Assure Holdings Corp. Announces Update
PARKER, Colo., May 29, 2018 (GLOBE NEWSWIRE) -- Assure Holdings Corp. (the “Company” or “Assure”) (TSXV:IOM) (OTCQB:ARHH) is providing an update relating to the appointment of its new auditor and an update relating to the Management Cease Trade Order (“MCTO”), effective May 1, 2018, previously applied for and granted by the British Columbia Securities Commission (the “BCSC”) in anticipation that the Company would not meet the filing deadline for its audited annual financial statements, management discussion and analysis (MD&A) and CEO and CFO certificates for the year ended December 31, 2017 (the “Required Annual Filings”) in accordance with National Instrument 51-102 Continuous Disclosure Requirements.
Update relating to Appointment of Auditor
As previously disclosed on May 15, 2018, the Company appointed Squar Milner LLP (“Squar Milner”) as its new independent registered public auditing firm for its Required Annual Filings. Audit field work commenced the week of May 21, 2018.
In accordance with National Instrument 51-102 – Ongoing Requirements for Issuers and Insiders (“NI 51-102”), the notice of change of auditor, together with the required letter received from Squar Milner LLP (the “Reporting Package”) have been reviewed and accepted by the board of directors (the “Board”) on May 29, 2018 and filed on www.sedar.com. Although the Company requested the letter required by Section 4.11(6)(ii) of NI 51-102 from its former auditor, EKS&H LLLP (the “Former Auditor”), it has yet to receive the same.
As disclosed in the Reporting Package, the Former Auditor previously advised the Company that there was a reportable event with respect to unresolved issues (as those terms are defined in NI 51-102) in connection with their resignation, the details of which are set out below:
- The former President and director of the Company, Matthew Willer, failed to provide a draft of the financial statements of the Company for the quarter ended September 30, 2017 (the “Q3 Financial Statements”). The Former Auditor did not advise the audit committee (the “AC”) or the Board of Mr. Willer’s apparent repeated failure to respond to their requests. For reasons that are not clear, the Former Auditor decided not to contact an alternative executive in the Company who could have provided the Q3 Financial Statements.
- Mr. Willer used his position as a fiduciary within the Company to access funds in excess of those due and owing to him. The Board became aware of Mr. Willer’s unauthorized use of Company funds and created an independent special committee (“IC”) to undertake an internal investigation. The amount of the Company funds accessed by Mr. Willer was not material financially. However, Mr. Willer’s breach of his position as a fiduciary was and is of material concern to the IC, the AC and Board. As a precautionary measure pending completion of the internal investigation, the IC recommended the Board to remove Mr. Willer’s access to Company funds. The Board did so.
- Shortly prior to commencing the audit fieldwork with the Former Auditor, the AC disclosed to the Former Auditor the results of the internal investigation and specifically Mr. Willer’s unauthorized use of Company funds. Unfortunately, the Former Auditor did not provide the AC with an opportunity to consider or respond to their concern prior to the delivery of their resignation letter dated March 7, 2018.
- In addition to Mr. Willer’s unauthorized use of Company funds, Mr. Willer engaged in actions apparently designed to conceal other inappropriate conduct. For example, Mr. Willer concealed from the Company the service of a garnishment order arising out of a settled litigation claim unrelated to the Company. The steps taken by Mr. Willer prevented the Company from discovering the existence of, and responding in a timely manner to, the garnishment order.
- The Former Auditor’s concern regarding the significant increase in amounts owed to the Company by Preston Parsons, the founder and a director of the Company, and Mr. Willer, as presented in the December 31, 2017 preliminary trial balance and as previously disclosed in the Q3 Financial Statements. These amounts include a commingling of personal and business expenses charged to the Company’s credit card, the majority of which are owed by Mr. Parsons. The amounts owed by Mr. Parsons, calculated as of May 15, 2018, and subject to adjustment based on further analysis, were disclosed in the Company’s news release disseminated on May 15, 2018. Mr. Parsons has agreed in writing to repay all amounts owed to the Company and is working with the Company to finalize a debt settlement agreement and repay the Company in the short term. The Company is also endeavouring to recover all amounts owed by Mr. Willer. Controls have been implemented, and as appropriate additional controls will be implemented on an ongoing basis, to prevent commingling and/or other improper use of Company funds in the future.
- The AC requested an opportunity for a representative of the Company to first inform the recently appointed Chief Financial Officer, Peter Csapo of the results of the internal investigation pertaining to Mr. Willer’s conduct prior to the Former Auditor discussing such details with Mr. Csapo. To that end, the AC requested that the Former Auditor allow them a reasonable period of time to do so. The Former Auditor interpreted the AC’s request as a direction to withhold the results of the investigation from the new Chief Financial Officer for an indeterminate amount of time. The AC rejects this position.
In addition to the appointment of Squar Milner, Assure continues to evaluate the forensic accountant review conducted by Rubin Brown LLP; the initial results of which were disclosed on May 15, 2018 by way of a press release. The Company also previously announced the appointment of John A. Farlinger (CPA, CA) as Executive Chairman and Interim Chief Executive Officer of the Company effective as of May 15, 2018. The Company remains committed to remediating its control environment over financial reporting and has committed to resolving the material weaknesses leading to the errors mentioned above.
Update relating to Management Cease Trade Order
The MCTO will remain in effect until the Company is no longer in default with respect to its filing requirements and the BCSC lifts the MCTO. The MCTO restricts all trading in securities of the Company, whether direct or indirect, by management of the Company until such time as the Required Annual Filings have been filed by the Company. The MCTO does not generally affect the ability of shareholders who are not insiders of the Company to trade their securities. The audit process is now underway and the Company is working closely with Squar Milner and expects to provide a further update regarding when it can expect to file the Required Annual Filings.
The Company intends to satisfy the provisions of the alternative information guidelines set out in National Policy 12-203 – Management Cease Trade Orders by continuing to issue by-weekly default status reports in the form of further news releases which will be filed on www.sedar.com, until the Required Annual Filings have been filed. The Company intends to file, to the extent applicable, its next default status report on or about June 12, 2018.
About Assure Holdings Corp.
Assure Holdings Corp. is a Colorado-based company that works with neurosurgeons and orthopedic spine surgeons to provide a turnkey suite of services that support intraoperative neuromonitoring activities during invasive surgeries. Assure employs its own staff of technologists and uses its own state-of-the-art monitoring equipment, handles 100% of intraoperative neuromonitoring scheduling and setup, and bills for all technical services provided. While Assure focuses primarily on supporting spinal and vascular surgeries, plans are in place to support other classes of medicine that rely on the standard of care that intraoperative neuromonitoring provides. For more information, visit the Company’s website at assureIOM.com.
This news release contains certain statements that may constitute forward-looking information under applicable securities laws. All statements, other than those of historical fact, which address activities, events, outcomes, results, developments, performance or achievements that Assure anticipates or expects may or will occur in the future (in whole or in part) should be considered forward-looking information. Such information may involve, but is not limited to, comments with respect to strategies, expectations, planned operations and future actions of the Company. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or statements formed in the future tense or indicating that certain actions, events or results "may", "could", "would", "might" or "will" (or other variations of the forgoing) be taken, occur, be achieved, or come to pass. Forward-looking information is based on currently available competitive, financial and economic data and operating plans, strategies or beliefs as of the date of this news release, but involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of Assure to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors may be based on information currently available to Assure, including information obtained from third-party industry analysts and other third-party sources, and are based on management's current expectations or beliefs regarding future growth, results of operations, future capital (including the amount, nature and sources of funding thereof) and expenditures. Any and all forward-looking information contained in this press release is expressly qualified by this cautionary statement.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
The securities of the Corporation have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Peter Csapo, Chief Financial Officer
Assure Holdings Corp.
Released May 29, 2018