8-K: IMAC Holdings Issues Warrants and Preferred Stock in Exchange and PIPE Transactions

IMAC Holdings, Inc. has entered into agreements to exchange existing preferred stock and warrants for new securities and to sell additional preferred stock and warrants in a private placement.

Summary

• IMAC Holdings, Inc. executed exchange agreements with holders of Series B Preferred Stock, exchanging 4,550 shares for 4,750 shares of Series C-1 Convertible Preferred Stock and existing warrants for new warrants, both with an exercise price of $2.561.
• The company also entered into a securities purchase agreement with accredited investors to sell 1,276 shares of Series C-2 convertible preferred stock and warrants for $900,000 in net proceeds.
• The new warrants have an exercise price of $2.561 per share and become exercisable on October 12, 2024, expiring on October 12, 2029.
• The Series C Preferred Stock accrues dividends at 10% per annum, payable in shares of Common Stock or capitalized by increasing the stated value of the preferred stock.
• The company is seeking stockholder approval by July 31, 2024, to issue more than 20% of its outstanding capital stock at a price less than $0.561.
• The company also entered into a credit agreement with Theralink Technologies, Inc. for up to $1,000,000, with an initial borrowing of $350,000 made on April 12, 2024, bearing interest at 9% per annum for cash payments and 11% per annum for PIK interest.

Sentiment

Score: 5

Explanation: The document indicates a complex financial restructuring with both positive and negative aspects. The capital raise is positive, but the potential dilution and high interest rate on the Theralink loan are concerning.

Positives

• The exchange of existing preferred stock and warrants simplifies the capital structure.
• The PIPE financing provides additional capital to the company.
• The new warrants have a five-year term, providing potential upside for investors.
• The credit agreement with Theralink Technologies, Inc. provides additional financing options.

Negatives

• The company is seeking stockholder approval to issue more than 20% of its outstanding capital stock at a price less than $0.561, which could be dilutive to existing shareholders.
• The new warrants have an exercise price of $2.561, which may be above the current market price of the common stock.

Risks

• The company may not obtain stockholder approval for the issuance of additional shares.
• The company may not be able to generate sufficient cash flow to repay the loans from Theralink Technologies, Inc.
• The company may not be able to maintain the listing of its common stock on the Nasdaq Capital Market.

Future Outlook

The company is seeking stockholder approval to issue more than 20% of its outstanding capital stock at a price less than $0.561, which, if obtained, would permit the issuance of more than 20% of the outstanding capital stock of the Company at a price less than $0.561.

Industry Context

This announcement reflects a common strategy for small-cap companies to raise capital through private placements and to restructure existing debt and equity.

Comparison to Industry Standards

• The terms of the warrants and preferred stock are typical for private placements in the small-cap market.
• The interest rate on the Theralink loan is relatively high, reflecting the risk associated with lending to a small-cap company.
• The company's need to seek stockholder approval for the issuance of additional shares is a common requirement for companies listed on the Nasdaq Capital Market.

Stakeholder Impact

• Existing shareholders may experience dilution due to the issuance of new shares.
• Investors in the private placement will receive preferred stock and warrants.
• Theralink Technologies, Inc. will receive a loan from IMAC Holdings, Inc.

Next Steps

• The company will seek stockholder approval for the issuance of additional shares.
• The company will file a registration statement to register the shares of Common Stock underlying the Series C Preferred Stock and the Warrants within forty-five (45) days after the filing date of the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Key Dates

Keywords

preferred stock, warrants, convertible securities, private placement, PIPE, exchange agreement, financing, capital raise, common stock, dilution