with Farkas abstaining from the vote. These institutional approvals provide a governance framework for a transaction between the company and its CEO in his capacity as a creditor. The available information did not provide details of a separate stockholder vote or any other conditions for completing the deal.
The company faces a separate process concerning the continued listing of its shares on Nasdaq. On October 21, according to a filing with the Securities and Exchange Commission, it received a notice stating that the market value of listed securities had remained below the $35,000,000 minimum for 30 consecutive business days, from September 9 to October 20. The notice also said the company did not meet the cited alternatives: stockholders’ equity of at least $2,500,000 or net income of $500,000 under the specified standards. The company said on October 7 that it had received a determination letter from Nasdaq staff on September 18, then requested a hearing within the prescribed time. It added that the hearing request stayed any further delisting action pending completion of the proceedings.
In an October 7 statement, NextNRG said it expected to reclassify about $9.0 million of Series C preferred stock as stockholders’ equity, with final accounting treatment subject to completion of its accounting analysis and review by its independent auditor. Farkas said at the time: "We expect this adjustment to strengthen our stockholders’ equity position as we present our compliance plan to the Nasdaq Hearings Panel." This preceded the debt swap announced in November, as part of steps the company said it was taking to address its stockholders’ equity position and listing requirements. The company also effected a 1-for-10 reverse stock split on September 14. These steps show that the compliance process involves adjustments to the capital structure and proceedings before the Nasdaq Hearings Panel.
The financial pressure dates back to the results for the first quarter of 2026, when the company reported revenue of $21,059,130, up 29% year over year from $16,272,673 in the comparable period. At the same time, net loss widened to $10,766,492 from a loss of $8,937,999 a year earlier. Interest expense declined to $680,596 from $3,323,397, down 80% year over year, which the company attributed to refinancing in 2025. The figures present a mixed picture: revenue growth was accompanied by a larger loss, while the interest burden declined during the quarter. The November swap concerns specific obligations comprising principal, interest and personal guarantee fees, and the transaction statement does not directly link the move to the first-quarter results.
NextNRG said it continues to work toward regaining compliance with continued listing requirements and is awaiting a written decision from the Nasdaq Hearings Panel. It cautioned, however, that there is no guarantee the actions will result in regaining or maintaining compliance. Since the company said the debt swap alone does not meet the stockholders’ equity requirement, the compliance path remains dependent on the rest of its plan and the panel’s decision. The disclosed information did not specify when that decision would be issued. The hearings panel’s decision remains the next step the company has announced in this process.