7. SHAREHOLDERS’ DEFICIT

Common stock

Common stock: 13,888,888 authorized; $0.001 par value. As of June 30, 2024, and December 31, 2023, there were 605,024 and 373,359 shares of common stock issued and outstanding, respectively.

On May 14, 2024, the Company reconvened its previously adjourned special meeting of stockholders for which a total of 5,427,462 shares of common stock were present and approved a proposal to increase the authorized shares to 250,000,000. The number of authorized shares was reduced to 13,888,888 as a result of the July 2024 reverse stock split discussed below.

Reverse Share Splits

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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.

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During July 2024, the total number of shares of common stock authorized by the Corporation was reduced from 250,000,000 shares of Common Stock, par $0.001, to 13,888,888 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 eighteen (18): effecting an eighteen (18) pre-split shares for one (1) post-split share reverse stock split.

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No fractional shares were issued in connection with the reverse splits and all fractional shares were rounded up to the next whole share.  

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Additionally, all options, warrants and other convertible securities of the Company outstanding immediately prior to the reverse splits 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), then again by eighteen (18) and multiplying the exercise or conversion price thereof by eighteen (18), 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.

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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.

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Nasdaq delisting

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On July 25, 2023, the Company received a letter from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s common stock, par value $0.001 per share (“Common Stock”), for the last 30 consecutive business days, the Company was not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Notice”).

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The Notice had no immediate effect on the continued listing status of the Company's Common Stock on The Nasdaq Capital Market, and, therefore, the Company's listing remained fully effective.

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The Company was provided a compliance period of 180 calendar days from the date of the Notice, or until January 22, 2024, to regain compliance with the minimum closing bid requirement, pursuant to Nasdaq Listing Rule 5810(c)(3)(A). If at any time before January 22, 2024, the closing bid price of the Company’s Common Stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, subject to Nasdaq’s discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(G) to 20 consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the minimum bid price requirement, and the matter would be resolved. If the Company does not regain compliance during the compliance period ending January 22, 2024, then Nasdaq may grant the Company a second 180 calendar day period to regain compliance, provided the Company meets the continued listing requirement for market value of publicly-held shares and all other initial listing standards for The Nasdaq Capital Market, other than the minimum closing bid price requirement, and notifies Nasdaq of its intent to cure the deficiency.

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On August 16, 2023, the Company received notice from the Staff of the Nasdaq that the Company no longer satisfied the $2.5 million stockholders’ equity requirement for continued listing on The Nasdaq Capital Market, or the alternatives to that requirement - a $35 million market value of listed securities or $500,000 in net income in the most recent fiscal year or two or the last three fiscal years - as required by Nasdaq Listing Rule 5550(b). The notification was separate from, and in addition to, the previously deficiency letter that the Company received from the Staff on July 25, 2023.

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As with the Bid Price Deficiency Letter, the Staff’s notification had no immediate effect on the Company’s continued listing on The Nasdaq Capital Market. In accordance with the Nasdaq Listing Rules, the Company was provided 45 calendar days, or until October 2, 2023, to submit a plan to regain compliance with the Equity Requirement (the “Compliance Plan”).

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On October 2, 2023, the Company submitted its plan of compliance to the Staff. On November 1, 2023, the Staff provided notice to the Company that the Staff had granted an extension until January 22, 2024, to complete certain key steps of the Company’s compliance plan and, assuming those steps were complete on or before January 22, 2024, to complete certain key steps of the Company’s compliance plan.

On January 24, 2024, the Company received a determination letter (the “Determination Letter”) from the Staff stating that it had not regained compliance with Listing Rule 5550(a)(2) and was not eligible for a second 180-day period to regain compliance. The Company appealed the Staff’s determination, pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series and had a hearing with a Nasdaq Hearings Panel (the “Panel”) on April 9, 2024. The Company still awaiting the Panel’s decision on whether the Company’s plan as presented to the Panel has been accepted.

Based on the Company’s representations made in its compliance plan submitted to the Staff, on November 1, 2023, the Staff granted the Company an extension until January 22, 2024, to regain compliance with the Equity Requirement. However, the Staff indicated in the Determination Letter that, pursuant to Listing Rule 5810(d)(2), this deficiency serves as an additional and separate basis for delisting, and as such, the Company should address its non-compliance with the Equity Requirement before the Panel, if it appeals the Staff’s determination, which the Company has done.

On May 16, 2024, the Company received a written notice from the Panel that it has granted the Company an extension to regain compliance with the continued listing requirements for The Nasdaq Capital Market (the “Panel Decision”). The Hearings Panel granted the Company an extension until July 22, 2024, by which date the Company would be required to demonstrate compliance with all applicable initial listing requirements for the Nasdaq Capital Market in relation to its completion of its previously announced transaction with Danam.

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On July 8, 2024, the Company effectuated an eighteen-to-one reverse stock split (discussed below) in an effort to comply with the minimum closing bid requirement, pursuant to Nasdaq Listing Rule 5810(c)(3)(A) of the closing bid price of the Company’s Common Stock at or above $1.00 per share for a minimum of 10 consecutive business days,

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On July 22, 2024, the Nasdaq notified Assure that the Panel determined to delist the Company’s common stock, and that trading of the Company’s securities will be suspended at the open of trading on July 24, 2024.

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In connection with the Nasdaq delisting notice, Nasdaq will complete the delisting by filing a Form 25 Notification of Delisting with the U.S. Securities and Exchange Commission after applicable appeal periods have lapsed. In the interim, the Company’s common stock began trading under its current trading symbol “IONM” on the OTC Markets system effective with the open of the markets on July 24, 2024. The Company has submitted an application to the OTCQB for quotation of its common stock.

The Company had 15 days after the date it received notice of the Panel’s decision (which was July 22, 2024) to request in writing that the Nasdaq Listing and Hearing Review Council (the “Council”) review the decision. In addition, the Council may, on its own motion, determine to review the Panel’s decision within 45 calendar days after the Company was notified of the decision.

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If the Company is not able to list securities on another national securities exchange, management expect its securities could be quoted on an over-the-counter market. As a result, the Company could face significant material adverse consequences, including:

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2023 Share Issuances

During March 2023, the Company completed a private placement for 2,778 common shares at $108.00 per common shares for gross proceeds of $300 thousand.

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During May 2023, the Company completed its pricing of an underwritten public offering of 277,778 shares of common stock (or prefunded warrants in lieu thereof) at an offering price to the public of $21.60 per share (or $21.58 per pre-funded warrant). The Company issued 750,000 pre-funded warrants which were immediately exercisable at a nominal exercise price of $0.001 or on a cashless basis. The 750,000 prefunded warrants were exercised during August. 

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.

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The Company granted the underwriters in the offering a 45-day option to purchase up to 41,667 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.

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During June 2023, the Company issued 3,319 common shares to certain employees, directors, and vendors in lieu of cash compensation. 

2024 Share Issuances

During March 2024, the Company issued 14,931 common shares to the members of the Board of Directors for compensation amounts owed from April 1,2023 through March 31, 2024.

During March 2024, the Company entered into exchange agreements with certain Convertible Debenture holders, whereby the Company agreed to issue 74,298 common shares to settle $334 thousand of principal and interest owed (Note 6).

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During April 2024, the Company entered into an exchange agreement with Centurion whereby the Company agreed to issue 13,120 common shares to settle $141 thousand of outstanding amounts owed under the Debenture agreement (Note 6).  

On April 8, 2024, the Company entered into a subscription agreement with Innovation pursuant to which Innovation agreed to the cancellation of $270,000 of future installment payments under the Asset Purchase Agreement dated August 2, 2023 by and between the Corporation and Innovation as consideration for the subscription of 24,292 shares of common stock representing a deemed exchange price of $11.12 per share.

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Subscription Agreements

On June 27, 2024, Assure entered into subscription agreements (“Subscription Agreements”) with certain investors (the “Investors”) pursuant to which Assure, and the Investors agreed to cancel certain trade accounts payable held by such Investors for shares of common stock of Assure. Pursuant to the Subscription Agreements, Assure issued an aggregate total of 104,468 shares of common stock to certain Investors in exchange for the cancellation of an aggregate amount of $437 thousand in trade accounts payable.

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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.

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As of June 30, 2024, there was 800 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, 2024, there was nil stock options outstanding and an aggregate of 100,000 shares of common stock were available for issuance under the 2021 Stock Option Plan. As of June 30, 2024, no transactions have occurred under the 2021 Employee Stock Purchase Plan.

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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.

A summary of the stock option activity is presented below:

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The following table summarizes information about stock options outstanding and exercisable under the Company’s Stock Option Plan at June 30, 2024:

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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 condensed 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 is 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, which can result in negative stock-based compensation expense in the period of forfeiture.

The Company did not grant any stock options during the three and six months ended June 30, 2024, or 2023.

Stock-based compensation benefit for the three and six months ended June 30, 2024, was $628 thousand and $454 thousand, respectively, compared to stock-based compensation expense for the three and six months ended June 30, 2023, of $66 thousand and $56 thousand, respectively. The stock-based compensation benefit for the three and six months ended June 30, 2024, was related to stock option forfeitures and cancellations related to the sale of the clinical assts and termination of clinical employees. As of June 30, 2024, there was approximately $26 thousand of total unrecognized compensation cost related to nine unvested stock options that is expected to be recognized over a weighted-average remaining vesting period of 2.25 years.

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Warrants

The following table summarizes warrant activity during the six months ended June 30, 2024.

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The following table summarizes warrants outstanding by transaction type as of June 30, 2024:

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The Debenture warrants were cancelled subsequent to June 30, 2024, in connection with the Centurion debenture settlement disclosed in Notes 6 and 10.