8-K: IMAC Holdings Regains Nasdaq Compliance After Abandoning Theralink Merger and Acquiring Assets

IMAC Holdings has regained compliance with Nasdaq's minimum stockholders' equity requirement after abandoning a merger with Theralink Technologies and acquiring certain of its assets.

Summary

• IMAC Holdings received a notice from Nasdaq in May 2023 stating they did not meet the minimum stockholders' equity requirement of $2.5 million.
• The company has now regained compliance after a series of transactions.
• These transactions include abandoning a proposed merger with Theralink Technologies, acquiring certain Theralink assets, and obtaining licenses from George Mason University and Vanderbilt University.
• The merger with Theralink was terminated on May 6, 2024, after Theralink defaulted on its debt.
• IMAC acquired 74.01% of Theralink's secured debt for 17,364 shares of Series D Preferred Stock.
• IMAC also acquired certain Theralink assets and liabilities in exchange for forgiving $19,221,873.89 of debt and issuing 22,067 shares of Series E Preferred Stock to Theralink.
• The company also hired former Theralink employees and obtained necessary licenses to operate the acquired lab.
• Nasdaq will continue to monitor IMAC's compliance, and the company could face delisting if it does not maintain compliance at the time of its next quarterly report.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company has regained compliance and acquired assets, it had to abandon a merger and take on liabilities. The risk of future delisting remains.

Positives

• IMAC Holdings has successfully regained compliance with Nasdaq's minimum stockholders' equity requirement.
• The company has acquired valuable assets and licenses from Theralink.
• IMAC has secured key personnel by hiring former Theralink employees.
• The company has expanded its business model by acquiring additional licenses from George Mason University for use in additional countries.

Negatives

• The proposed merger with Theralink was abandoned due to Theralink's inability to meet its debt obligations.
• IMAC had to acquire Theralink's debt and assets through a settlement agreement.
• Nasdaq will continue to monitor IMAC's compliance, and the company could face delisting if it does not maintain compliance.

Risks

• Nasdaq will continue to monitor the company's compliance with the Equity Rule.
• If the company does not evidence compliance at the time of its next Quarterly Report on Form 10-Q, its common stock may be subject to delisting.
• The company assumed certain liabilities of Theralink as part of the settlement agreement.

Future Outlook

Nasdaq will continue to monitor the company's ongoing compliance with the Equity Rule, and the company must evidence compliance at the time of its next Quarterly Report on Form 10-Q to avoid potential delisting.

Management Comments

• The company believes it has regained compliance with the Equity Rule after giving effect to certain recent transactions.
• The company is using the acquired assets of Theralink in its business.

Industry Context

The abandonment of the merger and subsequent asset acquisition reflects the challenges faced by companies in the biotechnology and precision medicine sectors, where financial stability and operational execution are critical for success. The need to acquire assets and licenses to continue operations is not uncommon in this industry.

Comparison to Industry Standards

• Many small cap biotech companies struggle to maintain Nasdaq listing compliance, particularly those in the development stage.
• The acquisition of assets and licenses from a failing company is a common strategy for companies looking to expand their technology portfolio.
• The need to raise capital and restructure debt is a frequent occurrence in the biotech industry, especially for companies that are not yet generating significant revenue.
• Companies like IMAC often face challenges in maintaining sufficient equity to meet listing requirements, similar to other small-cap biotech firms such as Athersys and Ocugen, which have also faced compliance issues.

Stakeholder Impact

• Shareholders will be impacted by the company's regained compliance and the potential for future delisting.
• Employees of Theralink who were hired by IMAC will be impacted by the change in employment.
• Creditors of Theralink may be impacted by the settlement agreement and the transfer of assets.

Next Steps

• The company must maintain compliance with Nasdaq's Equity Rule.
• The company will need to demonstrate compliance in its next Quarterly Report on Form 10-Q.

Key Dates

Keywords

Nasdaq compliance, merger abandonment, asset acquisition, debt settlement, Theralink Technologies, stockholders equity, licenses, proteomics