8-K: IMAC Holdings Acquires Theralink Debt, Settles Credit Agreement, and Terminates Merger

IMAC Holdings has entered into agreements to acquire Theralink Technologies' debt, settle a credit agreement, and terminate a previously planned merger, issuing new preferred stock in the process.

Summary

• IMAC Holdings has acquired senior secured convertible debentures of Theralink Technologies with a principal amount of $16,221,873.89.
• The acquisition was made in exchange for shares of IMAC's newly created Series D Convertible Preferred Stock.
• IMAC now holds approximately 74.01% of Theralink's outstanding notes.
• The exact number of Series D Preferred Stock shares will be determined based on an independent appraisal of Theralink's assets.
• IMAC also entered into a settlement agreement with Theralink, resolving a default under a previous credit agreement.
• As part of the settlement, Theralink will transfer all of its assets (excluding certain assets) and certain liabilities to IMAC.
• In return, IMAC will forgive the outstanding amounts due under the acquired notes and the credit agreement, and issue Series E Convertible Preferred Stock to Theralink.
• The number of Series E Preferred Stock shares will also be determined based on the appraisal of Theralink's assets, and it is possible that no shares will be issued.
• The merger agreement between IMAC and Theralink has been terminated, and the related registration statement will be withdrawn.
• IMAC will assume certain liabilities of Theralink and hire some of its employees.
• All transactions are expected to be completed in May 2024 after the valuation is available.

Sentiment

Score: 6

Explanation: The document outlines a complex financial restructuring. While the acquisition of debt and assets could be positive, the termination of the merger and the issuance of new preferred stock introduce uncertainty. The sentiment is neutral to slightly positive, reflecting a strategic shift but with potential risks.

Positives

• IMAC has acquired a significant portion of Theralink's debt at a discount.
• The settlement agreement allows IMAC to acquire Theralink's assets without completing the merger.
• The use of preferred stock for the acquisitions minimizes immediate cash outlay.
• IMAC will assume certain liabilities of Theralink, potentially gaining valuable assets and operations.

Negatives

• The exact number of shares of Series D and E Preferred Stock to be issued is dependent on an appraisal, creating uncertainty.
• There is a possibility that no shares of Series E Preferred Stock will be issued.
• IMAC is assuming certain liabilities of Theralink, which could impact its financial position.
• The merger agreement has been terminated, which may be viewed negatively by some investors.

Risks

• The valuation of Theralink's assets by the independent appraiser could result in unexpected outcomes.
• The assumption of certain liabilities of Theralink could negatively impact IMAC's financial health.
• The termination of the merger agreement could lead to uncertainty about IMAC's future strategy.
• The issuance of new preferred stock could dilute existing shareholders' equity.

Future Outlook

The transactions are expected to be consummated in May 2024 after the valuation is available and the numbers of Series D Preferred Stock and Series E Preferred Stock are calculated.

Industry Context

This announcement reflects a trend of companies using strategic acquisitions and debt restructuring to consolidate market positions and acquire assets. The termination of the merger and subsequent asset acquisition suggests a shift in strategy towards a more direct control of Theralink's assets.

Comparison to Industry Standards

• The acquisition of distressed debt in exchange for equity is a common strategy in turnaround situations, similar to how private equity firms often operate.
• The use of preferred stock to finance acquisitions is a standard practice to preserve cash, comparable to other companies in the biotech and healthcare sectors.
• The termination of a merger agreement and subsequent asset acquisition is a less common but not unheard of strategy, often seen when the initial merger terms become unfavorable or when a company seeks more direct control over assets.
• The valuation of assets by an independent appraiser is a standard practice to ensure fair value in such transactions, similar to how companies value assets in M&A deals.

Stakeholder Impact

• Shareholders may experience dilution due to the issuance of new preferred stock.
• Employees of Theralink may be offered employment by IMAC.
• Creditors of Theralink will be impacted by the debt acquisition and settlement.
• Customers and suppliers of Theralink will be impacted by the transfer of assets to IMAC.

Next Steps

• Complete the independent appraisal of Theralink's assets.
• Calculate the exact number of Series D and E Preferred Stock shares to be issued.
• File the Certificate of Designations for Series D and E Preferred Stock with the Secretary of State of Delaware.
• Consummate all transactions in May 2024.

Key Dates

Keywords

IMAC Holdings, Theralink Technologies, debt acquisition, preferred stock, merger termination, asset transfer, settlement agreement, convertible debentures, independent appraisal