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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2022

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: 001-40785

Graphic

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.)

7887 E. Belleview Ave., Suite 500 Englewood, Colorado

80111

(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:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par value per share 

 

IONM

 

Nasdaq Stock Market LLC (Nasdaq Capital Market)

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

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 shares of common stock outstanding as of August 12, 2022 was 12,919,666.

Table of Contents

ASSURE HOLDINGS CORP.

FORM 10Q

FOR THE QUARTER ENDED JUNE 30, 2022

TABLE OF CONTENTS

PAGE

Part I – Financial Information

2

Item 1. Financial Statements (unaudited)

2

Condensed Consolidated Balance Sheets

2

Condensed Consolidated Statements of Operations

3

Condensed Consolidated Statements of Cash Flows

4

Condensed Consolidated Statements of Changes in Shareholders’ Equity

5

Notes to Condensed Consolidated Financial Statements

6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3. Quantitative and Qualitative Disclosures About Market Risk

26

Item 4. Controls and Procedures

26

Part II – Other Information

27

Item 1. Legal Proceedings

27

Item 1A. Risk Factors

27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

27

Item 3. Defaults Upon Senior Securities

27

Item 4. Mine Safety Disclosures

28

Item 5. Other Information

28

Item 6. Exhibits

28

Signatures

29

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ASSURE HOLDINGS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par amounts)

(unaudited)

    

June 30, 

    

December 31, 

2022

2021

ASSETS

Current assets

 

  

 

  

Cash

$

792

$

4,020

Accounts receivable, net

 

20,989

 

27,810

Income tax receivable

157

136

Other current assets

 

357

 

151

Due from MSAs

6,591

5,886

Total current assets

 

28,886

 

38,003

Equity method investments

 

484

 

525

Fixed assets

 

55

 

85

Operating lease right of use asset, net

779

956

Finance lease right of use asset, net

579

743

Deferred tax asset, net

2,039

Intangibles, net

 

3,424

 

3,649

Goodwill

 

4,448

 

4,448

Total assets

$

40,694

$

48,409

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES

Current liabilities

Accounts payable and accrued liabilities

$

3,376

$

2,194

Current portion of debt

 

 

515

Current portion of lease liability

 

679

 

702

Current portion of acquisition liability

 

306

 

306

Total current liabilities

 

4,361

 

3,717

Lease liability, net of current portion

 

1,236

 

1,482

Debt, net of current portion

 

12,418

 

13,169

Acquisition liability

332

459

Fair value of stock option liability

 

 

25

Deferred tax liability, net

 

 

601

Total liabilities

 

18,347

 

19,453

Commitments and contingencies (Note 8)

SHAREHOLDERS’ EQUITY

Common stock: $0.001 par value; 180,000,000 shares authorized; 12,919,666 and 12,918,866 shares issued and outstanding, as of June 30, 2022 and December 31, 2021, respectively

 

13

 

13

Additional paid-in capital

 

43,963

 

43,387

Accumulated deficit

 

(21,629)

 

(14,444)

Total shareholders’ equity

 

22,347

 

28,956

Total liabilities and shareholders’ equity

$

40,694

$

48,409

See accompanying notes to condensed consolidated financial statements.

2

Table of Contents

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, 

2022

    

2021

2022

    

2021

Revenue

  

 

  

  

 

  

Technical services

$

67

$

4,095

$

1,463

$

7,228

Professional services

854

652

3,327

966

Other

 

724

 

1,473

 

1,556

 

2,791

Total revenue

 

1,645

 

6,220

 

6,346

 

10,985

Cost of revenues, excluding depreciation and amortization

 

4,002

 

3,170

 

7,879

 

5,702

Gross margin

 

(2,357)

 

3,050

 

(1,533)

 

5,283

Operating expenses

General and administrative

 

3,596

 

3,963

 

7,837

 

7,095

Sales and marketing

 

238

 

166

 

490

 

501

Depreciation and amortization

 

260

 

387

 

518

 

672

Total operating expenses

 

4,094

 

4,516

 

8,845

 

8,268

Loss from operations

 

(6,451)

 

(1,466)

 

(10,378)

 

(2,985)

Other income (expenses)

Income (loss) from equity method investments

 

4

 

20

 

9

 

(3)

Gain on Paycheck Protection Program loan forgiveness

1,665

Other income (expense), net

 

28

 

1

 

66

 

(2)

Accretion expense

(171)

(120)

(341)

(215)

Interest expense, net

 

(439)

 

(218)

 

(846)

 

(236)

Total other expense

 

(578)

 

(317)

 

553

 

(456)

Loss before income taxes

 

(7,029)

 

(1,783)

 

(9,825)

 

(3,441)

Income tax benefit

 

2,303

 

474

 

2,640

 

901

Net loss

$

(4,726)

$

(1,309)

$

(7,185)

$

(2,540)

Loss per share

Basic

$

(0.37)

$

(0.11)

$

(0.56)

$

(0.22)

Diluted

$

(0.37)

$

(0.11)

$

(0.56)

$

(0.22)

Weighted average number of shares used in per share calculation – basic

 

12,919,666

 

11,589,857

 

12,919,546

 

11,400,471

Weighted average number of shares used in per share calculation – diluted

 

12,919,666

 

11,589,857

 

12,919,546

 

11,400,471

See accompanying notes to condensed consolidated financial statements.

3

Table of Contents

ASSURE HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

    

Six Months Ended June 30, 

2022

    

2021

Cash flows from operating activities

Net loss

$

(7,185)

$

(2,540)

Adjustments to reconcile net loss to net cash used in operating activities

(Income) loss from equity method investments

 

(9)

 

3

Stock-based compensation

 

572

 

607

Depreciation and amortization

 

275

 

407

Amortization of debt issuance costs

 

80

 

13

Provision for stock option fair value

 

(25)

 

(1)

Gain on Paycheck Protection Program loan

(1,665)

Accretion expense

341

215

Change in operating assets and liabilities

Accounts receivable, net

 

6,821

 

(1,675)

Prepaid expenses

(206)

(420)

Right of use assets

421

205

Accounts payable and accrued liabilities

 

1,182

 

(712)

Due from MSAs

 

(705)

 

(1,063)

Lease liability

(349)

(343)

Income taxes

 

(2,661)

 

(901)

Other assets and liabilities

 

(16)

 

(58)

Net cash used in operating activities

 

(3,129)

 

(6,263)

Cash flows from investing activities

Purchase of fixed assets

 

(26)

 

Net cash paid for acquisitions

 

(127)

 

(156)

Distributions received from equity method investments

 

50

 

234

Net cash provided by (used in) investing activities

 

(103)

 

78

Cash flows from financing activities

Proceeds from exercise of stock options

 

4

 

832

Proceeds from Paycheck Protection Program loan

 

 

1,665

Proceeds from debenture

7,360

Repayment of short term debt

(4,100)

Net cash provided by financing activities

 

4

 

5,757

Decrease in cash

 

(3,228)

 

(428)

Cash at beginning of period

 

4,020

 

4,386

Cash at end of period

$

792

$

3,958

Supplemental cash flow information

Interest paid

$

769

$

127

Income taxes paid

$

$

Supplemental non-cash flow information

Purchase of equipment with finance leases

$

79

$

305

See accompanying notes to condensed consolidated financial statements.

4

Table of Contents

ASSURE HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands, except share amounts)

(unaudited)

    

    

Additional

    

    

Total

Common Stock

paid-in

Accumulated

shareholders'

    

Shares

    

Amount

    

Capital

    

deficit

    

equity

Balances, March 31, 2021

 

11,319,756

$

11

$

31,752

$

(12,919)

$

18,844

Share issuance, net

 

403,785

 

2

 

2,455

 

 

2,457

Stock-based compensation

 

 

 

327

 

 

327

Equity component of debenture issuance

 

 

 

1,204

 

 

1,204

Settlement of performance share liability

 

15,000

 

 

1,707

 

 

1,707

Net loss

 

 

 

 

(1,309)

 

(1,309)

Balances, June 30, 2021

 

11,738,541

$

13

$

37,445

$

(14,228)

$

23,230

Balances, March 31, 2022

12,919,666

$

13

$

43,714

$

(16,903)

$

26,824

Stock-based compensation

 

249

 

249

Net income

 

 

 

 

(4,726)

 

(4,726)

Balances, June 30, 2022

 

12,919,666

$

13

$

43,963

$

(21,629)

$

22,347

    

    

Additional

    

    

Total

Common Stock

paid-in

Accumulated

shareholders'

    

Shares

    

Amount

    

Capital

    

deficit

    

equity

Balances, December 31, 2020

 

11,275,788

$

11

$

30,886

$

(11,688)

$

19,209

Share issuance, net

 

403,785

 

2

 

2,455

 

 

2,457

Stock-based compensation

 

 

 

607

 

 

607

Equity component of debenture issuance

 

 

 

1,204

 

 

1,204

Settlement of performance share liability

58,968

2,293

2,293

Net loss

 

 

 

 

(2,540)

 

(2,540)

Balances, June 30, 2021

11,738,541

$

13

$

37,445

$

(14,228)

$

23,230

Balances, December 31, 2021

 

12,918,866

$

13

$

43,387

$

(14,444)

$

28,956

Exercise of stock options

 

800

 

 

4

 

 

4

Stock-based compensation

 

 

 

572

 

 

572

Net loss

 

 

 

 

(7,185)

 

(7,185)

Balances, June 30, 2022

 

12,919,666

$

13

$

43,963

$

(21,629)

$

22,347

See accompanying notes to condensed consolidated financial statements.

5

Table of Contents

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 (“Assure Neuromonitoring”) and Assure Networks, LLC (“Assure Networks”), provides technical and professional intraoperative neuromonitoring (“IONM”) surgical support services for neurosurgery, spine, cardiovascular, orthopedic, ear, nose, and throat, and other surgical procedures that place the nervous system at risk. 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. Assure Neuromonitoring employs interoperative neurophysiologists (“INP”) who utilize technical equipment and their technical training to monitor evoked potentials (”Eps”), electroencephalographic (“EEG”) and electromyography (“EMG”) signals during surgical procedures and to pre-emptively notify the underlying surgeon of any nervous related issues that are identified. The INPs perform their services in the operating room during the surgeries. The INPs are certified by a third-party accreditation agency.

Assure Networks performs similar support services as Assure Neuromonitoring except that these services are provided by employed or third party contracted neurologists or certified readers. The support service provided by the neurologist occurs at an offsite location at the same time and for the same surgery as the support services provided by the interoperative neurophysiologist.

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 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. Additionally, Networks manages other PEs that Networks does not have an ownership interest and charges those PEs a management fee.

COVID-19

The Company’s commitment to the health, well-being and peace of mind of our employees and the people we serve remains our focus as the pandemic environment evolves. We continue to leverage our resources, expertise, data and actionable intelligence to assist customers, clients and care providers throughout this time.

The situation surrounding COVID-19 remains fluid with continued uncertainty and a wide range of potential outcomes. We continue to actively manage our response and assess impacts to our financial position and operating results, as well as mitigate adverse developments in our business. 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

Consolidation

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.

6

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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.

Accounting Policies

There have been no changes to the Company’s significant accounting policies or recent accounting pronouncements during the six months ended June 30, 2022 as compared to the significant accounting policies disclosed in the 10-K for the year ended December 31, 2021 as filed on March 14, 2022.

Common Stock Reverse Split

During September 2021, the Company effectuated a five-for-one reverse stock split. All share, stock option and warrant information has been retroactively adjusted to reflect the stock split. See Note 6 for additional discussion.

Reclassifications

Certain amounts for the three and six months ended June 30, 2021 have been reclassified to conform to the 2022 presentation.

3. REVENUE

The Company disaggregates revenue from contracts with customers by revenue stream as this depicts the nature, amount, timing and uncertainty of its revenue and cash flows as affected by economic factors. Commercial insurance consists of neuromonitoring cases whereby a patient has healthcare insurance. Facility billing consists of neuromonitoring cases whereby the company has an agreement with the facility for services.  In these cases, the hospital’s patient may be uninsured or have government insurance.  

The Company’s revenue disaggregated by payor is as follows (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2022

    

2021

2022

    

2021

  

 

  

  

 

  

Commercial insurance

$

(306)

$

3,679

$

2,518

$

6,343

Facility billing

1,227

1,068

2,272

1,851

Managed service agreements

428

1,287

847

2,059

Other

 

296

 

186

 

709

 

732

Total

$

1,645

$

6,220

$

6,346

$

10,985

Accounts Receivable

A summary of the accounts receivable, net, by revenue stream is as follows (in thousands):

June 30, 

December 31,

    

2022

    

2021

Technical service

$

11,278

 

$

18,904

Professional service

9,315

8,209

Other

 

396

 

697

Total accounts receivable, net

$

20,989

$

27,810

7

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The concentration of accounts receivable, net, by payor as a percentage of total accounts receivable is as follows:

As of June 30,

As of December 31,

2022

    

2021

 

  

Commercial insurance

91

%

91

%

Facility billing

6

%

2

%

Managed service arrangements

2

%

3

%

Other

1

%

4

%

Total

 

100

%

100

%

4. 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 non-lease 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 an operating lease which expires October 31, 2025. The incremental borrowing rate for this lease was 10%.  

Finance leases

The Company leases medical equipment under various financing leases with stated interest rates ranging from 5.2% — 13.4% 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, 2022 and December 31, 2021 (in thousands):

    

June 30, 

December 31, 

2022

    

2021

Operating

 

$

779

 

$

956

Finance

 

579

 

743

Total

 

$

1,358

 

$

1,699

Finance lease assets are reported net of accumulated amortization of $2.2 million and $2.0 million as of June 30, 2022 and December 31, 2021, respectively.

8

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

Six Months Ended June 30, 

2022

    

2021

Lease cost:

Operating leases:

Amortization of ROU assets

$

154

$

127

Interest on lease liabilities

46

Total operating lease cost

200

127

Finance leases:

Amortization of ROU assets

291

249

Interest on lease liabilities

46

42

Total finance lease cost

337

291

Total lease cost

$

537

$

418

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

As of

As of

    

June 30, 2022

June 30, 2021

Weighted average remaining lease term (years):

Operating leases

 

3.3

Finance leases

 

2.7

3.3

Weighted average discount rate (%):

Operating leases

 

10.0

Finance leases

 

7.8

8.0

The Company acquired ROU assets in exchange for lease liabilities of $79 thousand upon commencement of finance leases during the six months ended June 30, 2022.

Future minimum lease payments and related lease liabilities as of June 30, 2022 were as follows (in thousands):

    

    

    

Total

Operating

Finance

Lease

Leases

Leases

Liabilities

Remainder of 2022

$

144

$

336

$

480

2023

 

303

 

360

 

663

2024

 

327

 

268

 

595

2025

279

152

431

2026

23

23

Total lease payments

 

1,053

 

1,139

 

2,192

Less: imputed interest

 

(166)

 

(111)

 

(277)

Present value of lease liabilities

887

1,028

1,915

Less: current portion of lease liabilities

 

206

 

473

 

679

Noncurrent lease liabilities

$

681

$

555

$

1,236

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.

9

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

5. DEBT

The Company’s debt obligations are summarized as follows:

June 30, 

December 31, 

    

2022

    

2021

Paycheck Protection Program loan

$

$

1,687

Face value of convertible debenture

 

3,450

 

3,450

Less: principal converted to common shares

(60)

(60)

Less: deemed fair value ascribed to conversion feature and warrants

 

(1,523)

 

(1,523)

Plus: accretion of implied interest

 

896

705

Total convertible debt

 

2,763

 

2,572

Face value of Centurion debenture

11,000

11,000

Less: deemed fair value ascribed to warrants

(1,204)

(1,204)

Plus: accretion of implied interest

326

176

Less: net debt issuance costs

(467)

(547)

Total Centurion debt

 

9,655

 

9,425

Total debt

 

12,418

 

13,684

Less: current portion of debt

 

 

(515)

Long-term debt

$

12,418

$

13,169

During the six months ended June 30, 2022, the Company recognized a gain of $1.7 million related to the January 2022 forgiveness of the balance of the Paycheck Protection Program loan.

The following table depicts accretion expense and interest expense (excluding debt issuance cost amortization) related to the Company’s debt obligations for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2022

    

2021

2022

    

2021

Accretion expense

  

 

  

  

 

  

Convertible debenture

$

95

$

95

$

191

$

190

Centurion debenture

 

76

 

25

 

150

25

$

171

$

120

$

341

$

215

Interest expense

Convertible debenture

$

77

$

77

$

221

$

154

Centurion debenture

 

284

 

46

 

548

 

46

$

361

$

123

$

769

$

200

10

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

As of June 30, 2022, future minimum principal payments are summarized as follows (in thousands):

    

Convertible

    

Bank

 

Debt

 

Indebtedness

Remainder of 2022

$

$

2023

 

965

 

2024

 

2,425

 

2025

 

 

11,000

Total

3,390

11,000

Less: fair value ascribed to conversion feature and warrants

 

(1,523)

 

(1,204)

Plus: accretion and implied interest

 

896

 

326

Less: net debt issuance costs

(467)

$

2,763

$

9,655

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, with an original maturity date of February 25, 2026 (the “PPP Loan”). The PPP Loan carried 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 was 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. Under the terms of the PPP Loan, all or a portion of the PPP 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 PPP Loan were 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 submitted its application for forgiveness of the PPP Loan during the fourth quarter of 2021 and in January 2022, the Company received forgiveness of the $1.7 million PPP Loan resulting in no balance due.

Convertible Debt

From November 2019 through May 2020, the Company closed multiple non-brokered private placements of convertible debenture units (“CD Unit”) for gross proceeds of $3.5 million. Each CD Unit was offered at a price of $1. Each CD Unit included, among other things, one common share purchase warrant that allows the holder to purchase shares of the Company’s common stock at prices ranging from $5.00 to $9.50 per share for a period of three years and the right to convert the CD Unit into shares of the Company’s common stock at a conversion prices ranging from $3.35 to $7.00 per share for a period of four years. The CD Units carry a 9% coupon rate.

The fair value of the convertible debt was determined to be $1.7 million, the conversion feature $1.2 million and the warrants $600 thousand.  The difference between the fair value of the debt of $1.7 million and the face value of convertible debt of $3.5 million will be accreted over the four-year life of the CD Units.  

Centurion Debt

During June 2021, Assure issued a debenture to Centurion (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”).  During November 2021, the Company and Centurion entered into an amendment to allow the Senior Short Term Acquisition Line to be utilized for organic growth and general working capital purposes. Under the terms and conditions of the debt arrangement, Centurion modified their debt

11

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

covenant calculations regarding bad debt expense.  As a result, the Company’s was in compliance with the debt covenants as of June 30, 2022.

The Credit Facility matures in June 2025 and bears interest at the rate of the greater of 9.50% or the Royal Bank of Canada Prime Rate plus 7.05% per annum.

The fair value of the Debenture was determined to be $6.8 million and the warrants $1.2 million.  The difference between the fair value of the debt of $6.8 million and the face value of the Debenture of $8.0 million will be accreted over the four-year term of the Debenture.

6. SHARE CAPITAL

Common stock

Common stock: 180,000,000 authorized; $0.001 par value. As of June 30, 2022 and December 31, 2021, there were 12,919,666 and 12,918,866 shares of common stock issued and outstanding, respectively.

Reverse Share Split

During September 2021, the total number of shares of common stock authorized by the Company was reduced from 900,000,000 shares of common stock, par $0.001, to 180,000,000 shares of common stock, par $0.001, and the number of shares of common stock held by each stockholder of the Company were consolidated automatically into the number of shares of common stock equal to the number of issued and outstanding shares of common stock held by each such stockholder immediately prior to the reverse split divided by five (5): effecting a five (5) old for one (1) new reverse stock split.

No fractional shares were issued in connection with the reverse split and all fractional shares were rounded up to the next whole share.  

Additionally, all options, warrants and other convertible securities of the Company outstanding immediately prior to the reverse split were adjusted by dividing the number of shares of common stock into which the options, warrants and other convertible securities are exercisable or convertible by five (5) and multiplying the exercise or conversion price thereof by five (5), all in accordance with the terms of the plans, agreements or arrangements governing such options, warrants and other convertible securities and subject to rounding to the nearest whole share.

All shares of common stock, options, warrants and other convertible securities and the corresponding price per share amounts have been presented to reflect the reverse split in all periods presented within this Form 10-Q.

Stock options

During November 2021, the Company has adopted and approved the 2021 Stock Incentive Plan and the 2021 Employee Stock Purchase Plan. The intent of the Company and the Board is that while the Amended 2020 Stock Option Plan and the 2020 Equity Incentive Plan will continue in existence in relation to the options and awards previously granted thereunder, the Board will not grant future options or awards thereunder. Instead, only the 2021 Stock Incentive Plan will be used for the grant of options and awards to eligible participants thereunder.

As of June 30, 2022, an aggregate of 1,870,000 shares of common stock were available for issuance under the 2021 Stock Option Plan. As of June 30, 2022, no transactions have occurred under the 2021 Employee Stock Purchase Plan.

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.

12

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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, 2021

 

1,204,233

$

5.56

3.6

Options granted

 

130,000

$

5.16

Options exercised

 

(800)

$

5.04

Options canceled / expired

 

(27,933)

$

6.26

Balance at June 30, 2022

 

1,305,500

$

4.99

 

3.2

 

$

242

Vested and exercisable at June 30, 2022

 

859,206

$

5.20

 

2.7

 

$

242

The following table summarizes information about stock options outstanding and exercisable under the Company’s Stock Option Plan at June 30, 2022:

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

200,000

 

3.2

$

0.25

 

200,000

$

0.25

12,000

 

0.3

$

14.00

 

12,000

$

14.00

15,000

 

5.6

$

9.00

 

15,000

$

9.00

85,000