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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, 2023

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 Denver, 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 11, 2023 was 5,422,014.

Table of Contents

ASSURE HOLDINGS CORP.

FORM 10Q

FOR THE QUARTER ENDED JUNE 30, 2023

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

19

Item 3. Quantitative and Qualitative Disclosures About Market Risk

29

Item 4. Controls and Procedures

29

Part II – Other Information

29

Item 1. Legal Proceedings

29

Item 1A. Risk Factors

30

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

31

Item 3. Defaults Upon Senior Securities

31

Item 4. Mine Safety Disclosures

31

Item 5. Other Information

31

Item 6. Exhibits

32

Signatures

33

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, 

2023

2022

ASSETS

Current assets

 

  

 

  

Cash

$

3,149

$

905

Accounts receivable, net

 

9,088

 

15,143

Other current assets

 

960

 

340

Due from MSAs

4,706

5,006

Total current assets

 

17,903

 

21,394

Equity method investments

 

278

 

310

Fixed assets

 

57

 

76

Operating lease right of use asset, net

561

672

Finance lease right of use asset, net

230

382

Intangibles, net

 

195

 

390

Goodwill

 

1,025

 

1,025

Total assets

$

20,249

$

24,249

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES

Current liabilities

Accounts payable and accrued liabilities

$

3,427

$

2,919

Current portion of debt

 

2,620

 

965

Current portion of lease liability

 

542

 

550

Current portion of acquisition liability

 

306

 

306

Other current liabilities

 

 

231

Total current liabilities

 

6,895

 

4,971

Lease liability, net of current portion

 

694

 

964

Debt, net of current portion

 

10,638

 

11,874

Acquisition liability

77

179

Deferred tax liability, net

 

617

 

796

Total liabilities

 

18,921

 

18,784

Commitments and contingencies (Note 8)

SHAREHOLDERS’ EQUITY

Common stock: $0.001 par value; 9,000,000 shares authorized; 5,422,014 and 1,051,098 shares issued and outstanding, as of June 30, 2023 and December 31, 2022, respectively

 

26

 

21

Additional paid-in capital

 

55,434

 

50,000

Accumulated deficit

 

(54,132)

 

(44,556)

Total shareholders’ equity

 

1,328

 

5,465

Total liabilities and shareholders’ equity

$

20,249

$

24,249

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, 

2023

    

2022

2023

    

2022

Revenue

  

 

  

  

 

  

Technical services

$

134

$

67

$

1,368

$

1,463

Professional services

839

854

2,713

3,327

Other

 

570

 

724

 

1,014

 

1,556

Total revenue

 

1,543

 

1,645

 

5,095

 

6,346

Cost of revenues, excluding depreciation and amortization

 

3,402

 

4,002

 

6,775

 

7,879

Gross margin

 

(1,859)

 

(2,357)

 

(1,680)

 

(1,533)

Operating expenses

General and administrative

 

3,355

 

3,596

 

6,566

 

7,837

Sales and marketing

 

69

 

238

 

197

 

490

Depreciation and amortization

 

181

 

260

 

365

 

518

Total operating expenses

 

3,605

 

4,094

 

7,128

 

8,845

Loss from operations

 

(5,464)

 

(6,451)

 

(8,808)

 

(10,378)

Other income (expenses)

Income from equity method investments

 

13

 

4

 

38

9

Gain on Paycheck Protection Program loan forgiveness

1,665

Other expense, net

 

324

 

28

 

382

 

66

Accretion expense

(171)

(171)

(341)

(341)

Interest expense, net

 

(509)

 

(439)

 

(1,018)

 

(846)

Total other expense

 

(343)

 

(578)

 

(939)

 

553

Loss before income taxes

 

(5,807)

 

(7,029)

 

(9,747)

 

(9,825)

Income tax benefit

 

545

 

2,303

 

171

 

2,640

Net loss

$

(5,262)

$

(4,726)

$

(9,576)

$

(7,185)

Loss per share

Basic

$

(1.63)

$

(7.32)

$

(4.45)

$

(11.12)

Diluted

$

(1.63)

$

(7.32)

$

(4.45)

$

(11.12)

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

 

3,232,345

 

645,983

 

2,149,777

 

645,977

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

 

3,232,345

 

645,983

 

2,149,777

 

645,977

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, 

2023

    

2022

Cash flows from operating activities

Net loss

$

(9,576)

$

(7,185)

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

Income from equity method investments

 

(38)

 

(9)

Stock-based compensation

 

56

 

572

Depreciation and amortization

 

365

 

518

Amortization of debt issuance costs

 

78

 

80

Provision for stock option fair value

 

 

(25)

Gain on Paycheck Protection Program loan

(1,665)

Accretion expense

341

341

Change in operating assets and liabilities

Accounts receivable, net

 

6,055

 

6,821

Prepaid expenses

(593)

(206)

Right of use assets

191

421

Accounts payable and accrued liabilities

 

507

 

1,182

Due from MSAs

 

337

 

(705)

Lease liability

(358)

(349)

Income taxes

 

(198)

 

(2,661)

Other assets and liabilities

 

(241)

 

(16)

Net cash used in operating activities

 

(3,074)

 

(2,886)

Cash flows from investing activities

Purchase of fixed assets

 

 

(26)

Net cash paid for acquisitions

 

(102)

 

(127)

Distributions received from equity method investments

 

37

 

50

Net cash used in investing activities

 

(65)

 

(103)

Cash flows from financing activities

Proceeds from exercise of stock options

 

 

4

Proceeds from share issuance, net

5,383

Net cash provided by financing activities

 

5,383

 

4

Increase (decrease) in cash

 

2,244

 

(2,985)

Cash at beginning of period

 

905

 

4,020

Cash at end of period

$

3,149

$

1,035

Supplemental cash flow information

Interest paid

$

977

$

769

Income taxes paid

$

$

Supplemental non-cash flow information

Purchase of equipment with finance leases

$

$

79

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, 2022

 

645,983

$

13

$

43,714

$

(16,903)

$

26,824

Stock-based compensation

 

 

 

249

 

 

249

Net income

 

 

 

 

(4,726)

 

(4,726)

Balances, June 30, 2022

 

645,983

$

13

$

43,963

$

(21,629)

$

22,347

Balances, March 31, 2023

1,101,098

$

22

$

50,289

$

(48,870)

$

1,441

Share issuance, net

4,041,667

4

5,079

5,083

Stock-based compensation

 

268,081

66

 

66

Other

 

11,168

 

Net loss

 

 

 

 

(5,262)

 

(5,262)

Balances, June 30, 2023

 

5,422,014

$

26

$

55,434

$

(54,132)

$

1,328

    

    

Additional

    

    

Total

Common Stock

paid-in

Accumulated

shareholders'

    

Shares

    

Amount

    

Capital

    

deficit

    

equity

Balances, December 31, 2021

 

645,943

$

13

$

43,387

$

(14,444)

$

28,956

Exercise of stock options

 

40

 

 

4

 

 

4

Stock-based compensation

 

 

 

572

 

 

572

Net loss

 

 

 

 

(7,185)

 

(7,185)

Balances, June 30, 2022

645,983

$

13

$

43,963

$

(21,629)

$

22,347

Balances, December 31, 2022

 

1,051,098

$

21

$

50,000

$

(44,556)

$

5,465

Share issuance, net

4,091,667

5

5,378

5,383

Stock-based compensation

 

268,081

 

 

56

 

 

56

Other

 

11,168

 

 

 

 

Net loss

 

 

 

 

(9,576)

 

(9,576)

Balances, June 30, 2023

 

5,422,014

$

26

$

55,434

$

(54,132)

$

1,328

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. (“Assure” or the “Company”), through its two indirect wholly-owned subsidiaries, Assure Neuromonitoring, LLC (“Neuromonitoring”) and Assure Networks, LLC (“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.

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 (“PE”), 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.

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 accounting principles generally accepted in the United States of America (“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. 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. All significant intercompany balances and transactions have been eliminated in consolidation.

Liquidity

The Company’s current cash balance and estimated cash from operations for the next 12 months is not sufficient to meet the Company’s working capital needs for the next 12 months. The Company intends to seek equity or debt financing and have implemented significant cost cutting measures to mitigate its going concern. Such financings may include the issuance of shares of common stock, warrants to purchase common stock, convertible debt or other instruments that may dilute current stockholders. Financing may not be available on acceptable terms depending on market conditions at the time the Company seeks financing. The Company has filed for a refund from the IRS under the CARES Act Employee Retention Credit program, however, there is no guarantee when, or if, these funds will be received. 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.

6

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Accounting Policies

There have been no changes to the Company’s significant accounting policies or recent accounting pronouncements during the three and six months ended June 30, 2023, as compared to the significant accounting policies disclosed in the 10-K for the year ended December 31, 2022 as filed on March 31, 2023.

On January 1, 2023, the Company adopted Accounting Standards Update No, 2016-13, Measurement of Credit Losses on Financial Instruments, and its related amendments using the prospective method.    The new standard requires the use of a current expected credit loss impairment model to develop and recognize credit losses for financial instruments at amortized cost when the asset is first originated or acquired, and each subsequent reporting period. The adoption of this standard did not have a material impact to the Company’s 2023 financial statements.

Common Stock Reverse Split

During March 2023, the Company effectuated a twenty -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 months ended June 30, 2022 have been reclassified to conform to the 2023 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 that we bill. Facility billing consists of neuromonitoring cases whereby the Company has an agreement to bill the medical facility for patients that do not have health care insurance.  

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

Three Months Ended June 30, 

Six Months Ended June 30, 

2023

    

2022

2023

    

2022

  

 

  

  

 

  

Commercial insurance

$

(243)

$

(306)

$

1,553

$

2,518

Facility billing

1,216

1,227

2,528

2,272

Managed service agreements and other

570

724

1,014

1,556

Total

$

1,543

$

1,645

$

5,095

$

6,346

The negative revenue for the three months ended June 30, 2023 and 2022 is related to implicit pricing concessions, including subsequent revisions of accrual rate estimates for services performed in previous periods, being greater than revenue generated for the period.  

7

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Accounts Receivable

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

June 30, 

December 31,

    

2023

    

2022

Technical service

$

1,844

 

$

3,072

Professional service

7,094

11,829

Other

 

150

 

242

Total accounts receivable, net

$

9,088

$

15,143

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,

2023

    

2022

 

  

Commercial insurance

86

%

84

%

Facility billing

9

%

9

%

Other

5

%

7

%

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.

8

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The condensed consolidated balance sheets include the following amounts for right of use (“ROU”) assets as of June 30, 2023 and December 31, 2022 (in thousands):

    

June 30, 

December 31, 

2023

    

2022

Operating

 

$

561

 

$

672

Finance

 

230

 

382

Total

 

$

791

 

$

1,054

Finance lease assets are reported net of accumulated amortization of $2.5 million and $2.4 million as of June 30, 2023 and December 31, 2022, respectively.

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

Six Months Ended June 30, 

2023

    

2022

Lease cost:

Operating leases:

Amortization of ROU assets

$

151

$

154

Interest on lease liabilities

37

46

Total operating lease cost

188

200

Finance leases:

Amortization of ROU assets

152

291

Interest on lease liabilities

25

46

Total finance lease cost

177

337

Total lease cost

$

365

$

537

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

As of

As of

    

June 30, 2023

June 30, 2022

Weighted average remaining lease term (years):

Operating leases

 

2.3

3.3

Finance leases

 

2.2

2.7

Weighted average discount rate (%):

Operating leases

 

10.0

10.0

Finance leases

 

7.9

7.8

9

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Future minimum lease payments and related lease liabilities as of June 30, 2023 were as follows (in thousands):

    

    

    

Total

Operating

Finance

Lease

Leases

Leases

Liabilities

Remainder of 2023

$

162

$

162

$

324

2024

 

328

 

268

 

596

2025

 

279

 

153

 

432

2026

23

23

Total lease payments

 

769

 

606

 

1,375

Less: imputed interest

 

(88)

 

(51)

 

(139)

Present value of lease liabilities

681

555

1,236

Less: current portion of lease liabilities

 

261

 

281

 

542

Noncurrent lease liabilities

$

420

$

274

$

694

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.

5. DEBT

The Company’s debt obligations are summarized as follows:

June 30, 

December 31, 

    

2023

    

2022

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

 

1,277

1,086

Total convertible debt

 

3,144

 

2,953

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

626

476

Less: net debt issuance costs

(308)

(386)

Total Centurion debt

 

10,114

 

9,886

Total debt

 

13,258

 

12,839

Less: current portion of debt

 

(2,620)

 

(965)

Long-term debt

$

10,638

$

11,874

10

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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, 2023 and 2022 (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2023

    

2022

2023

    

2022

Accretion expense

  

 

  

  

 

  

Convertible debenture

$

95

$

95

$

191

$

191

Centurion debenture

 

76

 

76

 

150

150

$

171

$

171

$

341

$

341

Debt issuance cost amortization

  

 

  

  

 

  

Centurion debenture

$

39

$

40

$

78

$

80

Interest paid

Convertible debenture

$

75

$

77

$

221

$

221

Centurion debenture

 

380

 

284

 

756

 

548

$

455

$

361

$

977

$

769

As of June 30, 2023, future minimum principal payments are summarized as follows (in thousands):

    

Convertible

    

 

Debt

 

Debenture

2023

$

2,620

$

2024

 

770

 

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

 

1,277

 

626

Less: net debt issuance costs

(308)

$

3,144

$

10,114

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”). Under the terms of the PPP Loan, all or a portion of the PPP Loan could 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. 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.

11

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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 is being accreted over the four-year life of the CD Units.  

Centurion Debt

In 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”).  Additionally, the Company issued 13,750 warrants with an exercise price of $7.55 which expire on June 14, 2025. 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 covenant calculations to allow bad debt expense to be excluded.  The Company’s was not in compliance with the debt covenants as of June 30, 2023. However, on August 11, 2023, the Company received a debt covenant waiver effective June 30, 2023. The Company expects similar waivers will be required from Centurion in future periods.  

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: 9,000,000 authorized; $0.001 par value. As of June 30, 2023, and December 31, 2022, there were 5,422,014 and 1,051,098 shares of common stock issued and outstanding, respectively.

Reverse Share Split

During March 2023, the total number of shares of common stock authorized by the Company was reduced from 180,000,000 shares of common stock, par $0.001, to 9,000,000 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 twenty (20): effecting a twenty (20) 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 twenty (20) and multiplying the exercise or conversion price thereof by twenty (20), 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.

12

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Share Issuance

During March 2023, the Company completed a private placement for 50,000 common shares at $6.00 per common shares for gross proceeds of $300 thousand.

During May 2023, the Company completed its pricing of an underwritten public offering of 5,000,000 shares of common stock (or prefunded warrants in lieu thereof) at an offering price to the public of $1.20 per share (or $1.199 per pre-funded warrant). The pre-funded warrants will be immediately exercisable at a nominal exercise price of $0.001 or on a cashless basis and may be exercised at any time until all of the pre-funded warrants are exercised in full. 

 

The gross proceeds to the Company from the offering of approximately $6 million, before deducting the underwriters’ fees and other offering expenses payable by Assure. The Company intends to use the net proceeds from the offering for general corporate purposes, including working capital, marketing, and capital expenditures.

 

The Company granted the underwriters in the offering a 45-day option to purchase up to 750,000 additional shares of the Company’s common stock and/or pre-funded warrants, in any combination thereof, from the Company at the public offering price, less underwriting discounts and commissions, solely to cover over-allotments, if any. No additional shares were issued under the allotment.

During June 2023, the Company issued 59,748 common shares to certain employees, directors and vendors in lieu of cash compensation.  

Stock options

On December 10, 2020, 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”).  On December 10, 2020, the Company’s shareholders approved the adoption of a new fixed equity incentive plan (the Equity Incentive Plan”), which authorizes the Company to grant (a) stock options, (b) restricted awards, (c) performance share units, and other equity-based awards for compensation purposes (collectively, “Awards”).

In November 2021, the Company adopted and approved the 2021 Stock Incentive Plan and the 2021 Employee Stock Purchase Plan. The intent of the Company and the Board of Directors 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, 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.

As of June 30, 2023, there was 35,870 stock options outstanding under the Amended Stock Option Plan.  No additional stock options will be issued under the Amended Stock Option Plan.  As of June 30, 2023, there was 11,500 stock options outstanding and an aggregate of 88,500 shares of common stock were available for issuance under the 2021 Stock Option Plan. As of June 30, 2023, no transactions have occurred under the 2021 Employee Stock Purchase Plan.

Options under the 2021 Stock Option 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.

13

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

 

60,212

$

111.20

 

3.60

 

  

Options granted

 

6,500

$

103.20

Options exercised

 

(40)

$

100.80

Options canceled / expired

 

(17,632)

$

50.20

Balance at December 31, 2022

 

49,040

$

129.60

2.8

Options granted

 

10,000

$

0.86

Options canceled / expired

 

(11,670)

$

122.54

Balance at June 30, 2023

 

47,370

$

131.09

 

2.8

 

$

Vested and exercisable at June 30, 2023

 

32,733

$

134.36

 

2.2

 

$

The following table summarizes information about stock options outstanding and exercisable under the Company’s Stock Option Plan at June 30, 2023:

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

750

 

4.6

$

180.00

 

750

$

180.00

3,400

 

0.3

$

180.00

 

3,400

$

180.00

5,740

 

0.5

$

156.00

 

5,740

$

156.00

3,025