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DOCUMENTS INCORPORATED BY REFERENCE
IMAC HOLDINGS, INC.
FORM 10-K—ANNUAL REPORT
For the Fiscal Year Ended December 31, 2024
Table of Contents
PART I
Cautionary Statement Regarding Forward-Looking Statements
Portions of this Annual Report on Form 10-K (including information incorporated by reference) include “forward-looking statements” based on our current beliefs, expectations, and projections regarding our business strategies, market potential, future financial performance, industry, and other matters. This includes, in particular, “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K, as well as other portions of this Annual Report on Form 10-K. The words “believe,” “expect,” “anticipate,” “project,” “could,” “would,” and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date the statements were made. The matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from those projected, anticipated, or implied in the forward-looking statements. The most significant of these risks, uncertainties, and other factors are described in “Item 1A — Risk Factors” of this Annual Report on Form 10-K. Except to the limited extent required by applicable law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Unless the context requires otherwise, references herein to “we,” “us,” “our,” “our company,” “our business” or “IMAC Holdings” are to IMAC Holdings, Inc., a Delaware corporation, and prior to the Corporate Conversion as defined below, IMAC Holdings, LLC, a Kentucky limited liability company, and in each case, their consolidated subsidiaries.
| ITEM 1. | BUSINESS |
Overview
We provide services related to proteomic products that identify and support oncology clinical treatment decisions and biopharmaceutical drug development.
Until recently, we were a holding company for IMAC Regeneration Centers, The BackSpace retail stores and our Investigational New Drug division, providing movement and orthopedic therapies and minimally invasive procedures to improve the physical health of patients at locations we owned or managed. As of December 31, 2023, we sold or discontinued patient care at all our locations.
In May 2024, we acquired certain assets and rights of Theralink Technologies, Inc. (“Theralink”), consisting primarily of a nationally CLIA-certified, CAP-accredited and New York State Clinical Laboratory Evaluation Program (“NYS-CLEP”) certified laboratory in Golden, Colorado and equipment located in the lab. Theralink was in the process of developing technology to monetize a license from Vanderbilt University (“Vanderbilt”), which provided a predictor of response to immunotherapy in cancer, and a license for business in the United States from George Mason University (“GMU”), which included intellectual property around improvements to the technology platform and biomarker signatures that form the basis for future proteomics products (collectively, the “Original Proteomics Licenses”). We have also entered into agreements with Vanderbilt and GMU to transfer the Original Proteomics Licenses.
On May 30, 2024, we formed a wholly-owned subsidiary, Ignite Proteomics LLC, a Delaware limited liability company (“Ignite”), to operate the medical lab acquired from Theralink, deliver services related to proteomic products under the licenses from GMU and Vanderbilt and collect fees for services rendered. We are using the acquired assets under our own branding, the Ignite name. Ignite has obtained credentials to bill Medicare for reimbursement for our Ignite proteomics test and is in the process of obtaining credentials for reimbursement by certain other third-party payors. We also accept payment from private insurers.
Intellectual Property
The Vanderbilt License
Under the license between Vanderbilt and Theralink, dated March 14, 2023, as amended from time to time, and assigned to us on May 15, 2024 pursuant to that certain Assignment and Assumption of License and Consent of Licensor between Theralink, IMAC and Vanderbilt (the “Vanderbilt License”), Vanderbilt granted us an exclusive license, in all fields of use, under the patents described in the Vanderbilt License (the “Vanderbilt Patents”) to make, use, offer to sell, sell and import products, processes and services that are covered by the Vanderbilt Patents (the “Vanderbilt Licensed Products”) during the term of the Vanderbilt License. The term of the Vanderbilt License shall continue until the expiration of the Vanderbilt Patents, unless sooner terminated by Vanderbilt or us in accordance with the terms of the Vanderbilt License.
As consideration for the Vanderbilt License, we agreed to pay Vanderbilt (1) an annual, non-refundable, non-creditable license fee, (2) a royalty percentage of gross sales of Vanderbilt Licensed Products ranging from 0.25% of gross sales for Vanderbilt Licensed Products that incorporate ten or more additional non-commodity constituent parts to 2% of gross sales for Vanderbilt Licensed Products that incorporate zero additional non-commodity constituent parts, and (3) for any improvement patents of Vanderbilt which we elect to use under the Vanderbilt License.
Vanderbilt has exclusive responsibility for prosecution of the Vanderbilt Patents, including choice of patent counsel.
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The GMU License
Under the License Agreement between George Mason Intellectual Properties (“GMIP”) and Theranostics Health, LLC and its successors dated September 15, 2006, as amended from time to time, and assigned to the Company on May 23, 2024 pursuant to that certain Assignment and Assumption of License and Consent of Licensor between Theralink, us and GMIP (the “GMU License”), GMIP granted us an exclusive, worldwide, sublicensable license, under the patents described in the GMU License (the “GMU Patents”), to make, have made, import, use, market, offer for sale and sell products designed, manufactured, used and/or marketed for use in all fields and for all uses during the term of the GMU License (the “GMU Licensed Products”). The term of the GMU License continues until the expiration of the GMU Patents, unless sooner terminated by GMIP or us in accordance with the terms of the GMU License. The exclusivity of the GMU License is conditioned on our agreement to manufacture GMU Licensed Products substantially in the United States unless we obtain a waiver of this requirement from an appropriate U.S. governmental authority.
Additionally, under the GMU License, GMIP granted to us an exclusive option (the “Exclusive Option”) to GMIP’s or George Mason University’s interest in any information, inventions, procedures, methods, devices, discoveries, technologies, data, designs or concepts related to the field of theranostics from certain inventors as described in the GMU License.
As consideration for the GMU License, we agreed to pay GMIP (1) an annual fee for the Exclusive Option, (2) quarterly royalties equal to the net revenue obtained by us and our affiliates from the sale of the GMU Licensed Products multiplied by one and one-half percent (1.5%), (3) quarterly sublicensing royalties equal to the sublicensing revenue obtained by us and our affiliates in connection with the GMU License multiplied by fifteen percent (15%), and (4) a payment for each patent issued relating to GMU Patents.
We have the right to control all aspects of filing, prosecuting, and maintaining the GMU Patents at our sole discretion. During the term of the GMU License, we have the first option to police the GMU Patents and the GMU Licensed Products against infringements by other parties worldwide within the designated field of use.
Strategy
Ignite Proteomics expects to generate revenue from clinical diagnostic testing, research contracts with leading academic and biopharmaceutical clients, participation in clinical trials and registries, and partnerships aimed at accelerating the development of novel targeted therapies. While breast cancer remains the immediate area of focus, the Company anticipates expanding to other tumor types and adding additional biomarkers with broad potential applications. High gross margins projected from the RPPA-based tests mean the Company can achieve profitability with a relatively modest share of the breast cancer diagnostics market. Beyond its internal clinical portfolio, Ignite’s lab services and intellectual property enable valuable partnerships in preclinical drug discovery and other technology collaborations.
The Company’s management believes ongoing clinical data, guideline endorsements, and expanded research collaborations will position Ignite as a premier resource for next-generation proteomic diagnostics in oncology.
Although we have patent coverage in certain jurisdictions outside of the United States for certain biomarkers related to Ignite’s assay, we do not currently offer or sell our products outside of the United Stares. Our immediate priority is to establish adoption within the United States. We plan to further explore international opportunities once we have sufficient funding and operational resources to implement our expansion strategy abroad.
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Product Portfolio
Our product is a unique and patented RPPA technology platform, which can quantify protein signaling to support oncology clinical treatment decisions and biopharmaceutical drug development. Because protein signaling is responsible for the development and progression of cancer, nearly all FDA-approved cancer therapeutics target proteins, not genes. The Ignite RPPA technology can reveal the protein drug target(s) that are essentially turned “on” in a patient’s cancer and may help support the most effective treatment plan to turn those proteins “off”. Therefore, the Ignite RPPA technology is a critical tool that may empower oncologists with actionable information to effectively treat a cancer patient, which is often missed by standard proteomic and genomic testing. Our commercially available Lab Developed Test (LDT), the Ignite RPPA Assay for Breast Cancer, is currently being utilized by oncologists across the United States to assist in making the most targeted treatment plan for their patients with advanced breast cancer. The Ignite Proteomics test determines which drug target(s) are present and/or activated and may reveal to the oncologist which patients are predicted to be responders versus non-responders to a particular therapeutic. The test may provide therapeutic recommendations to support oncologist treatment selection of the best therapy option – which may improve patient response and consequently save the healthcare system substantial dollars.
In molecular diagnostic testing, it is common for assays to include dozens or even hundreds of potential markers, even though only a smaller subset has the robust evidence to warrant major cancer care guideline inclusion, for instance, the guidelines of the National Comprehensive Cancer Network (NCCN), and commercial and government payer reimbursement. Our Ignite RPPA tests for 32 analyte, which are proteins or “activated” proteins. Although we currently measure 32 protein markers in a single test we are pursuing formal insurance coverage and guideline inclusion, including from NCCN, on a marker-by-marker basis, focusing first on those that demonstrate clear clinical utility.
We believe our RPPA analysis of phosphorylated AKT for AKT-targeted drugs, two-marker combinations for HER2 therapy response, and MHC-II for pembrolizumab meet the standards for NCCN guideline inclusion as emerging biomarkers based on the following clinical data:
| ● | phosphorylated AKT, which is shown to be a predictor of response to the drug ipatasertib independent of the traditional biomarkers. The findings are clinically significant (95% confidence level of 4%-67% improvement over standard of care), even though the sample size is small. The study is published at https://pmc.ncbi.nlm.nih.gov/articles/PMC9377742/. |
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| ● | Plotting pEGFR and pERBB2 expression together revealed a separation into two groups of patients: one with excellent response to the target therapy, neratinib, and one without. Since HER2 and EGFR are well-known heterodimerization partners, the fact that both are found to be highly co-activated in the pre-treatment tumor samples of responding patient population provide further evidence of functional HER2-driven pathway activation and signaling coherence. The study is published at https://pmc.ncbi.nlm.nih.gov/articles/PMC8571284/. | |
| ● | MHC-II has been shown to be a superior biomarker to PDL-1 for predicting response to pembrolizumab (Keytruda). The data we will present to NCCN is currently in review for publication. However, there are other studies that support our findings, including at https://pmc.ncbi.nlm.nih.gov/articles/PMC4740184/ for melanoma patients. Our data will be the first analysis in breast cancer patients to be published. |
The currently available Ignite RPPA Assay for Breast Cancer will be followed by the Ignite RPPA Pan-Tumor Assay 1.0, expected to launch in 2025 to include ovarian, endometrial, and head & neck cancers. The test is expected to expand further in 2026 to the Ignite RPPA Pan-Tumor Assay 2.0 to support the treatment of colorectal, prostate, pancreatic, lung, and other solid tumor cancer indications. We are aware that the U.S. Food and Drug Administration (the “FDA”) published new rules concerning LDT regulation on May 6, 2024, and intend to comply fully with the final regulations. Because we have demonstrated analytic and clinical validity under CLIA, CAP, and NYS CLEP standards, we anticipate meeting any additional FDA requirements as they come into effect. However, we cannot guarantee that we will meet any such new requirements or be able to obtain any new approvals required.
Corporate Information
The Company was organized in August 2000 as a Kentucky professional service corporation and was the forerunner to our business through 2023. In March 2015, IMAC Holdings, LLC, a Kentucky limited liability company was organized and effective June 1, 2018, IMAC Holdings, LLC converted into a Delaware corporation and changed its name to IMAC Holdings, Inc., which conversion is referred to herein as the Corporate Conversion. In conjunction with the conversion, all of our outstanding membership interests were exchanged on a proportional basis into shares of common stock.
Our principal executive offices are located at 3401 Mallory Lane, Suite 100, Franklin, Tennessee, 37067 and our telephone number is (303) 898-5896. We maintain a corporate website at imacholdings.com.
During the year ended December 31, 2024, the Company entered into several financing transactions with Theralink Technologies, Inc. that culminated in an acquisition of Theralink assets. Pursuant to the Settlement and Release Agreement, the Company acquired certain assets which resulted in the recording of long lived assets of $1.1 million. The Note receivables of $1.1 million was settled as part of the arrangement. In addition, in order to receive releases from security holders of Theralink, the Company issued 24,172 shares of Series E preferred stock. The Series E preferred stock was valued at a de minimis value. Series E preferred stock does not have any voting rights and each preferred share has a conversion price of $3.641 per share.
We subsequently obtained transfers to us of the Original Proteomics Licenses.
Listing of Company Securities
Beginning in 2023, the Company experienced deficiencies in compliance with Nasdaq Listing Rules. Including the Minimum Equity Rule, which required us to maintain a required minimum of $2,500,000 in stockholders’ equity for continued listing, as required under Listing Rule 5550(b)(1). We cured all such deficiencies subject ot a one year “Panel Monitor” as that term is defined by Nasdaq Listing Rule 5815(d)(4)(B) with respect to the Minimum Equity Rule.
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On January 21, 2025, the Company received a Notice from Nasdaq advising the Company that it no longer complied with the Minimum Equity Rule. Due to the Panel Monitor, the Company was not eligible to submit a plan to the Staff to request an extension of up to 180 calendar days in which to regain compliance with the Minimum Equity Rule, and as a result, the Staff determined to delist the Company’s securities from Nasdaq.
The Company appealed the delisting notice at a hearing before Nasdaq on March 4, 2025. On March 24, 2025, the Company was notified by Nasdaq that our appeal was denied and that the Company’s securities were suspended at the open of trading on March 26, 2025. We expect Nasdaq to complete the delisting by filing a Notification of Removal from Listing on Form 25 with the Securities and Exchange Commission (the “SEC”).
As a result of the suspension in trading and expected delisting, the Company’s common stock began trading publicly on the OTC Pink Market under its existing symbols “BACK” on March 26, 2025. The Company intends to apply to have its common stock traded on the OTCQB. There is no guarantee that such application will be approved or when.
Implications of Being a Smaller Reporting Company
We are a smaller reporting company as defined in the Securities Exchange Act of 1934, as amended, or the Exchange Act. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) the market value of our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Reports on Form 10-K and have reduced disclosure obligations regarding executive compensation, and, as long as we are a smaller reporting company with less than $100 million in annual revenue, we are not required to obtain an attestation report on internal control over financial reporting from our independent registered public accounting firm.
Government Regulation
Laboratory Developed Test Regulations
In general, the Food and Drug Administration (the “FDA”) and equivalent other country authorities require labeling, advertising and promotional materials to be truthful and not misleading and marketed only for the approved indications and in accordance with the provisions of the approved label.
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We intend to develop diagnostic tests, a laboratory developed test (“LDT”) for clients that cannot currently be provided using test kits approved or cleared by the FDA. The FDA has been considering changes to the way that it regulates these LDTs. Currently, all LDTs are conducted and offered in accordance with CLIA, and individual state licensing procedures. The FDA has published a draft guidance document that would require FDA clearance or approval of a subset of LDTs, as well as a modified approach for some lower risk LDTs that may require FDA oversight short of the full premarket approval or clearance process. Congress may enact legislation to provide a regulatory framework for the FDA’s role with regard to LDTs.
In 2014, the FDA issued draft guidance announcing that it would end its historical policy of enforcement discretion regarding LDTs and outlining the first of multiple frameworks that have been proposed for their regulation. The FDA announced in 2016 that it no longer planned to finalize its draft guidance and that it would continue to exercise enforcement discretion with respect to LDTs. On January 13, 2017, the FDA published a non-binding “Discussion Paper” proposing a framework of LDT oversight largely consistent with the draft guidance, “to spur further dialogue” and give “congressional authorizing committees the opportunity to develop a legislative solution.” Recent agency announcements made in the context of the COVID-19 public health emergency have produced a shifting policy landscape and further uncertainty regarding the FDA’s role in regulating LDTs. In August 2020, the Department of Health and Human Services (“HHS”) announced that the FDA would not require premarket review of LDTs absent notice-and-comment rulemaking, but in November 2021, HHS issued a statement withdrawing that prior announcement, indicating a return to the FDA’s longstanding approach to the regulation and enforcement discretion toward LDTs.
Congress has also considered a number of legislative proposals in recent years that would amend the regulatory framework for LDTs, including, among other requirements, FDA premarket review of certain LDTs. The most recent such proposal, the VALID Act, was introduced in both the House and Senate on June 24, 2021. A competing legislative proposal, the Verified Innovative Testing in American Laboratories Act of 2021 (“VITAL Act”), was introduced in the Senate on May 18, 2021. However, it remains uncertain whether Congress will enact legislation regulating LDTs, and, if so, whether the legislation will be similar to the framework described in the FDA’s 2014 draft guidance or Discussion Paper, or either the VITAL or VALID Acts.
Environmental Regulation
Our operations produce hazardous waste products, including chemicals, radioactive and biological materials. We are subject to a variety of federal, state and local laws and regulations relating to the use, handling, storage and disposal of these materials. Although we believe that our safety procedures for handling and disposing of these materials complies with the standards prescribed by state and federal laws and regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. We generally contract with third parties for the disposal of such hazardous waste products. We are also subject to regulation by the Occupational Safety and Health Administration (“OSHA”), the Environmental Protection Agency (the “EPA”). Additionally, we must comply with the regulations under the Toxic Substances Control Act, the Resource Conservation and Recovery Act and other regulatory statutes, and may in the future be subject to other federal, state or local regulations. OSHA and/or the EPA may promulgate regulations that may affect our research and development programs.
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Employees and Human Capital Management
As of March 31, 2025, we employed 15 individuals, of which all were full-time employees. As of that date, none of our employees were governed by collective bargaining agreements or were members of a union. We consider our relations with our employees to be good. We remain further committed to increasing the diversity of our employee base.
Available Information
We file electronically with the Securities and Exchange Commission (the “SEC”), our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”). The SEC maintains an Internet site (www.sec.gov), which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are available free of charge on our website at https://imacregeneration.com as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Such reports will remain available on our website for at least 12 months and are also available free of charge by written request or by contacting us at (303) 898-5896.
The contents of our website or any other website are not incorporated by reference into this Annual Report.
| ITEM 1A. | RISK FACTORS |
In addition to the information set forth at the beginning of this Form 10-K entitled “Cautionary Statement Regarding Forward-Looking Statements,” you should consider that there are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operation may be materially and adversely affected. In such case, the trading price of our securities could decline and investors could lose all or part of their investment. These risk factors may not identify all risks that we face and our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations.
Risks Relating to Our Business
We recorded a net loss for the years ended December 31, 2024 and December 31, 2023 and there can be no assurance that our future operations will result in net income; we received a going concern qualification.
For the year ended December 31, 2024 and December 31, 2023, we had net loss from our current business of approximately $6,298,000 and $0, respectively. There can be no assurance that our future operations will result in net income. Our failure to increase our revenues or improve our gross margins will harm our business. We may not be able to sustain or increase profitability on a quarterly or annual basis in the future. If our revenues grow more slowly than we anticipate, our gross margins fail to improve or our operating expenses exceed our expectations, our operating results will suffer. The fee we charge for our management services may decrease, which would reduce our revenues and harm our business. If we are unable to sell our services at acceptable prices relative to our costs, or if we fail to develop and introduce new services on a timely basis and services from which we can derive additional revenues, our financial results will suffer.
As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from, and net cash used in, operations and has a net capital deficiency, and has discontinued its operations, which raise substantial doubt about its ability to continue as a going concern. We expect to incur losses this year and may never achieve or maintain profitability. Our future success depends on our ability to attract and retain qualified personnel, and changes in management may negatively affect our business. We have a need for additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce, or eliminate our development. We may form or seek strategic alliances in the future, and we may not realize the benefits of such alliances. If we are unable to obtain sufficient financing to fund our operations, we may have to seek protection under applicable law, which may include Federal or state bankruptcy laws.
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Further, because of our small size and limited operating history, our company is particularly susceptible to adverse effects from changes in the law, economic conditions, consumer tastes, competition and other contingencies or events beyond our control. It may be more difficult for us to prepare for and respond to these types of risks than it would be for a company with an established business and operating cash flow. Due to changing circumstances or an inability to implement any portion of our growth strategy, we may be forced to dramatically change our planned operations.
If we are unable to successfully integrate the assets we purchased from Theralink, our financial results could be adversely affected.
On May 1, 2024, we acquired certain assets of Theralink. The Company is still in the process of integrating such assets into its control and business. On May 30, 2024, we formed our wholly-owned subsidiary, Ignite, to operate a medical lab, deliver services related to the assets we acquired from Theralink and collect fees for services rendered. Ignite is in the process of obtaining credentials for reimbursement for our Ignite test by Medicare and certain third-party payors. Until such time as Ignite is credentialed, we will accept payment from private insurers. Our Board has also approved the creation of the Ignite Compassionate Care program to enable those without private insurance or private funds to access our Ignite test when needed until we are credentialed and thereafter for those without access to any form of insurance. Any failure of the Company to obtain additional license agreement assignments, obtain credentials for reimbursement by Medicare and certain other third party providers or otherwise integrate the acquired assets limit our ability to generate or increase revenue and could adversely affect our financial results. We will need additional funding to achieve our goals and may be unable to raise additional capital when needed, which would force us to delay, reduce or eliminate our product development and commercialization efforts. Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies.
We expect to expend substantial resources for the foreseeable future to continue the development and commercialization of our technology. We may not be able to generate significant revenues for several years, if at all. Until such time as we can generate substantial service revenues, we may attempt to finance our cash needs through equity offerings, debt financings, government and/or other third-party grants or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our investors’ ownership interest will be diluted. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail one or more research or development programs, which would adversely impact potential revenues, results of operations and financial condition. We cannot be certain that additional funding will be available on acceptable terms, or at all. If adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our research and development activities.
We may fail completely to implement key elements of our growth and expansion strategy, which could adversely affect our operations and financial performance.
On May 30, 2024, we formed a wholly-owned subsidiary, Ignite, to operate a medical lab, deliver services related to the assets we acquired from Theralink and collect fees for services rendered. Ignite is in the process of obtaining credentials for reimbursement for our Ignite test by Medicare and certain third-party payors. Until such time as Ignite is credentialed, we will accept payment from private insurers. Our Board has also approved the creation of the Ignite Compassionate Care program to enable those without private insurance or private funds to access our Ignite test when needed until we are credentialed and thereafter for those without access to any form of insurance.
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If we cannot implement one or more key elements of our growth and expansion strategy, including raising sufficient capital, hiring and retaining qualified staff, leasing and developing acceptable premises for our medical clinics, securing necessary service contracts on favorable or adequate terms, generating sufficient revenue and achieving numerous other objectives, our projected financial performance may be materially adversely affected. Even if all of the key elements of our growth and expansion strategy are successfully implemented, we may not achieve the favorable results, operations and financial performance that we anticipate.
If we fail to achieve and sustain commercial success for our services, our business will suffer, our future prospects may be harmed, and our stock price would likely decline.
Prior to our acquisition of assets from Theralink, Theralink sold or marketed its product on a very limited basis. Unless we can continue to successfully commercialize our services or acquire the right to market other approved products or services, our business will be materially adversely affected. Our ability to generate revenues for our services will depend on, and may be limited by, a number of factors, including the following:
● acceptance of and ongoing satisfaction of our services by the medical community, patients receiving therapy and third-party payors in the United States, and eventually in foreign markets if we receive marketing approvals abroad;
● our ability to develop and expand market share for analyzing late-stage cancer patients, both in the United States and potentially in the rest of the world if we receive marketing approvals outside of the United States, in the midst of numerous competing technologies for late-stage cancer, many of which are already generally accepted in the medical community;
● adequate coverage or reimbursement for our services by government healthcare programs and third-party payors, including private health coverage insurers and health maintenance organizations; and
● the ability of patients to afford any required co-payments for our services
Our competitors may develop and market products that are less expensive, more effective, safer or reach the market sooner, which may diminish or eliminate the commercial success of any products we may commercialize.
Competition in the cancer information field is intense and accentuated by the rapid pace of advancements in product development. Further, research and discoveries by others may result in breakthroughs that render potential technologies obsolete before they generate revenue.
Some of our competitors in the cancer predictive biomarker space have substantially greater research and development capabilities than we do. Their processing, marketing, financial and managerial resources may be greater than ours. Acquisitions of competing companies by large pharmaceutical and biotechnology companies could enhance our competitors’ resources. In addition, our competitors may obtain patent protection or FDA approval and commercialize predictive biomarkers more rapidly than we do, which may impact future sales of our technology. We expect that competition among technology options will be based, among other things, on price, safety, reliability, availability, patent protection, sales, marketing and distribution capabilities. Our profitability and financial position will suffer if our technology cannot compete effectively in the marketplace.
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Many universities and private and public research institutes may in the future become active in cancer research, which may be in direct competition with us.
Some of our competitors in the cancer predictive biomarker space have substantially greater research and development capabilities than we do. Their processing, marketing, financial and managerial resources may be greater than ours. Acquisitions of competing companies by large pharmaceutical and biotechnology companies could enhance our competitors’ resources. In addition, our competitors may obtain patent protection or FDA approval and commercialize predictive biomarkers more rapidly than we do, which may impact future sales of our technology. We expect that competition among technology options will be based, among other things, on price, safety, reliability, availability, patent protection, sales, marketing and distribution capabilities. Our profitability and financial position will suffer if our technology cannot compete effectively in the marketplace.
We could face competition from other technologies and products that could impact our profitability.
We may face competition in Europe from other technologies and products, and we expect we may face competition from those technologies and products in the future in the United States as well. To the extent that governments adopt more permissive approval frameworks and competitors are able to obtain broader marketing approval for predictive biomarkers, our technology will become subject to increased competition. Expiration or successful challenge of applicable patent rights could trigger such competition, and we could face more litigation regarding the validity and/or scope of our patents. We cannot predict the end results other technologies or other competing products could have on the future potential sales of our services.
We must rely on relationships with third-party suppliers to supply necessary resources used in our technology. These relationships are not easy to replace.
We rely upon others for resources used in the production of predictive biomarkers for the Ignite assay. Problems with any of our suppliers’ facilities or processes could result in failure to produce or a delay in production of adequate information used in the production of the Ignite assay. This could delay or reduce commercial sales and materially harm our business. Any prolonged interruption in the operations of our suppliers’ facilities could result in a shortfall in the information necessary to complete our assay.
Our prospective revenues will be diminished if payors do not adequately cover or reimburse our services.
There has been and will continue to be significant efforts by both federal and state agencies to reduce costs in government healthcare programs and otherwise implement government control of healthcare costs. In addition, private payors continually seek ways to reduce and control overall healthcare costs. An increasing emphasis on managed care in the United States will continue to put pressure on the pricing of healthcare services. Uncertainty exists as to the coverage and reimbursement status of new applications and services. Third-party payors, including governmental payors such as Medicare and private payors, are scrutinizing new medical products and services and may not cover or may limit coverage and the level of reimbursement for our services. Third-party insurance coverage may not be available to patients for any of our existing service candidates or for tests we discover and develop, and a substantial portion of the testing for which we bill our hospital and laboratory clients may ultimately be paid by third-party payors. Likewise, any pricing pressure exerted by these third-party payors on our clients may, in turn, be exerted by our clients on us. If the government and other third-party payors do not provide adequate coverage and reimbursement for our tests, it could adversely affect our operating results, cash flow and our financial condition.
We are susceptible to risks relating to investigation or audit by the Centers for Medicare & Medicaid Services (“CMS”), health insurance providers and the IRS.
We may be audited by CMS or any health insurance provider that pays us for services provided to patients. Any such audit may result in reclaimed payments, which would decrease our revenue and adversely affect our financial performance. Our federal tax returns may be audited by the IRS and our state tax returns may be audited by applicable state government authorities. Any such audit may result in the challenge and disallowance of some of our deductions or an increase in our taxable income. We are currently involved in certain such ongoing audits based on our discontinued regenerative medicine business. No assurance can be made with regard to the deductibility of certain tax items or the position taken by us on our tax returns. Further, an audit or any litigation resulting from an audit could unexpectedly increase our expenses and adversely affect financial performance and operations.
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Regulatory changes, such as proposed government regulation of LDTs, could require us to conduct additional clinical trials or result in delays, increased costs, or the failure to obtain necessary regulatory approvals, which could harm our business.
We intend to develop diagnostic tests for clients (an LDT) that cannot currently be provided using test kits approved or cleared by the FDA. The FDA has been considering changes to the way that it regulates these LDTs. Currently, all LDTs are conducted and offered in accordance with CLIA, and individual state licensing procedures. The FDA has published a draft guidance document that would require FDA clearance or approval of a subset of LDTs, as well as a modified approach for some lower risk LDTs that may require FDA oversight short of the full premarket approval or clearance process. Congress may enact legislation to provide a regulatory framework for the FDA’s role with regard to LDTs. As a result, there is a risk that the FDA’s proposed regulatory process could delay the offering of certain tests and result in additional validation costs and fees. This FDA approval or clearance process may be time-consuming and costly, with no guarantee of ultimate approval or clearance.
In 2014, the FDA issued draft guidance announcing that it would end its historical policy of enforcement discretion regarding LDTs and outlining the first of multiple frameworks that have been proposed for their regulation. The FDA announced in 2016 that it no longer planned to finalize its draft guidance and that it would continue to exercise enforcement discretion with respect to LDTs. On January 13, 2017, the FDA published a non-binding “Discussion Paper” proposing a framework of LDT oversight largely consistent with the draft guidance, “to spur further dialogue” and give “congressional authorizing committees the opportunity to develop a legislative solution.” Recent agency announcements made in the context of the COVID-19 public health emergency have produced a shifting policy landscape and further uncertainty regarding the FDA’s role in regulating LDTs. In August 2020, the Department of Health and Human Services (“HHS”) announced that the FDA would not require premarket review of LDTs absent notice-and-comment rulemaking, but in November 2021, HHS issued a statement withdrawing that prior announcement, indicating a return to the FDA’s longstanding approach to the regulation and enforcement discretion toward LDTs.
Congress has also considered a number of legislative proposals in recent years that would amend the regulatory framework for LDTs, including, among other requirements, FDA premarket review of certain LDTs. The most recent such proposal, the VALID Act, was introduced in both the House and Senate on June 24, 2021. A competing legislative proposal, the Verified Innovative Testing in American Laboratories Act of 2021 (“VITAL Act”), was introduced in the Senate on May 18, 2021. However, it remains uncertain whether Congress will enact legislation regulating LDTs, and, if so, whether the legislation will be similar to the framework described in the FDA’s 2014 draft guidance or Discussion Paper, or either the VITAL or VALID Acts. It is possible that legislation and resulting FDA regulation may result in increased regulatory burdens and costs for us to seek marketing authorization for and maintain ongoing compliance for our existing tests, any modifications thereto, or any future tests we may develop. If the government begins to regulate our tests, it could require a significant volume of applications, which would be burdensome. Furthermore, governmental bodies could take a long time to review such applications and/or document responses if other laboratories were also required to file applications and/or document responses for each of their LDTs.
In the event that the FDA begins to regulate our tests, it may require additional pre-market clinical testing prior to submitting a regulatory notification or application for commercial sales. Such pre-market clinical testing could delay the commencement or completion of clinical testing, significantly increase our test development costs, delay commercialization of any future tests, and interrupt sales of our current tests. Additionally, the results of pre-clinical trials or previous clinical trials may not be predictive of future results, and clinical trials may not satisfy the requirements of the FDA or other non-U.S. regulatory authorities. Many of the factors that may cause or lead to a delay in the commencement or completion of clinical trials may also ultimately lead to delay or denial of regulatory clearance or approval. The commencement of clinical trials may be delayed due to insufficient patient enrollment, which is a function of many factors, including the size of the patient population, the nature of the protocol, the proximity of patients to clinical sites, and the eligibility criteria for the clinical trial. Each of these outcomes would harm our ability to market our tests and/or to achieve sustained profitability.
We are exposed to potential product liability claims, and insurance against these claims may not be adequate and may not be available to us at a reasonable rate in the future.
Our business exposes us to potential liability risks inherent in the research, development, manufacturing and marketing of our technology. We may be subject to liability for errors in the test results we provide to oncologists or for a misunderstanding of, or inappropriate reliance upon, the information we provide. We have commercial product liability insurance coverage. However, this insurance coverage may not be adequate to cover all claims against us. There is also a risk that adequate insurance coverage will not be available in the future on commercially reasonable terms, if at all. The successful assertion of an uninsured product liability or other claim against us could cause us to incur significant expenses to pay such a claim, could adversely affect our predictive biomarker development or technology sales and could cause a decline in our revenues. Even a successfully defended product liability claim could cause us to incur significant expenses to defend such a claim, could adversely affect our predictive biomarker development and could cause a decline in our revenues. In addition, product liability claims could result in an FDA or equivalent non-United States regulatory authority investigation of the safety or efficacy of our test, our manufacturing processes and facilities, or our marketing programs.
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We have exposure to general uncertainty and complex matters regarding the patents we license.
The patent positions of companies such as ours are generally uncertain and involve complex legal and factual questions. No consistent policy regarding the scope of claims allowable in patents in the field of method of use patents or reformulation patents has emerged in the United States. The relevant patent laws and their interpretation outside of the United States are also uncertain. Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our technology and to enforce the patent rights that we license, and could affect the value of such intellectual property. In particular, our ability to stop third parties from using, selling, offering to sell, or importing technology that infringe on our intellectual property will depend in part on our success in obtaining and enforcing patent claims that cover our technology, inventions, and improvements. With respect to both licensed and company-owned intellectual property, we cannot guarantee that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications we may file in the future, nor can we be sure that any patents that may be granted to us in the future will be commercially useful in protecting our technology or the methods of use. Patent and other intellectual property rights in the pharmaceutical and biotechnology space are evolving and involve many risks and uncertainties. For example, third parties may have blocking patents that could be used to prevent us from commercializing our technology. The issued patents that we in-license and those that may be issued in the future may be challenged, invalidated, or circumvented, which could limit our ability to stop competitors from marketing related technology or could limit the term of patent protection that otherwise may exist for our technology. In addition, the scope of the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies that are outside the scope of the rights granted under any issued patents that we own or exclusively in-license. For these reasons, we may face competition with respect to our technology. Moreover, because of the extensive time required for development, testing, and regulatory review of a potential technology, it is possible that, before any particular technology can be commercialized, any patent protection for such technology may expire or remain in force for only a short period following commercialization, thereby reducing the commercial advantage the patent provides.
If we are unable to protect the proprietary rights we license or to defend against infringement claims, we may not be able to compete effectively or operate profitably.
We develop predictive biomarkers that are the basis for or incorporated in our potential testing products. We protect our technology through United States and foreign patent filings, trademarks and trade secrets that we license from others.
The fact that we may file a patent application or that a patent has been issued does not ensure that we will have meaningful protection from competition with regard to the underlying technology. Patents, if issued, may be challenged, invalidated, declared unenforceable or circumvented or may not cover all applications we may desire. Any pending or future patent applications may not result in issued patents. Patents may not provide us with adequate proprietary protection or advantages against competitors with, or who could develop, similar or competing technologies or who could design around our patents. Patent law relating to the scope of claims in the pharmaceutical field in which we operate is continually evolving and can be the subject of some uncertainty. The laws providing patent protection may change in a way that would limit our protection.
We also rely on trade secrets and know-how that we seek to protect, in part, through confidentiality agreements. Our policy is to require our officers, employees, consultants, contractors, manufacturers, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements. These agreements provide that all confidential information developed or made known to an individual during the course of their relationship with us be kept confidential and not disclosed to third parties except in specific limited circumstances. We also require signed confidentiality agreements from companies that receive our confidential data. For employees, consultants and contractors, we require confidentiality agreements providing that all inventions conceived while rendering services to us shall be assigned to us as our exclusive property. It is possible, however, that these parties may breach those agreements, and we may not have adequate remedies for such a breach. It is also possible that our trade secrets or know-how will otherwise become known to or be independently developed by competitors.
We are also subject to the risk of claims, whether meritorious or not, that our technology infringes or misappropriates third-party intellectual property rights. Defending against such claims can be quite expensive even if the claims lack merit. If we are found to have infringed or misappropriated a third-party’s intellectual property, we could be required to seek a license or discontinue using certain technologies or delay commercialization of the affected technologies, and we could be required to pay substantial damages, which could materially harm our business.
We may be subject to litigation with respect to the ownership and use of intellectual property that will be costly to defend. The outcome of such a defense in uncertain.
Our business may bring us into conflict with our licensees, licensors or others with whom we have contractual or other business relationships, or with our competitors or others whose interests differ from ours. If we are unable to resolve those conflicts on terms that are satisfactory to all parties, we may become involved in litigation brought by or against us. That litigation is likely to be expensive and may require a significant amount of management’s time and attention, at the expense of other aspects of our business.
Litigation relating to the ownership and use of intellectual property is expensive, and our position as a relatively small company in an industry dominated by very large companies may cause us to be at a disadvantage in defending our intellectual property rights and in defending against claims that our technology infringes or misappropriate third-party intellectual property rights. Even if we are able to defend our position, the cost of doing so may adversely affect our profitability. We may in the future be subject to patent litigation and may not be able to protect our intellectual property at a reasonable cost if such litigation is initiated. The outcome of litigation is always uncertain, and in some cases could include judgments against us that require us to pay damages, enjoin us from certain activities or otherwise affect our legal or contractual rights, which could have a significant adverse effect on our business.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications may be due to be paid to the United States Patent and Trademark Office (“USPTO”), GMU, the NIH, Vanderbilt and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply with these requirements. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market creating a material adverse effect on our business.
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We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting and defending patents on our technology in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from using our inventions in all countries outside the United States, or from selling or importing technologies using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own technologies and may also export infringing technologies to territories where we have patent protection, but enforcement is not as strong as that in the United States. These technologies may compete with ours and our patents or other intellectual property rights.
If our product were to become the subject of concerns related to its efficacy, safety, or otherwise, our ability to generate revenues from our product could be seriously harmed.
With the use of any newly marketed technology by a wider patient population, serious adverse events may occur from time to time that initially do not appear to relate to the technology itself. Any safety issues could cause us to suspend or cease marketing of our approved technology, cause us to modify how we market our approved technology, subject us to substantial liabilities, and adversely affect our revenues and financial condition. In the event of a withdrawal of our product from the commercial market, our revenues would decline significantly and our business would be seriously harmed and could fail.
Adoption of our product for the analysis of patients with either early stage or advanced cancer may be slow or limited for a variety of reasons, including competing therapies and perceived difficulties in the treatment process or delays in obtaining reimbursement. If our product is not broadly accepted as a technology option for cancer, our business would be harmed.
The rate of adoption of our product for early stage or advanced cancer and the ultimate market size will be dependent on several factors, including the education of treating physicians on the information provided by our product. A significant portion of the prospective patient base for the product may be under the care of oncologists who may have little or no experience with our technology. Acceptance by oncologists of our product may be slow and may require us to educate physicians on the benefits of using our technology.
To achieve global success for our product as a technology, we will need to obtain approvals by foreign regulatory authorities. Data from our completed clinical trials of our product may not be sufficient to support approval for commercialization by regulatory agencies governing the sale of drugs outside of the United States. This could require us to spend substantial sums to develop sufficient clinical data for licensure by foreign authorities. Submissions for approval by foreign regulatory authorities may not result in marketing approval by these authorities. In addition, certain countries require pricing to be established before reimbursement for the specific technology may be obtained. We may not receive or maintain marketing approvals at favorable pricing levels or at all, which could harm our ability to market our product globally. Cancer is common in many regions where the healthcare support systems are limited and reimbursement for our product may be limited or unavailable, which will likely limit or slow adoption in these regions. If we are unable to successfully achieve the full global market potential of our product due to diagnostic practices or regulatory hurdles, our future prospects would be harmed, and our stock price could decline.
Our product in clinical development may be limited in use if we do not maintain or gain required regulatory approvals.
Our clinical business may be subject to extensive regulation by numerous state and federal governmental authorities in the United States and potentially by foreign regulatory authorities, with regulations differing from country to country.
Obtaining regulatory approval for marketing of a technology candidate in one country does not assure we will be able to obtain regulatory approval in other countries. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in other countries.
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In general, the FDA and equivalent other country authorities require labeling, advertising and promotional materials to be truthful and not misleading and marketed only for the approved indications and in accordance with the provisions of the approved label. If the FDA or other regulatory authorities were to challenge our promotional materials or activities, they may bring enforcement action.
Regulatory authorities could also add new regulations or reform existing regulations at any time, which could affect our ability to obtain or maintain approval of our technology. Our product is a novel technology. As a result, regulatory agencies lack experience with it, which may lengthen the regulatory review process, increase our development costs and delay or prevent commercialization of our product outside of the United States. We are unable to predict when and whether any changes to regulatory policy affecting our business could occur, and such changes could have a material adverse impact on our business. If regulatory authorities determine that we have not complied with regulations in the research and development of our predictive biomarkers, they may not approve the technology candidate and we would not be able to market and sell it. If we were unable to market and sell our technology candidate, our business and results of operations would be materially and adversely affected.
We use hazardous materials in our business and must comply with environmental laws and regulations, which can be expensive.
Our operations produce hazardous waste products, including chemicals, radioactive and biological materials. We are subject to a variety of federal, state and local laws and regulations relating to the use, handling, storage and disposal of these materials. Although we believe that our safety procedures for handling and disposing of these materials complies with the standards prescribed by state and federal laws and regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. We generally contract with third parties for the disposal of such hazardous waste products. We are also subject to regulation by the Occupational Safety and Health Administration (“OSHA”), the Environmental Protection Agency (the “EPA”). Additionally, we must comply with the regulations under the Toxic Substances Control Act, the Resource Conservation and Recovery Act and other regulatory statutes, and may in the future be subject to other federal, state or local regulations. OSHA and/or the EPA may promulgate regulations that may affect our research and development programs. We may be required to incur further costs to comply with current or future environmental and safety laws and regulations. In addition, in the event of accidental contamination or injury from these materials, we could be held liable for any damages that result, including remediation, and any such liability could exceed our resources.
Our management has identified material weaknesses in our internal controls over our financial reporting.
Our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are not effective because of certain material weaknesses in our internal control over financial reporting. The material weaknesses relates to the absence of in-house accounting personnel with the ability to properly account for complex transactions and the lack of separation of duties between accounting and other functions.
We anticipate expanding our accounting functions with dedicated staff and improving our internal accounting procedures and separation of duties when we can absorb the costs of such expansion and improvement with additional capital resources. In the meantime, management will continue to observe and assess our internal accounting function and make necessary improvements whenever they may be required. If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements, and we could be required to restate our financial results. In addition, if we are unable to successfully remediate this material weakness and if we are unable to produce accurate and timely financial statements, our stock price may be adversely affected and we may be unable to maintain compliance with applicable stock exchange listing requirements.
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Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership. Thus, our ability to utilize carryforwards of our net operating losses and other tax attributes to reduce future tax liabilities may be substantially restricted. Further, U.S. tax laws limit the time during which these carryforwards may be applied against future taxes. Therefore, we may not be able to take full advantage of these carryforwards for federal or state tax purposes. As of December 31, 2024, we had federal and state net operating loss carryforwards of approximately $59.5 million and $59.5 million, respectively.
Our financial results could be adversely affected by liabilities from our discontinued operations.
Until recently, we were a provider of movement and orthopedic therapies and minimally invasive procedures performed through our regenerative and rehabilitative medical treatments to improve the physical health of our patients at our chain of IMAC Regeneration Centers and BackSpace clinics which we owned or managed. As of December 31, 2023, we sold or discontinued patient care at all our locations including The BackSpace LLC.
Like other medical providers, our discontinued operations were subject to extensive regulation by government agencies in the U.S. Criminal charges, substantial fines and/or civil penalties, corporate integrity or deferred prosecution agreements, as well as reputational harm and increased public interest in a matter could result from government investigations of our discontinued business.
Risks Related to Our Securities
Our stock price is volatile and an investment could decline in value.
The market price of our common stock fluctuates substantially as a result of many factors, some of which are beyond our control. During the 52-week period ending March 26, 2025, the market price of our common stock ranged from a low of $0.14 to a high of $7.75. These fluctuations could cause you to lose all or part of the value of your investment in our common stock and/or warrants. Factors that could cause fluctuations in the market price of our common stock include the following:
| ● | quarterly variations in our results of operations; | |
| ● | results of operations that vary from the expectations of securities analysts and investors; | |
| ● | results of operations that vary from those of our competitors; | |
| ● | changes in expectations as to our future financial performance, including financial estimates by securities analysts; | |
| ● | publication of research reports about us or the outpatient medical clinic business; | |
| ● | announcements by us or our competitors of significant contracts, acquisitions or capital commitments; | |
| ● | announcements by third parties of significant claims or proceedings against us; | |
| ● | changes affecting the availability of financing in the outpatient medical services market; | |
| ● | regulatory developments in the outpatient medical clinic business; | |
| ● | significant future sales of our common stock; | |
| ● | additions or departures of key personnel; | |
| ● | the realization of any of the other risk factors presented in this prospectus; and | |
| ● | general economic, market and currency factors and conditions unrelated to our performance. |
In addition, the stock market in general has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to operating performance of individual companies. These broad market factors may seriously harm the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A class action suit against us could result in significant liabilities and, regardless of the outcome, could result in substantial costs and the diversion of our management’s attention and resources.
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Our issuance of preferred stock could adversely affect holders of Common Stock.
Our Board of Directors is authorized to issue series of preferred stock without any action on the part of our holders of Common Stock, known as “blank check” preferred stock. Our Board of Directors also has the power, without stockholder approval, to set the terms of any such series of preferred stock that may be issued, including voting rights, dividend rights, preferences over our Common Stock with respect to dividends or if we liquidate, dissolve or wind up our business and other terms. If we issue preferred stock in the future that has preference over our Common Stock with respect to the payment of dividends or upon our liquidation, dissolution or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our Common Stock, the rights of holders of our Common Stock or the price of our Common Stock could be adversely affected. In particular, as of March 31, 2025 we had issued and outstanding 2,020 Series C-1 Preferred Shares, 876 Series C-2 Preferred Shares, 14,003 Series D Preferred Shares, 24,172 Series E Preferred Shares, 300 Series F Preferred Shares and 4,676 Series G Preferred Shares which are convertible into an aggregate of 15,483,060 shares of our common stock.
The Company’s common stock has been suspended from trading on Nasdaq and currently trades on the OTC Pink Market, which may adversely affect the flexibility of holders of common stock to resell their securities in the secondary market.
Beginning in 2023, the Company experienced deficiencies in compliance with Nasdaq Listing Rules, including the Minimum Equity Rule, which required us to maintain a required minimum of $2,500,000 in stockholders’ equity for continued listing, as required under Listing Rule 5550(b)(1). We cured all such deficiencies subject to a one year “Panel Monitor” as that term is defined by Nasdaq Listing Rule 5815(d)(4)(B) with respect to the Minimum Equity Rule.
On January 21, 2025, the Company received a Notice from Nasdaq advising the Company that it no longer complied with the Minimum Equity Rule. Due to the Panel Monitor, the Company was not eligible to submit a plan to the Staff to request an extension of up to 180 calendar days in which to regain compliance with the Minimum Equity Rule, and as a result, the Staff determined to delist the Company’s securities from Nasdaq.
The Company appealed the delisting notice at a hearing before Nasdaq on March 4, 2025. On March 24, 2025, the Company was notified by Nasdaq that our appeal was denied and that the Company’s securities were suspended at the open of trading on March 26, 2025. We expect Nasdaq to complete the delisting by filing a Notification of Removal from Listing on Form 25 with the Securities and Exchange Commission (the “SEC”).
As a result of the suspension in trading and expected delisting, the Company’s common stock began trading publicly on the OTC Pink Market under its existing symbols “BACK” on March 26, 2025. The Company intends to apply to have its common stock traded on the OTCQB. There is no guarantee that such application will be approved or when.
The OTC Pink Market and OTCQB are significantly more limited markets than Nasdaq, and quotation on the OTC Pink Market or OTCQB will likely result in a less liquid market for existing and potential holders of the Company’s common stock to trade such securities and could further depress the trading price of the common stock. The Company can provide no assurance that its common stock will continue to trade on this market, whether broker-dealers will continue to provide public quotes of its common stock on this market, or whether the trading volume of its common stock will be sufficient to provide for an efficient trading market for existing and potential holders of its common stock.
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Trading on the OTC Pink Market or OTCQB could also harm the Company’s ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the loss of confidence in the Company’s financial stability by suppliers, customers and employees. Investors would likely find it more difficult to dispose of, or to obtain accurate market quotations for, the common stock, as the liquidity that Nasdaq provides would no longer be available to investors.
We do not expect to pay any dividends on our common stock for the foreseeable future.
We currently expect to retain all future earnings, if any, for future operation, expansion and debt repayment and have no current plans to pay any cash dividends to holders of our common stock for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our operating results, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. In addition, we must comply with the covenants in our credit agreements in order to be able to pay cash dividends, and our ability to pay dividends generally may be further limited by covenants of any future outstanding indebtedness we or our subsidiaries incur. As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it.
We may issue additional shares of common stock, warrants or other securities to finance our growth.
We may finance the business development or generate additional working capital through additional equity financing. Therefore, subject to the rules of the Nasdaq, we may issue additional shares of our common stock, warrants and other equity securities of equal or senior rank, with or without stockholder approval, in a number of circumstances from time to time. The issuance by us of shares of our common stock, warrants or other equity securities of equal or senior rank will have the following effects:
| ● | the proportionate ownership interest in us held by our existing stockholders will decrease; | |
| ● | the relative voting strength of each previously outstanding share of common stock may be diminished; and | |
| ● | the market price of our common stock may decline. |
In addition, if we issue shares of our common stock and/or warrants in a future offering (or, in the case of our common stock, the exercise of outstanding warrants to purchase our common stock), it could be dilutive to our security holders.
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Anti-takeover provisions in our charter documents could discourage, delay or prevent a change in control of our company and may affect the trading price of our common stock.
Our corporate documents and the Delaware General Corporation Law contain provisions that may enable our board of directors to resist a change in control of our company even if a change in control were to be considered favorable by you and other stockholders. These provisions:
● authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to help defend against a takeover attempt;
● establish advance notice requirements for nominating directors and proposing matters to be voted on by stockholders at stockholder meetings;
● provide that stockholders are only entitled to call a special meeting upon written request by 33.33% of the outstanding common stock; and
● require supermajority stockholder voting to effect certain amendments to our certificate of incorporation and bylaws.
In addition, Delaware law prohibits large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or consolidating with us except under certain circumstances. These provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of our company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take other corporate actions you desire.
General Risk Factors
Failure to retain key personnel could impede our ability to develop our technology and to obtain new collaborations or other sources of funding.
Companies like ours depend upon our scientific staff to discover new technologies and predictive biomarker. They utilize these biomarkers to recommend treatment guidance for cancer patients. The quality and reputation of our scientific, clinical and regulatory staff, especially the senior staff, and their success in performing their responsibilities, may directly influence the success of our technology development program.
Hiring and retention is difficult to manage, particularly in light of continually evolving laws relating to noncompete and non-solicitation agreements, including the Federal Trade Commission’s rule banning most noncompete agreements, which is currently being challenged by several business entities. We face intense competition for personnel from other companies, universities, public and private research institutions, government entities and other organizations. In some cases, our competitors have required their employees to agree to non-compete and/or non-solicitation agreements as part of their employment. We also may not be able to enter such arrangements. Both scenarios present challenges and potential costs. Additionally, in some cases our relationship with a customer may be impacted by turnover in our team.
As we pursue successful commercialization of Ignite products, we will need to hire sales and marketing, and operations executive management staff in order to ensure our organizational success. In addition, we require additional executive officers to provide strategic and operational guidance. Our inability to recruit key management, scientific, clinical, regulatory, medical, operational and other personnel, may delay or prevent us from achieving our business objectives.
| 18 |
If we are unable to safeguard against security breaches with respect to our information systems, our business may be adversely affected.
In the course of our business, we gather, transmit and retain confidential information through our information systems. Although we endeavor to protect confidential information through the implementation of security technologies, processes and procedures, it is possible that an individual or group could defeat security measures and access sensitive information about our business and employees. Any misappropriation, loss or other unauthorized disclosure of confidential information gathered, stored or used by us could have a material impact on the operation of our business, including damaging our reputation with our employees, third parties and investors. We could also incur significant costs implementing additional security measures and organizational changes, implementing additional protective technologies, training employees or engaging consultants. In addition, we could incur increased litigation as a result of any potential cyber-security breach. We are not aware that we have experienced any material misappropriation, loss or other unauthorized disclosure of confidential or personally identifiable information as a result of a cyber-security breach or other act, however, a cyber-security breach or other act and/or disruption to our information technology systems could have a material adverse effect on our business, prospects, financial condition or results of operations.
| ITEM 1B. | UNRESOLVED STAFF COMMENTS |
None.
| Item 1C. | CYBERSECURITY |
As part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards, in collaboration with IT and management. Personnel at all levels and departments are made aware of our cybersecurity processes through trainings.
We
engage consultants, or other third parties in connection with our risk assessment processes. These service providers assist us to design
and implement our cybersecurity procedures, as well as to monitor and test our safeguards. We require each
| 19 |
Our Chief Executive Officer and Chief Financial Officer oversee our cybersecurity processes, including those described in “Risk Management and Strategy” above. The cybersecurity risk management program includes tools and activities to prevent, detect, and analyze current and emerging cybersecurity threats, and plans and strategies to address threats and incidents.
| ITEM 2. | PROPERTIES |
We manage our business operations from our principal executive office in Franklin, Tennessee and laboratory space in Golden, Colorado. We are in the process of having the lease for the laboratory space we use in Golden, Colorado assigned to us. Our executive office lease and our laboratory lease are on a month-to-month basis. Our total rent expense was $0.1 million under our office and laboratory lease for 2024.
We believe our present office space are adequate for our current operations.
| ITEM 3. | LEGAL PROCEEDINGS |
Lincoln Gardens Partners, LLC d/b/a Twin Lakes Office Park (“Landlord”), filed a complaint against the Company, IMAC Management of Florida (“IMAC Florida”), and Mr. Marty Willmitch on March 14, 2025 in the Circuit Court of the Thirteenth Judicial Circuit, in and for Hillsborough County, Florida relating to an alleged default in a foreclosure action regarding a lease by Landlord of the Company’s former clinic location in Tampa, Florida. The Company has surrendered the premises and is in discussions with the Landlord regarding outstanding amounts and a potential settlement. The Landlord alleges that the Company may owe approximately $0.15 million for accelerated lease payments, commissions, costs of tenant improvements, and interest owed in accordance with certain lease agreements.
From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of our business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any legal proceedings or claims that we believe would or could have, individually or in the aggregate, a material adverse effect on us. Regardless of final outcomes, however, any such proceedings or claims may nonetheless impose a significant burden on management and employees and may come with costly defense costs or unfavorable preliminary interim rulings. Refer to Note 12, Commitments and Contingencies, to our Consolidated Financial Statements included in “Part II, Item 8. Financial Statements” of this Form 10-K for a description of current legal proceedings.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
| 20 |
PART II
| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Market Information
In connection with the completion of our initial public offering, our common stock and warrants began trading on the Nasdaq Capital Market on February 13, 2019, under the symbols “IMAC” and “IMACW”, respectively. On August 8, 2022, the Company changed its “IMAC” ticker symbol to “BACK”. Our publicly traded warrants expired in February 2024 and are no longer listed for trading.
As of March 31, 2025, there were approximately 63 holders of record of our common stock. We believe that the number of beneficial owners is substantially greater than the number of record holders because a large portion of our common stock is held of record through brokerage firms in “street name.”
Dividend Policy
Our board of directors will determine our future dividend policy based on our results of operations, financial condition, capital requirements and other circumstances. We have not previously declared or paid any cash dividends on our Common Stock. We anticipate that we will retain earnings to support operations and finance the growth of our business. Accordingly, it is not anticipated that any cash dividends will be paid on our Common Stock in the foreseeable future.
| ITEM 6. | RESERVED |
| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth previously under the caption “Risk Factors.” This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this report.
The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods.
| 21 |
Overview
IMAC Holdings, Inc. operates primarily through its wholly owned subsidiary, Ignite Proteomics, LLC (Ignite), that utilizes a unique and patented RPPA technology platform, which can quantify protein signaling to support oncology clinical treatment decisions and biopharmaceutical drug development.
Ignite has recently obtained credentials to bill Medicare for reimbursement.
For the year ended December 31, 2024, the Company had:
| ● | $0.07 million in net revenue; | |
| ● | net loss of $9.0 million comprised of ($6.3 million) from our continuing operations and ($2.7 million) from our discontinued operations; and, | |
| ● | a one-time expenses of $2.7 million in discontinued operations related to a reserve for CMS request for payment related to a Medicare audit. |
Matters that May or Are Currently Affecting Our Business
We believe that the growth of our business and our future success depend on various opportunities, challenges, trends and other factors, including the following:
| ● | Our ability to obtain additional financing for the projected costs associated with the growth of our recently acquired laboratory; | |
| ● | Our ability to attract competent, skilled laboratory and sales personnel for our operations at acceptable prices to manage our overhead; and |
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above.
For a detailed discussion of our significant accounting policies and related judgments, see Note 2 of the Notes to Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” of this report.
| 22 |
Results of Operations for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023
Revenues, net
The Company’s revenue is diversified between biopharmaceutical drug development, contract research and patient or third party payors. The Company had revenues of $.07 million and $0 for the years ended December 31, 2024 and 2023, respectively.
Cost of Revenues
Cost of revenues consisted of laboratory supplies of $0.2 million and depreciation expense of $0.1 million.
Operating expenses
Operating expenses were $5.4 million for the year ended December 31, 2024. They consisted of $1.8 million for salaries and benefits, $1.2 million in legal fees, $1.6 million in professional fees and consulting, $0.3 million in insurance, $0.2 million for occupancy and $0.3 million for other expenses.
Discontinued Operations
Costs and expenses incurred in discontinued operations relate to the legal accrual associated with the Progressive Health matter.
Liquidity and Capital Resources
As of December 31, 2023, we had $0.5 million in cash and a working capital deficit of $(7.3) million. As of December 31, 2023, we had cash of $0.2 million and working capital of $(0.8) million. The decrease in working capital was primarily due to a $2.3 million increase in accounts payable, $1.1 million increase in dividends payable and $2.7 million related to the reserve for the Medicare audit.
As of December 31, 2024, we had approximately $8.0 million in current liabilities. Approximately $2.7 million of our current liabilities outstanding were to our vendors, $1.3 million were dividends payable to our preferred shareholders and $4.0 million for liabilities of discontinued operations. Of the discontinued operations liabilities, $2.7 million relates to the reserve for the Medicare audit and $0.5 are for operating leases.
As of December 31, 2024, we had an accumulated deficit of $65.0 million. We anticipate that we will need to raise additional capital to fund future operations. However, we may be unable to raise additional funds or enter into such arrangements when needed or favorable terms, or at all, which would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our development or acquisition activity. Failure to receive additional funding could also cause us to cease operations, in part or in full. Furthermore, even if we believe we have sufficient funds for our current of future operating plans, we may seek additional capital due to favorable market conditions or strategic considerations. Our management team has determined that our financial condition raises substantial doubt as to our ability to continue as a going concern.
Cash Flows
The primary source of our operating cash flow is the collection of accounts receivable from patients, private insurance companies, government programs, self-insured employers and other payers.
During the year ended December 31, 2024, net cash used in operations increased to $3.2 million compared to $2.8 million for the year ended December 31, 2023. This decrease was primarily attributable to our increase in accounts payable.
Net cash used in investing activities during the years ended December 31, 2024 and 2023 was $0.4 million and $1.8 million, respectively. The decrease was primarily due to the previous years’ sale of physician practices and property and equipment.
Net cash provided by financing activities during the year ended December 31, 2024 was $3.9 million, which was primarily proceeds from the sale of preferred stock, net of related fees, and issuance of promissory notes. Net cash provided by financing activities during the year ended December 31, 2023 was $4.0 million, including proceeds from the sale of preferred stock, net of related fees.
Impact of Inflation
We believe that inflation had a material impact on our results of operations for the years ended December 31, 2024. Inflation was evident in staffing and supply costs related to the delivery of patient care. There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.
| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not applicable for smaller reporting companies.
| 23 |
ITEM 8.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| 24 |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
IMAC Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of IMAC Holdings, Inc. (the “Company”) as of December 31, 2024, the related consolidated statement of operations, stockholders’ equity (deficit) and cash flow for each of the one year in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We also audited the disclosure of significant expenses and other segment items in Note 14 that have been disclosed for 2023 due to the adoption of ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, and the recast of the segment disclosures in Note 14 to reflect one reportable segment. In our opinion, such disclosures are appropriate. However, we were not engaged to audit, review, or apply any procedures to the 2023 consolidated financial statements of the Company other than with respect to these disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2023 consolidated financial statements taken as a whole.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 3, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Marcum llp
We have served as the Company’s auditor since 2024.
April 14, 2025
| 25 |
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of:
IMAC Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of IMAC Holdings, Inc. and Subsidiaries (the “Company”) as of December 31, 2023, the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows, for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has had historical net losses and net cash used in operating activities, has discontinued operations and will require additional financing to continue operations in 2024. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s Plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Salberg & Company, P.A.
We have served as the Company’s auditor since 2024
April 16, 2024
2295 NW Corporate Blvd., Suite 240 ● Boca Raton, FL 33431-7326
Phone: (561) 995-8270 ● Toll Free: (866) CPA-8500 ● Fax: (561) 995-1920
www.salbergco.com ● [email protected]
Member National Association of Certified Valuation Analysts ● Registered with the PCAOB
Member CPAConnect with Affiliated Offices Worldwide ● Member AICPA Center for Audit Quality
| 26 |
IMAC Holdings, Inc.
Consolidated Balance Sheets
December 31, 2024 and 2023
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Note receivable, net | ||||||||
| Assets of discontinued operations | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Dividends payable | ||||||||
| Liabilities of discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitment and Contingencies – Note 13 | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Preferred stock - $ par value, authorized, issued and outstanding at December 31, 2024 and Series B-1 and Series B-2 issued and outstanding at December 31, 2023 | ||||||||
| Common stock; $par value, authorized; and shares issued and outstanding at December 31, 2024 and 2023, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ( | |||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
See notes to consolidated financial statements
| 27 |
IMAC Holdings, Inc.
Consolidated Statements of Operations
For the Years Ended December 31, 2024 and 2023
| 2024 | 2023 | |||||||
| Patient revenue, net | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit (loss) | ( | ) | ||||||
| Operating expenses: | ||||||||
| General and administrative | ||||||||
| Loss on disposition or impairment | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Interest income | ||||||||
| Other income (expense) | ( | ) | ||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other income (expenses) | ( | ) | ( | |||||
| Net loss before income taxes | ( | ) | ( | ) | ||||
| Income taxes | ||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Discontinued Operations: | ||||||||
| Loss from operations of discontinued component | ( | ) | ( | ) | ||||
| Loss on disposal of discontinued operations | ( | ) | ( | ) | ||||
| Net loss from discontinued operations | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Preferred dividends | ( | ) | ( | ) | ||||
| Net loss available to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Net loss per share from continuing operations – Basic and diluted | $ | ) | $ | ) | ||||
| Loss per share from discontinued operations – Basic and diluted | $ | ) | $ | ) | ||||
| Net loss per share – Basic and diluted | $ | ) | $ | ) | ||||
| Weighted average common shares outstanding | ||||||||
| Basic and diluted | ||||||||
See notes to consolidated financial statements
| 28 |
IMAC Holdings, Inc.
Consolidated Statement of Changes in Stockholders’ Equity (Deficit)
For the Years Ended December 31, 2024 and 2023
| Preferred Stock | Common Stock | |||||||||||||||||||||||||||
| Number of Shares | Par | Number of Shares | Par | Additional Paid-In- | Accumulated Deficit | Total | ||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Issuance of common stock for cash | - | |||||||||||||||||||||||||||
| Issuance of fractional shares with reverse stock split | - | ( | ) | |||||||||||||||||||||||||
| Issuance of employee stock options | - | - | ||||||||||||||||||||||||||
| Share based compensation expense | - | |||||||||||||||||||||||||||
| Issuance of preferred stock net of issuance costs | - | |||||||||||||||||||||||||||
| Dividends declared | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, December 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of preferred stock for cash, net of issuance costs | ||||||||||||||||||||||||||||
| Dividends declared | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Conversion of preferred stock into common shares | ( | ) | ( | ) | ||||||||||||||||||||||||
| Share based compensation expenses | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
See notes to consolidated financial statements
| 29 |
IMAC Holdings, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2024 and 2023
| Year Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss from discontinuing operations | ( | ) | ( | ) | ||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash from operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Interest expense - OID | ||||||||
| Share based compensation | ||||||||
| Loss on disposition of assets | ||||||||
| Loss on impairment | ||||||||
| Bad debt expense | ||||||||
| Gain on extinguishment of debt | ( | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | ( | ) | ||||||
| Prepaid expenses and other current assets | ||||||||
| Deferred compensation | ||||||||
| Security deposits | ||||||||
| Liability to issue common stock | ( | ) | ||||||
| Right of use/lease liability | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Patient deposits | ( | ) | ||||||
| Net cash used in operating activities from continuing operations | ( | ) | ||||||
| Net cash used in operating activities from discontinued operations | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ||||||||
| Note receivable | ( | ) | ( | ) | ||||
| Proceeds from sale of practices | ||||||||
| Proceeds from sale of property and equipment | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Proceeds from issuance of preferred stock, net of offering costs | ||||||||
| Payments on notes payable | ( | ) | ||||||
| Proceeds from notes payable | ||||||||
| Payments on finance lease obligation | ( | ) | ( | ) | ||||
| Net cash from financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash, beginning of year | ||||||||
| Cash, end of year | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income Tax | $ | $ | ||||||
| Preferred stock conversion | ||||||||
| Accrued dividends | $ | $ | ||||||
| Settlement of notes receivable in connection with asset purchase agreement | $ | $ | ||||||
See notes to consolidated financial statements
| 30 |
Note 1 – Description of Business
We provide services related to proteomic products that identify and support oncology clinical treatment decisions and biopharmaceutical drug development.
Continuing operations
The continuing operations of the business are precision medicine in cancer treatment based on activated protein analysis. The Company has acquired laboratory capabilities from Theralink Technologies, Inc, and has the technical capability and intellectual property licenses to engage in clinical testing of breast cancer patients to determine which medications and treatments will be most effective. The Company also engages in collaborations with biopharmaceutical companies to identify drug targets based on activated protein analysis. Drug makers benefit from the application of our technology in target identification, clinical trial design, and clinical trial execution.
On August 30, 2024, the Company amended its 2018 Incentive Compensation Plan to increase the number of shares authorized for issuance thereunder from to shares.
Discontinued operations
Until recently, IMAC Holdings, Inc. was a holding company for IMAC Regeneration Centers, The BackSpace retail stores and our Investigational New Drug division. As of December 31, 2024 and 2023, the Company has sold or discontinued patient care at all our locations and has accordingly presented this component as discontinued operations. (See Note 11)
Note 2 – Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as promulgated by the Financial Accounting Standards Board (“FASB”) through the Accounting Standards Codification (“ASC”) and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
The accompanying consolidated financial statements include the accounts of IMAC Holdings, Inc. and the following entities which are consolidated due to direct ownership of a controlling voting interest or other rights granted to us as the sole general partner or managing member of the entity: Ignite Proteomics, LLC (“Ignite”), IMAC Regeneration Center of St. Louis, LLC (“IMAC St. Louis”), IMAC Management Services, LLC (“IMAC Management”), IMAC Regeneration Management, LLC (“IMAC Texas”) IMAC Regeneration Management of Nashville, LLC (“IMAC Nashville”) IMAC Management of Illinois, LLC (“IMAC Illinois”), Advantage Hand Therapy and Orthopedic Rehabilitation, LLC (“Advantage Therapy”), IMAC Management of Florida, LLC (“IMAC Florida”), Louisiana Orthopaedic & Sports Rehab (“IMAC Louisiana”) and The Back Space, LLC (“BackSpace”); the following entity which is consolidated with IMAC Regeneration Management of Nashville, LLC due to control by contract: IMAC Regeneration Center of Nashville, PC (“IMAC Nashville PC”); the following entities which are consolidated with IMAC Management of Illinois, LLC due to control by contract: Progressive Health and Rehabilitation, Ltd., Illinois Spine and Disc Institute, Ltd. and Ricardo Knight, P.C.; the following entities which are consolidated with IMAC Management Services, LLC due to control by contract: Integrated Medicine and Chiropractic Regeneration Center PSC (“Kentucky PC”) and IMAC Medical of Kentucky, PSC (“Kentucky PSC”) ; the following entities which are consolidated with IMAC Florida due to control by contract: Willmitch Chiropractic, P.A. and IMAC Medical of Florida, P.A.; the following entity which is consolidated with Louisiana Orthopaedic & Sports Rehab due to control by contract: IMAC Medical of Louisiana, a Medical Corporation; and the following entities which are consolidated with BackSpace due to control by contract: ChiroMart LLC, ChiroMart Florida LLC, and ChiroMart Missouri LLC.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses at the date and for the periods that the consolidated financial statements are prepared. On an ongoing basis, the Company evaluates its estimates, including those related to contractual insurance adjustments on revenues and expected credit losses, impairment of long-lived assets including intangible assets, valuation of loans receivable and valuation of stock-based compensation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could materially differ from those estimates.
| 31 |
Revenue Recognition
The Company accounts for its revenue transactions under Financial Accounting Standards Board (“FASB”) through the Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). In accordance with ASC Topic 606, the Company recognizes revenues when its customers obtain control of its product for an amount that reflects the consideration it expects to receive from its customers in exchange for that product. To determine revenue recognition for contracts that are determined to be in scope of ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when such performance obligation is satisfied.
In 2024, the Company’s revenue is diversified between biopharmaceutical drug development, contract research and patient or third party payors. Revenue is recognized when the analysis report is submitted to the customer.
Fair Value of Financial Instruments
The carrying amount of accounts receivable and accounts payable approximate their respective fair values due to the short-term nature. The carrying amount of the line of credit and note payable approximates fair values due to their market interest rates. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable.
Cash and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. The Company had
Note Receivable
Note Receivable is a subordinated promissory
note and a convertible promissory note that the Company’s merger partner, Theralink Technologies, Inc. (“THER”)
entered into during July of 2023 and August of 2023, respectively. Each note is due to be repaid within one year and contains
interest compounding at
During the year ended December 31, 2024, the Company entered
into several financing transactions with Theralink Technologies, Inc. (“Theralink”) that culminated in an acquisition of
Theralink assets. Pursuant to the Settlement and Release Agreement dated May 1, 2024, the Company acquired certain assets which
resulted in the recording of long lived assets of $
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Additions and improvements to property and equipment are capitalized at cost. Depreciation of owned assets are computed using the straight-line method over the estimated useful lives. The cost of assets sold or retired, and the related accumulated depreciation are removed from the accounts and any resulting gains or losses are reflected in other income (expense) for the year. Expenditures for maintenance and repairs are charged to expense as incurred.
Long-Lived Assets
Long-lived assets such as property and equipment, operating lease assets and intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Deferred tax assets are required to be reduced by a valuation allowance to the extent that, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized.
Reclassifications
Certain prior year amounts have been reclassified
for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Specifically,
we reclassified $
Recently Issued Accounting Standards
On December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires entities to disclose specific rate reconciliations, amount of income taxes separated by federal and individual jurisdiction, and the amount of income (loss) from continuing operations before income tax expense (benefit) disaggregated between federal, state, and foreign. The new standard is effective for the Company for its fiscal year beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard.
| 32 |
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures (ASU 2023-07). ASU 2023-07 requires that a public entity that has a single reportable segment, such as the Company, provide all the disclosures required by the existing segment disclosure requirements in Topic 280, as amended. These segment disclosures include significant segment expenses regularly provided to the chief operating decision maker (“CODM”) and included with each reported measure of segment loss, disclosure of other segment items by reportable segment and a description of the segment’s composition, disclosures about our reportable segment’s profit or loss and assets currently required, disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(S) of segment profit or loss in assessing segment performance and deciding how to allocate resources. We adopted ASU 2023-07 effective for the year ended December 31, 2024, and have retrospectively applied it to all periods presented.
In December 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income- Expense Disaggregation Disclosures (ASU 2024-03). ASU 2024-03 requires disclosure of specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods. The objective of the disclosure requirements is to provide disaggregated information to help financial statement users (a) better understand the Company’s performance, (b) better assess the Company’s prospects for future cash flows, and (c) compare the Company’s performance over time and with that of other entities. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. We are currently evaluating the impact that this guidance will have on our consolidated financial statements.
Note 3 –Liquidity and Going Concern Considerations
The Company’s consolidated financial statements are prepared in accordance with GAAP and includes the assumption of a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has historically and expects to incur operating losses and cash outflows from operations and as a result concludes that there is substantial doubt to continue as a going concern twelve months from the issuance of these statements.
These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 – Property and Equipment
Property and equipment consisted of the following at December 31, 2024 and 2023:
Estimated Useful Life | December 31, 2024 | December 31, 2023 | ||||||||
| Equipment | ||||||||||
| Less: accumulated depreciation | ( | ) | ||||||||
| Total property and equipment, net | $ | $ | ||||||||
Depreciation
was approximately $
Note 5 – Settlement and Release Agreement - Theralink
During
the year ended December 31, 2024, the Company entered into several financing transactions with Theralink Technologies, Inc.
(“Theralink”) that culminated in an acquisition of Theralink assets. Pursuant to the Settlement and Release Agreement
dated May 1, 2024, the Company acquired certain assets which resulted in the recording of long lived assets of $
Note 6 – Note Payable
During
the year ended December 31, 2024, the Company issued promissory notes (the “Notes”) to certain lenders (the “Lenders”)
in the aggregate principal amount for approximately $
The
Company has used $
Note 7 – Stock Option
| Number of Shares | Weighted Average | Weighted Average Remaining Contractual Life | ||||||||||
| Outstanding at December 31, 2022 | $ | |||||||||||
| Granted | - | |||||||||||
| Exercised | - | |||||||||||
| Cancelled | ( | ) | ||||||||||
| Outstanding at December 31, 2023 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | - | |||||||||||
| Cancelled | ( | ) | ||||||||||
| Outstanding at December 31, 2024 | $ | |||||||||||
2018 Incentive Compensation Plan
On August 30, 2024, the Company amended its 2018 Incentive Compensation Plan to increase the number of shares authorized for issuance thereunder from to shares.
| 33 |
Note 8 – Shareholders’ Equity (Deficit)
Preferred Stock 2023
On July 25, 2023, the Company entered into a definitive
securities purchase agreement with several institutional and accredited investors, including existing significant investors of Theralink
Technologies, Inc., its previously announced merger partner (OTC:THER) (“Theralink”), and Theralink’s Chairman, for
the sale of its preferred stock and warrants. IMAC sold an aggregate of shares of its Series A-1 Convertible Preferred Stock, stated
value $ per share, shares of its Series A-2 Convertible Preferred Stock, stated value $ per share, and Warrants to purchase
up to shares of its common stock for aggregate gross proceeds of $
The Company also entered into a Registration Rights Agreement, pursuant to which it agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) covering the resale of the shares of the Company’s common stock underlying the Series A-1 Convertible Preferred Stock, Series A-2 Convertible Preferred Stock and Warrants no later than 45 days following the closing of the planned merger.
On December 20, 2023, the Company entered into a letter
agreement with several institutional and accredited investors providing for the sale of an additional aggregate $
All terms other than the conversion price are the same as the Series A-1 and A-2.
In 2024, the Series B-1 and B-2 preferred shares were exchanged for Series C-1 and C-2 preferred shares.
Preferred Stock sold for cash
During
the year ended December 31, 2024, the Company sold , , ,
and
shares of Series C-2, Series D, Series E, Series F and Series G preferred stock, respectively, for gross proceeds of $
The
Company used $
Series
C-2, Series D, Series E, Series F and Series G preferred stock have dividends equal to
In
connection with the sale of preferred stock in 2024, the Company issued common stock purchase warrants of
Inputs
associated with the value of those warrants is Contractual term of
Preferred stock exchanged
During
the year ended December 31, 2024, certain investors exchanged
shares of Series B-1 and B-2 preferred stock for shares of Series C-1 preferred stock. The share exchange was accounted for as a modification;
however, the difference in fair value was de minimis. The Series C-1 have dividends equal to
Preferred stock converted
During the year ended December 31, 2024, shares of preferred stock were converted into shares of common stock.
Restricted Stock Units
On May 19, 2023, the Company granted an
aggregate of RSUs to Board members with these RSU’s vesting immediately with a fair value of $
| Number of Shares | Weighted Average Grant Date Fair Value | |||||||
| Outstanding at December 31, 2022 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Cancelled | ( | ) | ||||||
| Outstanding at December 31, 2023 | ||||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Outstanding at December 31, 2024 | $ | |||||||
Liquidation preference
Liquidation Value
| Preferred Shares Outstanding | Liquidation Preference | |||||||
| Series C-1 | $ | |||||||
| Series C-2 | ||||||||
| Series D | ||||||||
| Series E | ||||||||
| Series F | ||||||||
| Series G | ||||||||
| Total | $ | |||||||
Common Stock
In January 2023, the Company
issued common shares for cash of $
On December 27, 2023, issued an aggregate
of common shares for the Board members valued at $ per share or $
| 34 |
Note 9 – Common stock purchase warrants
In July 2023, the Company issued
| Number of Warrants | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term | ||||||||||
| December 31, 2022 | $ | |||||||||||
| Granted | ||||||||||||
December 31, 2023 | ||||||||||||
| Granted | ||||||||||||
| Expired | ( | ) | ||||||||||
| December 31, 2024 | $ | |||||||||||
Basic net loss per common share is computed by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the year. Diluted net loss per common share is determined using the weighted-average of common shares outstanding during the year, adjusted for the dilutive effect of common stock equivalents, consisting of the conversion option embedded in convertible debt. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would have a potentially dilutive effect.
Dilutive shares not included in the computation of dilutive loss per share because the effect would be potentially dilutive due to the Company’s net loss were as follows:
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Common Stock Purchase Warrants | ||||||||
| Preferred shares B-1 | ||||||||
| Preferred shares B-2 | ||||||||
| Preferred shares C-1 | ||||||||
| Preferred shares C-2 | ||||||||
| Preferred shares D | ||||||||
| Preferred shares E | ||||||||
| Preferred shares F | ||||||||
| Preferred shares G | ||||||||
| Stock options | ||||||||
| Potentially dilutive shares | ||||||||
Note 11 – Discontinued operations
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Accounts receivable, net | $ | $ | ||||||
| Other current assets | ||||||||
| Property and equipment, net | ||||||||
| Other assets | ||||||||
| Net assets from discontinued operations | $ | $ | ||||||
| Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Other current liabilities | ||||||||
| Other liabilities | ||||||||
| Net liabilities from discontinued operations | $ | $ | ||||||
The following table shows the results of income (loss) from discontinued operations:
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Patient revenues, net | $ | $ | ||||||
| Operating expenses (recovery) | ( | ) | ||||||
| Other expenses | ||||||||
| Total (recovery) costs and expenses | ||||||||
| Income (loss) from discontinued operations, net of income taxes | $ | ( | ) | $ | ( | ) | ||
| 35 |
Revenue Recognition
The Company’s patient service revenue was derived from non-surgical procedures performed at our outpatient medical clinics. The fees for such services were billed either to the patient or a third-party payer, including Medicare.
The Company recognized service revenues based upon the estimated amounts the Company expects to be entitled to receive from patients and third-party payers. Estimates of contractual adjustments are based upon the payment terms specified in the related contractual agreements. The Company also records estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record these revenues at the estimated amounts expected to be collected.
Starting in January 2020, the Company implemented wellness maintenance programs on a subscription basis. There were four membership plans offered with different levels of service for each plan. The Company recognized membership revenue on a monthly basis. Enrollment in the wellness maintenance program can occur at any time during the month and can be dis-enrolled at any time.
Starting in June 2021, the Company introduced BackSpace and began offering outpatient chiropractic and spinal care services as well as memberships services in Walmart retail locations. The fees for such services were paid and recognized as incurred.
Starting in September 2022, the Company introduced hormone replacement therapy “HRT” and medical weight loss programs. The Company recognized HRT and medical weight loss revenue as the services are provided.
Other management service fees are derived from management services where the Company provided billings and collections support to the clinics and where management services were provided based on state specific regulations known as the corporate practice of medicine (“CPM”). Under the CPM, a business corporation is precluded from practicing medicine or employing a physician to provide professional medical services. In these circumstances, the Company provides all administrative support to the physician-owned PC through a LLC. The PC is consolidated due to control by contract (an “MSA” – Management Services Agreement). The fees we derive from these management arrangements are either based on a predetermined percentage of the revenue of each clinic or a percentage mark up on the costs of the LLC. The company recognized other management service revenue in the period in which services were rendered. These revenues are earned by IMAC Nashville, IMAC Management, IMAC Illinois, IMAC Florida, IMAC Louisiana and the Back Space and are eliminated in consolidation to the extent owned.
Accounts Receivable
Accounts receivable primarily consists of amounts due from third-party payers (non-governmental), governmental payers and private pay patients and is recorded net of allowances for doubtful accounts and contractual discounts. The Company’s ability to collect outstanding receivables is critical to its results of operations and cash flows. Accordingly, accounts receivable reported in the Company’s consolidated financial statements is recorded at the net amount expected to be received.
The Company’s accounts receivable from third-party payers are recorded net of estimated contractual adjustments and allowances from third-party payers, which are estimated based on the historical trend of the Company’s facilities’ cash collections and contractual write-offs, accounts receivable aging, established fee schedules, relationships with payers and procedure statistics. While changes in estimated reimbursement from third-party payers remain a possibility, the Company expects that any such changes would be minimal and, therefore, would not have a material effect on the Company’s consolidated financial condition or results of operations. The Company’s collection policies and procedures are based on the type of payor, size of claim and estimated collection percentage for each patient account. The Company analyzes accounts receivable at each of the facilities to ensure the proper collection and aged category. The operating systems generate reports that assist in the collection efforts by prioritizing patient accounts. Collection efforts include direct contact with insurance carriers or patients and written correspondence.
Accounts receivable of discontinued operations consisted of the following at December 31:
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Accounts receivable, net of contractual adjustments | $ | $ | ||||||
| Less: allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
Allowance for Contractual, Other Discounts and Doubtful Accounts
Management estimates the allowance for contractual and other discounts based on its historical collection experience and contracted relationship with the payers. The services authorized and provided and related reimbursement are often subject to interpretation and negotiation that could result in payments that differ from the Company’s estimates.
In June 2016, the FASB issued Accounting Standards Update (ASU) 2016-13, “Financial Instruments – Credit Losses.” This ASU added a new impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. As a result, the Company changed its accounting policy for allowance for doubtful accounts using an expected losses model rather than using incurred losses. The new model is based on the credit losses expected to arise over the life of the asset based on the Company’s expectations as of the balance sheet date through analyzing historical customer data as well as taking into consideration current economic trends.
As a smaller reporting Company pursuant to Rule 12b-2 of the Securities Exchange Act of 1934, as amended, these changes became effective for the Company on January 1, 2023. The adoption of ASU 2016-13 did not have a material financial impact on the Company’s consolidated financial statements.
| 36 |
Variable Interest Entities
Certain states prohibit the “corporate practice of medicine,” which restricts business corporations from practicing medical care by exercising control over clinical decisions by doctors. In states which prohibit the corporate practice of medicine, the Company entered into long-term management agreements with professional corporations (“PCs”) that are owned by licensed doctors, which, in turn employ or contract with doctors who provide professional care in its clinics. Under these management agreements with PCs, the Company provided, on an exclusive basis, all non-clinical services of the practice.
The consolidated financial statements include the accounts of variable interest entities (“VIE”) in which the Company is the primary beneficiary under the provisions of the FASB Accounting Standards Codification 810, “Consolidation”. The Company has the power to direct the activities that most significantly impact a VIE’s economic performance. Additionally, the Company would absorb the substantially all of the expected losses from any of these entities should such expected losses occur. As of December 31, 2024 and 2023, the Company’s consolidated VIE’s include 12 PCs and 12 PCs, respectively.
The total assets (excluding
goodwill and intangible assets, net) of the consolidated VIEs included in the accompanying consolidated balance sheets as of December
31, 2024 and 2023, were approximately $
Note 12 – Income Taxes
Components of income tax expense /benefit for the year ended December 31, 2024 and December 31, 2023 are as follows:
| 2024 | 2023 | |||||||
| Current Income Tax Expense (Benefit) - Federal | ||||||||
| Current Income Tax Expense (Benefit) - State | ||||||||
| Total Current Income Tax Expense (Refund) | ||||||||
| Deferred Income Tax Expense (Benefit) - Federal | ||||||||
| Deferred Income Tax Expense (Benefit) - State | ||||||||
| Total Deferred Income Tax Expense (Benefit) | ||||||||
| Total Provision for Income Taxes | ||||||||
The tax effects of cumulative temporary differences which give rise to the significant portions of deferred tax assets or liabilities at December 31, 2024 and 2023 are as follows:
| Deferred Tax Assets: | 2024 | 2023 | ||||||
| Reserves & Allowances | ||||||||
| Accrued Payroll Expenses | ||||||||
| Other Accrued Expenses | ||||||||
| Straight-Line Rent Accrual | ||||||||
| Interest Expense | ||||||||
| Carryforward of Sec. 179 | ||||||||
| Charitable Contribution Carryforward | ||||||||
| Unrealized Gains/Losses on FX Exchange | ||||||||
| Net operating loss carryforward - Federal | ||||||||
| Net operating loss carryforward - State | ||||||||
| Tax Credits | ||||||||
| Non Qualified Stock Options | ||||||||
| Amortization | ||||||||
| Total deferred tax assets | ||||||||
| Deferred Tax Liabilities: | ||||||||
| Depreciation | ( | ) | ( | ) | ||||
| Amortization | ||||||||
| - | - | |||||||
| Net deferred tax liability | ( | ) | ( | ) | ||||
| Less Valuation Allowance | ( | ) | ( | ) | ||||
| Total Net Deferred Tax Assets | ||||||||
The
Company has federal net operating loss carryforward of approximately $
ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2024 and 2023, a full valuation allowance was required.
In addition, the Company performed a comprehensive review of its uncertain tax positions and determined that no liabilities or related interest and penalties were necessary relating to unrecognized tax benefits at December 31, 2024. The Company’s federal and state income tax returns are subject to examination by taxing authorities for three years after the returns are filed, and the Company’s federal and state income tax returns for 2021 and 2023 remain open to examination. The primary state income tax returns are for Florida, Illinois, Kentucky,and Missouri. As of the date of these financial statements, the Company has not yet filed its federal and state income tax returns for the year ended December 31, 2023. The Company does not have any Uncertain Tax Positions (“UTPs”) as of the reporting date. However, if UTPs were to arise, the Company’s policy would be to recognize interest and penalties related to UTPs in the income statement as part of income tax expense.
| 37 |
The reconciliation of the computed effective tax rate to the U.S. federal statutory rate is as follows:
| 2024 | 2023 | |||||||
| Federal statutory income tax | % | % | ||||||
| Permanent Differences | % | % | ||||||
| Change in Tax Credits | % | % | ||||||
| Change in Tax Rate | % | % | ||||||
| Change in Valuation Allowance | - | % | - | % | ||||
| State income taxes, net of federal benefit | % | % | ||||||
| Prior Year Adjustments | % | - | % | |||||
| Total | % | % | ||||||
Note 13 – Commitments and Contingencies
From time to time the Company may become subject to threatened and/or asserted claims arising in the ordinary course of our business. Other than the matter described below, management is not aware of any matters, either individually or in the aggregate, that are reasonably likely to have a material impact on the Company’s financial condition, results of operations or liquidity.
Third Party Audit
From time to time, in the ordinary course of business with respect to our discontinued operations, we are subject to audits under various governmental programs in which third party firms engaged by the Center for Medicare & Medicaid Services (“CMS”) conduct extensive reviews of claims data to identify potential improper payments. We cannot predict the ultimate outcome of any regulatory reviews or other governmental audits and investigations.
Progressive Health
In
October 2021, the Company received notification from Covent Bridge Group (“Covent Bridge”), a CMS contractor, that they are recommending to CMS that the Company was overpaid and a request for payment was made
in December 2021 in the amount of approximately $
The amount represents a statistical extrapolation of charges from a sample of claims for the periods July 2017 to November 2020 for Progressive Health & Rehabilitation, Ltd (“Progressive Health”). The Company entered into a management agreement with Progressive Health in April 2019.
The Company has initiated the appropriate appeals. The Company submitted a redetermination request in March 2022, which was denied. The Company submitted a reconsideration request February 2023. In July 2023, the Company received a reconsideration decision from the second appeal. The Qualified Independent Contractor provided a partially favorable decision that medical necessity supported a portion of the claims. The Company filed an appeal and a hearing with an Administrative Law Judge (ALJ) was conducted November 2023. The ALJ decision received on February 2024 did not address the Company’s appeal and the impact on the partially favorable decision from the Independent contractor and the potential impact on the extrapolated charges.
The
Company filed an appeal to Medicare Appeals Council in April 2024 and the result was unfavorable. The Company plans to continue its appeal by seeking relief from a U.S. District Court. The Company has reserved the
request for payment amount of approximately $
| 38 |
Advantage Therapy
In
May 2022 the Company received notifications from Covent Bridge, that they are recommending to CMS that the Company was overpaid and
a request for payment was made in the amount of approximately $
The Company submitted a reconsideration request in May 2023. In August 2023 the Company received a reconsideration decision from the second appeal. The Qualified Independent Contractor provided a partially favorable decision supporting the appealed claims.
Subsequent to the findings of the second Appeal the Company filed an appeal and conducted a hearing with an Administrative Law Judge in February 2024. The Company awaits the response from the hearing.
IMAC St. Louis
In
November 2024, the Company received notification from Covent Bridge, that it estimates the Company was overpaid CMS funds in the
amount of approximately $
Note 14 – Segment Reporting
The Company has determined that it currently operates in a single segment, precision medicine in cancer treatment, currently located in a single geographic location, the United States. The accounting policies of the segment are the same as those described in the summary of significant accounting policies. Since the Company operates in a single segment, the measure of segment total assets and loss from operations is the same as that reported on the accompanying balance sheets as total assets, and the accompanying statement of operations as loss from operations, respective.
The Company’s chief operating decision maker (“CODM”) is the chief executive officer. The Company’s CODM reviews and evaluates the total consolidated net loss for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods. In addition to the significant expense categories included within the total net loss presented on the Company’s Statements of Operations, the following table sets forth significant segment expenses:
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Patient revenue, net | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit (loss) | ( | ) | ||||||
| Operating expenses | ||||||||
| Employee expense | ||||||||
| Professional fees | ||||||||
| Occupancy | ||||||||
| Insurance | ||||||||
| Loss on disposition or impairment | ||||||||
| Other | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Interest income | ||||||||
| Other income (expense) | ( | ) | ||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other income (expenses) | ( | ) | ( | ) | ||||
| Income (loss) from continuing operations, net of income taxes | $ | ( | ) | $ | ( | ) | ||
Note 15 - Subsequent Events
On March 26, 2025, the Company’s shareholders approved the Board of Directors’ proposal to increase the number of authorized shares of the Company’s common stock to shares from shares.
In 2025, we issued promissory notes (the “2025
Notes”) to certain lenders in the aggregate principal amount of $
| 39 |
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES |
None.
| ITEM 9A. | CONTROLS AND PROCEDURES |
| (1) | Evaluation of Disclosure Controls and Procedures |
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 (the “Exchange Act”) reports is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As further discussed below, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, our chief executive officer and chief financial officer concluded that, because of certain material weaknesses in our internal control over financial reporting our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of December 31, 2024, due to material weaknesses discussed below.
| (2) | Management’s Report on Internal Control over Financial Reporting |
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Based on our evaluation under the framework in Internal Control—Integrated Framework (2013), our management concluded that, because our internal controls over financial report were not effective as of December 31, 2024, our disclosure controls and procedures as defined in Rule 12a-15E and 15d-15E under the Exchange Act were not effective as of December 31, 2024 and 2023.
The material weaknesses relate to the absence of in-house accounting personnel with the ability to properly account for complex transactions and a lack of separation of duties between accounting and other functions. Three material weaknesses are as follows:
| 1. | The Company does not have sufficient resources in our accounting department, which restricts our ability to gather, analyze and properly review information related to financial reporting, including applying complex accounting principles relating to consolidation accounting, related party transactions, fair value estimates, accounting contingencies and analysis of financial instruments for proper classification in the consolidated financial statements, in a timely manner. |
| 2. | Due to the Company’s size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties during our assessment of our disclosure controls and procedures and concluded that the control deficiency that resulted represented a material weakness. | |
| 3. | The Company has not sufficiently designed and implemented operating controls surrounding accounting policies and controls to ensure the Company’s books and records are recorded in accordance with US GAAP. |
Remediation
We hired a consulting firm to advise on technical issues related to U.S. GAAP as related to the maintenance of our accounting books and records and the preparation of our consolidated financial statements. Although we are aware of the risks associated with not having dedicated accounting personnel, we are also at an early stage in the development of our business. We anticipate expanding our accounting functions with dedicated staff and improving our internal accounting procedures and separation of duties when we can absorb the costs of such expansion and improvement with additional capital resources. In the meantime, management will continue to observe and assess our internal accounting function and make necessary improvements whenever they may be required. If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements, and we could be required to restate our financial results. In addition, if we are unable to successfully remediate this material weakness and if we are unable to produce accurate and timely financial statements, our stock price may be adversely affected and we may be unable to maintain compliance with applicable stock exchange listing requirements.
| (3) | Changes in Internal Control over Financial Reporting |
Except as described above, there has been no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Exchange Act that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| ITEM 9B. | OTHER INFORMATION |
| ITEM 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
None.
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PART III
| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE |
The names and ages of our executive officers and directors, and their positions with us, are as follows:
| Name | Age | Position | ||
| Faith Zaslavsky | 50 | Chief Executive Officer | ||
| Sheri F. Gardzina, CPA | 56 | Chief Financial Officer | ||
| Peter Beitsch | 64 | Director | ||
| Jeffrey Busch | 67 | Director | ||
| Maurice E. Evans | 45 | Director | ||
| Michael D. Pruitt | 64 | Director | ||
| Matthew Schwartz | 51 | Director |
Faith Zaslavsky joined our company in May 2024 and serves as our Chief Executive Officer. Prior to joining the Company, Ms. Zaslavsky most recently served as Chief Executive Officer since June 2023, and President and Chief Operating Officer since December 2022, of Theralink Technologies, Inc. (OTC: THER). Prior to Theralink, Ms. Zaslavsky served as President of Oncology for Myriad Genetic Laboratories, (NASDAQ: MYGN). Her responsibilities included overseeing all commercial functions which include leading Medical Services, Medical Affairs, National and Enterprise Accounts and Sales and Marketing. She has spent 22 years leading and transforming teams, designing solutions for physicians to support care and advocating for patients facing a journey with cancer. She received a Business Administration degree from Washington State University. Ms. Zaslavsky also serves on the board of directors of the American Society of Breast Surgeons Foundation.
Sheri F. Gardzina, CPA joined our company in November 2017 and serves as our Chief Financial Officer. Prior to joining IMAC, Ms. Gardzina served as the controller or member of the accounting executive team of Smile Direct Club, LLC, a marketer of invisible aligners, from June 2016 to September 2017, Adoration Health, a home health and hospice company, from October 2015 to June 2016, Lattimore, Black, Morgan & Cain, an accounting and consulting firm where she provided temporary chief financial officer services to Peak Health Solutions, from August to September 2015, EB Employee Solutions, LLC, a healthcare self-insurance product developer, from May to December 2014, and Inspiris Inc., a start-up care management company sold to Optum, from November 2003 to May 2014. Ms. Gardzina started her career as an auditor with Ernst & Young, where she worked from October 1994 to August 1997. Ms. Gardzina earned a B.S. degree in business administration and finance from Purdue University and an M.S. in accountancy and M.B.A. from Northeastern University.
Peter Beitsch, MD, joined our Board of Directors in June 2024. Since 1994, Dr. Beitsch has been in private medical practice with a focus on melanoma and breast cancer. He is actively involved in breast cancer and melanoma research and has held numerous positions in national surgical societies including the American Society of Breast Surgeons where he served as first Chairman of the Membership Committee 2001-4, Program Director for the 2005 Annual Meeting in Los Angeles, Board of Directors Member from 2006-9 and 2012-15. He was President of the Society 2013-14. In addition, he has served on the Executive Committee of the Society of Surgical Oncology 2008-2010, General Surgical Oncology Committee of the American Board of Surgery 2013-19, and was a National Ultrasound Faculty for the American College of Surgeons. Dr. Beitsch was a co-founder of, and remains involved with, Targeted Medical Education, which has been involved in studies and clinical trials for breast cancer research and which was acquired by Aptitude Health in 2022. Additionally, Dr. Beitsch has been involved with InVitae and is a surgeon with the Dallas Surgical Group. Dr. Beitsch attended the University of Texas Southwestern Medical School in Dallas. He trained in general surgery residency at Parkland Hospital in Dallas from 1986 to 1993, during which he received a 2 year National Cancer Institute fellowship at M.D. Anderson Cancer Center from 1988-90. He completed his training with a surgical oncology fellowship at the John Wayne Cancer Institute in Santa Monica, California.
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Dr. Beitsch’s extensive experience in breast cancer research and treatment will assist the Board to guide the Company in connection with its current RPPA technology platform.
Jeffrey Busch joined our Board of Directors in September 2024. Mr. Busch has been the Chairman of the Board of Theralink Technologies, Inc., from which the Company acquired certain assets in May 2024. Mr. Busch is the current Chairman and CEO of Global Medical REIT, a NYSE listed company (NYSE:GMRE) that acquires licensed medical facilities. Mr. Busch has been a Presidential Appointee, entrepreneur and active investor in various asset classes, including medical and pharmaceutical, since 1985. Mr. Busch has had a distinguished career in public service, which includes serving as a Chief of Staff to a United States Congressman and serving in senior positions in two U.S. presidential administrations. Mr. Busch represented the United States before the United Nations in Geneva, Switzerland. Mr. Busch has served as a top advisor to several publicly traded medical companies and has worked in the medical, blood supply and management fields. Mr. Busch also served as President of the Safe Blood International Foundation, where he oversaw the establishment of medical facilities in 35 developing nations, including China. Mr. Busch is a graduate of the New York University Stern School of Business, holds a Master of Public Administration specializing in health care from New York University, and a Doctor of Jurisprudence from Emory University.
Dr. Busch’s extensive experience with the Company’s current RPPA technology platform and the marketplace will assist the Board to guide the Company in connection with its current business plans to expand the use of the RPPA technology into different markets and for different cancers.
Maurice E. (Mo) Evans joined our Board of Directors in October 2020. Mr. Evans. is a business leader, advisor, consultant, investor and speaker to businesses in the sports business vertical. He is the co-founder of ELOS Sports and Entertainment, LLC (“ELOS”), a provider of brand management services to athletes and businesses in the sports and entertainment industry. Mr. Evans has served as the principal of ELOS since 2014. Prior to that, from 2001 to 2012, he was a professional basketball player, playing for the Washington Wizards, Atlanta Hawks, Orlando Magic, Los Angeles Lakers, Detroit Pistons and Sacramento Kings. He also served as Executive Vice President of the NBA Players Association from 2010 to 2013. Mr. Evans received a B.A. degree from the University of Texas at Austin.
Mr. Evans provides more than a decade of experience in leading and managing customer-centric personal service organizations such as the NBA Players Association and ELOS Sports and Entertainment. He also brings the benefit of a long tenure with the Board.
Michael D. Pruitt joined our Board of Directors in October 2020. He founded Avenel Financial Group, a boutique financial services firm concentrating on emerging technology company investments in 1999. In 2001, he formed Avenel Ventures, a technology investment and private venture capital firm. In February 2005, Mr. Pruitt formed Chanticleer Holdings, Inc., then a public holding company (now known as Sonnet BioTherapeutics Holdings, Inc.), and he served as Chairman of the Board of Directors and Chief Executive Officer until April 1, 2020, at which time the restaurant operations of Chanticleer Holdings were spun out into a new public entity, Amergent Hospitality Group, Inc., where Mr. Pruitt has served as its Chairman and Chief Executive Officer to date. Mr. Pruitt also served as a director on the board of Hooters of America, LLC from 2011 to 2019. Mr. Pruitt received a B.A. degree from Costal Carolina University. He currently sits on the Board of Visitors of the E. Craig Wall Sr. College of Business Administration, the Coastal Education Foundation Board, and the Athletic Committee of the Board of Trustees.
Mr. Pruitt’s over 15 years of day-to-day operational leadership and service as a board member at public companies Chanticleer Holdings and Amergent Hospitality Group make him well qualified as a member of the Board. He also brings transactional expertise in mergers and acquisitions and capital markets.
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Matthew Schwartz, MD, joined our Board of Directors in June 2024. Dr Schwartz is a Radiation Oncologist with 20 years of experience in the Oncology and Biotechnology industries. 2011 to 2020, Dr. Schwarz held key leadership positions at Comprehensive Cancer Centers of Nevada (“CCCN”), including serving on the Board of Directors and as Chairman of the Marketing Committee. In 2010, Dr. Schwartz co-founded Las Vegas Cyberknife, an institution using advanced, non-invasive targeted radiation treatments for tumors. Currently, he serves as the Chairman of the Board of Managers at Las Vegas Cyberknife, Dr. Schwartz has also served on the Radiation Oncology Leadership Council of the US Oncology Network, the US Oncology Clinical Pathways Committee, and the McKesson Specialty Health Radiation Executive Committee. Dr. Schwartz served on the board of directors of Theralink Technologies, Inc. from 2022 - 2024 and on the board of directors of Avant Diagnostics from 2019 - 2020. Dr. Schwartz completed his training at McGill University, where he was Chief Resident, and Yale-New Haven Hospital.
Dr. Schwartz brings to the Board extensive knowledge and experience with oncology practice and treatments, which knowledge and experience are useful to the Company in connection with its current Reverse Phase Protein Array (RPPA) technology platform.
Code of Ethics
We have adopted a Code of Business Ethics and Conduct (“Ethics Code”) that applies to all our officers, directors, employees, and contractors. The Ethics Code contains general guidelines for conducting our business consistent with the highest standards of business ethics and compliance with applicable law, and is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K. Day-to-day compliance with the Ethics Code is overseen by the Company compliance officer appointed by our Board of Directors. The Ethics Code is available on our website at https://ir.imacregeneration.com. If we make any substantive amendments to the Ethics Code or grant any waiver from a provision of the Ethics Code to any director or executive officer, we will promptly disclose the nature of the amendment or waiver on our website.
Insider Trading Policy
The Company has adopted an insider trading policy and procedures governing the purchase, sale, and other dispositions of our securities by directors, officers, and employees that we believe are reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq listing standards. Our insider trading policy states, among other things, that our directors, officers, and employees are prohibited from trading in such securities while in possession of material, nonpublic information. The foregoing summary of our insider trading policies and procedures does not purport to be complete and is qualified by reference to our Insider Trading Policy filed as an exhibit to this Annual Report on Form 10-K. In addition, with regard to the Company’s trading in its own securities, it is our policy to comply with the federal securities laws and the applicable exchange listing requirements.
Board Composition
Our business and affairs are managed under the direction of our board of directors. The number of directors is determined by our board of directors, subject to the terms of our certificate of incorporation and bylaws. Our board of directors currently consists of five members.
Director Independence
Or common stock is listed for trading on The Nasdaq Capital Market. Under Nasdaq rules, independent directors must comprise a majority of a listed company’s board of directors. In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and governance committees must be independent. Under Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (i) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (ii) be an affiliated person of the listed company or any of its subsidiaries.
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Our board of directors undertook a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors has determined that Messrs. Beitsch, Busch, Evans, Pruitt and Schwartz, representing all of our directors, do not have any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under Nasdaq rules. In making these determinations, our board of directors considered the relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.
Board Committees
Our board of directors has three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. Under Nasdaq rules, the membership of the audit committee is required to consist entirely of independent directors, subject to applicable phase-in periods. The following is a brief description of our committees.
Audit committee. In accordance with our audit committee charter, our audit committee oversees our corporate accounting and financial reporting processes and our internal controls over financial reporting; evaluates the independent public accounting firm’s qualifications, independence and performance; engages and provides for the compensation of the independent public accounting firm; approves the retention of the independent public accounting firm to perform any proposed permissible non-audit services; reviews our consolidated financial statements; reviews our critical accounting estimates and internal controls over financial reporting; and discusses with management and the independent registered public accounting firm the results of the annual audit and the reviews of our quarterly consolidated financial statements. We believe that our audit committee members meet the requirements for financial literacy under the current requirements of the Sarbanes-Oxley Act, Nasdaq and SEC rules and regulations. In addition, the board of directors has determined that Michael D. Pruitt is qualified as an audit committee financial expert within the meaning of SEC regulations. We have made this determination based on information received by our board of directors, including questionnaires provided by the members of our audit committee. The audit committee is composed of Messrs. Pruitt (Chairman), Evans and Busch.
Compensation committee. In accordance with our compensation committee charter, our compensation committee reviews and recommends policies relating to compensation and benefits of our officers and employees, including reviewing and approving corporate goals and objectives relevant to compensation of the Chief Executive Officer and other senior officers, evaluating the performance of these officers in light of those goals and objectives and setting compensation of these officers based on such evaluations. The compensation committee also administers the issuance of stock options and other awards under our equity-based incentive plans. We believe that the composition of our compensation committee meets the requirements for independence under, and the functioning of our compensation committee complies with, any applicable requirements of the Sarbanes-Oxley Act, Nasdaq and SEC rules and regulations. We intend to comply with future requirements to the extent they become applicable to us. The compensation committee is composed of Messrs. Evans (Chairman), Pruitt and Schwartz.
Nominating and governance committee. In accordance with our nominating and governance committee charter, our nominating and governance committee recommends to the board of directors nominees for election as directors, and meets as necessary to review director candidates and nominees for election as directors; recommends members for each committee of the board; oversee corporate governance standards and compliance with applicable listing and regulatory requirements; develops and recommends to the board governance principles applicable to the company; and oversee the evaluation of the board and its committees. We believe that the composition of our nominating and governance committee meets the requirements for independence under, and the functioning of our compensation committee complies with, any applicable requirements of the Sarbanes-Oxley Act, Nasdaq and SEC rules and regulations. We intend to comply with future requirements to the extent they become applicable to us. The nominating and governance committee is composed of Messrs. Busch (Chairman), Beitsch and Schwartz.
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Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee is an executive officer or employee of our company. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.
Limitations on Director and Officer Liability and Indemnification
Our certificate of incorporation limits the liability of our directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except liability for:
| ● | any breach of their duty of loyalty to the corporation or its stockholders; | |
| ● | acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; | |
| ● | unlawful payments of dividends or unlawful stock repurchases or redemptions; or | |
| ● | any transaction from which the director derived an improper personal benefit. |
Our certificate of incorporation and our bylaws provide that we are required to indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. Any repeal of or modification to our certificate of incorporation and our bylaws may not adversely affect any right or protection of a director or officer for or with respect to any acts or omissions of such director or officer occurring prior to such amendment or repeal. Our bylaws will also provide that we shall advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in connection with their services to us, regardless of whether our bylaws permit such indemnification.
We intend to enter into separate indemnification agreements with our directors and executive officers, in addition to the indemnification provided for in our bylaws. These agreements, among other things, provide that we will indemnify our directors and executive officers for certain expenses (including attorneys’ fees), judgments, fines, penalties and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of such person’s services as one of our directors or executive officers, or any other company or enterprise to which the person provides services at our request. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers.
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The limitation of liability and indemnification provisions that are contained in our certificate of incorporation and our bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. There is no pending litigation or proceeding involving one of our directors or executive officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
The Board of Directors’ Role in Risk Oversight
Our Board of Directors, as a whole and also at the committee level, has an active role in managing enterprise risk. The members of our Board of Directors participate in our risk oversight assessment by receiving regular reports from members of senior management and the Company compliance officer appointed by our Board of Directors on areas of material risk to us, including operational, financial, legal and regulatory, and strategic and reputational risks. The Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements. The Audit Committee oversees management of financial risks, as well as our policies with respect to risk assessment and risk management. The Nominating and Governance Committee manages risks associated with the independence of our Board of Directors and potential conflicts of interest. Members of the management team report directly to our Board of Directors or the appropriate committee. The directors then use this information to understand, identify, manage, and mitigate risk. Once a committee has considered the reports from management, the chairperson will report on the matter to our full Board of Directors at the next meeting of the Board of Directors, or sooner if deemed necessary. This enables our Board of Directors and its committees to effectively carry out its risk oversight role.
Communications with our Board of Directors
Any stockholder may send correspondence to our Board of Directors, c/o IMAC Holdings, Inc., 3401 Mallory Lane, Suite 100, Franklin, Tennessee 37067 and our telephone number is (303) 898-5896. Our management will review all correspondence addressed to our Board of Directors, or any individual director, and forward all such communications to our Board of Directors or the appropriate director prior to the next regularly scheduled meeting of our Board of Directors following the receipt of the communication, unless the corporate secretary decides the communication is more suitably directed to Company management and forwards the communication to Company management. Our management will summarize all stockholder correspondence directed to our Board of Directors that is not forwarded to our Board of Directors and will make such correspondence available to our Board of Directors for its review at the request of any member of our Board of Directors.
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Indebtedness of Directors and Executive Officers
None of our directors or executive officers or their respective associates or affiliates is currently indebted to us.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our executive officers, directors and holders of more than 10% of our equity securities to file reports of ownership and changes in ownership of our securities (Forms 3, 4 and 5) with the SEC. To the best of our knowledge, based solely on a review of the Section 16(a) reports and written statements from executive officers and directors, for the years ended December 31, 2024 and 2023, all required reports of executive officers, directors and holders of more than 10% of our equity securities were filed on time, except one late filing of Form 3 by Dr. Beitsch.
Family Relationships
There are no family relationships among our directors and executive officers.
| ITEM 11. | EXECUTIVE COMPENSATION |
Summary Compensation Table
The following table sets forth summary compensation information for the following persons: (i) all persons serving as our principal executive officer during the years ended December 31, 2024 and 2023, and (ii) our other most highly compensated executive officers who received compensation during the years ended December 31, 2024 and 2023 of at least $100,000 and who were executive officers on December 31, 2024 and 2023. We refer to these persons as our “named executive officers” in this Form 10-K. The following table includes all compensation earned by the named executive officers for the respective period, regardless of whether such amounts were actually paid during the period:
| Name and Position | Years | Salary | Bonus | Stock Awards | Option Awards | Non- equity Incentive Plan Comp | Non- qualified Deferred Comp | All Other Comp | Total | |||||||||||||||||||||||||||
| Faith Zaslavsky, | 2024 | $ | 262,713 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 262,713 | |||||||||||||||||||
| Chief Executive Officer | 2023 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Sheri Gardzina, | 2024 | $ | 227,294 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 227,294 | |||||||||||||||||||
| Chief Financial Officer | 2023 | 203,846 | 6,250 | - | - | - | - | - | 210,096 | |||||||||||||||||||||||||||
| Jeffrey S. Ervin, | 2024 | $ | 85,947 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 85,947 | |||||||||||||||||||
| Former Chief Executive Officer(1) | 2023 | $ | 200,000 | $ | 12,500 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 212,500 | |||||||||||||||||||
| (1) | Mr. Ervin resigned as chief executive officer of the Company and from the Board of Directors on May 23, 2024. |
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Employment Agreements
We entered into an employment agreement effective March 1, 2019 with Jeffrey Ervin. The employment agreement was extended for a term expiring on February 28, 2023. Mr. Ervin resigned as chief executive officer of the Company and from the Board of Directors on May 23, 2024.
Pursuant to the employment agreement, Mr. Ervin agreed to devote substantially all of his business time, attention and ability, to the Company’s business as the Chief Executive Officer. In addition, Mr. Ervin was entitled to receive, at the sole discretion of the Board of Directors, cash bonuses based on meeting and exceeding performance goals of the Company. He was also entitled to participate in the Company’s 2018 Incentive Compensation Plan. The Company agreed to pay or reimburse Mr. Ervin up to $100 per month for the business use of their personal cell phone.
The employment agreement also provided for termination by the Company upon death or disability of Mr. Ervin (defined as three aggregate months of incapacity during any 365-consecutive day period) or upon conviction of a felony crime of moral turpitude or a material breach of his obligations to the Company. In the event the employment agreement were terminated by the Company without cause, Mr. Ervin was entitled to compensation for the balance of the term.
In the event of a change of control of our company, Mr. Ervin could terminate his employment within six months after such event and would have been entitled to continue to be paid pursuant to the terms of the employment agreements.
The employment agreement also contained covenants (a) restricting Mr. Ervin from engaging in any activities competitive with the Company’s business during the terms of his employment agreement and one year thereafter, (b) prohibiting him from disclosure of confidential information regarding the Company at any time and (c) confirming that all intellectual property developed by Mr. Ervin and relating to the Company’s business constitutes the Company’s sole and exclusive property.
Grants of Plan-Based Awards
As of December 31, 2024, the Company had outstanding stock options to purchase 1,306 shares of its common stock which were granted as non-qualified stock options to various employees of the Company. These options vest over a period of four years, with 25% vesting after one year and the remaining 75% vesting in equal monthly installments over the following 36 months, are exercisable for a period of ten years, and enable the holders to purchase shares of the Company’s common stock at the exercise price of award. The per-share fair values of these options range from $35.70 to $121.20 based on Black-Scholes-Merton pricing model.
At December 31, 2024, the Company had 4,000 outstanding restricted stock units (“RSUs”) which were granted to, and deferred by, a Named Executive Officer.
On September 9, 2024, the Company granted to former director, Carey Sucoff, 3,333 RSUs that vest on September 9, 2025 and 10,000 stock options that will vest on such date as the Company is in compliance with Nasdaq’s requirements.
On December 31, 2024, the Company granted 3,333 shares of common stock to each of the members of the Board of Directors.
Outstanding Equity Awards at December 31, 2024
No stock options were granted to any of our named executive officers during the year ended December 31, 2024. As of December 31, 2024 a total of 4,000 RSUs were reserved for issuance upon vesting of RSUs held by named executive officers.
The following table presents the outstanding equity awards held by each of the named executive officers as of the fiscal year ended December 31, 2024, including the value of the stock awards.
| Option Awards | Stock Awards | |||||||||||||||||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units That Have Not Vested ($) | |||||||||||||||||
| Sheri Gardzina | 5/21/2019 | 1,250 | 0 | $ | 121.20 | 5/21/2029 | 4,000 | (1) | $ | 5,080 | ||||||||||||||
| (1) | Four-year vesting with four equal annual installments |
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2018 Incentive Compensation Plan
Under our 2018 Incentive Compensation Plan (the “Plan”), adopted by our board of directors and holders of a majority of our outstanding shares of common stock in May 2018, 66,667 shares (after giving effect to an adjustment approved by the Compensation Committee on April 30, 2024 in light of the 1-for-30 reverse stock split effected in September 2023) of common stock (subject to certain adjustments) were authorized for issuance upon exercise of stock options and grants of other equity awards. On August 30, 2024, with approval of holders of a majority of the Company’s outstanding shares of common stock, the Company amended the Plan to increase the number of shares authorized for issuance under the Plan from 66,667 to 566,667 shares of common stock. The Plan is designed to serve as an incentive for attracting and retaining qualified and motivated employees, officers, directors, consultants and other persons who provide services to us. The compensation committee of our board of directors administers and interprets the Plan and is authorized to grant stock options and other equity awards thereunder to all eligible employees of our company, including non-employee consultants to our company and directors.
The Plan provides for the granting of “incentive stock options” (as defined in Section 422 of the Code), non-statutory stock options, stock appreciation rights, shares of restricted stock, restricted stock units, deferred stock, dividend equivalents, bonus stock and awards in lieu of cash compensation, other stock-based awards and performance awards. Options may be granted under the Plan on such terms and at such prices as determined by the compensation committee of the board, except that the per share exercise price of the stock options cannot be less than the fair market value of our common stock on the date of grant. Each option will be exercisable after the period or periods specified in the stock option agreement, but all stock options must be exercised within ten years from the date of grant. Options granted under the Plan are not transferable other than by will or by the laws of descent and distribution. The compensation committee of the board has the authority to amend or terminate the Plan, provided that no amendment shall be made without stockholder approval if such stockholder approval is necessary to comply with any tax or regulatory requirement. Unless terminated sooner, the Plan will terminate ten years from its effective date.
Equity Compensation Plan Summary
The following table provides information as of December 31, 2024, relating to our equity compensation plan:
| Plan Category | Number of be Issued Upon of Outstanding | Weighted- Exercise Price of Outstanding | Number of Remaining Available for Issuance Under Equity Plans (Excluding Securities in the First | |||||||||
| Equity compensation plan approved by security holders (1) | 11,306 | $ | 15.93 | 485,044 | ||||||||
| Equity compensation plans not approved by security holders | - | $ | - | - | ||||||||
| Total | 11,306 | $ | 15.93 | 485,044 | ||||||||
| (1) | Consists solely of the 2018 Incentive Compensation Plan. |
Director Compensation
We compensate each non-employee director through annual stock awards under our 2018 Incentive Compensation Plan and by paying a cash fee as determined by the Board of Directors. During the year ended December 31, 2024, each of our non-employee directors, Messrs. Beitsch, Busch, Evans, Pruitt, and Schwartz was paid the cash compensation set forth below and each of them was awarded 3,333 shares of common stock. Carey Sucoff was also awarded 10,000 stock options.
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Non-Employee Director Compensation Table
The following table sets forth summary information concerning compensation paid or accrued for services rendered to us in all capacities by the non-employee members of our Board of Directors for the fiscal year ended December 31, 2024.
| Name | Fees Paid in Cash ($) | Stock Awards ($) (1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Comp ($) | Total ($) | |||||||||||||||||||||
| Peter Beitsch | $ | - | $ | 4,233 | - | - | - | - | $ | 4,233 | ||||||||||||||||||
| Jeffrey Busch | $ | - | $ | 4,233 | - | - | - | - | $ | 4,233 | ||||||||||||||||||
| Maurice Evans | $ | 28,750 | $ | 4,233 | - | - | - | - | $ | 32,983 | ||||||||||||||||||
| Michael D. Pruitt | $ | 28,750 | $ | 4,233 | - | - | - | - | $ | 32,983 | ||||||||||||||||||
| Matthew Schwartz | $ | - | $ | 4,233 | - | - | - | - | $ | 4,233 | ||||||||||||||||||
| Cary W. Sucoff (2) | $ | 11,250 | $ | 5,249 | $ | 14,250 | - | - | - | $ | 30,749 | |||||||||||||||||
| Matthew Wallis (3) | $ | - | $ | - | - | - | - | - | $ | - | ||||||||||||||||||
| (1) | Represents full fair value at grant date of RSUs granted to our directors, computed in accordance with FASB ASC Topic 718. | |
| (2) | Mr. Sucoff resigned as a member of the Board of Directors on September 9, 2024. | |
| (3) | Dr. Wallis resigned as a member of the Board of Directors on May 23, 2024. |
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The following table sets forth information as of March 31, 2025 regarding the beneficial ownership of our common stock by (i) each person we know to be the beneficial owner of 5% or more of our common stock, (ii) each of our named executive officers, as defined below, (iii) each of our directors, and (iv) all of our current executive officers and directors as a group. Information with respect to beneficial ownership has been furnished by each director and executive officer, as the case may be. There are no beneficial owners of 5% or more of our common stock other than the directors and executive officers included below. The address for all executive officers and directors is c/o IMAC Holdings, Inc., 3401 Mallory Lane, Suite 100, Franklin, Tennessee 37067.
Percentage of beneficial ownership in the table below is calculated based on 3,784,966 shares of common stock outstanding as of March 31, 2025. Beneficial ownership is determined in accordance with the rules of the SEC, which generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and includes shares of our common stock issuable pursuant to the exercise of stock options, warrants or other securities that are immediately exercisable or convertible or exercisable or convertible within 60 days of the Record Date. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them.
| Name of Beneficial Owner | Shares Beneficially Owned | Percentage Beneficially Owned | ||||||
| Faith Zaslavsky | - | - | ||||||
| Sheri Gardzina | 10,195 | (1) | * | |||||
| Michael D. Pruitt | 12,141 | * | ||||||
| Maurice E. Evans | 18,071 | * | ||||||
| Peter Beitsch | 3,333 | * | ||||||
| Matthew Schwartz | 3,333 | * | ||||||
| Jeffrey Busch(2) | 570,254 | 9.99 | % | |||||
| Jeffrey S. Ervin(3) | 12,380 | * | ||||||
| All directors and executive officers as a group (7 persons)(1)(2) | 613,327 | 11.23 | % | |||||
| * | Less than 1% of outstanding shares. |
| (1) | Includes (i) 1,250 shares of common stock issuable upon exercise of currently exercisable stock options, (ii) 4,000 outstanding Restricted Stock Units, (iii) 941 shares and (iv) 4 shares owned by Mrs. Gardzina’s spouse. |
| (2) | Includes (i) 111,160 shares of common stock issuable upon conversion of 265 currently convertible shares of Series C-1 Preferred Stock and (ii) 455,761 shares of common stock issuable upon conversion of 1,641 shares of currently convertible Series E Preferred Stock. However, the Series C-1 Preferred Stock and Series E Preferred Stock are subject to a beneficial ownership cap that prohibits the conversion of the Series C-1 Preferred Stock and/or the Series E Preferred Stock into shares of common stock to the extent that such conversion would cause Mr. Busch’s beneficial ownership, together with his affiliates’ ownership, to exceed 9.99% of the then outstanding common stock. |
| (3) | Mr. Ervin resigned as CEO of the Company and from the Board of Directors on May 23, 2024. |
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| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Policies and Procedures for Transactions with Related Persons
Our board of directors intends to adopt a written related person transaction policy to set forth the policies and procedures for the review and approval or ratification of related person transactions. Related persons include any executive officer, director or a holder of more than 5% of our common stock, including any of their immediate family members and any entity owned or controlled by such persons. Related person transactions refers to any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which (i) we were or are to be a participant, (ii) the amount involved exceeds $120,000, and (iii) a related person had or will have a direct or indirect material interest. Related person transactions include, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness, and employment by us of a related person, in each case subject to certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act.
We expect that the policy will provide that in any related person transaction, our audit committee and board of directors will consider all of the available material facts and circumstances of the transaction, including: the direct and indirect interests of the related persons; in the event the related person is a director (or immediate family member of a director or an entity with which a director is affiliated), the impact that the transaction will have on a director’s independence; the risks, costs and benefits of the transaction to us; and whether any alternative transactions or sources for comparable services or products are available. After considering all such facts and circumstances, our audit committee and board of directors will determine whether approval or ratification of the related person transaction is in our best interests. For example, if our audit committee determines that the proposed terms of a related person transaction are reasonable and at least as favorable as could have been obtained from unrelated third parties, it will recommend to our board of directors that such transaction be approved or ratified. In addition, if a related person transaction will compromise the independence of one of our directors, our audit committee may recommend that our board of directors reject the transaction if it could affect our ability to comply with securities laws and regulations or Nasdaq listing requirements.
Related Party Transactions
On February 14, 2025, the Company issued a promissory note to Jeffrey Busch, the Chairman of the Board of Directors, in the principal amount of $22,000, for an aggregate purchase price of $20,000. On March 13, 2025, the Company issued a promissory note to Jeffrey Busch in the principal amount of $27,500, for an aggregate purchase price of $25,000. On March 19, 2025, the Company issued a promissory note to Jeffrey Busch in the principal amount of $16,500, for an aggregate purchase price of $15,000. The notes are unsecured and mature on the earlier of (i) November 14, 2025, and (ii) the initial time of consummation by the Company after the date hereof of any public or private offering(s), individually or in the aggregate, of securities with gross proceeds of at least $1 million.
Other than as discussed above, there have been no transactions between the Company and a related person that would be reportable under SEC rules or regulations.
Indemnification Agreements
We have entered into an indemnification agreement with each of our directors and executive officers. The indemnification agreements and our certificate of incorporation and bylaws require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law.
Director Independence
Our Board of Directors has determined that Messrs. Beitsch, Busch, Evans, Pruitt and Schwartz, representing all of our directors, are independent directors (as currently defined in Rule 5605(a)(2) of the Nasdaq listing rules). In determining the independence of our directors, the Board of Directors considered all transactions in which the Company and any director had any interest, including those discussed above. The independent directors meet as often as necessary to fulfill their responsibilities, including meeting at least twice annually in executive session without the presence of non-independent directors and management.
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| ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
On December 28, 2023, Cherry Bekaert LLP (“Cherry Bekaert”) resigned as the independent registered public accounting firm of the Company. Neither the Company’s Board of Directors nor the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) took part in Cherry Bekaert’s decision to resign.
The Audit Committee conducted a search to determine the Company’s independent registered public accounting firm following the resignation of Cherry Bekaert. On February 8, 2024, the Audit Committee approved the appointment of Salberg & Company, P.A. (“Salberg”) as the Company’s independent registered public accounting firm, subject to satisfactory completion of standard engagement acceptance procedures, which were subsequently completed. On June 26, 2024, Salberg was terminated as the independent registered public accounting firm of the Company.
The Audit Committee conducted a search to determine the Company’s independent registered public accounting firm in connection with the termination of Salberg. On June 26, 2024, the Audit Committee approved the appointment of Marcum, LLP (“Marcum”) as the Company’s independent registered public accounting firm, subject to satisfactory completion of standard engagement acceptance procedures, which were subsequently completed.
During the Company’s two most recent fiscal years and the subsequent interim period preceding Marcum or Salberg’s engagement, neither the Company nor anyone acting on its behalf consulted Marcum or Salberg regarding (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and neither Marcum or Salberg provided either a written report or oral advice to the Company that was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, or (2) any matter that was either the subject of a disagreement (as that term is used in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) on accounting principles or practices, financial statement disclosure or auditing scope or procedures or a “reportable event” (as described in Item 304(a)(1)(v) of Regulation S-K).
The following table sets forth the aggregate accounting fees paid by us for the year ended December 31, 2024 and the year ended December 31, 2023. The below audit fees were paid to Marcum for the year ended December 31, 2024, Salberg for the years ended December 31, 2024 and 2023 and Cherry Bekaert for the years ended December 31, 2024 and 2023. All non-audit related services in the table were pre-approved and/or ratified by the Audit Committee of our Board of Directors.
| Marcum, LLP | Salberg & Company, PA | Cherry Bekaert, LLP | Salberg & Company, PA | Cherry Bekaert, LLP | ||||||||||||||||
| Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
| Type of Fees | December 31, 2024 | December 31, 2024 | December 31, 2024 | December 31, 2023 | December 31, 2023 | |||||||||||||||
| Audit fees | $ | 46,000 | $ | 8,500 | $ | 22,000 | $ | 60,000 | $ | 165,000 | ||||||||||
| Audit related fees | - | 16,000 | 25,000 | - | 74,000 | |||||||||||||||
| Tax fees | - | - | - | - | - | |||||||||||||||
| Other fees | - | - | - | - | - | |||||||||||||||
| Total | $ | 46,000 | $ | 24,500 | $ | 47,000 | $ | 60,000 | $ | 239,000 | ||||||||||
Types of Fees Explanation
Audit Fees. Audit fees were incurred for accounting services rendered for the audit of our consolidated financial statements for the years ended December 31, 2024 and 2023 and reviews of quarterly consolidated financial statements.
Audit Related Fees. We incurred fees in connection with accounting reviews for S-1 filings and agreed-upon procedures.
Audit Committee Pre-Approval of Services by Independent Registered Public Accounting Firm
Section 10A(i)(1) of the Exchange Act and related SEC rules require that all auditing and permissible non-audit services to be performed by our principal accountants be approved in advance by the Audit Committee of the Board. Pursuant to Section 10A(i)(3) of the Exchange Act and related SEC rules, the Audit Committee has established procedures by which the Chairman of the Audit Committee may pre-approve such services provided that the pre-approval is detailed as to the particular service or category of services to be rendered and the Chairman reports the details of the services to the full Audit Committee at its next regularly scheduled meeting.
The audit committee has considered the services provided by Marcum, Salberg and Cherry Bekaert as disclosed above in the captions “audit fees” and has concluded that such services are compatible with the independence of Marcum, Salberg and Cherry Bekaert as our principal accountants for the year ended December 31, 2024 and December 31, 2023, respectively.
Our Board has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
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PART IV
| ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
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| † | Compensatory plan or agreement. |
| * | Filed herewith |
| ** | Portions of this exhibit have been omitted pursuant to Item 601(b)(2)(ii) of Regulation S-K because they are both (i) not material and (ii) the type that the registrant treats as private or confidential. A copy of any omitted portions will be furnished to the SEC upon request; provided, however, that the parties may request confidential treatment for any document so furnished. |
| + | The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of IMAC Holdings, Inc. under the Securities and Exchange Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended, whether made before or after the date of this 10-K, irrespective of any general incorporation language contained in such filings. |
All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
| ITEM 16. | FORM 10-K SUMMARY |
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| IMAC HOLDINGS, INC. | ||
| Dated: April 14, 2025 | By: | /s/ Faith Zaslavsky |
| Name: | Faith Zaslavsky | |
| Title: | Chief Executive Officer | |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below hereby constitutes and appoints Faith Zaslavsky and Sheri Gardzina, and each of them individually, his or her true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments to this Report together with all schedules and exhibits thereto, (ii) act on, sign and file with the Securities and Exchange Commission any and all exhibits to this Report and any and all exhibits and schedules thereto, (iii) act on, sign and file any and all such certificates, notices, communications, reports, instruments, agreements and other documents as may be necessary or appropriate in connection therewith and (iv) take any and all such actions which may be necessary or appropriate in connection therewith, granting unto such agents, proxies and attorneys-in-fact, and each of them individually, full power and authority to do and perform each and every act and thing necessary or appropriate to be done, as fully for all intents and purposes as he or she might or could do in person, and hereby approving, ratifying and confirming all that such agents, proxies and attorneys-in-fact, any of them or any of his, her or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
| Name | Title | Date | ||
| /s/ Faith Zaslavsky | Director and Chief Executive Officer | April 14, 2025 | ||
| Faith Zaslavsky | (Principal Executive Officer) | |||
| /s/ Sheri Gardzina | Chief Financial Officer | April 14, 2025 | ||
| Sheri Gardzina | (Principal Financial and Accounting Officer) | |||
| /s/ Peter Beitsch | Director | April 14, 2025 | ||
| Peter Beitsch | ||||
| /s/ Jeffrey Busch | Director | April 14, 2025 | ||
| Jeffrey Busch | ||||
| /s/ Maurice E. Evans | Director | April 14, 2025 | ||
| Maurice E. Evans | ||||
| /s/ Michael D. Pruitt | Director | April 14, 2025 | ||
| Michael D. Pruitt | ||||
| /s/ Matthew Schwartz | Director | April 14, 2025 | ||
| Matthew Schwartz |
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