IMAC Holdings(BACK) - 2025 Q2 - Quarterly Report

Important Information Regarding Forward-Looking Statements This section highlights that the report contains forward-looking statements subject to risks and uncertainties - This report contains forward-looking statements based on current beliefs, expectations, and projections, subject to risks and uncertainties that could cause actual results to differ materially. Significant risks are detailed in the Annual Report on Form 10-K/A for the fiscal year ended December 31, 2023[8] PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and related disclosures for interim periods Item 1. Financial Statements (Unaudited) Presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with detailed notes Condensed Consolidated Balance Sheets Presents the company's condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------------- | :------------ | :------------------ | | Cash | $42,665 | $504,189 | | Total current assets | $277,096 | $684,341 | | Total assets | $1,077,390 | $1,589,021 | | Accounts payable and accrued expenses | $4,498,691 | $2,714,105 | | Total current liabilities | $10,903,336 | $7,227,546 | | Total stockholders' deficit | $(9,825,946) | $(5,638,525) | Condensed Consolidated Statements of Operations Presents the company's condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations Highlights | Metric | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues, net | $0 | $15,750 | $1,500 | $15,750 | | Gross profit | $(102,328) | $(56,252) | $(204,015) | $(56,252) | | Operating loss | $(1,972,113) | $(1,401,944) | $(4,161,014) | $(1,810,574) | | Net loss from continuing operations | $(2,120,265) | $(1,413,106) | $(4,320,447) | $(1,862,005) | | Net loss | $(2,120,265) | $(1,383,404) | $(4,320,133) | $(1,790,623) | | Net loss available to common stockholders | $(3,363,656) | $(2,031,520) | $(6,777,861) | $(2,518,104) | | Net loss per share – Basic and diluted | $(0.89) | $(1.72) | $(1.95) | $(2.16) | Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) Details changes in stockholders' equity (deficit) for the six months ended June 30, 2025, reflecting stock transactions and net loss Changes in Stockholders' Equity (Deficit) - Six Months Ended June 30, 2025 | Metric | January 31, 2025 Balance (USD) | Dividends Declared (USD) | Capitalized Dividends (USD) | Preferred Stock Conversion (USD) | Common Stock Issuance (USD) | Net Loss (USD) | June 30, 2025 Balance (USD) | | :-------------------------- | :----------------------- | :----------------- | :-------------------- | :------------------------- | :-------------------- | :--------- | :---------------------- | | Preferred Stock (Par) | $51 | - | - | $(4) | - | - | $47 | | Common Stock (Par) | $1,168 | - | - | $4 | $165 | - | $1,337 | | Additional Paid-In Capital | $59,344,408 | $(2,457,728) | $2,312,108 | $178,332 | $99,835 | - | $59,476,955 | | Accumulated Deficit | $(64,984,152) | - | - | - | - | $(4,320,133) | $(69,304,285) | | Total | $(5,638,525) | $(2,457,728) | $2,312,108 | $178,332 | $100,000 | $(4,320,133) | $(9,825,946) | Condensed Consolidated Statements of Cash Flows Presents the company's condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (As Restated) (USD) | | :------------------------------------------ | :----------------------------- | :------------------------------------------- | | Net cash used in operating activities | $(2,328,451) | $(930,128) | | Net cash used in investing activities | $0 | $(375,000) | | Net cash provided in financing activities | $1,866,927 | $1,974,227 | | Net increase (decrease) in cash | $(461,524) | $669,099 | | Cash, end of period | $42,665 | $890,610 | Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1 – Description of Business Describes the company's continuing operations in precision medicine for cancer treatment and its discontinued operations - The Company's continuing operations focus on precision medicine in cancer treatment, utilizing activated protein analysis for clinical testing of breast cancer patients and collaborations with biopharmaceutical companies for drug target identification[24] - Discontinued operations include IMAC Regeneration Centers, The BackSpace retail stores, and the Investigational New Drug division, with patient care at all locations sold or discontinued as of December 31, 2023[25] Note 2 – Summary of Significant Accounting Policies Outlines the significant accounting policies used in preparing the unaudited condensed financial statements and impact of new standards - The unaudited condensed financial statements are prepared in accordance with GAAP for interim financial information and Article 8 of Regulation S-X, including only normal recurring adjustments[26] - Management makes estimates and assumptions affecting reported amounts, with actual results potentially differing materially[28] - The Company is evaluating the impact of recently issued accounting standards: ASU 2023-09 (Income Taxes) effective after December 15, 2024, and ASU 2024-03 (Expense Disaggregation Disclosures) effective after December 15, 2026[29][30] Note 3 – Going Concern Considerations Addresses the company's ability to continue as a going concern, citing expected operating losses and plans for capital raises - The Company expects to incur operating losses and cash outflows, leading to substantial doubt about its ability to continue as a going concern within twelve months from the statements' issuance[31] - Management plans to raise additional capital through debt and equity to mitigate going concern risks[31] Note 4 – Property and Equipment Details the company's property and equipment, net of accumulated depreciation, and related depreciation expense Property and Equipment, Net | Category | June 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------- | :------------ | :------------------ | | Equipment | $1,044,000 | $1,044,000 | | Less: accumulated depreciation | $(244,000) | $(139,000) | | Total property and equipment, net | $800,000 | $905,000 | - Depreciation expense for the six months ended June 30, 2025, was approximately $0.10 million, significantly higher than $0.04 million for the same period in 2024[33] Note 5 – Note Payable Summarizes the company's notes payable, including new issuances and unamortized debt discounts Notes Payable Summary | Note Type | June 30, 2025 (USD) | December 31, 2024 (USD) | | :------------------------ | :------------ | :------------------ | | 40% OID promissory note | $2,278,000 | $0 | | 10% OID promissory note | $154,000 | $0 | | Total notes payable | $2,432,000 | $0 | | Less: unamortized debt discounts | $(505,000) | $0 | | Notes payable, net | $1,927,000 | $0 | - During the six months ended June 30, 2025, the Company issued promissory notes totaling $2.43 million in principal for an aggregate purchase price of $1.77 million[34] Note 6 – Shareholders' Deficit Details changes in shareholders' deficit, including preferred stock conversions and common stock issuances - 4,455 shares of preferred stock were converted into 1,425,170 shares of common stock during the six months ended June 30, 2025[35] Preferred Stock Liquidation Preference as of June 30, 2025 | Series | Shares Outstanding | Stated Value (USD) | Liquidation Preference (USD) | | :------- | :----------------- | :----------- | :--------------------- | | Series C-1 | 2,020 | $1,000 | $2,578,000 | | Series C-2 | 876 | $1,000 | $1,071,000 | | Series D | 14,003 | $1,090 | $17,177,000 | | Series E | 24,172 | $1,090 | $29,650,000 | | Series F | 300 | $1,091 | $368,000 | | Series G | 4,676 | $1,038 | $5,462,000 | | Total | 46,047 | | $56,306,000 | - Shareholders approved an increase in authorized common stock to 120,000,000 shares from 60,000,000 shares on March 26, 2025. The Company issued 329,932 common shares for $0.10 million cash in the six months ended June 30, 2025[37] Note 7 – Net Loss Per Share Explains the calculation of basic and diluted net loss per share and lists dilutive instruments excluded due to anti-dilutive effects - Basic and diluted net loss per common share are computed by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding. Dilutive common stock equivalents are excluded due to their anti-dilutive effect from the Company's net loss[38] Dilutive Shares Not Included in EPS Calculation | Instrument | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Common Stock Purchase Warrants | 5,905,946 | 2,928,231 | | Preferred shares C-1 | 927,857 | 1,043,388 | | Preferred shares C-2 | 383,860 | 509,318 | | Preferred shares D | 4,298,245 | 4,828,637 | | Preferred shares E | 7,419,643 | 6,721,844 | | Preferred shares F | 98,639 | 134,043 | | Preferred shares G | 3,169,988 | - | | Stock options | 11,306 | 1,312 | | Total | 22,215,484 | 16,166,773 | Note 8 – Commitments and Contingencies Outlines the company's commitments and contingencies, primarily related to governmental program audits and potential overpayments - The Company is subject to audits under governmental programs, with CMS contractors recommending overpayments for discontinued operations[40] - For Progressive Health, CMS recommended an overpayment of approximately $2.7 million. The Company has appealed through multiple levels, including filing a lawsuit in federal court on May 14, 2025, and has reserved this amount[41][43][44] - For Advantage Therapy, CMS recommended an overpayment of approximately $0.5 million. The Company received a partially favorable reconsideration decision and awaits a response from an Administrative Law Judge hearing[45][46] - For IMAC St. Louis, CMS estimated an overpayment of approximately $1.1 million for the period February 26, 2020, through January 2, 2024[47] Note 9 – Segment Reporting Identifies the company's single operating segment in precision medicine and presents segment expenses from continuing operations - The Company operates in a single segment: precision medicine in cancer treatment, located in the United States[48] Segment Expenses from Continuing Operations | Expense Category | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Employee expense | $1,144,984 | $431,207 | $1,947,025 | $581,409 | | Professional fees | $372,074 | $752,799 | $1,435,279 | $910,535 | | Occupancy | $71,569 | $34,257 | $137,555 | $36,334 | | Insurance | $69,091 | $85,408 | $139,597 | $167,248 | | Other | $212,067 | $42,021 | $297,543 | $58,796 | | Total operating expenses | $1,869,785 | $1,345,692 | $3,956,999 | $1,754,322 | | Operating loss | $(1,972,113) | $(1,401,944) | $(4,161,014) | $(1,810,574) | Note 10 – Subsequent Events Reports significant events occurring after June 30, 2025, including the issuance of additional unsecured promissory notes - Subsequent to June 30, 2025, the Company issued unsecured promissory notes (Q3 2025 Notes) with an aggregate principal amount of $1.2 million for a purchase price of $0.9 million, maturing by December 24, 2025, or upon a qualifying securities offering[50] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on the company's financial condition, operating results, liquidity, and capital resources for interim periods Special Note Regarding Forward-Looking Information Highlights that this discussion contains forward-looking statements subject to uncertainties and risks that could materially affect actual results - This discussion contains forward-looking statements subject to uncertainties, risks, and other influences, many beyond the company's control, which could materially affect actual results. The company does not undertake to update these statements[51][52] Overview Provides an overview of IMAC Holdings, Inc.'s primary operations through Ignite Proteomics, LLC, and key financial highlights - IMAC Holdings, Inc. primarily operates through Ignite Proteomics, LLC, which uses a patented RPPA technology platform for oncology clinical treatment decisions and biopharmaceutical drug development[54] Key Financials for Q2 and H1 2025 | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :-------------------------------- | :------------------------------- | :----------------------------- | | Net revenue | $0 | $0.002 million | | Net loss | $2.1 million | $4.3 million | | Net loss from continuing operations | $(2.1 million) | $(4.3 million) | | Net loss from discontinued operations | $0 | $0 | | Legal fees (H1 only) | N/A | $0.6 million | Matters that May or Are Currently Affecting Our Business Discusses factors impacting the business, including the need for additional financing and attracting skilled personnel - Future success depends on the ability to obtain additional financing for the recently acquired laboratory's growth and to attract competent, skilled laboratory and sales personnel at acceptable prices[57] Critical Accounting Estimates Explains the role of management estimates and assumptions in financial statements and the impact of critical accounting estimates - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, with material differences potentially impacting financial condition or results of operations[58] - A critical accounting estimate involves highly uncertain assumptions and changes that could materially impact financial condition or results[59] Results of Operations for the Three and Six Months Ended June 30, 2025 Compared to the Three and Six Months Ended June 30, 2024 Analyzes the company's operating results for the three and six months ended June 30, 2025, compared to the same periods in 2024 - Cost of revenues increased for both the three and six months ended June 30, 2025, primarily due to costs incurred in the operation of the laboratory acquired in May 2024[61][62] - Operating expenses increased to $1.9 million (Q2 2025) from $1.3 million (Q2 2024) and to $4.0 million (H1 2025) from $1.8 million (H1 2024), mainly attributable to the acquired laboratory's operations, including higher salaries and benefits[63][64] - Other expenses, primarily interest expense, significantly increased to $0.1 million (Q2 2025) from $0.01 million (Q2 2024) and to $0.2 million (H1 2025) from $0.05 million (H1 2024)[65] Liquidity and Capital Resources Assesses the company's liquidity position, working capital, and capital resources, including the need for additional funding Liquidity Position | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :------------------ | | Cash | $0.04 million | $0.5 million | | Working capital deficit | $(10.6) million | $(6.5) million | | Total current liabilities | $10.9 million | N/A | - The decrease in working capital was primarily due to a $1.8 million increase in accounts payable and a $1.8 million increase in notes payable[66] - The Company had an accumulated deficit of $69.3 million as of June 30, 2025, and anticipates needing to raise additional capital to fund future operations. Management has determined that the financial condition raises substantial doubt about the ability to continue as a going concern[68] Cash Flows Analyzes the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 - Net cash used in operating activities increased to $2.3 million for the six months ended June 30, 2025, compared to $0.9 million for the same period in 2024, primarily due to an increase in accounts payable[69] - Net cash provided by financing activities was $1.9 million for the six months ended June 30, 2025, mainly from common stock sales and promissory note issuances, compared to $2.0 million in the prior year[70] Impact of Inflation Discusses the material impact of inflation on the company's results of operations, particularly on staffing and supply costs - Inflation had a material impact on the Company's results of operations for the six months ended June 30, 2025, particularly affecting staffing and supply costs related to patient care[71] Item 3. Quantitative and Qualitative Disclosures about Market Risk States that there are no quantitative and qualitative disclosures about market risk applicable to the Company - This item is not applicable to the Company[73] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting Disclosure Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2025, and June 30, 2025, due to material weaknesses in internal control over financial reporting[75][77] Material Weaknesses Identifies material weaknesses in internal control over financial reporting, including insufficient accounting resources and lack of segregation of duties - Insufficient resources in the accounting department, limiting the ability to gather, analyze, and properly review financial reporting information, including complex accounting principles - Lack of segregation of duties, where conflicting duties may not always be possible to separate due to the Company's size and nature - Insufficiently designed and implemented operating controls surrounding accounting policies to ensure books and records are recorded in accordance with US GAAP[78] Changes in Internal Control over Financial Reporting Reports no material changes in internal control over financial reporting during the most recent fiscal quarter - No change in internal control over financial reporting occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting[79] PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings and risk factors Item 1. Legal Proceedings The Company may be involved in various lawsuits and legal proceedings, but management is not aware of any material adverse effects - The Company is not currently aware of any legal proceedings or claims that are believed to have a material adverse effect on the business[81] Item 1A. Risk Factors No material changes to the Company's Risk Factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to Risk Factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024[82] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports that there were no unregistered sales of equity securities or use of proceeds to disclose - None to report[82] Item 3. Defaults Upon Senior Securities This section indicates that there were no defaults upon senior securities - None to report[83] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the Company - Not applicable[84] Item 5. Other Information This section reports that there is no other information to disclose - None to report[85] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate organizational documents and certifications - Includes Certificate of Incorporation, Bylaws, Specimen Common Stock Certificate, various Forms of Warrants, Form of Promissory Note, Credit Agreement, and Security and Pledge Agreement[87] - Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002 are filed herewith[88] SIGNATURES This section confirms the report was duly signed by the Chief Executive Officer and Chief Financial Officer on August 14, 2025 - The report was duly caused to be signed on behalf of IMAC Holdings, Inc. by Faith Zaslavsky, Chief Executive Officer, and Sheri Gardzina, Chief Financial Officer, on August 14, 2025[90][91]