8-K: IMAC Holdings Secures $129,000 in Promissory Notes Amid Nasdaq Compliance Concerns

IMAC Holdings issued promissory notes totaling $129,000 to lenders, including its Board Chair, while also facing potential delisting from the Nasdaq Capital Market due to its stock price falling below the minimum bid requirement.

Summary

• IMAC Holdings, Inc. issued a promissory note for $27,500 to Jeffrey M. Busch, the Chair of the Board, and additional promissory notes totaling $101,500 to other lenders on March 13, 2025.
• The total principal amount of these notes is $129,000, with an aggregate purchase price of $97,500.
• The notes are unsecured and mature on the earlier of November 14, 2025, or the date of consummation of any offering of securities with gross proceeds of at least $1 million.
• The company can prepay any portion of the outstanding principal at any time without penalty.
• The notes include standard representations, warranties, covenants, and events of default, including bankruptcy or insolvency.
• On the same day, March 13, 2025, IMAC Holdings received a notice from Nasdaq stating that it no longer complies with the minimum bid price requirement of $1.00 per share for continued listing.
• IMAC Holdings has until September 9, 2025, to regain compliance, and its stock will continue to be listed during this period.
• The company intends to take necessary steps to regain compliance, including a potential reverse stock split, which will be voted on at a special meeting on March 26, 2025.
• The Board of Directors approved an amendment to the company's bylaws, effective immediately, to lower the required quorum for any meeting of the stockholders from a majority to one-third of the votes.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the Nasdaq delisting notice and the need for short-term debt financing. While the company is taking steps to address these issues, the overall outlook is uncertain.

Positives

• The company has the option to prepay the promissory notes at any time without penalty.
• The company is taking steps to regain compliance with Nasdaq listing requirements, including considering a reverse stock split.

Negatives

• The company received a delisting notice from Nasdaq due to its stock price falling below $1.00 per share for 30 consecutive trading days.
• The company is relying on debt financing, which could indicate financial strain.
• The company is already subject to a previously disclosed deficiency relating to Nasdaqs minimum stockholders equity requirement.

Risks

• Failure to regain compliance with Nasdaq listing rules by September 9, 2025, could result in delisting.
• The company's ability to raise $1 million through a securities offering by November 14, 2025, is uncertain.
• The company's reliance on promissory notes could increase its debt burden and financial risk.
• The company is already subject to a previously disclosed deficiency relating to Nasdaqs minimum stockholders equity requirement.

Future Outlook

The company intends to take the necessary steps to regain compliance with Nasdaq's listing rules, including potentially effecting a reverse stock split. The company must regain compliance by September 9, 2025, to avoid delisting. The promissory notes mature on November 14, 2025, unless the company completes a securities offering of at least $1 million before then.

Industry Context

Small cap companies often face challenges in maintaining Nasdaq listing compliance, especially during periods of financial difficulty. Raising capital through promissory notes is a common short-term strategy, but it can add to the company's debt burden. Reverse stock splits are frequently used to increase the stock price and meet minimum bid requirements, but they can also negatively impact shareholder value if the underlying issues are not addressed.

Comparison to Industry Standards

• Many small-cap companies listed on exchanges like Nasdaq and NYSE American struggle with maintaining the minimum bid price requirement.
• Reverse stock splits are a common, though often viewed negatively, tactic used by companies to regain compliance; however, their long-term success depends on the company's ability to improve its financial performance.
• Issuing promissory notes is a typical method for small companies to raise capital quickly, but it often comes with higher interest rates and stricter terms compared to traditional bank loans.
• Comparable companies that have faced similar situations include those in the biotechnology and resource exploration sectors, which are often subject to volatile stock prices and the need for frequent capital raises.

Corporate Governance

Related Party Transactions

• Jeffrey M. Busch, the Chair of the Board of Directors of the Company, received a promissory note in the principal amount of $27,500.

Stakeholder Impact

• Shareholders face the risk of delisting from Nasdaq, which could negatively impact the stock price.
• Employees may be concerned about the company's financial stability and future prospects.
• Creditors face increased risk due to the company's reliance on debt financing.

Next Steps

• The company will hold a special meeting of stockholders on March 26, 2025, to vote on a reverse stock split.
• The company must regain compliance with Nasdaq listing rules by September 9, 2025.
• The company needs to either raise $1 million through a securities offering or repay the promissory notes by November 14, 2025.

Key Dates