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 September 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: 001-40785

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:


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 November 8, 2021 was 11,839,304.

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ASSURE HOLDINGS CORP.

FORM 10Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS


	PAGE
Part I – Financial Information	2
Item 1. Financial Statements (unaudited)	2
Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31 2020	2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020	3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	4
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 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	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	28
Item 4. Controls and Procedures	28

Part II – Other Information	29
Item 1. Legal Proceedings	29
Item 1A. Risk Factors	29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3. Defaults Upon Senior Securities	29
Item 4. Mine Safety Disclosures	29
Item 5. Other Information	30
Item 6. Exhibits	31

Signatures	32

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ASSURE HOLDINGS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par amounts)

(unaudited)


	September 30,		December 31,
	2021		2020
ASSETS
Current assets
Cash	$	918	$	4,386
Accounts receivable, net		22,683		14,965
Income tax receivable		150		150
Other current assets		104		618
Due from PEs		5,734		4,856
Total current assets		29,589		24,975
Equity method investments		638		608
Fixed assets		109		356
Operating lease right of use asset		—		124
Finance lease right of use asset		877		608
Deferred tax asset, net		144		—
Intangibles, net		3,763		4,115
Goodwill		4,448		2,857
Total assets	$	39,568	$	33,643
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	2,069	$	2,871
Current portion of debt		—		4,100
Current portion of lease liability		579		521
Current portion of acquisition liability		306		—
Other current liabilities		10		96
Total current liabilities		2,964		7,588
Lease liability, net of current portion		750		772
Debt, net of current portion		10,451		2,251
Acquisition liability		561		—
Acquisition share issuance liability		540		540
Fair value of stock option liability		40		16
Performance share issuance liability		—		2,668
Deferred tax liability, net		—		599
Total liabilities		15,306		14,434
Commitments and contingencies (Note 8)
SHAREHOLDERS’ EQUITY
Common stock: $0.001 par value; 180,000,000 shares authorized; 11,839,304 and 11,275,788 shares issued and outstanding, as of September 30, 2021 and December 31, 2020, respectively		12		11
Additional paid-in capital		38,385		30,886
Accumulated deficit		(14,135)		(11,688)
Total shareholders’ equity		24,262		19,209
Total liabilities and shareholders’ equity	$	39,568	$	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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue
Patient service fees, net	$	6,443	$	2,965	$	13,087	$	(6,342)
Hospital, management and other		2,103		998		6,446		3,902
Total revenue		8,546		3,963		19,533		(2,440)
Cost of revenues		4,254		2,232		9,956		5,062
Gross margin		4,292		1,731		9,577		(7,502)
Operating expenses
General and administrative		3,180		1,957		10,275		5,853
Sales and marketing		247		349		748		801
Depreciation and amortization		293		249		965		769
Total operating expenses		3,720		2,555		11,988		7,423
Income (loss) from operations		572		(824)		(2,411)		(14,925)
Other income (expenses)
Income (loss) from equity method investments		139		(232)		136		(1,449)
Other income (expense), net		(27)		(3)		(29)		50
Accretion expense		(171)		(227)		(386)		(619)
Interest expense, net		(264)		(58)		(500)		(164)
Total other expense		(323)		(520)		(779)		(2,182)
Income (loss) before income taxes		249		(1,344)		(3,190)		(17,107)
Income tax benefit (expense)		(158)		367		743		2,396
Net income (loss)	$	91	$	(977)	$	(2,447)	$	(14,711)
Income (loss) per share
Basic	$	0.01	$	(0.14)	$	(0.21)	$	(2.11)
Diluted	$	0.01	$	(0.14)	$	(0.21)	$	(2.11)
Weighted average number of shares used in per share calculation – basic		11,838,032		6,988,058		11,528,371		6,968,728
Weighted average number of shares used in per share calculation – diluted		15,724,103		6,988,058		11,528,371		6,968,728

See accompanying notes to condensed consolidated financial statements.

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ASSURE HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities
Net loss	$	(2,447)	$	(14,711)
Adjustments to reconcile net loss to net cash used in operating activities
(Income) loss from equity method investments		(136)		1,449
Stock-based compensation		818		456
Depreciation and amortization		599		769
Amortization of debt issuance costs		53		—
Provision for stock option fair value		24		(50)
Accretion expense		386		619
Tax impact of equity component of convertible debt issuance		—		(288)
Change in operating assets and liabilities
Accounts receivable, net		(5,723)		16,243
Prepaid expenses		177		—
Right of use assets		291		—
Accounts payable and accrued liabilities		(1,045)		(3,126)
Due from related parties		(1,121)		(1,113)
Lease liability		(399)		(172)
Income taxes		(743)		(1,715)
Other assets and liabilities		(86)		(209)
Net cash used in operating activities		(9,352)		(1,848)
Cash flows from investing activities
Purchase of fixed assets		—		(33)
Net cash paid for acquisitions		(204)		(3,934)
Distributions received from equity method investments		312		424
Net cash provided by (used in) investing activities		108		(3,543)
Cash flows from financing activities
Proceeds from exercise of stock options		19		—
Proceeds from share issuance, net		832		102
Proceeds from promissory note		—		1,978
Repayment of promissory note		—		(1,418)
Proceeds from Paycheck Protection Program loan		1,665		1,211
Proceeds from line of credit		—		2,122
Repayment of line of credit		—		(1,000)
Proceeds from debenture		7,360		—
Repayment of short term debt		(4,100)		—
Proceeds from convertible debenture		—		2,485
Net cash provided by financing activities		5,776		5,480
Increase (decrease) in cash		(3,468)		89
Cash at beginning of period		4,386		59
Cash at end of period	$	918	$	148
Supplemental cash flow information
Interest paid	$	301	$	145
Income taxes paid	$	—	$	62
Supplemental non-cash flow information
Purchase of equipment with finance leases	$	431	$	269

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, June 30, 2020	6,959,063	$	7	$	8,056	$	(10,386)	$	(2,323)
Share issuance, net	25,184		—		102		—		102
Stock-based compensation	—		—		88		—		88
Settlement of payables	10,000		—		40		—		40
Net loss	—		—		—		(977)		(977)
Balances, September 30, 2020	6,994,247	$	7	$	8,286	$	(11,363)	$	(3,070)

Balances, June 30, 2021	11,833,431	$	12	$	38,136	$	(14,226)	$	23,922
Exercise of stock options	3,000		—		19		—		19
Share issuance, net	—		—		—		—		—
Stock-based compensation	—		—		210		—		210
Convertible debt converted into shares	2,858		—		20		—		20
Other	15		—		—		—		—
Net income	—		—		—		91		91
Balances, September 30, 2021	11,839,304	$	12	$	38,385	$	(14,135)	$	24,262


				Additional		Retained		Total
	Common Stock			paid-in		earnings		shareholders'
	Shares	Amount		Capital		(deficit)		equity
Balances, December 31, 2019	6,959,063	$	7	$	6,710	$	3,348	$	10,065
Share issuance, net	25,184		—		102		—		102
Stock-based compensation	—		—		456		—		456
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
Settlement of payables	10,000		—		40		—		40
Net loss	—		—		—		(14,711)		(14,711)
Balances, September 30, 2020	6,994,247	$	7	$	8,286	$	(11,363)	$	(3,070)

Balances, December 31, 2020	11,275,788	$	11	$	30,886	$	(11,688)	$	19,209
Exercise of stock options	3,000		—		19		—		19
Share issuance, net	171,032		—		832		—		832
Share issuance, acquisition related	332,117		1		2,274		—		2,275
Stock-based compensation	—		—		818		—		818
Convertible debt converted into shares	13,384				60				60
Equity component of debenture issuance	—		—		1,203		—		1,203
Settlement of performance share liability	43,968		—		2,293		—		2,293
Other	15		—		—		—		—
Net loss	—		—		—		(2,447)		(2,447)
Balances, September 30, 2021	11,839,304	$	12	$	38,385	$	(14,135)	$	24,262

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 outsourced intraoperative neurophysiological monitoring (“IONM”) and is an emerging provider of remote neurology services. The Company delivers a turnkey suite of clinical and operational services to support surgeons and medical facilities during invasive procedures including spine, neurosurgery, ear, nose, and throat, cardiovascular and orthopedic. Accredited by The Joint Commission, Assure’s mission is to provide exceptional surgical care and a positive patient experience.

IONM identifies real-time changes in spinal cord, brain, and peripheral nerve functions during high-risk surgeries to prevent injuries or accidental damage to patients that could lead to strokes, heart attacks, paralysis or other serious medical issues. IONM is well established and is regarded as the standard of care in U.S healthcare.

Assure employs highly trained IONM technologists, who provide a direct point of contact in the operating room to relay critical information to the surgical team while Company physicians deliver remote neurology services in support of the surgical team. In addition, Assure offers surgeons and medical facilities a value-added platform that manages patient scheduling, billing and collections, physician relationship management and patient advocacy services. The high quality IONM support that Assure provides results in decreased hospital and surgeon liability, abbreviated patient stays, fewer readmissions, reduced hospital costs, enhanced overall patient satisfaction and the efficient achievement of better clinical outcomes.

The Company maintains operations in twelve U.S. states. Assure believes that continued geographic expansion initiatives, facility-wide outsourcing agreements with medical facilities, the acceleration of its remote neurology services platform, and selective acquisitions will combine to generate substantial growth opportunities going forward.

The Company was originally incorporated in Colorado on November 7, 2016. In conjunction with a reverse merger with Montreux Capital Corp., a British Columbia corporation, the Company was redomesticated from British Columbia to 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,

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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-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

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.

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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 nine months ended September 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.

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 5 for additional discussion.

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 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 two operating sub-leases which expired June 30, 2021. The Company is negotiating lease renewal terms and is currently under a month-to-month lease arrangement.

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 September 30, 2021 and December 31, 2020 (stated in thousands):


	September 30,		December 31,
	2021		2020
Operating	$	—	$	124
Finance		877		608
Total	$	877	$	732

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Finance lease assets are reported net of accumulated amortization of $1.8 million and $1.3 million as of September 30, 2021 and December 31, 2020, respectively.

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


	Nine Months Ended September 30,
	2021		2020
Lease cost:
Operating leases	$	227	$	159
Finance leases:
Amortization of ROU assets		372		398
Interest on lease liabilities		69		60
Total finance lease cost		441		458
Total lease cost	$	668	$	617

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


	As of	As of
	September 30, 2021	December 31, 2020
Weighted average remaining lease term (years):
Operating leases	—	0.5
Finance leases	3.1	3.3
Weighted average discount rate:
Operating leases	—	6.9
Finance leases	8.1	7.9

The Company acquired ROU assets in exchange for lease liabilities of $431 thousand upon commencement of finance leases during the nine months ended September 30, 2021.

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


					Total
	Operating		Finance		Lease
	Leases		Leases		Liabilities
Remainder 2021	$	—	$	167	$	167
2022		—		620		620
2023		—		306		306
2024		—		239		239
2025		—		148		148
Thereafter		—		23		23
Total lease payments		—		1,503		1,503
Less: imputed interest		—		(174)		(174)
Present value of lease liabilities		—		1,329		1,329
Less: current portion of lease liabilities		—		579		579
Noncurrent lease liabilities	$	—	$	750	$	750

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.

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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 fourth quarter of 2021.

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.

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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 275,000 non-transferrable common stock purchase warrants. Each warrant entitles Centurion to acquire one share in the capital of Assure, at an exercise price equal to US$7.55 (representing the closing price of Assure’s shares of common stock 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 shares of common stock are subject to applicable hold periods under U.S. securities laws.

The Company’s debt obligations are summarized as follows:


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

Face value of convertible debenture		3,450		3,450
Less: principal converted to common shares		(60)		—
Less: deemed fair value ascribed to conversion feature and warrants		(1,523)		(1,523)
Plus: accretion of implied interest		610		324
Total convertible debt		2,477		2,251

Face value of Centurion debenture		8,000		—
Less: deemed fair value ascribed to warrants		(1,204)		—
Plus: accretion of implied interest		100		—
Less: net debt issuance costs		(587)		—
Total Centurion debt		6,309		—
Total debt		10,451		6,351
Less: current portion of debt		—		(4,100)
Long-term debt	$	10,451	$	2,251

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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


	PPP		Convertible		Bank
	Loan			Debt	Indebtedness
Remainder 2021	$	—	$	—	$	—
2022		—		—		—
2023		—		965		—
2024		—		2,425		—
2025		—		—		8,000
2026		1,665		—		—
Total		1,665		3,390		8,000
Less: fair value ascribed to conversion feature and warrants		—		(1,523)		(1,204)
Plus: accretion and implied interest		—		610		100
Less: net debt issuance costs		—		—		(587)
	$	1,665	$	2,477	$	6,309

5. SHARE CAPITAL

Common stock

Common stock: 180,000,000 authorized; $0.001 par value. As of September 30, 2021 and December 31, 2020, there were 11,839,304 and 11,275,788 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.

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 Company with a value of $1,625,000, determined on the effective date, as quoted on the TSX Venture Exchange (237,226 shares of common stock). In addition, the Company placed into escrow 94,891 shares of the

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Company’s common stock with a value of $650,000. The common stock is subject to a 12-month lock up beginning on the date of delivery. See Note 7 for additional discussion.

Share issuance

In June 2020, in connection with common stock purchase agreements, the Company issued 156,032 shares of common stock at a deemed value of $4.00 per share to certain employees, directors and third parties.

Convertible debt

During the nine months ended September 30, 2021, certain holders of the convertible debenture exercised their right to convert $60,000 of outstanding principal into shares of common stock, resulting in the issuance of 13,384 common stock.

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 September 30, 2021, an aggregate of 1,183,930 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 1,014,100 shares are outstanding as of September 30, 2021.

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	748,600	$	5.25	4.00
Options granted	348,000		5.33
Options exercised	(3,000)		6.40
Options canceled / expired	(79,500)		5.96
Balance at September 30, 2021	1,014,100		5.16	3.62	$	2,670
Vested and exercisable at September 30, 2021	636,008		4.93	3.39	$	1,894

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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 September 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
200,000	3.90	$	0.25	200,000	$	0.25
12,000	1.07	$	14.00	12,000	$	14.00
15,000	6.30	$	9.00	15,000	$	9.00
85,000	2.00	$	9.00	73,667	$	9.00
146,800	2.30	$	7.80	127,227	$	7.80
81,300	3.01	$	6.40	48,780	$	6.40
40,000	3.91	$	4.50	18,667	$	4.50
93,000	4.20	$	4.85	31,000	$	4.85
311,000	4.34	$	5.30	103,667	$	5.30
30,000	4.54	$	5.60	6,000	$	5.60
1,014,100	3.62	$	5.16	636,008	$	4.93

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)

The following assumptions were used to value the awards granted during the nine months ended September 30, 2021:


	Nine Months Ended September 30,
	2021		2020
Expected life (in years)	5.0		5.0
Risk-free interest rate	0.4	%