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 as a charge to retained earnings and increase to debt as the Company no longer incurs accretion expense. As a result, the deemed fair value of the warrants and beneficial conversion feature, in the table above, was reduced by $427 thousand as of January 1, 2024.

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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 and six months ended June 30, 2024, and 2023 (in thousands):

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As of June 30, 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 June 30, 2024. The Company did not receive a waiver related to non-compliance with debt covenants.

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, including principal and accrued interest.  As such, the convertible debt is payable on demand.  However, the Company anticipates issuing 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.

During March 2024, the Company entered into exchange agreements with certain Convertible Debenture holders, whereby the Company issued 74,298 common shares to settle $334 thousand of principal and interest owed.

On June 21, 2024, the Company filed a Schedule TO, as amended, with the SEC in connection with an offer (the “Convertible Note Exchange Offer”) to exchange, for each $1,000 claim, consisting of principal amount, and accrued and unpaid interest through, and including, September 20, 2024, of the Company’s 9% Convertible Debentures due 2023 and 2024 (the “Assure Convertible Debentures”), 1,000 shares (18,000 shares on a pre-reverse split basis) of the Company’s common stock equal to the quotient of $1,000 divided by a per share price of $1.00 ($0.055 on a pre-reverse split basis), as adjusted for a 1-for-18 reverse stock split which took effect on July 9, 2024.  Assure is seeking to exchange any and all outstanding Assure Convertible Debentures in the Convertible Note Exchange Offer for the offered shares of common stock.

The Convertible Note Exchange Offer commenced on June 21, 2024, and expired at 11:59 p.m. (Mountain time) on September 20, 2024.

On September 22, 2024, in connection with the “Convertible Note Exchange Offer”, the Company issued to holders of the Assure Convertible Notes, 2,477,082 shares of Common Stock in exchange for $2,129,000 in principal amount of tendered and accepted Assure Convertible Notes and including an additional $348,093 in accrued and unpaid interest.

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 764 warrants with an exercise price of $21.60 which originally expired on June 14, 2025. During November 2021, the Company and Centurion entered 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 from the covenant calculation. 

The Credit Facility originally matured in June 2025 and bore 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 13,120 common shares to settle $141 thousand of outstanding amounts owed under the Debenture agreement.

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On July 18, 2024, the Company entered into a binding memorandum of understanding with Centurion pursuant to which the Company and Centurion agreed to the settlement of the Company’s obligations under the Debenture to Centurion whereby the Company assigned $2.5 million of arbitration receivable and $3.0 million of Employee Retention Tax Credit assets along with the issuance of 9.1 million common shares and cancellation of 764 warrants in settlement of the entire debt balance including principle and interest.  On August 30, 2024, the Company entered a binding amended and restated memorandum of understanding (the “Amended and Restated MOU”) with Centurion pursuant to which the Company and Centurion agreed to amend certain of the terms of that certain binding memorandum of understanding dated July 18, 2024. Under the Amended and Restated MOU, the Company and Centurion agreed to settle the Company’s obligations under the Debenture whereby the Company assigned certain assets of the Company along with a share payment of 9,135,924 shares of common stock at a price of $0.70 per share and the Company obtaining settlement of all outstanding claims and obligations of the Company by October 10, 2024. The Assigned Assets under the MOU are as follows: (a) At closing, the Company will assign to Centurion 75% of the Company’s portion of federal and state settlements and IDR Awards under the “No Suprises Act”. Centurion will be entitled to cash receipts from the assigned IDR Accounts Receivable in the amount of 75% of the amount to which the Company is entitled of the collected amount of all amounts as collected and the Company will retain rights to cash receipts from the assigned IDR Accounts Receivable as to 25% of the amount to which the Company is entitled of the collected amount. (b) The Company’s Employee Retention Tax Credit refund from the Internal Revenue Service from the tax years 2020 through 2021.

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Short-Term Promissory Notes

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During January 2024, the Company entered short-term promissory notes to settle potential 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.   In 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.  

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As discussed in Note 1, in connection with the Danam Waiver Agreement, on April 8, 2024, the Company issued a convertible note to Danam in principal amount of $1,000,000. The note is convertible into shares of the Company's common stock at a conversion price of $0.54 per share. The note accrues interest on the then outstanding principal balance at a rate equal to 10% per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. The note has a maturity date of July 22, 2024. As of the date of this filing, the note matured, and the Company is currently in default.