6. DEBT

The Company’s debt obligations are summarized as follows:

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As discussed in Note 2, the Company adopted ASU 2020-06 Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by removing certain separation models such that the embedded conversion features are no longer separated from the host contract. The convertible debt instrument will be accounted for as a single liability measured at amortized cost. ASU 2020-06 only applies to the Company’s beneficial conversion feature associated with the convertible debt.  As of January 1, 2024, the remaining value of the beneficial conversion feature was recorded to retained earnings and the Company no longer incurs accretion expense.  

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The following table depicts accretion expense and interest expense (excluding debt issuance cost amortization) related to the Company’s debt obligations for the three months ended March 31, 2024 and 2023 (in thousands):

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As of March 31, 2024, future minimum principal payments are summarized as follows (in thousands):

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The Centurion debt is contractually due during 2025 but has been classified as current liability for accounting purposes as the Company is not compliant with the Centurion debt covenants as of March 31, 2024.  

Convertible Debt

The majority of the convertible debt matured during the period of December 2023 through March 2024. The Company has not paid the contractual amounts due per the terms of the convertible debt agreements.  As such, the convertible debt is payable on demand.  However, the Company anticipates offering Assure common shares as settlement of the remaining principal and accrued interest.   There is no guarantee the Company will be able to settle the amounts outstanding under the Convertible Debenture with common shares of the Company.  

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During March 2024, the Company entered into exchange agreements with certain Convertible Debenture holders, whereby the Company issued 1,337,371 common shares to settle $334 thousand of principal and interest owed.

Centurion Debt

In June 2021, Assure issued a debenture to Centurion Financial Trust (“Centurion”) 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 $1.20 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 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.

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During April 2024, the Company entered into an exchange agreement with Centurion whereby the Company issued 236,164 common shares to settle $141 thousand of outstanding amounts owed under the Debenture agreement.

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Short-Term Promissory Notes

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During January 2024, the Company entered into short-term promissory notes to settle threatened legal action for a total of $692 thousand. The short-term promissory notes mature January 25, 2025 and incur interest at a rate of 6% per annum.   During April 2024, the Company paid $173 thousand to the short-term promissory note holders in accordance with the terms of the short-term promissory notes.