[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited statements show a significant decline in assets and revenue, a net loss, and key corporate actions [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and stockholders' equity declined significantly due to net losses and operational changes Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $2,071.7 | $4,207.9 | | **Total Assets** | $4,264.5 | $11,081.6 | | **Total Current Liabilities** | $2,459.4 | $3,713.8 | | **Total Liabilities** | $3,236.1 | $6,430.3 | | **Total Stockholders' Equity** | $1,028.4 | $4,651.3 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenues fell sharply due to clinic sales, resulting in a nine-month net loss of $8.0 million Statement of Operations Summary (Unaudited) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $1,565,820 | $3,786,228 | $5,003,159 | $12,714,302 | | **Operating Loss** | $(2,897,611) | $(6,346,159) | $(7,975,547) | $(11,292,137) | | **Net Loss** | $(2,857,671) | $(6,333,625) | $(7,960,429) | $(11,339,849) | | **Net Loss Per Share (Basic & Diluted)** | $(2.63) | $(6.93) | $(7.28) | $(12.66) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash from financing was offset by cash used in operations and a loan, decreasing the overall cash position Cash Flow Summary for the Nine Months Ended September 30 (Unaudited) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $(2,957,156) | $(8,220,753) | | **Net Cash from Investing Activities** | $(1,870,000) | $(215,940) | | **Net Cash from Financing Activities** | $4,288,591 | $4,151,104 | | **Net Decrease in Cash** | $(538,565) | $(4,285,589) | | **Cash, End of Period** | $224,646 | $2,833,391 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail a pending merger, asset sales, a reverse stock split, and significant Medicare audit contingencies - The company entered into a merger agreement with Theralink Technologies, Inc. on May 23, 2023, where Theralink will become a wholly-owned subsidiary. Post-merger, Theralink shareholders will own approximately **85% of the combined company's shares**[23](index=23&type=chunk)[24](index=24&type=chunk) - In the first nine months of 2023, the company closed five underperforming clinics and sold its Louisiana Orthopedic, Illinois (Ricardo Knight, PC), and The BackSpace, LLC operations to raise capital[22](index=22&type=chunk)[31](index=31&type=chunk) - A **30-for-1 reverse stock split** of common stock was implemented on September 7, 2023, reducing authorized shares from 60 million to 2 million[85](index=85&type=chunk) - In July 2023, the company raised **$4.3 million** in gross proceeds by selling Series A-1 and A-2 Convertible Preferred Stock and warrants. Approximately **$3.0 million** of these proceeds were loaned to Theralink[90](index=90&type=chunk) - The company is appealing multiple overpayment claims from CMS contractors. One claim from October 2021 alleges a **$2.7 million overpayment**, and another from May 2022 alleges a **$492,086 overpayment**. Both are in the appeals process[100](index=100&type=chunk)[101](index=101&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a strategic shift through asset sales, leading to lower revenue but a reduced EBITDA loss - During the first half of 2023, the company closed five underperforming locations and sold its Louisiana Orthopedic, Chicago practices, and The BackSpace, LLC operations to raise capital and support ongoing operations[118](index=118&type=chunk) Revenue Comparison (in thousands) | Period | 2023 | 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Three Months Ended Sep 30** | $1,566 | $3,786 | $(2,220) | (58.6)% | | **Nine Months Ended Sep 30** | $5,003 | $12,714 | $(7,711) | (60.6)% | Operating Expense Comparison - Nine Months Ended Sep 30 (in thousands) | Expense Category | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | **Salaries and Benefits** | $4,477 | $11,173 | $(6,696) | | **Advertising and Marketing** | $120 | $858 | $(738) | | **General and Administrative** | $3,524 | $5,539 | $(2,015) | | **Depreciation and Amortization** | $387 | $1,367 | $(980) | Adjusted EBITDA Reconciliation (Non-GAAP, in thousands) | Period | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **GAAP Net Loss** | $(2,858) | $(6,334) | $(7,960) | $(11,340) | | **Adjusted EBITDA** | $(537) | $(1,918) | $(3,479) | $(5,679) | - As of September 30, 2023, the company had **$0.2 million in cash** and **negative working capital of ($0.5) million**, a decrease from $0.5 million in working capital at year-end 2022[159](index=159&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable to the company - The company has indicated that quantitative and qualitative disclosures about market risk are not applicable[165](index=165&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were deemed ineffective due to material weaknesses in internal financial reporting expertise - The CEO and CFO concluded that **disclosure controls and procedures were not effective** as of September 30, 2023[167](index=167&type=chunk) - Identified **material weaknesses** include the absence of in-house accounting personnel capable of handling complex transactions and a lack of separation of duties[167](index=167&type=chunk) - To mitigate these weaknesses, the company has hired a consulting firm to advise on U.S. GAAP compliance and financial statement preparation[168](index=168&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no legal proceedings expected to have a material adverse effect on the business - The company states it is not aware of any legal proceedings that would have a material adverse effect on the business[172](index=172&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) Key risks include a history of net losses, a Nasdaq non-compliance notice, and uncertainties of the Theralink merger - The company has a history of net losses, reporting a loss of approximately **$8.0 million** for the nine months ended September 30, 2023, and has received a **going concern qualification**[59](index=59&type=chunk)[174](index=174&type=chunk) - On May 31, 2023, the company received a notice from Nasdaq for failing to maintain the minimum **$2.5 million stockholders' equity requirement**. A plan to regain compliance was submitted following a financing transaction in July 2023[177](index=177&type=chunk) - The completion of the merger with Theralink is subject to **numerous risks**, including shareholder approvals, potential for the deal not to close, and the risk that expected synergies and cost savings may not be realized[184](index=184&type=chunk) - The company sold **$4.3 million** in convertible preferred stock and warrants in July 2023. The conversion of these securities is contingent on shareholder approval and could be **dilutive** to existing common stockholders[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities were reported during the period - None reported for the period[185](index=185&type=chunk) [Item 3. Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - None reported for the period[185](index=185&type=chunk) [Item 4. Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[185](index=185&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) No other information was reported for the period - None reported for the period[185](index=185&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including agreements and officer certifications - Lists various corporate and financial documents filed with the report, such as Certificates of Designation for preferred stock, securities purchase agreements, and Sarbanes-Oxley certifications[186](index=186&type=chunk)[187](index=187&type=chunk)[189](index=189&type=chunk)

Financial Performance - Total revenue for the three months ended June 30, 2023, was $1,343,975, a significant decrease from $5,033,088 in the same period of 2022[12] - Operating loss for the three months ended June 30, 2023, was $(1,380,950), compared to $(1,801,157) for the same period in 2022, indicating an improvement[13] - Net loss for the six months ended June 30, 2023, was $(5,101,960), compared to $(5,006,224) for the same period in 2022, showing a slight increase in losses[13] - Patient revenues for the six months ended June 30, 2023, totaled $3,437,337, down from $8,928,075 in the same period of 2022[13] - The company reported a significant reduction in operating expenses, totaling $2,724,925 for the three months ended June 30, 2023, compared to $6,834,245 in the same period of 2022[13] - The net loss for the second quarter of 2023 was $5,101,960, compared to a net loss of $5,006,224 in the same period of 2022[17] - Cash flows from operating activities resulted in a net cash outflow of $1,670,284 for the second quarter of 2023, an improvement from $5,862,808 in the prior year[17] - The company raised $64,032 from the issuance of common stock during the second quarter of 2023, compared to $829,663 in the same period of 2022[17] Assets and Liabilities - Total current assets decreased to $1,276,336 as of June 30, 2023, from $4,207,927 at the end of 2022[9] - Total liabilities as of June 30, 2023, were $5,003,970, down from $6,430,350 at the end of 2022[9] - Cash reserves decreased to $247,002 as of June 30, 2023, compared to $763,211 at the end of 2022[9] - As of June 30, 2023, the company had negative working capital of approximately $2.6 million, compared to $0.5 million at December 31, 2022[57] - The company reported total notes payable of $74,579,000 as of June 30, 2023, down from $104,696,000 as of December 31, 2022, reflecting a decrease of approximately 29%[82] Shareholder Information - The weighted average common shares outstanding for the three months ended June 30, 2023, were 33,141,324, an increase from 26,800,926 in the same period of 2022[13] - As of June 30, 2023, the total number of common shares outstanding was 33,280,049, with an accumulated deficit of $51,621,700[15] - The company had issued stock options to purchase 131,050 shares of common stock, with most options vesting over four years[87] - The company granted 263,000 restricted stock units (RSUs) to Board members on May 19, 2023, all vesting immediately[88] Mergers and Acquisitions - The company is currently pursuing a merger with Theralink Technologies, which may impact future financial performance[6] - IMAC Holdings, Inc. plans to merge with Theralink Technologies, with Theralink shareholders receiving 85% of the total number of Company Shares outstanding post-merger[21][22] - The merger agreement was unanimously approved by the boards of both companies on May 22, 2023[21] - The merger agreement stipulates that holders of Theralink shares will receive Company shares representing 85% of the total number of Company shares outstanding at the effective time of the merger[99] - The Merger is subject to customary closing conditions, including majority approval from Theralink shareholders and the Company's common stock holders[103] Operational Changes - The company closed five underperforming locations in the first half of 2023 to support ongoing operations[20] - The Company closed operations at four underperforming clinic locations in January 2023[31] - As of June 30, 2023, the company operated three medical clinics located in Kentucky and Missouri[19] Clinical and Service Developments - The company is conducting a clinical trial for an investigational compound for the treatment of bradykinesia due to Parkinson's disease[19] - The Company implemented wellness maintenance programs on a subscription basis starting January 2020, with four membership plans currently offered[36] - The Company introduced hormone replacement therapy (HRT) and medical weight loss programs starting September 2022, recognizing revenue as services are provided[37] - The Company’s patient service revenue is derived from non-surgical procedures performed at outpatient medical clinics, billed to patients or third-party payers[35] Financial Management and Taxation - The Company has accrued a potential overpayment liability of approximately $492,086 related to Advantage Therapy, with ongoing appeals regarding this amount[96] - The company has no unrecognized tax benefits recorded as of June 30, 2023, indicating a comprehensive review of its uncertain tax positions[91] - The Company recorded a goodwill impairment loss of $4.5 million in December 2022, following a significant drop in share price[71] Lease and Operating Expenses - Total operating lease liability as of June 30, 2023, was $1,990,312, with current portion of $947,657[79] - The Company incurred operating lease expense of $747,698 for the six months ended June 30, 2023, compared to $830,373 for the same period in 2022[77] - Future minimum lease payments under operating leases total $2,133,592, with the largest portion due in 2024 at $734,612[79]

[General Information](index=1&type=section&id=General%20Information) This section provides an overview of IMAC Holdings, Inc.'s classification and common stock outstanding - IMAC Holdings, Inc. is classified as a **smaller reporting company** and an **emerging growth company**[2](index=2&type=chunk) Common Stock Outstanding | As of Date | Shares Outstanding | | :----------- | :------------------- | | May 19, 2023 | 33,017,049 | [Important Information Regarding Forward-Looking Statements](index=4&type=section&id=IMPORTANT%20INFORMATION%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights the inherent risks of forward-looking statements, noting actual results may differ materially - The report contains forward-looking statements, particularly in 'Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations', which are subject to risks and uncertainties[5](index=5&type=chunk) - Actual results may differ materially from projections due to factors described in 'Item 1A — Risk Factors' in the Annual Report on Form 10-K[5](index=5&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section provides the unaudited condensed consolidated financial statements for IMAC Holdings, Inc. for the quarter ended March 31, 2023, and comparative periods, including the balance sheets, statements of operations, statements of stockholders' equity, and statements of cash flows, followed by comprehensive notes detailing accounting policies and financial specifics [Condensed Consolidated Balance Sheets](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2023 (Unaudited) ($) | December 31, 2022 ($) | | :--------------------------- | :--------------------------- | :------------------ | | Total Assets | $5,842,800 | $11,081,606 | | Total Liabilities | $4,845,845 | $6,430,350 | | Total Stockholders' Equity | $996,955 | $4,651,256 | | Accumulated Deficit | $(50,218,393) | $(46,519,740) | - Total assets decreased by approximately **47.3%** from **$11.08 million** at December 31, 2022, to **$5.84 million** at March 31, 2023[8](index=8&type=chunk)[10](index=10&type=chunk) - Total stockholders' equity decreased by approximately **78.6%** from **$4.65 million** at December 31, 2022, to **$0.99 million** at March 31, 2023[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section outlines the company's financial performance, including revenues, operating expenses, and net loss for the reporting periods Condensed Consolidated Statements of Operations Highlights (Three Months Ended March 31) | Metric | 2023 (Unaudited) ($) | 2022 (Unaudited) ($) | | :------------------------------------- | :--------------- | :--------------- | | Total Revenue | $2,093,362 | $3,894,987 | | Total Operating Expenses | $5,789,548 | $7,039,807 | | Operating Loss | $(3,696,186) | $(3,144,820) | | Net Loss | $(3,698,653) | $(3,162,125) | | Net Loss Per Share (Basic and Diluted) | $(0.11) | $(0.12) | - Total revenue decreased by approximately **46.3%** from **$3.89 million** in Q1 2022 to **$2.09 million** in Q1 2023[12](index=12&type=chunk) - Loss on disposal or impairment of assets significantly increased from **$47,429** in Q1 2022 to **$1,441,012** in Q1 2023[12](index=12&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY) This section details changes in the company's stockholders' equity, including accumulated deficit, for the reporting period Condensed Consolidated Statements of Stockholders' Equity Highlights | Metric | December 31, 2022 ($) | March 31, 2023 ($) | | :--------------------------- | :---------------- | :------------- | | Total Stockholders' Equity | $4,651,256 | $996,955 | | Accumulated Deficit | $(46,519,740) | $(50,218,393) | | Net Loss (Q1 2023) | N/A | $(3,698,653) | - Accumulated deficit increased from **$(46,519,740)** at December 31, 2022, to **$(50,218,393)** at March 31, 2023, reflecting the net loss[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section presents cash inflows and outflows from operating, investing, and financing activities for the reporting periods Condensed Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31) | Cash Flow Activity | 2023 (Unaudited) ($) | 2022 (Unaudited) ($) | | :-------------------------------- | :--------------- | :--------------- | | Net Cash from Operating Activities | $(1,417,578) | $(2,592,551) | | Net Cash from Investing Activities | $1,050,000 | $(216,079) | | Net Cash from Financing Activities | $(5,529) | $(35,099) | | Net Decrease in Cash | $(373,107) | $(2,843,729) | | Cash, End of Period | $390,104 | $4,275,251 | - Proceeds from sale of Louisiana Orthopedic operations provided **$1,050,000** in cash from investing activities in Q1 2023[16](index=16&type=chunk) - Net cash used in operating activities decreased by **45.3%** from **$2.59 million** in Q1 2022 to **$1.42 million** in Q1 2023[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section details accounting policies, significant transactions, financial position, and going concern considerations - IMAC Holdings, Inc. provides movement, orthopedic, and neurological therapies through its IMAC Regeneration Centers and is conducting a clinical trial for an investigational compound for Parkinson's disease[18](index=18&type=chunk) - In Q1 2023, the company closed four underperforming clinics and sold its Louisiana Orthopedic practice and The BackSpace, LLC operations to raise capital and support ongoing operations[19](index=19&type=chunk)[23](index=23&type=chunk) Key Financial Position Indicators | Metric | March 31, 2023 | December 31, 2022 | | :---------------- | :------------- | :---------------- | | Working Capital | $(1.73) million | $(0.5) million | | Net Loss (Q1) | $(3.7) million | $(3.16) million | | Cash Used in Ops (Q1) | $(1.4) million | $(2.59) million | - The company's financial statements are prepared under a going concern assumption, but recurring losses and negative working capital raise substantial doubt about its ability to continue as a going concern[50](index=50&type=chunk)[51](index=51&type=chunk) Accounts Receivable, Net | Date | Amount ($) | | :----------- | :----------- | | Mar 31, 2023 | $1,077,291 | | Dec 31, 2022 | $2,881,239 | Property and Equipment, Net | Date | Amount ($) | | :----------- | :----------- | | Mar 31, 2023 | $683,452 | | Dec 31, 2022 | $1,584,714 | Intangible Assets, Net | Date | Amount ($) | | :----------- | :----------- | | Mar 31, 2023 | $1,200,263 | | Dec 31, 2022 | $1,365,457 | - Intangible assets of approximately **$61,000** for the Louisiana market and **$60,000** for BackSpace retail stores were written off as impaired in Q1 2023 due to sales[61](index=61&type=chunk)[62](index=62&type=chunk) - The company is subject to several CMS audits, with potential overpayment claims, and has accrued **$20,000** for one such potential overpayment related to Progressive Health[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - Subsequent to March 31, 2023, the company agreed to sell its Chicago market operations, including fixed assets, intangible assets, and associated leases[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition and results of operations for the three months ended March 31, 2023, compared to the same period in 2022. It highlights a significant decrease in revenue and an increased net loss, primarily due to strategic divestitures and clinic closures aimed at improving financial stability. The company also provides a reconciliation of non-GAAP financial measures and discusses its liquidity challenges [Special Note Regarding Forward-Looking Information](index=25&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Information) This section cautions on forward-looking statements, noting inherent uncertainties and potential for differing actual results - The discussion includes forward-looking statements, which are not guarantees of future performance and are subject to risks and uncertainties, particularly those in Item 1A. Risk Factors[95](index=95&type=chunk) - The company cautions that actual results, performance, and achievements could differ materially from those expressed or implied in forward-looking statements[96](index=96&type=chunk) [Overview](index=25&type=section&id=Overview) This section describes IMAC Holdings' business model, medical treatments, and recent strategic actions - IMAC Holdings provides non-invasive medical treatments for pain and soft tissue conditions through its IMAC Regeneration Centers and BackSpace clinics, focusing on sports medicine without opioids[98](index=98&type=chunk) - In Q1 2023, the company closed four underperforming clinics and sold its Louisiana Orthopedic practice and The BackSpace, LLC operations to generate capital and support ongoing operations[99](index=99&type=chunk) - The company operates clinics directly or through long-term management services agreements in states with corporate practice of medicine restrictions, consolidating financial results due to operational control[100](index=100&type=chunk) [Significant Financial Metrics](index=27&type=section&id=Significant%20financial%20metrics) This section highlights key financial performance indicators for Q1 2023 versus Q1 2022 Significant Financial Metrics (Q1 2023 vs. Q1 2022) | Metric | Q1 2023 ($) | Q1 2022 ($) | | :----------------- | :---------- | :---------- | | Net Patient Revenue | $2.4 million | $3.9 million | | Working Capital | $(1.5) million | $0.5 million | | Adjusted EBITDA | $(1.6) million | $(2.5) million | - The company sold its Louisiana market and BackSpace retail stores, and closed four underperforming locations during Q1 2023[102](index=102&type=chunk) [Matters that May or Are Currently Affecting Our Business](index=28&type=section&id=Matters%20that%20May%20or%20Are%20Currently%20Af%20ecting%20Our%20Business) This section outlines critical factors for future success, including personnel, patient volume, and financing needs - Key factors for future success include hiring additional healthcare professionals and enhancing revenue through increased patient volume and new services[104](index=104&type=chunk) - The company needs to obtain additional financing for clinic acquisitions, management, and development, and control operating expenses during expansion[104](index=104&type=chunk) [Results of Operations for the Three Months Ended March 31, 2023 Compared to the Three Ended March 31, 2022](index=28&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202023%20Compared%20to%20the%20Three%20Ended%20March%2031%2C%202022) This section provides a comparative analysis of revenues and operating expenses for Q1 2023 and 2022 Revenue Breakdown (Three Months Ended March 31) | Revenue Type | 2023 (in thousands $) | 2022 (in thousands $) | | :----------------------- | :------------------ | :------------------ | | Outpatient facility services | $1,905 | $3,661 | | Memberships | $188 | $234 | | Total Revenues | $2,093 | $3,895 | - Total revenues decreased by approximately **$1.8 million**, mainly due to the sale of the Louisiana market, BackSpace retail stores, and closure of underperforming clinics[110](index=110&type=chunk) Operating Expenses (Three Months Ended March 31) | Expense Category | 2023 ($) | 2022 ($) | Change ($) | Percent Change (%) | | :------------------------- | :------- | :------- | :--------- | :------------- | | Patient Expenses | $266,000 | $460,000 | $(194,000) | (42)% | | Salaries and Benefits | $2,313,000 | $3,899,000 | $(1,586,000) | (41)% | | Advertising and Marketing | $75,000 | $370,000 | $(295,000) | (80)% | | General and Administrative | $1,504,000 | $1,815,000 | $(310,000) | (17)% | | Depreciation and Amortization | $190,000 | $447,000 | $(257,000) | (57)% | | Loss on disposal and impairment | $1,441,000 | $47,000 | $1,394,000 | 2,966% | - Loss on disposal and impairment of assets increased by **$1,394,000 (2,966%)** in Q1 2023 due to the sale of Louisiana and retail stores, clinic closures, and equipment sales[125](index=125&type=chunk) [Analysis of Cash Flows](index=32&type=section&id=Analysis%20of%20Cash%20Flows) This section analyzes the company's cash flows from operating, investing, and financing activities for Q1 2023 - Net cash used in operating activities was approximately **$1.4 million** in Q1 2023, primarily due to loss on disposition of assets[126](index=126&type=chunk) - Net cash provided by investing activities was **$1,050,000** in Q1 2023, attributed to the sale of Louisiana Orthopedic operations[126](index=126&type=chunk) - Net cash used in financing activities was approximately **$6,000** in Q1 2023, mainly consisting of **$17,000** in debt payments[126](index=126&type=chunk) [Reconciliation of Non-GAAP Financial Measures](index=32&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section reconciles GAAP net loss to Adjusted EBITDA, a non-GAAP measure for operating performance - Adjusted EBITDA is presented as a non-GAAP financial measure to evaluate operating performance, excluding non-cash and non-operating items[128](index=128&type=chunk) Adjusted EBITDA Reconciliation (Three Months Ended March 31) | Metric | 2023 ($) | 2022 ($) | | :------------------------------------- | :----------- | :----------- | | GAAP Loss Attributable to IMAC Holdings | $(3,699,000) | $(3,162,000) | | Interest Expense | $2,000 | $4,000 | | Other Expense | $0 | $13,000 | | Share-based Compensation Expense | $86,000 | $189,000 | | Depreciation and Amortization | $190,000 | $447,000 | | Loss on Disposition and Impairment of Assets | $1,441,000 | $47,000 | | Adjusted EBITDA | $(1,979,000) | $(2,462,000) | - Adjusted EBITDA improved by **$483,000 (19.6%)** from Q1 2022 to Q1 2023[130](index=130&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet financial obligations, including cash, working capital, and commitments Liquidity Position | Metric | March 31, 2023 ($) | December 31, 2022 ($) | | :---------------- | :------------- | :---------------- | | Cash | $0.4 million | $0.8 million | | Working Capital | $(1.7) million | $0.5 million | | Current Liabilities | $3.5 million | N/A | - Operating leases represent **$1.0 million** of current liabilities, with accounts payable and accrued expenses making up **$0.9 million** and **$0.8 million**, respectively[131](index=131&type=chunk) Contractual Obligations as of March 31, 2023 | Obligation Type | Total ($) | Less Than 1 Year ($) | 1-3 Years ($) | 4-5 Years ($) | | :------------------------------ | :---------- | :--------------- | :---------- | :---------- | | Short-term obligations | $37,005 | $37,005 | $- | $- | | Long-term obligations (incl. interest) | $55,971 | $- | $55,971 | $- | | Finance lease obligations (incl. interest) | $26,357 | $16,354 | $10,003 | $- | | Operating lease obligations | $2,428,439 | $832,959 | $1,439,966 | $155,514 | | Total | $2,547,772 | $886,318 | $1,505,940 | $155,514 | [Off-Balance Sheet Arrangements](index=33&type=section&id=Of%20-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements as of March 31, 2023 - The company had no off-balance sheet arrangements as of March 31, 2023[134](index=134&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that quantitative and qualitative disclosures about market risk are not applicable to the company - Quantitative and qualitative disclosures about market risk are not applicable[135](index=135&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were deemed ineffective as of March 31, 2023, due to material weaknesses in internal control over financial reporting. These weaknesses include the absence of in-house accounting personnel capable of handling complex transactions and a lack of separation of duties. Management plans to expand accounting functions and improve procedures when additional capital resources become available - Disclosure controls and procedures were not effective as of March 31, 2023, due to material weaknesses in internal control over financial reporting[137](index=137&type=chunk)[139](index=139&type=chunk) - Material weaknesses include the absence of in-house accounting personnel for complex transactions and a lack of separation of duties[137](index=137&type=chunk)[219](index=219&type=chunk) - Management plans to expand accounting functions and improve internal procedures with dedicated staff and additional capital resources[138](index=138&type=chunk)[220](index=220&type=chunk) - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[140](index=140&type=chunk) [PART II. OTHER INFORMATION](index=35&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides additional information, including legal proceedings and risk factors [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company may be involved in various lawsuits and legal proceedings in the ordinary course of business but is currently unaware of any matters that would have a material adverse effect on its financial condition, results of operations, or liquidity - The company is not currently aware of any legal proceedings or claims that are reasonably likely to have a material adverse effect on its financial condition, results of operations, or liquidity[142](index=142&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section details numerous risks that could materially and adversely affect the company's business, financial condition, or results of operations. Key risks include recurring losses and going concern doubts, challenges in implementing growth strategies, dependence on key personnel, intense competition, regulatory compliance, and risks related to clinical trials, data security, and stock ownership [Financial and Operational Risks](index=35&type=section&id=Financial%20and%20Operational%20Risks) This section outlines significant financial and operational challenges, including recurring losses, going concern, and funding - The company recorded net losses for the three months ended March 31, 2023 (**$3.699 million**) and 2022 (**$3.162 million**), and there is no assurance of future profitability[144](index=144&type=chunk)[145](index=145&type=chunk) - Recurring losses from operations and a net capital deficiency raise substantial doubt about the company's ability to continue as a going concern[146](index=146&type=chunk)[149](index=149&type=chunk)[161](index=161&type=chunk) - The company needs additional funding to support operations and implement business plans, with no assurance of successful capital raising[51](index=51&type=chunk)[157](index=157&type=chunk) - Failure to obtain financing on acceptable terms could materially adversely affect operations and the ability to implement growth and expansion strategies[158](index=158&type=chunk)[159](index=159&type=chunk) [Business Model and Regulatory Compliance Risks](index=38&type=section&id=Business%20Model%20and%20Regulatory%20Compliance%20Risks) This section addresses risks from management services agreements, medical control, and conflicts of interest - The company manages, but does not own, certain medical clinics and does not employ medical service providers, making its financial and operational success highly dependent on professional service corporations[164](index=164&type=chunk)[165](index=165&type=chunk) - Management services agreements can be terminated, leading to a loss of management fees and adverse effects on operating results and financial condition[166](index=166&type=chunk) - Lack of direct control over medical care in facilities and potential changes in state medical board licensing or ownership requirements pose risks to operations and revenue[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - Potential conflicts of interest exist with management services agreements, particularly with clinics owned by company executives, which could diverge from company interests[172](index=172&type=chunk)[173](index=173&type=chunk)[176](index=176&type=chunk) [Personnel and Competition Risks](index=41&type=section&id=Personnel%20and%20Competition%20Risks) This section highlights risks from key executive loss, personnel attraction, and intense competition - The loss of services from CEO **Jeffrey S. Ervin** or President **Matthew C. Wallis, DC**, would materially and adversely affect business operations and prospects[178](index=178&type=chunk)[179](index=179&type=chunk) - Success depends on the ability to attract and retain highly skilled managerial personnel, medical doctors, chiropractors, and other practitioners[180](index=180&type=chunk) - The company faces strong competition from established orthopedic surgeons, pain management clinics, and hospital systems, which may be better capitalized[182](index=182&type=chunk) - The services provided are relatively new and unique, and there is no certainty of achieving or sustaining market acceptance or sufficient patient volume[183](index=183&type=chunk) [Healthcare Industry and Brand Risks](index=43&type=section&id=Healthcare%20Industry%20and%20Brand%20Risks) This section covers risks from healthcare law compliance, insurance changes, revenue, and brand reputation - Compliance with numerous government laws and regulations, including those from the FDA and CMS, could require substantial capital expenditures and increase costs if regulations change[186](index=186&type=chunk) - Changes to national health insurance policy or third-party insurance carrier fee schedules could decrease patient revenue and adversely affect financial performance[187](index=187&type=chunk) - If private health insurance, Medicare, and Medicaid begin covering regenerative medical treatments, per-treatment revenue might decline due to tighter fee schedules, and competition could increase[188](index=188&type=chunk) - Any adverse change to the brand, reputation, or financial performance of an IMAC Regeneration Center at one location could negatively affect the entire company[189](index=189&type=chunk) [Legal, Audit, and Regulatory Risks](index=44&type=section&id=Legal%2C%20Audit%2C%20and%20Regulatory%20Risks) This section details risks from uninsured losses, CMS audit claims, and FDA investigations - The company may incur losses not covered by insurance, or losses exceeding insured limits, which could materially adversely affect financial performance[190](index=190&type=chunk) - Audits by CMS, health insurance providers, and the IRS could result in reclaimed payments, increased tax liabilities, or unexpected expenses[191](index=191&type=chunk) - The company is subject to multiple CMS overpayment claims and payment suspensions, including a **$2.7 million** claim for Progressive Health and a **$0.5 million** claim for Advantage Therapy, with ongoing appeals[194](index=194&type=chunk)[195](index=195&type=chunk) - The FDA's pursuit of 'bad actors' in the regenerative medicine industry could subject the company to broad investigations regarding its treatments[196](index=196&type=chunk)[197](index=197&type=chunk) [Clinical Trial and CRO Dependence Risks](index=46&type=section&id=Clinical%20Trial%20and%20CRO%20Dependence%20Risks) This section addresses risks from clinical trial delays, CRO reliance, drug approval, and healthcare law compliance - Delays or difficulties in patient enrollment for clinical trials, due to factors like patient withdrawal, adverse events, or competition, could materially adversely affect R&D efforts[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) - Reliance on CROs for preclinical and clinical studies means the company is responsible for ensuring compliance with regulations, and CRO failures could delay or terminate trials[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) - The company has no prior experience in bringing a drug to regulatory approval, and the FDA may require additional studies, causing significant delays or increased resource expenditure[207](index=207&type=chunk) - The company is subject to federal and state healthcare laws (e.g., Anti-Kickback Statute, False Claims Act), and non-compliance could lead to criminal sanctions, civil penalties, and exclusion from government programs[209](index=209&type=chunk)[210](index=210&type=chunk) [Data Security and IT System Risks](index=49&type=section&id=Data%20Security%20and%20IT%20System%20Risks) This section outlines risks from system disruptions, cyber-attacks, data breaches, and unauthorized data access - Significant disruptions in computer systems, including cyber-attacks, could result in loss or degradation of service, harming business and reputation[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - Breaches of security measures, due to employee error, malfeasance, or system vulnerabilities, could lead to unauthorized access to patient data, legal claims, and material costs[216](index=216&type=chunk) - Changes in third-party vendors or systems could cause interruptions, delays, and potential loss, misuse, or theft of data, adversely affecting operations[215](index=215&type=chunk) [Accounting and Regulatory Compliance Risks (Emerging Growth Company)](index=50&type=section&id=Accounting%20and%20Regulatory%20Compliance%20Risks%20(Emerging%20Growth%20Company)) This section discusses risks from internal control weaknesses, reduced reporting, and accounting changes - Material weaknesses in internal controls over financial reporting, such as lack of in-house accounting personnel for complex transactions and insufficient separation of duties, render disclosure controls ineffective[219](index=219&type=chunk) - As an 'emerging growth company' and 'smaller reporting company,' the company utilizes reduced reporting requirements, which may affect comparability of financial statements and investor attractiveness[221](index=221&type=chunk)[222](index=222&type=chunk) - Changes in accounting principles or interpretations could result in unfavorable accounting charges or restatements, potentially causing stock price decline[218](index=218&type=chunk) [Risks Relating to Ownership of Common Stock and Warrants](index=51&type=section&id=Risks%20Relating%20to%20Ownership%20of%20Our%20Common%20Stock%20and%20Warrants) This section covers risks from stock price volatility, delisting, ownership, no dividends, dilution, and anti-takeover measures - The market price of common stock is volatile, and trading below **$1.00** per share risks delisting from The Nasdaq Capital Market[225](index=225&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) - Concentration of ownership among executive officers and directors may limit other stockholders' influence on significant corporate decisions[238](index=238&type=chunk) - The company does not expect to pay dividends in the foreseeable future, retaining earnings for operations, expansion, and debt repayment[239](index=239&type=chunk) - Future issuances of common stock, warrants, or other securities to finance growth could dilute existing stockholders' ownership and voting strength, and potentially depress the market price[240](index=240&type=chunk)[241](index=241&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could discourage, delay, or prevent a change in control, potentially affecting the stock price[233](index=233&type=chunk)[234](index=234&type=chunk)[237](index=237&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds were reported[245](index=245&type=chunk) [Item 3. Defaults Upon Senior Securities](index=56&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities to report for the period - No defaults upon senior securities were reported[247](index=247&type=chunk) [Item 4. Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[247](index=247&type=chunk) [Item 5. Other Information](index=56&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report for the period - No other information was reported[247](index=247&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including certifications, XBRL documents, and various corporate and contractual agreements incorporated by reference - The exhibits include certifications (Principal Executive Officer, Principal Financial Officer), Inline XBRL documents, and various corporate and contractual agreements[248](index=248&type=chunk)[249](index=249&type=chunk) - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished but not filed for Section 18 purposes[250](index=250&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.001 per share BACK The NASDAQ Stock Market LLC Warrants to Purchase Common Stock IMACW The NASDAQ Stock Market LLC Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURI ...