Annual Report for Fiscal Year Ending December 31, 2024 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth previously under the caption "Risk Factors." This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this report.

The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods.

Overview

IMAC Holdings, Inc. operates primarily through its wholly owned subsidiary, Ignite Proteomics, LLC (Ignite), that utilizes a unique and patented RPPA technology platform, which can quantify protein signaling to support oncology clinical treatment decisions and biopharmaceutical drug development.

Ignite has recently obtained credentials to bill Medicare for reimbursement.

For the year ended December 31, 2024, the Company had:

	●	$0.07 million in net revenue;
	●	net loss of $9.0 million comprised of ($6.3 million) from our continuing operations and ($2.7 million) from our discontinued operations; and,
	●	a one-time expenses of $2.7 million in discontinued operations related to a reserve for CMS request for payment related to a Medicare audit.

Matters that May or Are Currently Affecting Our Business

We believe that the growth of our business and our future success depend on various opportunities, challenges, trends and other factors, including the following:

	●	Our ability to obtain additional financing for the projected costs associated with the growth of our recently acquired laboratory;
	●	Our ability to attract competent, skilled laboratory and sales personnel for our operations at acceptable prices to manage our overhead; and

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above.

For a detailed discussion of our significant accounting policies and related judgments, see Note 2 of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this report.

Results of Operations for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023

Revenues, net

The Company's revenue is diversified between biopharmaceutical drug development, contract research and patient or third party payors. The Company had revenues of $.07 million and $0 for the years ended December 31, 2024 and 2023, respectively.

Cost of Revenues

Cost of revenues consisted of laboratory supplies of $0.2 million and depreciation expense of $0.1 million.

Operating expenses

Operating expenses were $5.4 million for the year ended December 31, 2024. They consisted of $1.8 million for salaries and benefits, $1.2 million in legal fees, $1.6 million in professional fees and consulting, $0.3 million in insurance, $0.2 million for occupancy and $0.3 million for other expenses.

Discontinued Operations

Costs and expenses incurred in discontinued operations relate to the legal accrual associated with the Progressive Health matter.

Liquidity and Capital Resources

As of December 31, 2023, we had $0.5 million in cash and a working capital deficit of $(7.3) million. As of December 31, 2023, we had cash of $0.2 million and working capital of $(0.8) million. The decrease in working capital was primarily due to a $2.3 million increase in accounts payable, $1.1 million increase in dividends payable and $2.7 million related to the reserve for the Medicare audit.

As of December 31, 2024, we had approximately $8.0 million in current liabilities. Approximately $2.7 million of our current liabilities outstanding were to our vendors, $1.3 million were dividends payable to our preferred shareholders and $4.0 million for liabilities of discontinued operations. Of the discontinued operations liabilities, $2.7 million relates to the reserve for the Medicare audit and $0.5 are for operating leases.

As of December 31, 2024, we had an accumulated deficit of $65.0 million. We anticipate that we will need to raise additional capital to fund future operations. However, we may be unable to raise additional funds or enter into such arrangements when needed or favorable terms, or at all, which would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our development or acquisition activity. Failure to receive additional funding could also cause us to cease operations, in part or in full. Furthermore, even if we believe we have sufficient funds for our current of future operating plans, we may seek additional capital due to favorable market conditions or strategic considerations. Our management team has determined that our financial condition raises substantial doubt as to our ability to continue as a going concern.

Cash Flows

The primary source of our operating cash flow is the collection of accounts receivable from patients, private insurance companies, government programs, self-insured employers and other payers.

During the year ended December 31, 2024, net cash used in operations increased to $3.2 million compared to $2.8 million for the year ended December 31, 2023. This decrease was primarily attributable to our increase in accounts payable.

Net cash used in investing activities during the years ended December 31, 2024 and 2023 was $0.4 million and $1.8 million, respectively. The decrease was primarily due to the previous years' sale of physician practices and property and equipment.

Net cash provided by financing activities during the year ended December 31, 2024 was $3.9 million, which was primarily proceeds from the sale of preferred stock, net of related fees, and issuance of promissory notes. Net cash provided by financing activities during the year ended December 31, 2023 was $4.0 million, including proceeds from the sale of preferred stock, net of related fees.

Impact of Inflation

We believe that inflation had a material impact on our results of operations for the years ended December 31, 2024. Inflation was evident in staffing and supply costs related to the delivery of patient care. There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.