UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒		QUARTELRY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2021
OR
☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 333-251829

ASSURE HOLDINGS CORP.

(Exact Name of Registrant as Specified in its Charter)


Nevada		82-2726719
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4600 South Ulster Street, Suite 1225 Denver, Colorado		80237
(Address of Principal Executive Offices)		(Zip Code)

(720) 287-3093

(Registrant’s Telephone Number, including Area Code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

Common Stock, $0.001 Par Value

Title of Each Class

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer ☒ Smaller Reporting Company ☒ Emerging Growth Company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised ﬁnancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of the registrant’s common shares outstanding as of August 10, 2021 was 59,181,440.

Table of Contents

TABLE OF CONTENTS


	PAGE
PART I – FINANCIAL INFORMATION	2
ITEM 1. FINANCIAL STATEMENTS (unaudited)	2
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUN3 30, 2021 AND DECEMBER 31, 2020	2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020	3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020	4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020	5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26
ITEM 4. CONTROLS AND PROCEDURES	26
PART II – OTHER INFORMATION	26
ITEM 1. LEGAL PROCEEDINGS	26
ITEM 1A. RISK FACTORS	27
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	27
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	28
ITEM 4. MINE SAFETY DISCLOSURES	28
ITEM 5. OTHER INFORMATION	28
ITEM 6. EXHIBITS	29
SIGNATURES	31

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ASSURE HOLDINGS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)


	June 30,		December 31,
	2021 (unaudited)		2020
ASSETS
Current assets
Cash	$	3,960	$	4,386
Accounts receivable, net		18,640		14,965
Income tax receivable		150		150
Other current assets		785		618
Due from PEs		5,797		4,856
Total current assets		29,332		24,975
Equity method investments		371		608
Property, plant and equipment, net		123		356
Operating lease right of use asset		—		124
Finance lease right of use asset		882		608
Deferred tax asset, net		302		—
Intangibles, net		3,941		4,115
Goodwill		4,448		2,857
Total assets	$	39,399	$	33,643
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	2,402	$	2,871
Current portion of debt		—		4,100
Current portion of lease liability		568		521
Other current liabilities		36		96
Total current liabilities		3,006		7,588
Lease liability, net of current portion		736		772
Debt, net of current portion		10,301		2,251
Acquisition liability		1,569		—
Acquisition share issuance liability		540		540
Fair value of stock option liability		15		16
Performance share issuance liability		—		2,668
Deferred tax liability, net		—		599
Total liabilities		16,167		14,434
Commitments and contingencies (Note 7)
SHAREHOLDERS’ EQUITY
Common stock: $0.001 par value; 900,000,000 shares authorized; 58,692,701 and 56,378,939 shares issued and outstanding, as of June 30, 2021 and December 31, 2020, respectively		58		56
Additional paid-in capital		37,400		30,841
Accumulated deficit		(14,226)		(11,688)
Total shareholders’ equity		23,232		19,209
Total liabilities and shareholders’ equity	$	39,399	$	33,643

See accompanying notes to condensed consolidated financial statements.

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ASSURE HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue
Patient service fees, net	$	3,694	$	(11,653)	$	6,644	$	(9,307)
Hospital, management and other		2,528		917		4,343		2,904
Total revenue		6,222		(10,736)		10,987		(6,403)
Cost of revenues		3,170		1,039		5,702		2,830
Gross margin		3,052		(11,775)		5,285		(9,233)
Operating expenses
General and administrative		3,963		1,711		7,095		3,896
Sales and marketing		166		163		501		452
Depreciation and amortization		387		261		672		520
Total operating expenses		4,516		2,135		8,268		4,868
Loss from operations		(1,464)		(13,910)		(2,983)		(14,101)
Other income (expenses)
Income (loss) from equity method investments		20		(1,110)		(3)		(1,217)
Other income (expense), net		1		(4)		(2)		53
Accretion expense		(120)		(207)		(215)		(392)
Interest expense, net		(218)		(53)		(236)		(106)
Total other expense		(317)		(1,374)		(456)		(1,662)
Loss before income taxes		(1,781)		(15,284)		(3,439)		(15,763)
Income tax benefit		474		1,954		901		2,019
Net loss	$	(1,307)	$	(13,330)	$	(2,538)	$	(13,744)
Loss per common share
Basic	$	(0.02)	$	(0.38)	$	(0.04)	$	(0.39)
Diluted	$	(0.02)	$	(0.38)	$	(0.04)	$	(0.39)
Weighted average number of common shares used in per share calculation – basic		57,949,285		34,795,313		57,002,355		34,795,313
Weighted average number of common shares used in per share calculation – diluted		57,949,285		34,795,313		57,002,355		34,795,313

See accompanying notes to condensed consolidated financial statements.

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ASSURE HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities
Net loss	$	(2,538)	$	(13,744)
Adjustments to reconcile net loss to net cash used in operating activities
Losses from equity method investments		3		1,217
Stock-based compensation		607		368
Depreciation and amortization		407		520
Amortization of debt issuance costs		13		—
Provision for stock option fair value		(1)		(53)
Accretion expense		215		392
Tax impact of equity component of convertible debt issuance		—		(288)
Change in operating assets and liabilities
Accounts receivable, net		(1,675)		15,746
Prepaid expenses		(420)		—
Right of use assets		205		—
Accounts payable and accrued liabilities		(712)		(1,844)
Due from related parties		(1,063)		(635)
Lease liability		(343)		(172)
Income taxes		(901)		(1,728)
Other assets and liabilities		(58)		26
Net cash used in operating activities		(6,261)		(195)
Cash flows from investing activities
Purchase of equipment and furniture		—		(33)
Net cash paid for acquistion		(156)		(2,715)
Distributions received from equity method investments		234		287
Net cash provided by (used in) investing activities		78		(2,461)
Cash flows from financing activities
Proceeds from common share issuance, net		832		—
Repayment of promissory note		—		(326)
Proceeds from Paycheck Protection Program loan		1,665		1,211
Repayment of line of credit		—		(500)
Proceeds from debenture		7,360		—
Repayment of short term debt		(4,100)		—
Proceeds from convertible debenture		—		2,485
Net cash provided by financing activities		5,757		2,870
Increase (decrease) in cash		(426)		214
Cash at beginning of period		4,386		59
Cash at end of period	$	3,960	$	273
Supplemental cash flow information
Interest paid	$	127	$	87
Income taxes paid	$	—	$	30
Supplemental non-cash flow information
Purchase of equipment with finance leases	$	305	$	239

See accompanying notes to condensed consolidated financial statements.

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ASSURE HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands, except share amounts)

(unaudited)


				Additional		Retained		Total
	Common Stock			paid-in		earnings		shareholders'
	Shares	Amount		Capital		(deficit)		equity
Balances, March 31, 2020	34,795,313	$	35	$	7,500	$	2,934	$	10,469
Stock-based compensation	—		—		163		—		163
Expected tax loss of future stock compensation option exercises	—		—		(115)		—		(115)
Equity component of convertible debt issuance	—		—		466		—		466
Fair value of finders’ warrants	—		—		14		—		14
Net loss	—		—		—		(13,330)		(13,330)
Balances, June 30, 2020	34,795,313	$	35	$	8,028	$	(10,396)	$	(2,333)

Balances, March 31, 2021	56,598,777	$	56	$	31,707	$	(12,919)	$	18,844
Common share issuance, net	2,018,924		2		2,455		—		2,457
Stock-based compensation	—		—		327		—		327
Equity component of debenture issuance	—		—		1,204		—		1,204
Settlement of performance share liability	75,000		—		1,707		—		1,707
Net loss	—		—		—		(1,307)		(1,307)
Balances, June 30, 2021	58,692,701	$	58	$	37,400	$	(14,226)	$	23,232


				Additional		Retained		Total
	Common Stock			paid-in		earnings		shareholders'
	Shares	Amount		Capital		(deficit)		equity
Balances, December 31, 2019	34,795,313	$	35	$	6,682	$	3,348	$	10,065
Stock-based compensation	—		—		368		—		368
Expected tax loss of future stock compensation option exercises	—		—		(288)		—		(288)
Equity component of convertible debt issuance	—		—		1,220		—		1,220
Fair value of finders’ warrants	—		—		46		—		46
Net loss	—		—		—		(13,744)		(13,744)
Balances, June 30, 2020	34,795,313	$	35	$	8,028	$	(10,396)	$	(2,333)

Balances, December 31, 2020	56,378,939	$	56	$	30,841	$	(11,688)	$	19,209
Common share issuance, net	2,018,924		2		2,455		—		2,457
Stock-based compensation	—		—		607		—		607
Equity component of debenture issuance	—		—		1,204		—		1,204
Settlement of performance share liability	294,838		—		2,293		—		2,293
Net loss	—		—		—		(2,538)		(2,538)
Balances, June 30, 2021	58,692,701	$	58	$	37,400	$	(14,226)	$	23,232

See accompanying notes to condensed consolidated financial statements.

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.NATURE OF OPERATIONS

Assure Holdings Corp. (the “Company” or “Assure”), through its two wholly-owned subsidiaries, Assure Neuromonitoring, LLC (“Neuromonitoring”) and Assure Networks, LLC (“Networks”), provides technical and professional intraoperative neuromonitoring (“IONM”) surgical support services primarily associated with spine and head surgeries. These services have been recognized as the standard of care by hospitals and surgeons for risk mitigation. Assure Holdings, Inc., a wholly-owned subsidiary, employs most of the corporate employees and performs various corporate services on behalf of the consolidated Company.

Neuromonitoring employs technologists who utilize technical equipment and their technical training to monitor neurological signals during surgical procedures and to pre-emptively notify the underlying surgeon of any nerve related issues that are identified. The technologists perform their services in the operating room during the surgeries. The technologists are certified by a third party credentialing agency.

Networks performs similar support services as Neuromonitoring except that these services are provided by third party contracted neurologists or certified readers. The support services provided by Networks occurs at the same time and for the same surgeries as the support services provided by the Neuromonitoring technologist, except that they typically occur at an offsite location.

The Company was originally incorporated in Colorado on November 7, 2016. In conjunction with a reverse merger, the Company was redomiciled in Nevada on May 16, 2017.

Neuromonitoring was formed on August 25, 2015 in Colorado and it currently has multiple wholly-owned subsidiaries. The Company’s services are sold in the United States, directly through the Company.

Networks was formed on November 7, 2016 in Colorado and holds varying ownerships interests in numerous Provider Network Entities (“PEs”), which are professional IONM entities. These entities are accounted for under the equity method of accounting.

Networks also manages other PEs that Networks does not have an ownership interest and charges those PEs a management fee which is accounted for as service revenue.

The Company operates in the United States in one segment.

COVID-19

Our business and results of operations have been, and continues to be, adversely affected by the global COVID-19 pandemic and related events and we expect its impact to continue. The impact to date has included periods of significant volatility in various markets and industries, including the healthcare industry. The volatility has had, and we anticipate it will continue to have, an adverse effect on our customers and on our business, financial condition and results of operations, and may result in an impairment of our long-lived assets, including goodwill, increased credit losses and impairments of investments in other companies. In particular, the healthcare industry, hospitals and providers of elective procedures have been and may continue to be impacted by the pandemic and/or other events beyond our control, and further volatility could have an additional negative impact on these industries, customers, and our business. In addition, the COVID-19 pandemic and, to a lesser extent, the impact on other industries, including automotive, electronics and real estate, increased fuel costs, U.S. restrictions on trade, and transitory inflation have impacted and may continue to impact the financial conditions of our customers and the patients they serve.

In addition, actions by United States federal, state and foreign governments to address the COVID-19 pandemic, including travel bans, stay-at-home orders and school, business and entertainment venue closures, also had and may continue to have a significant adverse effect on the markets in which we conduct our businesses. COVID-19 poses the risk that our workforce, suppliers, and other partners may be prevented from conducting normal business activities for an extended period of time, including due to shutdowns or stay-at-

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

home orders that may be requested or mandated by governmental authorities. We have implemented policies to allow our employees to work remotely as a result of the pandemic as we reviewed processes related to workplace safety, including social distancing and sanitation practices recommended by the Centers for Disease Control and Prevention (CDC). The COVID-19 pandemic could also cause delays in acquiring new customers and executing renewals and could also impact our business as consumer behavior changes in response to the pandemic.

Since the start of the second quarter of 2021, there has been increased availability and administration of vaccines against COVID-19, as well as an easing of restrictions on social, business, travel, and government activities and functions, including healthcare and elective surgeries, and we have experienced a gradual resumption of economic activities in our industries. On the other hand, infection rates continue to fluctuate in various regions and new strains of the virus, including the Delta variant, remain a risk, which may give rise to implementation of restrictions in the geographic areas that we serve. In addition, there are ongoing global impacts resulting from the pandemic, including disruption of the supply chains, product shortages, increased delivery costs, increased governmental regulation, strains on healthcare systems, and delays in shipments, product development, technology launches and facility access.

We have been closely monitoring the COVID-19 pandemic and its impact on our business, including legislation to mitigate the impact of COVID-19 such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act which was enacted in March 2020, and the American Rescue Plan Act of 2021 which was enacted in March 2021. Although a significant portion of our anticipated revenue for 2021 is derived from fixed-fee and minimum-guarantee arrangements, primarily from large, well-capitalized customers which we believe somewhat mitigates the risks to our business, our per-unit and variable-fee based revenue will continue to be susceptible to the volatility, supply chain disruptions, microchip shortages and potential market downturns induced by the COVID-19 pandemic.

The full extent of the future impact of the COVID-19 pandemic on the Company’s operational and financial performance is uncertain and will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and duration of the pandemic; the availability, distribution and effectiveness of vaccines; the spread of new variants of COVID-19; the continued and renewed imposition of protective public safety measures; the impact of COVID-19 on integration of acquisitions, expansion plans, implementation of telemedicine, restrictions on elective procedures, delays in payor remittance and increased regulations; and the impact of the pandemic on the global economy and demand for consumer products. Although we are unable to predict the full impact and duration of the COVID-19 pandemic on our business, we are actively managing our financial expenditures in response to continued uncertainty. Further discussion of the potential impacts on our business from the COVID-19 pandemic is provided under Part I, Item 1A – Risk Factors of the Form 10-K.

2.BASIS OF PRESENTATION

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, and majority-owned entities. The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The accompanying consolidated financial statements do not include any adjustments that might become necessary should the Company be unable to continue as a going concern. All significant intercompany balances and transactions have been eliminated in consolidation.

For entities in which management has determined the Company does not have a controlling financial interest but has varying degrees of influence regarding operating policies of that entity, the Company’s investment is accounted for using the equity method of accounting.

There have been no changes to the Company’s significant accounting policies or recent accounting pronouncements during the six months ended June 30, 2021 as compared to the significant accounting policies disclosed in the 10-K for the year ended December 31, 2020 as filed on March 30, 2021.

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

3. LEASES

Under ASC 842, Leases, a contract is a lease, or contains a lease, if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. To determine whether a contract conveys the right to control the use of an identified asset for a period of time, an entity shall assess whether, throughout the period of use, the entity has both of the following: (a) the right to obtain substantially all of the economic benefits from the use of the identified asset; and (b) the right to direct the use of the identified asset. The Company does not assume renewals in the determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Lease agreements generally do not contain material residual value guarantees or material restrictive covenants.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. As a practical expedient, the Company elected not to separate nonlease components for the corporate office facility (e.g., common-area maintenance costs) from lease components (e.g., fixed payments including rent) and instead to account for each separate lease component and its associated non-lease components as a single lease component.

Operating leases

The Company leases corporate office facilities under two operating sub-leases which expired June 30, 2021. The Company is negotiating lease renewal terms.

Finance leases

The Company leases medical equipment under various financing leases with stated interest rates ranging from 6.5% — 12.2% per annum which expire at various dates through 2026.

The condensed consolidated balance sheets include the following amounts for right of use (“ROU”) assets as of June 30, 2021 and December 31, 2020 (stated in thousands):


	June 30,		December 31,
	2021		2020
Operating	$	—	$	124
Finance		882		608
Total	$	882	$	732

Finance lease assets are reported net of accumulated amortization of $1.6 million and $1.3 million as of June 30, 2021 and December 31, 2020, respectively.

The following are the components of lease cost for operating and finance leases (stated in thousands):


	Six Months Ended June 30,
	2021		2020
Lease cost:
Operating leases	$	127	$	107
Finance leases:
Amortization of ROU assets		249		248
Interest on lease liabilities		42		33
Total finance lease cost		291		281
Total lease cost	$	418	$	388

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following are the weighted average lease terms and discount rates for operating and finance leases:


	As of	As of
	June 30, 2021	December 31, 2020
Weighted average remaining lease term (years):
Operating leases	—	0.5
Finance leases	3.3	3.3
Weighted average discount rate:
Operating leases	—	6.9
Finance leases	8.0	7.9

The Company acquired ROU assets in exchange for lease liabilities of $305 thousand upon commencement of finance leases during the six months ended June 30, 2021.

Future minimum lease payments and related lease liabilities as of June 30, 2021 were as follows (stated in thousands):


					Total
	Operating		Finance		Lease
	Leases		Leases		Liabilities
Remainder 2021	$	—	$	283	$	283
2022		—		570		570
2023		—		258		258
2024		—		204		204
2025		—		148		148
Thereafter		—		23		23
Total lease payments		—		1,486		1,486
Less: imputed interest		—		(182)		(182)
Present value of lease liabilities		—		1,304		1,304
Less: current portion of lease liabilities		—		568		568
Noncurrent lease liabilities	$	—	$	736	$	736

Note: Future minimum lease payments exclude short-term leases as well as payments to landlords for variable common area maintenance, insurance and real estate taxes.

4. DEBT

Paycheck Protection Program

During March 2021, the Company received an unsecured loan under the United States Small Business Administration Paycheck Protection Program (“PPP”) in the amount of $1.7 million. Assure executed a PPP promissory note, which matures on February 25, 2026. The PPP Loan carries an interest rate of 1.0% per annum, with principal and interest payments due on the first day of each month, with payments commencing on the earlier of: (i) the day the amount of loan forgiveness granted to Assure is remitted by the Small Business Administration to the Bank of Oklahoma; or (ii) 10 months after the end of the 24-week period following the grant of the Loan. All or a portion of the Loan may be forgiven if the Company maintains its employment and compensation within certain parameters during the 24-week period following the loan origination date and the proceeds of the Loan are spent on payroll costs, rent or lease agreements dated before February 15, 2020 and utility payments arising under service agreements dated before February 15, 2020. The Company intends to submit its application for forgiveness of the PPP promissory note during the second half of 2021.

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Debenture

On June 10, 2021, the Company entered into definitive agreements to secure a credit facility under the terms of a commitment letter dated March 8, 2021 (the “Commitment Letter”) with Centurion Financial Trust, an investment trust formed by Centurion Asset Management Inc. (“Centurion”). Under the terms of the Commitment Letter, Assure issued a debenture to Centurion, dated June 9, 2021 (the “Debenture”), with a maturity date of June 9, 2025 (the “Maturity Date”), in the principal amount of $11 million related to a credit facility comprised of a $6 million senior term loan (the “Senior Term Loan”), a $2 million senior revolving loan (the “Senior Revolving Loan”) and a $3 million senior term acquisition line (the “Senior Term Acquisition Line” and together with the Senior Term Loan and the Senior Revolving Loan, the “Credit Facility”). The Senior Term Acquisition Line will be made available to the Company to fund future acquisitions, subject to certain conditions and approvals of Centurion. The Credit Facility matures in June 2025.

The principal amount of the Debenture drawn and outstanding from time to time shall bear interest both before and after maturity, default and judgment from the date hereof to the date of repayment in full at the rate of the greater of 9.50% or the Royal Bank of Canada Prime Rate plus 7.05% per annum calculated and compounded monthly in arrears and payable on the first business day of each month during which any obligations are outstanding, the first of such payments being due July 2, 2021 for the period from the Advance to the date of payment, and thereafter monthly. The difference between the commitment and the amount of the Loan outstanding from time to time shall bear a standby charge, for the period between June 2021 and the end of the availability period, in the amount of 1.50% per annum calculated and compounded monthly in arrears and payable on the first business day of each month during which any amount of the commitment remains available and undrawn, the first of such payments being due July 2, 2021. Interest on overdue interest shall be calculated and payable at the same rate plus 3% per annum.

With respect to the Senior Revolving Loan, Assure may prepay advances outstanding thereunder from time to time, with not less than 10 business days prior written notice of the prepayment date and the amount, in the minimum amount of $250 thousand. Any amount of the Senior Revolving Loan prepaid may be re-advanced. With respect to the Senior Term Loan and Senior Term Acquisition Line, Assure may prepay the advances outstanding thereunder, without penalty or bonus, in an amount not to exceed 25% of the aggregate of all Advances then outstanding under the Term Loans, on each anniversary date of the first advance made hereunder, provided in each case with not less than 30 days written notice of the Company's intention to prepay on such anniversary date and the proposed prepayment amount. Any prepayments to the Term Loans other than those permitted in the immediately preceding sentence may only be made on 30 days prior written notice of the prepayment date and the amount, and are subject to the Company paying on such prepayment date a prepayment charge equal to the lesser of (i) twelve (12) months interest and (ii) interest for the months remaining from the prepayment date to the Maturity Date, on the amount prepaid at the interest rate in effect on the applicable Term Loan as of the date of prepayment. Any amount of the Term Loan prepaid may not be re-advanced.

The Credit Facility is guaranteed by the subsidiaries under the terms of the guarantee and secured by a first ranking security interest in all of the present and future assets of Assure and the Subsidiaries under the terms of the security agreement.

Assure paid Centurion on first Advance of the Loan a commitment fee of 2.25%, being $248 thousand, made by withholding from the first advance.

A portion of the proceeds from the Debenture were utilized to repay the Central Bank line of credit and the Central Bank promissory note.

Warrant Fee

In addition, Assure issued Centurion an aggregate of 1,375,000 non-transferrable common share purchase warrants. Each warrant entitles Centurion to acquire one common share in the capital of Assure, at an exercise price equal to US$1.51 (representing the closing price of Assure’s common shares as of the close of business on June 9, 2021 and multiplied by the Bank of Canada’s daily exchange rate on June 9, 2021) for a term of 48 months. The warrants and underlying common shares are subject to applicable hold periods under U.S. securities laws.

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company’s debt obligations are summarized as follows:


	June 30,		December 31,
	2021		2020
Central Bank line of credit	$	—	$	1,978
Central Bank promissory note		—		2,122
PPP promissory note		1,665		—
		1,665		4,100

Face value of convertible debenture		3,450		3,450
Less: fair value ascribed to conversion feature and warrants		(1,523)		(1,523)
Plus: accretion of implied interest		513		324
		2,440		2,251

Face value of Centurion debenture		8,000		—
Less: fair value ascribed to warrants		(1,204)		—
Plus: accretion of implied interest		25		—
Less: net debt issuance costs		(625)
		6,196		—
Total debt		10,301		6,351
Less: current portion of debt		—		(4,100)
Long-term debt	$	10,301	$	2,251

As of June 30, 2021, future minimum principal payments are summarized as follows (stated in thousands):


	PPP		Bank		Convertible
	Loan			Indebtedness	Debt
Remainder 2021	$	—	$	—	$	—
2022		—		—		—
2023		—		—		965
2024		—		—		2,485
2025		—		8,000		—
2026		1,665		—		—
Total		1,665		8,000		3,450
Less: fair value ascribed to conversion feature and warrants		—		(1,204)		(1,523)
Plus: accretion and implied interest		—		25		513
Less: net debt issuance costs		—		(625)		—
	$	1,665	$	6,196	$	2,440

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

5. SHARE CAPITAL

Common shares

Common shares: 900,000,000 authorized; $0.001 par value. As of June 30, 2021 and December 31, 2020, there were 58,692,701 and 56,378,939 common shares issued and outstanding (“Common Shares”), respectively.

Acquisition shares

In connection with the acquisition of the Sentry Neuromonitoring, LLC (the “Seller”) assets, we issued to Seller or the Principals, as elected by Seller, shares of common stock of the Registrant with a value of $1,625,000, determined on the Effective Date, as quoted on the TSX Venture Exchange (1,186,129 shares of common stock). In addition, the Registrant agreed to escrow, no event later than May 14, 2021, with an escrow agent, mutually selected by Purchaser and Seller, common stock of the Registrant with a value of $650,000 (474,452 shares of common stock). The common stock is subject to a 12-month lock up beginning on the date actually delivered to Seller or the Principals. See Note 7 for a complete discussion.

Share issuance

In connection with common share purchase agreements, during June 2020, the Company issued 780,162 shares of common stock at a deemed value of $0.80 per share to certain employees, directors and third parties.

Convertible debt

During the second quarter of 2021, a holder of the convertible debenture exercised the right to convert the outstanding principal into common shares at an exercise price of $1.40, resulting in the issuance of 52,633 common shares.

Stock options

On December 10, 2020, our shareholders approved amendments to the Company’s stock option plan, which amended the plan previously approved on November 20, 2019 (the “Amended Stock Option Plan”). As of June 30, 2021, an aggregate of 5,659,878 shares of common stock (10% of the issued and outstanding shares of common stock) were available for issuance under the Amended Stock Option Plan. Of this amount, stock options in respect of 5,120,500 common shares have been issued.

Options under the Plan are granted from time to time at the discretion of the Board of Directors, with vesting periods and other terms as determined by the Board of Directors.

A summary of the stock option activity is presented below:


	Options Outstanding
		Weighted		Weighted
		Average		Average
	Number of	Exercise		Remaining	Aggregate
	Shares Subject	Price Per		Contractual	Intrinsic Value
	to Options	Share		Life (in years)	(in thousands)
Balance at December 31, 2020	3,743,000	$	1.05	4.00
Options granted	1,740,000		1.06
Options exercised	—		—
Options canceled / expired	(362,500)		1.20
Balance at June 30, 2021	5,120,500		1.03	3.87	$	5,123
Vested and exercisable at June 30, 2021	2,869,167		0.96	3.60	$	2,599

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table summarizes information about stock options outstanding and exercisable under the Company’s Stock Option Plan at June 30, 2021:


Options Outstanding				Options Exercisable
	Weighted
	Average	Weighted			Weighted
	Remaining	Average			Average
Number of	Contractual	Exercise Price		Number	Exercise Price
Outstanding	Life (in years)	Per Share		Exercisable	Per Share
1,000,000	4.16	$	0.05	1,000,000	$	0.05
60,000	1.32	$	2.80	60,000	$	2.80
75,000	6.55	$	1.80	75,000	$	1.80
425,000	2.25	$	1.80	368,333	$	1.80
734,000	2.55	$	1.56	538,267	$	1.56
434,000	3.27	$	1.28	260,400	$	1.28
200,000	4.16	$	0.90	66,667	$	0.90
465,000	4.45	$	0.97	155,000	$	0.97
1,577,500	4.59	$	1.06	315,500	$	1.06
150,000	4.78	$	1.12	30,000	$	1.12
5,120,500	3.87	$	1.03	2,869,167	$	0.96

The Company uses the Black-Scholes option pricing model to determine the estimated fair value of options. The fair value of each option grant is determined on the date of grant and the expense is recorded on a straight-line basis and is included as a component of general and administrative expense in the consolidated statements of operations. The assumptions used in the model include expected life, volatility, risk-free interest rate, dividend yield and forfeiture rate. The Company’s determination of these assumptions are outlined below.

Expected life — The expected life assumption is based on an analysis of the Company’s historical employee exercise patterns.

Volatility — Volatility is calculated using the historical volatility of the Company’s common stock for a term consistent with the expected life.

Risk-free interest rate — The risk-free interest rate assumption is based on the U.S. Treasury rate for issues with remaining terms similar to the expected life of the options.

Dividend yield — Expected dividend yield is calculated based on cash dividends declared by the Board for the previous four quarters and dividing that result by the average closing price of the Company’s common stock for the quarter. The Company has not declared a dividend to date.

Forfeiture rate — The Company does not estimate a forfeiture rate at the time of the grant due to the limited number of historical forfeitures. As a result, the forfeitures are recorded at the time the grant is forfeited.

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

There were no stock option grants during the three and six months ended June 30, 2020.The following assumptions were used to value the awards granted during the three and six months ended June 30, 2021:


Expected life (in years)	5.0
Risk-free interest rate	0.4	%
Dividend yield	—	%
Expected volatility	91	%

Stock-based compensation expense recognized in our consolidated financial statements for the three months ended June 30, 2021 and 2020 was $163 thousand and $327 thousand, respectively, and $607 and $368 for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, there was approximately $947 thousand of total unrecognized compensation cost related to 2,251,333 unvested stock options that is expected to be recognized over a weighted-average remaining vesting period of 2.4 years.

Warrants

As of June 30, 2021 and December 31, 2020, there were 19,700,028 and 18,325,028 warrants outstanding, respectively.


		Number of Warrants outstanding
Balance at December 31, 2020		18,325,028
Debenture, warrants issued (Note 4)		1,375,000
Balance at June 30, 2021		19,700,028

6. LOSS PER SHARE

The following table sets forth the computation of basic and fully diluted loss per common share for the three months ended June 30, 2021 and 2020 (stated in thousands, except per share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net loss	$	(1,307)	$	(13,330)	$	(2,538)	$	(13,744)
Basic weighted average common shares outstanding		57,949,285		34,795,313		57,002,355		34,795,313
Basic loss per common share	$	(0.02)	$	(0.38)	$	(0.04)	$	(0.39)
Net loss	$	(1,307)	$	(13,330)	$	(2,538)	$	(13,744)
Dilutive weighted average common shares outstanding		57,949,285		34,795,313		57,002,355		34,795,313
Diluted loss per common share	$	(0.02)	$	(0.38)	$	(0.04)	$	(0.39)

Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the treasury stock method to calculate the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential dilutive common shares include incremental common shares issuable upon the exercise of stock options, less shares from assumed proceeds. The assumed proceeds calculation includes actual proceeds to be received from the employee upon exercise and the average unrecognized stock compensation cost during the period.

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Stock options to purchase 2,638,467 common shares and warrants to purchase 18,325,028 common shares were outstanding at June 30, 2021 that were not included in the computation of diluted weighted average common shares outstanding because their effect would have been anti-dilutive.

7. ACQUISITION

Effective on April 30, 2021, Assure Networks Texas Holdings II, LLC, a Colorado limited liability company and wholly-owned subsidiary of Assure Holdings (the “Purchaser”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Sentry Neuromonitoring, LLC (the “Seller”), and Kenneth Sly and on behalf of (SLY HOLDINGS, LLC, a Texas limited liability company (“KRS”), Wesley Varghese and (on behalf of Northern Lights Investments and consulting, LLC, a Texas limited liability company (“NLI”), Patricia Worley, Stephanie Hicks, on behalf of Texas Medsurge, LLC and Shelia Jumper (collectively “Principals”).

The acquisition closed on April 30, 2021 (the “Closing Date”).

Under the terms of the Purchase Agreement, Assure Texas Holdings agreed to purchase certain assets (“Acquired Assets”) related to the Seller’s interoperative neuromonitoring business (the “Business”) and assumed certain liabilities of the Seller. The Acquired Assets included, among other items, all assets used in the Business, certain tangible personal property, inventory, Seller’s records related to the Business, deposits and prepaid expenses, certain contracts related to the Business, licenses, intellectual property, goodwill and accounts receivables. The purchase qualified as a business combination for accounting purposes.

The purchase price for the assets consisted of cash and stock, payable as follows:

Cash Payment

Cash consideration of $1,125,000 in installment payments, payable (a) $153,125 at closing, (b) $153,125 within 30 days of Closing Date and (c) $818,750, (together with interest at the applicable federal rate, shall be paid in cash in thirty-six equal monthly installments, with the first installment being due on or before the first business day of the first month following the sixtieth day from the Closing Date and the remaining installments being due on the first business day of each month thereafter.

Stock Payment

Shares of common stock to be issued to Seller or the Principals, as elected by Seller, with a value of $1,625,000, determined on the Closing Date, as quoted on the TSX Venture Exchange (1,186,129 shares of common stock), issued on or about the Closing Date and shares of common stock to be escrowed, no event later than May 14, 2021, with an escrow agent, mutually selected by Purchaser and Seller (the “Escrow Agent”), common stock of the Registrant with a value of $650,000 (474,452 shares of common stock) and held by the Escrow Agent pursuant to terms set forth in an escrow agreement to be mutually agreed to by Purchaser and Seller. The common stock is subject to regulatory restrictions and requirements and a 12 month lock up from the date of issuance to the Seller or the Principals, as applicable, in addition to any additional lock up period imposed on the common stock under applicable law and/or regulation,

Reimbursements

Reimbursement to Seller for operational capital injected by Seller or its Principals since December 31, 2020, for verifiable and reasonable expenses, consistent with past business practices up to a cap of $50 thousand.

Receivable Bonus

Purchaser agreed to pay Seller or the Principals, as elected by Seller, a bonus in an amount equal to $250,000 (“Receivable Bonus”) upon collecting $3,000,001 in accounts receivable acquired by Purchaser for accounts receivable that was generated by Seller prior to the Closing. The Receivable Bonus, if earned, will be paid to Seller or the Principals, as elected by Seller, in