Quarterly report pursuant to Section 13 or 15(d)

DEBT

v3.23.2
DEBT
6 Months Ended
Jun. 30, 2023
DEBT  
DEBT

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

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.

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.