THER.OTC.PinkTheralink Technologies, INC
10-Q: Theralink Technologies Reports Q1 2024 Results Amidst Merger Plans with IMAC Holdings
Sentiment:
Quarterly Report
Theralink Technologies reports a net loss for Q1 2024 while progressing towards a merger with IMAC Holdings.
Capital raiseThe company states that it will need to raise substantial additional capital in 2024 in order to satisfy its outstanding indebtedness, maintain its operations and continue its efforts to restructure the Company.The company states that if it is unable to do so it may be forced to cease operations or pursue bankruptcy protection.
Worse than expectedThe company's net loss and working capital deficit have increased, raising concerns about its financial stability.The company's management has expressed substantial doubt about its ability to continue as a going concern.
Summary
- Theralink Technologies, a precision medicine company, reported its financial results for the quarter ended December 31, 2023.
- The company is progressing with its merger agreement with IMAC Holdings, Inc., expecting completion in early 2024.
- Revenue for the quarter was $83,949, an increase of 51.8% compared to $55,295 in the same period last year.
- The cost of revenues increased significantly to $52,947 from $10,818 year-over-year.
- The company experienced a net loss of $19,046,638, compared to a net loss of $36,456,347 in the prior year.
- The net loss per common share was $0.00 compared to $0.01 in the same quarter of the previous year.
- The company had a working capital deficit of $57.5 million as of December 31, 2023.
- Management expresses substantial doubt about the company's ability to continue as a going concern for the next twelve months without additional capital.
- The company plans to launch the Theralink Pan-Tumor Assay 1.0 in 2024, followed by Theralink Pan-Tumor Assay 2.0.
- The company identified material weaknesses in its internal control over financial reporting.
Sentiment
Score: 4
Explanation: The document presents a mixed sentiment. While revenue increased, the company is still operating at a loss and faces significant financial challenges, including doubts about its ability to continue as a going concern. The merger with IMAC Holdings is a positive development, but its success is not guaranteed.
Positives
- Revenue increased by 51.8% compared to the same period last year.
- Net loss decreased from $36.46 million to $19.05 million year-over-year.
- The company is actively working towards completing its merger with IMAC Holdings, Inc. in early 2024.
- The company plans to launch the Theralink Pan-Tumor Assay 1.0 in 2024, followed by Theralink Pan-Tumor Assay 2.0.
Negatives
- The company experienced a net loss of $19.05 million for the quarter.
- The cost of revenues increased significantly.
- The company has a substantial working capital deficit of $57.5 million.
- Management expresses substantial doubt about the company's ability to continue as a going concern.
- The company identified material weaknesses in its internal control over financial reporting.
Risks
- The company's ability to continue as a going concern is in substantial doubt.
- The company needs to raise additional capital to meet its working capital requirements.
- There is no assurance that additional financing will be available on commercially reasonable terms.
- The company identified material weaknesses in its internal control over financial reporting.
- The company may be forced to scale down or cease operations if it cannot secure additional financing.
Future Outlook
The company expects to complete the merger with IMAC Holdings in early 2024 and plans to launch the Theralink Pan-Tumor Assay 1.0 in 2024, followed by Theralink Pan-Tumor Assay 2.0.
Management Comments
- Management expresses substantial doubt about the company's ability to continue as a going concern for the next twelve months without additional capital.
Industry Context
The announcement reflects the ongoing trend of consolidation in the healthcare and precision medicine sectors, with companies seeking to expand their service offerings and market reach through mergers and acquisitions.
Comparison to Industry Standards
- It is difficult to compare Theralink's results directly to industry standards due to its unique RPPA technology and focus on protein signaling.
- However, the company's revenue growth of 51.8% is a positive sign, although the high cost of revenues and net losses are concerning.
- Comparable companies in the precision medicine space include Foundation Medicine (acquired by Roche), Guardant Health, and Exact Sciences, but their business models and financial metrics may differ significantly.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Executive Officer | Dr. Michael Ruxin | Faith Zaslavsky | 2023-06-28 | Dr. Ruxin transitioned to Chief Medical Officer. |
| Chief Financial Officer | Thomas E. Chilcott, III | Andrew Kucharchuk | 2023-05-05 | Mr. Chilcott's employment was terminated. |
Legal Proceedings
- The company is involved in ongoing legal proceedings, including a complaint filed by Erika Singleton.
Related Party Transactions
- The company has significant related-party transactions, including convertible notes payable, notes payable, and accrued liabilities with related parties.
Stakeholder Impact
- Shareholders face the risk of dilution and potential loss of investment if the company is unable to raise additional capital.
- Employees face uncertainty about their job security due to the company's financial instability.
- Customers may be affected by potential disruptions in service if the company is forced to scale down or cease operations.
- Creditors face the risk of non-payment if the company is unable to meet its financial obligations.
Next Steps
- Complete the merger with IMAC Holdings, Inc.
- Launch the Theralink Pan-Tumor Assay 1.0 and 2.0.
- Raise additional capital to meet working capital requirements.
- Remediate material weaknesses in internal control over financial reporting.
Key Dates
| Date | Description |
|---|---|
| 2006-09-01 | Date of exclusive license agreement with George Mason Intellectual Properties (GMU). |
| 2015-08-20 | Date of Certificate of Designation with the Nevada Secretary of State, designating 1,333 shares of the authorized 26,667 Preferred Stock as Series A Preferred Stock. |
| 2017-09-30 | Date of note agreement with a third-party investor. |
| 2018-03-01 | Date of two license agreement (NIH License Agreements) with the National Institutes of Health (NIH). |
| 2018-11-01 | Effective date of financing agreement with the first lessor to finance the purchase of equipment. |
| 2019-03-01 | Effective date of financing agreement with a third lessor to finance the purchase of equipment. |
| 2019-08-01 | Effective date of financing agreement with a fourth lessor to finance the purchase of equipment. |
| 2019-12-01 | Date of lease agreement for corporate and laboratory facility in Golden, Colorado. |
| 2020-01-01 | Effective date of financing agreement with a fifth lessor to finance the purchase of equipment. |
| 2020-05-18 | Date of filing a certificate of designation, preferences and rights of Series C-1 Preferred Stock with the Nevada Secretary of State. |
| 2020-06-05 | Date of employment agreement with Dr. Michael Ruxin. |
| 2020-06-05 | Date of employment agreement with Jeffrey Busch. |
| 2020-07-05 | Date of Scientific Advisory Board Service Agreement. |
| 2020-09-24 | Date of offer letter with Thomas E. Chilcott, III. |
| 2021-01-01 | Effective date of consulting agreement with Andrew Kucharchuk. |
| 2021-04-26 | Date of Promissory Note Agreement with Jeffrey Busch. |
| 2021-05-12 | Date of Securities Purchase Agreement with a related party. |
| 2021-06-10 | Date of amendment to existing Warehouse Lease. |
| 2021-07-30 | Date of filing a Certificate of Designation, Preferences and Rights of Series F Preferred Stock with the Nevada Secretary of State. |
| 2021-11-01 | Date of Securities Purchase Agreement with a related party. |
| 2021-12-10 | Date of YPH LLC filed a complaint against the Company. |
| 2022-01-27 | Date of Securities Purchase Agreement with an investor. |
| 2022-01-31 | Date of Securities Purchase Agreement with an investor. |
| 2022-04-18 | Date of approval of the 2022 Equity Incentive Plan. |
| 2022-04-30 | Date of termination of consulting agreement with Mr. Kucharchuk. |
| 2022-05-05 | Date of amendment of the April 26, 2021 note with Jeffrey Busch. |
| 2022-05-09 | Date of Securities Purchase Agreement with a related party. |
| 2022-06-15 | Date of Securities Purchase Agreement with a related party, Danica Holley. |
| 2022-07-01 | Date of Securities Purchase Agreement with an investor. |
| 2022-07-29 | Date of Demand Promissory Note Agreement with Jeffrey Busch. |
| 2022-08-11 | Date of Demand Promissory Note Agreement with a related party. |
| 2022-08-16 | Date of stock option grants to Dr. Ruxin and Jeffrey Busch. |
| 2022-09-02 | Date of Demand Promissory Note Agreement with a related party. |
| 2022-09-28 | Date of settlement agreement between the Company and YHP LLC. |
| 2022-10-22 | Date of issuance of a new convertible note for $200,000 to an existing investor for the settlement of claims. |
| 2022-11-01 | Date of Demand Promissory Note Agreements with two related parties. |
| 2022-11-29 | Date of initial closing of a private placement offering. |
| 2022-12-05 | Date of appointment of Faith Zaslavsky as President and Chief Operating Officer. |
| 2023-01-27 | Date of second closing of the Offering. |
| 2023-03-01 | Date of license agreement with the Vanderbilt University. |
| 2023-04-11 | Date of third closing of the Offering. |
| 2023-04-28 | Date of Promissory Note Agreement with Douglas Mergenthaler. |
| 2023-05-05 | Date of letter agreement with Mr. Kucharchuk, whereby Mr. Kucharchuk was hired as the Companys Chief Financial Officer. |
| 2023-05-23 | Date of Agreement and Plan of Merger with IMAC Holdings, Inc. |
| 2023-06-28 | Date the Company appointed Ms. Zaslavsky as the Companys Chief Executive Officer. |
| 2023-07-14 | Date the Company terminated the employment agreement and entered into a Chief Medical Officer Consulting Agreement with Dr. Michael Ruxin. |
| 2023-07-28 | Date of Promissory Note Agreement with IMAC Holdings, Inc. |
| 2023-08-16 | Date of Convertible Secured Promissory Note with IMAC Holdings, Inc. |
| 2023-08-18 | Date the Company repaid $108,000 of the note. |
| 2023-08-28 | Date the Company repaid $250,000 of the note. |
| 2023-11-27 | Date the Company announced its intention to automatically extend the Maturity Date of the Debentures for an additional three-month period. |
| 2023-12-31 | End of the quarterly period. |
| 2024-01-25 | Date the Company entered into a subordinated promissory note agreement with an individual for $50,000. |
| 2024-02-20 | Date of report. |
Keywords
Theralink Technologies, IMAC Holdings, Merger, Financial Results, Q1 2024, Reverse Phase Protein Array, RPPA, Precision Medicine, Oncology, Net Loss, Revenue, Going Concern, Capital Raise, Convertible Notes, Warrants
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