UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTELRY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the Quarterly Period Ended | ||
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:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) | (Zip Code) |
(
(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
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.
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).
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 ☐
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
The number of the registrant’s common shares outstanding as of August 10, 2021 was
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 | $ | | $ | | ||
Accounts receivable, net |
| |
| | ||
Income tax receivable | | | ||||
Other current assets |
| |
| | ||
Due from PEs | | | ||||
Total current assets |
| |
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Equity method investments |
| |
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Property, plant and equipment, net |
| |
| | ||
Operating lease right of use asset | — | | ||||
Finance lease right of use asset | | | ||||
Deferred tax asset, net | | — | ||||
Intangibles, net |
| |
| | ||
Goodwill |
| |
| | ||
Total assets | $ | | $ | | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
LIABILITIES | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | $ | | $ | | ||
Current portion of debt |
| — |
| | ||
Current portion of lease liability |
| |
| | ||
Other current liabilities |
| |
| | ||
Total current liabilities |
| |
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Lease liability, net of current portion |
| |
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Debt, net of current portion |
| |
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Acquisition liability | | — | ||||
Acquisition share issuance liability |
| |
| | ||
Fair value of stock option liability |
| |
| | ||
Performance share issuance liability |
| — |
| | ||
Deferred tax liability, net |
| — |
| | ||
Total liabilities |
| |
| | ||
Commitments and contingencies (Note 7) | ||||||
SHAREHOLDERS’ EQUITY | ||||||
Common stock: $ |
| |
| | ||
Additional paid-in capital |
| |
| | ||
Accumulated deficit |
| ( |
| ( | ||
Total shareholders’ equity |
| |
| | ||
Total liabilities and shareholders’ equity | $ | | $ | |
See accompanying notes to condensed consolidated financial statements.
2
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 | $ | | $ | ( | $ | | $ | ( | |||
Hospital, management and other |
| |
| |
| |
| | |||
Total revenue |
| |
| ( |
| |
| ( | |||
Cost of revenues |
| |
| |
| |
| | |||
Gross margin |
| |
| ( |
| |
| ( | |||
Operating expenses | |||||||||||
General and administrative |
| |
| |
| |
| | |||
Sales and marketing |
| |
| |
| |
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Depreciation and amortization |
| |
| |
| |
| | |||
Total operating expenses |
| |
| |
| |
| | |||
Loss from operations |
| ( |
| ( |
| ( |
| ( | |||
Other income (expenses) | |||||||||||
Income (loss) from equity method investments |
| |
| ( |
| ( |
| ( | |||
Other income (expense), net |
| |
| ( |
| ( |
| | |||
Accretion expense | ( | ( | ( | ( | |||||||
Interest expense, net |
| ( |
| ( |
| ( |
| ( | |||
Total other expense |
| ( |
| ( |
| ( |
| ( | |||
Loss before income taxes |
| ( |
| ( |
| ( |
| ( | |||
Income tax benefit |
| |
| |
| |
| | |||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||
Loss per common share | |||||||||||
Basic | $ | ( | $ | ( | $ | ( | $ | ( | |||
Diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||
Weighted average number of common shares used in per share calculation – basic |
| |
| |
| |
| | |||
Weighted average number of common shares used in per share calculation – diluted |
| |
| |
| |
| |
See accompanying notes to condensed consolidated financial statements.
3
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 | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||
Losses from equity method investments |
| |
| | ||
Stock-based compensation |
| |
| | ||
Depreciation and amortization |
| |
| | ||
Amortization of debt issuance costs |
| |
| — | ||
Provision for stock option fair value |
| ( |
| ( | ||
Accretion expense | | | ||||
Tax impact of equity component of convertible debt issuance | — | ( | ||||
Change in operating assets and liabilities | ||||||
Accounts receivable, net |
| ( |
| | ||
Prepaid expenses | ( | — | ||||
Right of use assets | | — | ||||
Accounts payable and accrued liabilities |
| ( |
| ( | ||
Due from related parties |
| ( |
| ( | ||
Lease liability | ( | ( | ||||
Income taxes |
| ( |
| ( | ||
Other assets and liabilities |
| ( |
| | ||
Net cash used in operating activities |
| ( |
| ( | ||
Cash flows from investing activities | ||||||
Purchase of equipment and furniture |
| — |
| ( | ||
Net cash paid for acquistion |
| ( |
| ( | ||
Distributions received from equity method investments |
| |
| | ||
Net cash provided by (used in) investing activities |
| |
| ( | ||
Cash flows from financing activities | ||||||
Proceeds from common share issuance, net | | — | ||||
Repayment of promissory note |
| — |
| ( | ||
Proceeds from Paycheck Protection Program loan |
| |
| | ||
Repayment of line of credit |
| — |
| ( | ||
Proceeds from debenture | | — | ||||
Repayment of short term debt | ( | — | ||||
Proceeds from convertible debenture | — | | ||||
Net cash provided by financing activities |
| |
| | ||
Increase (decrease) in cash |
| ( |
| | ||
Cash at beginning of period |
| |
| | ||
Cash at end of period | $ | | $ | | ||
Supplemental cash flow information | ||||||
Interest paid | $ | | $ | | ||
Income taxes paid | $ | — | $ | | ||
Supplemental non-cash flow information | ||||||
Purchase of equipment with finance leases | $ | | $ | |
See accompanying notes to condensed consolidated financial statements.
4
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 |
| | $ | | $ | | $ | | $ | | ||||
Stock-based compensation |
| — |
| — |
| |
| — |
| | ||||
Expected tax loss of future stock compensation option exercises |
| — |
| — |
| ( |
| — |
| ( | ||||
Equity component of convertible debt issuance |
| — |
| — |
| |
| — |
| | ||||
Fair value of finders’ warrants |
| — |
| — |
| |
| — |
| | ||||
Net loss |
| — |
| — |
| — |
| ( |
| ( | ||||
Balances, June 30, 2020 |
| | $ | | $ | | $ | ( | $ | ( | ||||
Balances, March 31, 2021 | | $ | | $ | | $ | ( | $ | | |||||
Common share issuance, net | | | | — | | |||||||||
Stock-based compensation |
| — |
| — |
| |
| — |
| | ||||
Equity component of debenture issuance |
| — |
| — |
| |
| — |
| | ||||
Settlement of performance share liability | | — | | — | | |||||||||
Net loss |
| — |
| — |
| — |
| ( |
| ( | ||||
Balances, June 30, 2021 |
| | $ | | $ | | $ | ( | $ | |
|
| Additional |
| Retained |
| Total | ||||||||
Common Stock | paid-in | earnings | shareholders' | |||||||||||
| Shares |
| Amount |
| Capital |
| (deficit) |
| equity | |||||
Balances, December 31, 2019 |
| | $ | | $ | | $ | | $ | | ||||
Stock-based compensation |
| — |
| — |
| |
| — |
| | ||||
Expected tax loss of future stock compensation option exercises |
| — |
| — |
| ( |
| — |
| ( | ||||
Equity component of convertible debt issuance |
| — |
| — |
| |
| — |
| | ||||
Fair value of finders’ warrants |
| — |
| — |
| |
| — |
| | ||||
Net loss |
| — |
| — |
| — |
| ( |
| ( | ||||
Balances, June 30, 2020 | | $ | | $ | | $ | ( | $ | ( | |||||
Balances, December 31, 2020 |
| | $ | | $ | | $ | ( | $ | | ||||
Common share issuance, net | | | | — | | |||||||||
Stock-based compensation |
| — |
| — |
| |
| — |
| | ||||
Equity component of debenture issuance |
| — |
| — |
| |
| — |
| | ||||
Settlement of performance share liability | | — | | — | | |||||||||
Net loss |
| — |
| — |
| — |
| ( |
| ( | ||||
Balances, June 30, 2021 |
| | $ | | $ | | $ | ( | $ | |
See accompanying notes to condensed consolidated financial statements.
5
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.NATURE OF OPERATIONS
Assure Holdings Corp. (the “Company” or “Assure”), through its
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
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-
6
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.
7
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
Finance leases
The Company leases medical equipment under various financing leases with stated interest rates ranging from
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 |
| $ | — |
| $ | |
Finance |
| |
| | ||
Total |
| $ | |
| $ | |
Finance lease assets are reported net of accumulated amortization of $
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 | $ | | $ | | ||
Finance leases: | ||||||
Amortization of ROU assets | | | ||||
Interest on lease liabilities | | | ||||
Total finance lease cost | | | ||||
Total lease cost | $ | | $ | |
8
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 |
| ||||
Finance leases |
| ||||
Weighted average discount rate: | |||||
Operating leases |
| — | | ||
Finance leases |
| | |
The Company acquired ROU assets in exchange for lease liabilities of $
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 | $ | — | $ | | $ | | |||
2022 |
| — |
| |
| | |||
2023 |
| — |
| |
| | |||
2024 | — | | | ||||||
2025 | — | | | ||||||
Thereafter |
| — |
| |
| | |||
Total lease payments |
| — |
| |
| | |||
Less: imputed interest |
| — |
| ( |
| ( | |||
Present value of lease liabilities | — | | | ||||||
Less: current portion of lease liabilities |
| — |
| |
| | |||
Noncurrent lease liabilities | $ | — | $ | | $ | |
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 $
9
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 $
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
With respect to the Senior Revolving Loan, Assure may prepay advances outstanding thereunder from time to time, with not less than
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
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
10
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 | $ | — | $ | | ||
Central Bank promissory note |
| — |
| | ||
PPP promissory note |
| |
| — | ||
| |
| | |||
Face value of convertible debenture |
| |
| | ||
Less: fair value ascribed to conversion feature and warrants |
| ( |
| ( | ||
Plus: accretion of implied interest |
| | | |||
| |
| | |||
Face value of Centurion debenture | | — | ||||
Less: fair value ascribed to warrants | ( | — | ||||
Plus: accretion of implied interest | | — | ||||
Less: net debt issuance costs | ( | |||||
| |
| — | |||
Total debt |
| |
| | ||
Less: current portion of debt |
| — |
| ( | ||
Long-term debt | $ | | $ | |
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 |
| — |
| — |
| | |||
2024 |
| — |
| — |
| | |||
2025 |
| — |
| |
| — | |||
2026 | | — | — | ||||||
Total | | | | ||||||
Less: fair value ascribed to conversion feature and warrants |
| — |
| ( |
| ( | |||
Plus: accretion and implied interest |
| — |
| |
| | |||
Less: net debt issuance costs | — | ( | — | ||||||
$ | | $ | | $ | |
11
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
5. SHARE CAPITAL
Common shares
Common shares:
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 $
Share issuance
In connection with common share purchase agreements, during June 2020, the Company issued
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 $
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
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 |
| | $ | | ||||||
Options granted |
| | | |||||||
Options exercised |
| — | — | |||||||
Options canceled / expired |
| ( | | |||||||
Balance at June 30, 2021 |
| | |
|
| $ | | |||
Vested and exercisable at June 30, 2021 |
| | |
|
| $ | |
12
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 | ||||||
| $ | |
| | $ | | ||||
| $ | |
| | $ | | ||||
| $ | |
| | $ | | ||||
| $ | |
| | $ | | ||||
| $ | |
| | $ | | ||||
| $ | |
| | $ | | ||||
$ | | | $ | | ||||||
| $ | |
| | $ | | ||||
$ | | | $ | | ||||||
$ | | | $ | | ||||||
| $ | |
| | $ | |
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.
13
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
There were
Expected life (in years) |
|
| |
Risk-free interest rate |
| | % |
Dividend yield |
| — | % |
Expected volatility |
| | % |
Stock-based compensation expense recognized in our consolidated financial statements for the three months ended June 30, 2021 and 2020 was $
Warrants
As of June 30, 2021 and December 31, 2020, there were
| Number of Warrants outstanding | |
Balance at December 31, 2020 |
| |
Debenture, warrants issued (Note 4) |
| |
Balance at June 30, 2021 |
| |
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 | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Basic weighted average common shares outstanding |
| |
| |
| |
| | ||||
Basic loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Dilutive weighted average common shares outstanding |
| |
| |
| |
| | ||||
Diluted loss per common share | $ | ( | $ | ( | $ | ( | $ | ( |
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.
14
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Stock options to purchase
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 $
Stock Payment
Shares of common stock to be issued to Seller or the Principals, as elected by Seller, with a value of $
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 $
Receivable Bonus
Purchaser agreed to pay Seller or the Principals, as elected by Seller, a bonus in an amount equal to $