UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the Quarterly Period Ended | ||
OR | ||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class |
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Large Accelerated Filer ☐ Accelerated Filer ☐
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The number of the registrant’s shares of common stock outstanding as of September 22, 2024, was
ASSURE HOLDINGS CORP.
FORM 10Q
FOR THE QUARTER ENDED JUNE 30, 2024
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASSURE HOLDINGS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and par amounts)
| June 30, |
| December 31, | |||
2024 | 2023 | |||||
(unaudited) | ||||||
ASSETS | ||||||
Current assets |
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Cash | $ | | $ | | ||
Accounts receivable, net |
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Other current assets |
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Earnout from sale of assets | | — | ||||
Assets held for sale |
| — |
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Total current assets |
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Equity method investments |
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Operating lease right of use asset, net | | | ||||
Total assets | $ | | $ | | ||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||
LIABILITIES | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | $ | | $ | | ||
Current portion of debt |
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Current portion of lease liability |
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Current portion of acquisition liability |
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Short-term promissory notes | | — | ||||
Other current liabilities |
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Total current liabilities |
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Lease liability, net of current portion |
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Acquisition liability, net of current portion | — | | ||||
Total liabilities |
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Commitments and contingencies (Note 9) | ||||||
SHAREHOLDERS’ DEFICIT | ||||||
Common stock: $ |
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Additional paid-in capital |
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Accumulated deficit |
| ( |
| ( | ||
Total shareholders’ deficit |
| ( |
| ( | ||
Total liabilities and shareholders’ deficit | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
ASSURE HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2024 |
| 2023 | 2024 |
| 2023 | ||||||
Revenue | $ | | $ | | $ | | $ | | |||
Cost of revenue |
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Gross margin |
| ( |
| ( |
| ( |
| ( | |||
Operating (income) expenses | |||||||||||
General and administrative |
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Gain on settlement of accounts payable | — | — | ( | — | |||||||
Total operating expenses |
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Loss from operations |
| ( |
| ( |
| ( |
| ( | |||
Other income (expenses) | |||||||||||
Income from equity method investments |
| — |
| |
| — | | ||||
Income from ERTC (Employee Retention Tax Credit) | | — | | — | |||||||
Failed merger fees | ( | — | ( | — | |||||||
Interest expense |
| ( |
| ( |
| ( |
| ( | |||
Other income, net |
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| |
| |
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Accretion expense | ( | ( | ( | ( | |||||||
Total other income (expense), net |
| ( |
| ( |
| ( |
| ( | |||
Loss from continuing operations before income taxes |
| ( |
| ( |
| ( |
| ( | |||
Income tax benefit (expense) on continuing operations |
| — |
| ( |
| — |
| | |||
Loss from continuing operations | ( | ( | ( | ( | |||||||
Income (loss) from discontinued operations, net of tax | | ( | | ( | |||||||
Net income (loss) | $ | ( | $ | ( | $ | ( | $ | ( | |||
Income (loss) per share | |||||||||||
Loss from continuing operations, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||
Income (loss) from discontinued operations, basic and diluted | $ | | $ | ( | $ | | $ | ( | |||
Income (loss) per share, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||
Weighted average number of shares used in per share calculation – basic |
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| |
| |
| | |||
Weighted average number of shares used in per share calculation – diluted |
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| |
| |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
ASSURE HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Six Months Ended June 30, | |||||
2024 |
| 2023 | ||||
Cash flows from operating activities | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||
Income from equity method investments |
| — |
| ( | ||
Stock-based compensation |
| ( |
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Depreciation and amortization |
| — |
| — | ||
Amortization of debt issuance costs |
| |
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Accretion expense | | | ||||
Short term promissory notes issued | | — | ||||
Gain on sale of assets | ( | — | ||||
Gain on settlement of account payable | ( | — | ||||
Right of use assets | | | ||||
Deferred income taxes, net |
| — |
| ( | ||
Change in operating assets and liabilities | ||||||
Accounts receivable |
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Accounts payable and accrued liabilities |
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Lease liability | ( | — | ||||
Other assets and liabilities |
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| ( | ||
Operating cash flows from discontinued operations | — | | ||||
Net cash used in operating activities |
| ( |
| ( | ||
Cash flows from investing activities | ||||||
Proceeds from sale of assets | | — | ||||
Distributions received from equity method investments |
| — |
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Net cash provided by investing activities |
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Cash flows from financing activities | ||||||
Proceeds from share issuance, net of share issuance costs | — | | ||||
Repayment of debt |
| ( |
| — | ||
Repayment of short-term promissory notes | ( | — | ||||
Finance lease principal payments |
| ( |
| ( | ||
Payment of acquisition liability |
| ( |
| ( | ||
Net cash (used in) provided by financing activities |
| ( |
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Increase (decrease) in cash |
| ( |
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Cash at beginning of period |
| |
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Cash at end of period | $ | | $ | | ||
Supplemental cash flow information | ||||||
Interest paid | $ | | $ | | ||
Income taxes paid | $ | — | $ | — | ||
Supplemental non-cash investing and financing activities | ||||||
Settlement of accounts payable and other liabilities for common shares | $ | | $ | — | ||
Debenture principal and interest exchanged for common shares | $ | | $ | — | ||
Convertible debt converted to common shares | $ | | $ | — |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
ASSURE HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(in thousands, except share amounts)
(unaudited)
Changes in shareholders’ equity for the three months ended June 30, 2024, and 2023:
|
| Additional |
|
| Total | |||||||||
Common Stock | paid-in | Accumulated | shareholders' | |||||||||||
| Shares |
| Amount |
| Capital |
| deficit |
| equity (deficit) | |||||
Balances, March 31, 2023 |
| | $ | — | $ | | $ | ( | $ | | ||||
Share issuance, net |
| |
| — |
| |
| — |
| | ||||
Stock-based compensation |
| |
| — |
| |
| — |
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Other |
| |
| — |
| — |
| — |
| — | ||||
Net loss |
| — |
| — |
| — |
| ( |
| ( | ||||
Balances, June 30, 2023 |
| | $ | — | $ | | $ | ( | $ | | ||||
Balances, March 31, 2024 | | $ | — | $ | | $ | ( | $ | ( | |||||
Stock-based compensation |
| | — | ( | — |
| ( | |||||||
Debenture principal and interest settled in common shares |
| | — | | — |
| | |||||||
Accounts payable settled in common shares |
| | | | — |
| | |||||||
Other liabilities settled in common shares |
| | — | | — |
| | |||||||
Net loss |
| — |
| — |
| — |
| ( |
| ( | ||||
Balances, June 30, 2024 |
| | $ | | $ | | $ | ( | $ | ( |
Changes in shareholders’ equity for the six months ended June 30, 2024, and 2023:
|
| Additional |
|
| Total | |||||||||
Common Stock | paid-in | Accumulated | shareholders' | |||||||||||
| Shares |
| Amount |
| Capital |
| deficit |
| equity (deficit) | |||||
Balances, December 31, 2022 |
| | $ | — | $ | | $ | ( | $ | | ||||
Share issuance, net |
| | — | | — |
| | |||||||
Stock-based compensation |
| |
| — |
| |
| — |
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Other |
| |
| — |
| — |
| — |
| — | ||||
Net loss |
| — |
| — |
| — |
| ( |
| ( | ||||
Balances, June 30, 2023 | | $ | — | $ | | $ | ( | $ | | |||||
Balances, December 31, 2023 |
| | $ | — | $ | | $ | ( | $ | ( | ||||
Adoption of new accounting standard ASU 2006-20 | — | — | ( | | ( | |||||||||
Stock-based compensation |
| |
| |
| ( |
| |
| ( | ||||
Convertible debt converted into common shares | | — | | — | | |||||||||
Debenture principal and interest settled in common shares |
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Accounts payable settled in common shares |
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Other liabilities settled in common shares |
| |
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Net loss |
| |
| |
| |
| ( |
| ( | ||||
Balances, June 30, 2024 |
| | $ | | $ | | $ | ( | $ | ( |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.NATURE OF OPERATIONS
Overview
Assure has been a provider of Intraoperative neuromonitoring (“IONM”). The Company delivered a turnkey suite of clinical and operational services to support surgeons and medical facilities during invasive surgical procedures. IONM has been well established as a standard of care and risk mitigation tool for various surgical verticals such as neurosurgery, spine, cardiovascular, orthopedic, ear, nose, and throat (“ENT”), and other surgical procures that place the nervous system at risk. Assure’s mission was to provide exceptional surgical care and help make invasive surgeries safer. Our strategy focused on utilizing best of class personnel and partners to deliver outcomes that are beneficial to all stakeholders including patients, surgeons, hospitals, insurers, and stockholders.
During each procedure, Assure provided two types of services, the Technical Component and Professional Component of IONM. Our in-house Interoperative Neurophysiologists (“INP”) provide the Technical Component IONM services from the operating room throughout the procedure, while telehealth-oriented supervising practitioners provide a level of redundancy and risk mitigation in support of the onsite INPs and the surgical team. In addition, Assure offered a comprehensive suite of IONM services, including scheduling the INP and supervising practitioner, real time monitoring, patient advocacy and subsequent billing and collecting for services provided.
Historically, the foundation of Assure’s business has been providing the Technical Component of IONM via our INP staff. We employed highly trained INPs, which provided a direct point of contact in the operating room during the surgeries to relay critical information to the surgical team. In this one-to-one business model, Assure paired a team of INPs with third-party surgeons to promote a level of familiarity, comfort, and efficiency between the surgeon and the INP. Our INPs monitored the surgical procedure using state of the art, commercially available, diagnostic medical equipment. The success of our service depended upon the timely recognition and successful interpretation of the data signals by our INPs and remote supervisors to quickly determine if the patient was experiencing a deficiency and advised the surgeon to determine if surgical intervention is required to positively impact the patient and surgery.
During September 2023, the Company’s Board of Directors initiated a process to explore strategic alternatives for the business. In consultation with financial and legal advisors, a comprehensive strategic review process began immediately and evaluated a broad range of options to maximize shareholder value. As part of this review process, Assure’s board agreed to conduct an auction process for the sale of its clinical operations. On March 11, 2024, the Company, and its subsidiaries, Assure Neuromonitoring, LLC, Assure Networks, LLC, Assure Networks Texas Holdings, LLC and Assure Networks Texas Holdings II, LLC (collectively, the “Sellers’) entered into an asset purchase agreement (the “APA”) with National Neuromonitoring Services, LLC (“Purchaser”). Upon the terms and subject to the satisfaction of the conditions described in the APA, the Company and the Sellers sold to Purchaser certain assets of the Sellers and Purchaser assumed certain liabilities and obligations of the Sellers (the “Sale Transaction”). See Note 3 for a complete disclosure of the sale of assets and discontinued operations. On March 26, 2024, Assure closed the sale transaction resulting in the disposal of most of the Company’s clinical operations, equipment, and contracts. As of the filing date of this Quarterly Report on Form 10-Q, Assure is providing IONM services in limited markets, primarily Arizona and Montana.
Corporate Structure
Assure Holdings Corp.
Assure Holdings Corp., formerly Montreux Capital Corp, a Canadian Capital Pool Company (“Montreux”), was formed under the British Columbia Business Corporations Act in British Columbia, Canada on September 24, 2007, is a Nevada corporation, existing under the laws of the State of Nevada pursuant to its Articles of Domestication filed with the Nevada Secretary of State on May 15, 2017.
6
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Assure Holdings, Inc.
Assure Holdings, Inc. is a direct subsidiary is Assure Holdings, Corp., is a Colorado corporation, formed under the laws of the State of Colorado on November 7, 2016. Assure Holdings, Inc. became a wholly owned subsidiary of Assure Holdings Corp. on May 15, 2017 when Assure Holdings Inc. and its stockholders and Montreux and its stockholders entered into a Share Exchange Agreement pursuant to which the stockholders of Assure Holdings, Inc. received shares of Montreux as consideration for their assignment of their shares in Assure Holdings, Inc. to Montreux in the “Qualifying Transaction” under the rules of the TSX Venture Exchange (“TSX-V”). One of the primary objectives of the Qualifying Transactions was to facilitate our going public and listing on the TSX-V.
Assure Holdings, Inc. is the sole member of Assure Neuromonitoring, LLC (“Assure Neuromonitoring”), a Colorado limited liability company formed under the laws of the state of Colorado on August 25, 2015. Assure Neuromonitoring became a wholly owned subsidiary of Assure Holdings, Inc. on November 7, 2016, when its members assigned their interest in Assure Neuromonitoring to Assure Holdings, Inc. for shares of Assure Holdings, Inc.
Assure Holdings, Inc. is the sole member of Assure Networks, LLC (“Assure Networks”), a Colorado limited liability company formed under the laws of the state of Colorado on November 2, 2016. Assure Networks became a wholly owned subsidiary of Assure Holdings, Inc. on November 7, 2016, when its members assigned their interest in Assure Networks to Assure Holdings, Inc. for shares of Assure Holdings, Inc.
Assure Holdings, Inc. is the sole member of Assure Equipment Leasing, LLC (“Assure Equipment Leasing”), a Colorado limited liability company formed under the laws of the state of Colorado on April 20, 2020.
Assure Neuromonitoring, LLC.
Assure Neuromonitoring, LLC exists for the purpose of facilitating the performance of the Technical Component of IONM support to surgeons and patients. This includes a Technical Component via our INP staff who utilize technical equipment and technical training to monitor EEG, EMG, and a number of complex modalities during surgical procedures to pre-emptively notify the underlying surgeon of any nerve related issues that are identified.
Assure Networks, LLC.
Assure Networks, LLC exists for the purpose of facilitating the performance of the Professional Component of IONM support to surgeons and patients. Assure Networks provides off-site tele-neurology services for IONM. These services are provided by and through the Assure Networks, LLC’s subsidiaries, which own interest in entities that either (i) directly perform the Professional Component through third-party contracted neurologists or oversight reading physicians, or (ii) provide management services for entities owned by licensed physicians. These oversight services support the INP and strengthen our capacity to pre-emptively notify the underlying surgeon of any nerve related issues that are identified during a surgical procedure.
Current Strategy
As of June 30, 2024, the Company had
7
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Financial Reporting and Classification
As a result of the corporate actions previously described, the Company’s technical and professional services met the criteria to be considered “held for sale” as that term is defined in accounting principles generally accepted in the United States (“GAAP”). Accordingly, the assets associated with these services are classified and reflected in the condensed consolidated balance sheets as “held for sale” as of December 31, 2023, and their results of operations are classified as “discontinued operations” in the condensed consolidated statements of operations for the three and six months ended June 30, 2024, and 2023. Certain financial disclosures including major components of the assets and results of operations related to discontinued operations are provided in Note 3. Our continuing operations consists of our billing and collections services and costs to maintain our public company listing and are presented as such for all periods presented herein and until such time a strategic transaction is completed.
Merger Agreement
On February 12, 2024, Assure entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Danam and Assure Merger Corp., a newly formed wholly owned subsidiary of Assure (“Assure Merger”). Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, including approval of the transaction by the stockholders of Assure and Danam, Assure Merger would have merged with and into Danam (the “Merger”), with Danam surviving the Merger as a wholly-owned subsidiary of Assure. The Merger was intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.
The parties were able to terminate the Merger Agreement upon mutual consent. Either party may have terminated the Merger Agreement (i) if any of the representations or warranties of the other party set forth in the Merger Agreement shall not be true and correct or if the other party failed to perform any covenant or agreement on the part of such party set forth in the Merger Agreement, (ii) the Merger was not consummated by the outside date (May 15, 2024), (iii) there was a governmental order prohibiting the Merger, and (iv) failure to obtain the stockholder vote. Danam was able to terminate the Merger Agreement if (i) the Board changes its recommendation to stockholders with respect to the Merger, (ii) the Board failed to reaffirm its recommendation to stockholders with respect to the Merger following a tender offer for Assure, (iii) the Board failed to reaffirm its recommendation to stockholders with respect to the merger following a publicly announced acquisition proposal for Assure, (iv) Assure breaches its non-solicitation provisions, or (v) the Board resolved to do any of the above. Assure was able to terminate the Merger Agreement for acceptance of a superior proposal.
In the event Danam or Assure terminated the Merger Agreement pursuant to certain of the sections set forth above, Assure was required to pay Danam a termination fee of $
On April 8, 2024, the Company entered into a partial waiver and amendment agreement (the “Waiver Agreement”) which waived and amended certain provisions of the Merger Agreement.
Pursuant to the terms and conditions of the Waiver Agreement, Danam partially waived its right to terminate the Merger Agreement pursuant to breaches of Section 6.8(a) and 6.20 of the Merger Agreement. The Waiver Agreement required the following:
a. | Assure obtain the Preliminary Shareholder Vote required by Section 6.20 of the Merger Agreement no later than April 30, 2024; |
b. | Assure file the proxy statement and registration statement on Form S-4 required by the Section 6.8(a) Covenant no later than April 26th, 2024; |
c. | Assure issues Danam a $ |
d. | Assure receive shareholder approval for the Merger five (5) Business Days prior to the Termination Date and effects the Reverse Split prior to the Termination Date; |
e. | Assure was not in default under the Convertible Note; and |
f. | Assure was not in breach of any other covenants set forth in the Merger Agreement, subject to any necessary notice requirements and cure period set forth therein. |
8
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Further the Waiver Agreement amended the Merger Agreement to change the definition of “Termination Date” to mean July 22, 2024.
In connection with the Waiver Agreement, on April 8, 2024, the Company issued a convertible note to Danam in principal amount of $
On June 11, 2024, Assure delivered a letter to Danam pursuant to which Assure terminated the Merger Agreement with Danam and Assure Merger, pursuant to Section 8.1(b) thereof. According to the terms of the Merger Agreement, Danam may be entitled to a $
Pursuant to Section 8.1(b) of the Merger Agreement, Assure terminated the Merger Agreement based on Assure’s assertion of certain misrepresentations by Danam regarding its representations and warranties set form in Article 4 of the Merger Agreement, including but not limited to, its representations regarding its financial condition and ability to complete the Acquisition Transactions, and the Company’s assertion that Danam was failing to perform its covenants under the Merger Agreement, including but not limited to its covenant to meet the closing condition to complete the Acquisition Transactions prior to or concurrent with the closing of the Merger and such breaches could not be cured within the time periods set forth in Section 8.1(b) thereof.
As a result of the termination of the Merger Agreement, in addition to reserving its right to seek other remedies, pursuant to Section 8.3(c) of the Merger Agreement, Assure is seeking reimbursement for all of its fees, costs and expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants) in relation to the Merger Agreement and its performance thereunder.
As of June 30, 2024, the Company has recorded $
2.BASIS OF PRESENTATION
Basis of Presentation and Principles of Consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America. The Company’s financial statements were prepared on a consolidated basis and include the accounts of the Company and its wholly owned subsidiaries, as well as an entity in which the Company has a controlling financial interest. All intercompany accounts and transactions have been eliminated in consolidation.
9
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Unaudited Interim Financial Statements
The accompanying unaudited interim condensed consolidated financial statements are presented in accordance with the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. The amounts as of December 31, 2023, have been derived from the Company’s annual audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2023, filed on April 26, 2024 (the “Form 10-K”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, which consist of normal recurring adjustments, necessary to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Form 10-K. The results of operations for the three and six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024, or any future period and the Company makes no representations related thereto.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The accounting estimates and assumptions that require management’s most significant, difficult, and subjective judgment include the recognition and measurement of patient service fees, net, hospital, management and other revenue, the collectability of accounts receivable, the fair value measurements of goodwill and intangible assets, the assessment of the recoverability of goodwill, the assessment of useful lives and recoverability of intangible assets and long-lived assets, fair value measurement of earnout from sale of assets, recognition and measurement of current and deferred income tax assets and liabilities, the assessment of unrecognized tax benefits, the valuation and recognition of stock-based compensation expense, among others. Actual results experienced by the Company may differ from management’s estimates. Revisions to accounting estimates are recognized in the period in which the estimate is revised and also in future periods when the revision affects both current and future periods. Significant assumptions, judgments, and estimates that management has made at the end of the reporting period that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following: patient service fees, net; hospital, management, and other revenue; accounts receivable; and due to/from related parties.
Liquidity and Going Concern
The Company’s current cash balance and estimated cash from operations for the next 12 months is not sufficient to meet the Company’s working capital needs for the next 12 months, which raised substantial doubt as to the Company’s ability to continue as a going concern. The Company intends to seek equity or debt financing and have implemented significant cost cutting measures to mitigate its going concern. Such financings may include the issuance of shares of common stock, warrants to purchase common stock, convertible debt or other instruments that may dilute current stockholders. Financing may not be available on acceptable terms depending on market conditions at the time the Company seeks financing. The accompanying consolidated financial statements do not include any adjustments that might become necessary should the Company be unable to continue as a going concern.
Common Stock Reverse Split
10
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Accounting Policies
There have been no changes, except as noted below, to the Company’s significant accounting policies or recent accounting pronouncements during the three and six months ended June 30, 2024, as compared to the significant accounting policies disclosed in the 10-K for the year ended December 31, 2023, as filed on April 26, 2024.
Sale of Assets
As a result of the sale of assets, disclosed in notes 1 and 3, the Company has recorded contingent consideration receivable in the amount of $
Accounting Policies Recently Adopted
In August 2020, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 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. This guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within the year. The Company adopted the standard on January 1, 2024 utilizing the modified retrospective method, that resulted in a reclassification of a charge of $
Recent Accounting Pronouncements Accounting Standards Not Yet Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires significant segment expenses and other segment related items to be disclosed on an interim and annual basis. The new disclosure requirements are also applicable to companies with a single reportable segment. This guidance is effective on a retrospective basis for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the disclosures within its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of specific categories in the effective tax rate reconciliation and additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions. This guidance is effective on a prospective or retrospective basis for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the disclosures within its consolidated financial statements.
Reclassifications
Certain amounts for the three and six months ended June 30, 2023, have been reclassified to conform to the 2024 presentation as it relates to assets held for sale and discontinued operations. Total assets, liabilities, equity, and net loss did not change for the prior periods due to the reclassifications.
11
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Credit Risk
Credit risk arises from cash and accounts receivables. The exposure to credit risk was as follows (in thousands):
| June 30, |
| December 31, | |||
2024 | 2023 | |||||
Cash | $ | | $ | | ||
Accounts receivable, net |
| |
| | ||
Total | $ | | $ | |
Cash
Cash is held in financial institutions with good standing, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.
Accounts receivable
On January 1, 2023, the Company adopted Accounting Standards Update No, 2016-13, Measurement of Credit Losses on Financial Instruments, and its related amendments using the prospective method. The new standard requires the use of a current expected credit loss impairment model to develop and recognize credit losses for financial instruments at amortized cost when the asset is first originated or acquired, and each subsequent reporting period.
The cash collection cycles of the Company may be protracted due to the majority of its revenue being billed to third-party commercial insurance payors on an out-of-network basis. The collection cycle for IONM to out-of-network payors may require an extended period to maximize reimbursement on claims, which results in accounts receivable growth tied to the Company’s overall growth in technical and professional service revenues. The collection cycle may consist of multiple payments from out-of-network private insurance payors, as the collection process entails multiple rounds of denials, underpayments, appeals and negotiations as part of the process to maximize the reimbursement yield on claims. Based on the Company’s historical experience, claims generally become uncollectible once they are aged greater than
3. DISCONTINUED OPERATIONS
During September 2023, the Company’s Board of Directors initiated a process to explore strategic alternatives for the business. In consultation with financial and legal advisors, a comprehensive strategic review process began immediately and evaluated a broad range of options to maximize shareholder value. As part of this review process, Assure’s board of directors agreed to conduct an auction process for the sale of its clinical operations. As of the filing date of this Quarterly Report on Form 10Q, Assure is providing limited IONM services in Arizona and Montana.
On March 26, 2024, the Company closed the sale of certain clinical assets with National Neuromonitoring Services, LLC for up to $
12
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
As a result of the corporate actions described above, the Company’s technical and professional services meet the criteria to be considered “held for sale.” Accordingly. the assets associated with these services were classified and reflected on our consolidated balance sheets as “held for sale” as of December 31, 2023, and their results of operations are classified as “discontinued operations” in the condensed consolidated statements of operations for the three and six months ended June 30, 2024, and 2023. Since the sale of clinical assets closed on March 26, 2024, the assets held for sale balance was
The following table presents the major classes of assets of the discontinued operations as of December 31, 2023 (stated in thousands):
| December 31, | ||
2023 | |||
Fixed assets | $ | | |
Finance lease right of use asset, net | | ||
Intangibles, net |
| | |
Goodwill |
| | |
Total assets | $ | |
The following table summarizes the results of operations of the discontinued operations (stated in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2024 |
| 2023 | 2024 |
| 2023 | ||||||
Revenue |
|
|
|
|
|
| |||||
Technical services | $ | | $ | | $ | | $ | | |||
Professional services | | | | | |||||||
Other |
| ( |
| |
| |
| | |||
Revenue, net | | | | | |||||||
Cost of revenues, excluding depreciation and amortization |
| |
| |
| |
| | |||
Gross margin |
| |
| ( |
| |
| ( | |||
Operating expenses | |||||||||||
Sales and marketing |
| |
| |
| |
| | |||
Depreciation and amortization |
| — |
| |
| — |
| | |||
Total operating expenses |
| |
| |
| |
| | |||
Income from discontinued operations |
| |
| ( |
| |
| ( | |||
Other income (expense) | |||||||||||
Gain on sale of assets | — | — | | — | |||||||
Interest expense |
| — |
| ( |
| ( |
| ( | |||
Total other income (expense) |
| — |
| ( |
| |
| ( | |||
Income from discontinued operations | | ( | | ( | |||||||
Income tax expense | — | — | — | — | |||||||
Net income from discontinued operations | $ | | $ | ( | $ | | $ | ( |
4. REVENUE
The Company disaggregates revenue between continuing operations and discontinued operations. Revenue streams from contracts with customers depicts the nature, amount, timing and uncertainty of its revenue and cash flows as affected by economic factors. Commercial insurance consists of neuromonitoring cases whereby a patient has healthcare insurance that we bill. Facility billing consists of neuromonitoring cases whereby the Company has an agreement to bill the medical facility for patients that do not have health care insurance.
13
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The Company does not have any contract assets or contract liabilities as of or during the six months ended June 30, 2024, or 2023 or as of December 31, 2023.
The Company’s revenue is as follows (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2024 |
| 2023 | 2024 |
| 2023 | ||||||
Managed service agreements and other | $ | | $ | | $ | | $ | |
Accounts Receivable
A summary of the accounts receivable, net, by revenue stream is as follows (in thousands):
June 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Technical service | $ | |
| $ | | |
Professional service | | | ||||
Arbitration receivable |
| |
| — | ||
Total receivables, net | $ | | $ | |
The concentration of accounts receivable, net, by payor as a percentage of total accounts receivable is as follows:
As of June 30, | As of December 31, | |||||
2024 |
| 2023 | ||||
Commercial insurance | | % | | % | ||
Facility billing | — | % | | % | ||
Total |
| | % | | % |
5. LEASES
Under ASC 842, Leases, a contract is a lease, or contains a lease, if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. To determine whether a contract conveys the right to control the use of an identified asset for a period of time, an entity shall assess whether, throughout the period of use, the entity has both of the following: (a) the right to obtain substantially all of the economic benefits from the use of the identified asset; and (b) the right to direct the use of the identified asset. The Company does not assume renewals in the determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Lease agreements generally do not contain material residual value guarantees or material restrictive covenants.
Leases with an initial term of 12 months or less are not recorded in the condensed consolidated balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. As a practical expedient, the Company elected not to separate non-lease components for the corporate office facility (e.g., common-area maintenance costs) from lease components (e.g., fixed payments including rent) and instead to account for each separate lease component and its associated non-lease components as a single lease component.
Operating leases
The Company leases a corporate office facility in Denver, Colorado under an operating lease which expires October 31, 2025. The Company entered a sublease for this space during November 2023 for the remaining lease term. The incremental borrowing rate for this lease was
14
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
During November 2023, the Company entered into a month-to-month lease for corporate office space in Denver, Colorado which expired on June 30, 2024, and was renewed under a new month-to-month lease expiring on August 31, 2024. The Company does not plan to review this lease.
During April 2023, the Company entered a lease for corporate offices space in Houston, Texas, which expires May 2025. The Company set a notice of termination in April 2024. The incremental borrowing rate for this lease was
Finance leases
The Company historically leased medical equipment under various financing leases with stated interest rates ranging from
The condensed consolidated balance sheets include the following amounts for right-of-use (“ROU”) assets as of June 30, 2024, and December 31, 2023 (in thousands):
| June 30, | December 31, | ||||
2024 |
| 2023 | ||||
Operating |
| $ | |
| $ | |
The following are the components of lease cost for operating and finance leases (in thousands). Finance lease costs are included as a component of loss from discontinued operations in the condensed consolidated statements of operations for the periods presented.
Six Months Ended June 30, | ||||||
2024 |
| 2023 | ||||
Operating leases: | ||||||
Amortization of ROU assets | $ | | $ | | ||
Interest on lease liabilities | | | ||||
Total operating lease cost, included in general and administrative expenses | | | ||||
Finance leases: | ||||||
Amortization of ROU assets | — | | ||||
Interest on lease liabilities | | | ||||
Total finance lease cost, included in discontinued operations | | | ||||
Total lease cost | $ | | $ | |
During the six months ended June 30, 2024, the Company incurred operating and finance lease principal payments of $
The following are the weighted average lease terms and discount rates for operating and finance leases:
As of | As of | ||||
| June 30, 2024 | June 30, 2023 | |||
Weighted average remaining lease term (years): | |||||
Operating leases |
| ||||
Finance leases |
| NA | |||
Weighted average discount rate (%): | |||||
Operating leases |
| | | ||
Finance leases |
| NA | |
15
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Future minimum lease payments and related lease liabilities as of June 30,2024, were as follows (in thousands):
|
|
| Total | ||||||
Operating | Lease | ||||||||
Leases | Liabilities | ||||||||
Remainder of 2024 | $ | | $ | — | $ | | |||
2025 |
| |
| — |
| | |||
| |
| — |
| | ||||
Less: imputed interest |
| |
| — |
| | |||
| — | | |||||||
| |
| — |
| | ||||
$ | | $ | — | $ | |
Future minimum lease payments exclude short-term leases as well as payments to landlords for variable common area maintenance, insurance and real estate taxes.
6. DEBT
The Company’s debt obligations are summarized as follows:
June 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Face value of convertible debt | $ | | $ | | ||
Less: principal converted to common shares | ( | ( | ||||
Less: deemed fair value ascribed to warrants and beneficial conversion feature |
| ( |
| ( | ||
Plus: accretion of implied interest |
| | | |||
Total convertible debt |
| |
| | ||
Face value of Centurion debt | | | ||||
Less: deemed fair value ascribed to warrants | ( | ( | ||||
Plus: accretion of implied interest | | | ||||
Less: unamortized debt issuance costs | ( | ( | ||||
Total Centurion debt |
| |
| | ||
Total debt |
| |
| | ||
Less: current portion of debt |
| ( |
| ( | ||
Long-term debt | $ | — | $ | — |
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 $
16
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2024 |
| 2023 | 2024 |
| 2023 | ||||||
Accretion expense |
|
|
|
|
|
| |||||
Convertible debt | $ | — | $ | | $ | | $ | | |||
Centurion debt |
| |
| |
| | | ||||
$ | | $ | | $ | | $ | | ||||
Debt issuance cost amortization |
|
|
|
|
|
| |||||
Centurion debt | $ | | $ | | $ | | $ | | |||
Interest paid | |||||||||||
Convertible debt | $ | — | $ | | $ | — | $ | | |||
Centurion debt |
| — |
| |
| |
| | |||
$ | — | $ | | $ | | $ | |
As of June 30, 2024, future minimum principal payments are summarized as follows (in thousands):
| Convertible |
| ||||
| Debt |
| Debenture | |||
Principal due in 2024 | $ | | $ | | ||
Less: fair value ascribed to conversion feature and warrants |
| ( |
| ( | ||
Plus: accretion and implied interest |
| |
| | ||
Less: debt issuance costs | — | ( | ||||
$ | | $ | |
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
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 $
17
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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,
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 $
The Credit Facility originally matured in June 2025 and bore interest at the rate of the greater of
During April 2024, the Company entered into an exchange agreement with Centurion whereby the Company issued
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 $
Short-Term Promissory Notes
During January 2024, the Company entered short-term promissory notes to settle potential legal action for a total of $
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 $
18
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
7. SHAREHOLDERS’ DEFICIT
Common stock
Common stock:
On May 14, 2024, the Company reconvened its previously adjourned special meeting of stockholders for which a total of
Reverse Share Splits
During March 2023, the total number of shares of common stock authorized by the Company was reduced from
During July 2024, the total number of shares of common stock authorized by the Corporation was reduced from
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
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.
Nasdaq delisting
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”).
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.
19
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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.
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.
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
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.
On July 8, 2024, the Company effectuated an
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,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.
20
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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.
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:
● | a limited availability of market quotations for our securities; |
● | reduced liquidity for our securities; |
● | a determination that the common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
● | a limited amount of news and analyst coverage; and |
● | a decreased ability to issue additional securities or obtain additional financing in the future. |
2023 Share Issuances
During March 2023, the Company completed a private placement for
During May 2023, the Company completed its pricing of an underwritten public offering of
The gross proceeds to the Company from the offering of approximately $
The Company granted the underwriters in the offering a
During June 2023, the Company issued
2024 Share Issuances
During March 2024, the Company issued
During March 2024, the Company entered into exchange agreements with certain Convertible Debenture holders, whereby the Company agreed to issue
During April 2024, the Company entered into an exchange agreement with Centurion whereby the Company agreed to issue
21
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
On April 8, 2024, the Company entered into a subscription agreement with Innovation pursuant to which Innovation agreed to the cancellation of $
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
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.
As of June 30, 2024, there was
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:
Options Outstanding | ||||||||||
|
| Weighted |
| Weighted |
| |||||
Average | Average | |||||||||
Number of | Exercise | Remaining | Aggregate | |||||||
Shares Subject | Price Per | Contractual | Intrinsic Value | |||||||
to Options | Share | Life (in years) | (in thousands) | |||||||
Balance at December 31, 2022 |
| $ | |
|
|
| ||||
Options granted |
| | $ | | ||||||
Options canceled |
| ( | $ | | ||||||
Balance at December 31, 2023 |
| | $ | | ||||||
Options expired | ( | $ | | |||||||
Options canceled |
| ( | $ | | ||||||
Balance at June 30, 2024 |
| | $ | |
|
| $ | — | ||
Vested and exercisable at June 30, 2024 |
| | $ | |
|
| $ | — |
22
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following table summarizes information about stock options outstanding and exercisable under the Company’s Stock Option Plan at June 30, 2024:
Options Outstanding | Options Exercisable | |||||||||
| Weighted |
|
|
| ||||||
Average | Weighted | Weighted | ||||||||
Remaining | Average | Average | ||||||||
Number of | Contractual | Exercise Price | Number | Exercise Price | ||||||
Outstanding | Life (in years) | Per Share | Exercisable | Per Share | ||||||
| $ | |
| | $ | | ||||
$ | | | $ | | ||||||
$ | | | $ | | ||||||
$ | | | $ | | ||||||
| $ | |
| | $ | |
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 $
23
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Warrants
The following table summarizes warrant activity during the six months ended June 30, 2024.
Balance at December 31, 2023 |
| |
Warrants expired |
| ( |
Balance at June 30, 2024 |
| |
The following table summarizes warrants outstanding by transaction type as of June 30, 2024:
Debenture, warrants issued | | |
Other warrants issued | | |
December 2020 equity financing warrants issued | | |
Total warrants outstanding |
| |
The Debenture warrants were cancelled subsequent to June 30, 2024, in connection with the Centurion debenture settlement disclosed in Notes 6 and 10.
8. LOSS PER SHARE
The following table sets forth the computation of basic and fully diluted loss per share for the three and six months ended June 30, 2024, and 2023 (in thousands, except per share amounts):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2024 |
| 2023 | 2024 |
| 2023 | |||||||
Loss from continuing operations | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Income (loss) from discontinued operations |
| |
| ( |
| |
| ( | ||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Loss from continuing operations per share, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Income (loss) from discontinued operations per share, basic and diluted |
| |
| ( |
| |
| ( | ||||
Loss per share, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Basic weighted average common stock outstanding |
| |
| |
| |
| | ||||
Dilutive weighted average common stock outstanding |
| |
| |
| |
| |
Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income loss per share is computed using the treasury stock method to calculate the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential dilutive common shares include incremental common shares issuable upon the exercise of stock options, less shares from assumed proceeds. The assumed proceeds calculation includes actual proceeds to be received from the employee upon exercise and the average unrecognized stock compensation cost during the period.
Stock options to purchase
24
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
9. COMMITMENTS AND CONTINGENCIES
Indemnifications
The Company is a party to a variety of agreements in the ordinary course of business under which it may be obligated to indemnify third parties with respect to certain matters. These obligations include, but are not limited to, contracts entered into with physicians where the Company agrees, under certain circumstances, to indemnify a third party, against losses arising from matters including but not limited to medical malpractice and other liability. The impact of any such future claims, if made, on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to final outcome of these potential claims.
As permitted under Nevada law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company believes, given the absence of any such payments in the Company’s history, and the estimated low probability of such payments in the future, that the estimated fair value of these indemnification agreements is immaterial. In addition, the Company has directors’ and officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable the Company to recover any payments, should they occur.
In April 2022, the U.S. Department of Justice (“DOJ)” issued Civil Investigative Demands which seek information with respect to a civil investigation under the Anti-kickback Statute and the False Claims Act. The Company voluntarily contacted the DOJ offering to provide any materials needed in the investigation and to answer any questions. While the Company’s policy during the relevant time was to not seek payments from federal health care programs, the third-party billing company utilized at that time submitted some claims to Medicare Advantage plans administered by commercial insurance companies. The Company worked diligently to ensure that payments from Medicare Advantage plans were returned to the commercial insurance companies and believes it has returned substantially all such payments that it has discovered, totaling approximately $
During February 2024, a Settlement Agreement (“Settlement Agreement”) was executed between Assure and the DOJ.
In exchange for a payment of approximately $
10. SUBSEQUENT EVENT
Subscription Agreements
Since June 30, 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 at a deemed value per share ranging from $
Nasdaq
On July 22, 2024, the Nasdaq Stock Market LLC (“Nasdaq”) notified the Company that the Nasdaq Hearings Panel (the “Panel”) determined to delist the Company’s common stock.
25
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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. See Note 7 for complete disclosure.
Reverse Stock Split
As of July 8, 2024, the total number of shares of common stock authorized by the Corporation was reduced from
All options, warrants and other convertible securities of the Company outstanding immediately prior to the Reverse Split 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
Immediately after the Reverse Split, each stockholder’s percentage ownership interest in the Company and proportional voting power remained virtually unchanged, except for minor changes and adjustments that will result from rounding fractional shares into whole shares. The rights and privileges of the holders of shares of Common Stock were substantially unaffected by the Reverse Split.
Equity Purchase Agreement
On July 31, 2024, the Company signed an equity purchase agreement with 0915223 B.C. Ltd., a British Columbia corporation (the “Buyer”), pursuant to which the Buyer agreed to purchase all the equity interests of certain of the Company’s subsidiaries (the “Subsidiaries”) in consideration of the Buyer assuming certain indebtedness of the Subsidiaries totaling approximately $
Securities Purchase Agreement, Bridge Note and Promissory Note
On August 2, 2024, the Company entered into
The Bridge Note is subject to a one-time interest charge of
26
ASSURE HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The Bridge Note will be deemed in default upon the occurrence of a number of events set forth therein, including (i) failure to pay principal and interest when due and payable, (ii) breach of covenants, (iii) breach of representations and warranties, (iv) the Company making an assignment for the benefit of creditors, (v) the bankruptcy, insolvency, reorganization or liquidation of the Company, (vi) maintaining the listing of the Company’s common stock on the OTC Markets or comparable exchange, (vii) failure to comply with the reporting obligations of the Company under the Securities Exchange Act of 1934, (viii) any cessation of operations of the Company, (ix) any restatement of the financial statements of the Company, (x) replacement of the transfer agent, or (xi) cross-default in any other debts of the Company.
Upon the occurrence of an event of default under the Bridge Note, the Bridge Note will become immediately due and payable at
The Promissory Note is subject to a one-time interest charge of
The Promissory Note will be deemed in default upon the occurrence of a number of events set forth therein, including (i) failure to pay principal and interest when due and payable, (ii) breach of covenants, (iii) breach of representations and warranties, (iv) the Company making an assignment for the benefit of creditors, (v) the bankruptcy, insolvency, reorganization or liquidation of the Company, (vi) maintaining the listing of the Company’s common stock on the OTC Markets or comparable exchange, (vii) failure to comply with the reporting obligations of the Company under the Securities Exchange Act of 1934, (viii) any cessation of operations of the Company, (ix) any restatement of the financial statements of the Company, (x) replacement of the transfer agent, or (xi) cross-default in any other debts of the Company.
Upon the occurrence of an event of default under the Promissory Note, the Promissory Note will become immediately due and payable at
Legal Settlement
On August 6, 2024, the Company entered into a settlement agreement for $
27
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached unaudited condensed consolidated financial statements and notes thereto, and with our audited financial statements and notes thereto for the year ended December 31, 2023, found in the annual report on Form 10-K filed by Assure Holdings Corp. on April 26, 2024 (the “Form 10-K”)
This Quarterly Report contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this Annual Report, including statements regarding the Company’s future financial condition, results of operations, plans, objectives, expectations, future performance, business operations and business prospects, are forward-looking statements and may be identified by the use of words including, but not limited to the following; “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “continue,” or the negative thereof or other variations thereon or comparable terminology.
These forward-looking statements are based on our management’s current plans and expectations and are subject to uncertainty and changes in circumstances. We cannot assure you that future developments affecting us will be those that we have anticipated or occur in the manner we expected. Actual results may differ materially from these expectations due to changes in expected future political, legal, economic, business, competition, market and regulatory conditions and other factors and assumptions of management in making such statements, many of which are beyond our control.
Although forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks, uncertainties, and changes in condition, significance, value, and effect, including those discussed under the heading “Risk Factors” in our annual report on Form 10-K and other documents we file from time to time with the Securities and Exchange Commission (“SEC”), such as our quarterly reports on Form 10-Q and our current reports on Form 8-K. Such risks, uncertainties and changes in condition, significance, value, and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report and are based on information currently and reasonably known to us. We undertake no obligation to revise or update any forward-looking statements to reflect any event or circumstance that may arise after the date of this Quarterly Report, other than as required by law. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
As used in this Quarterly Report, references to “Assure,” the “Company,” “we,” “our,” or “us” mean Assure Holdings Corp., and consolidated subsidiaries, or any one or more of them, as the context requires.
OVERVIEW
Assure is a provider of Intraoperative neuromonitoring (“IONM”). The Company delivers a turnkey suite of clinical and operational services to support surgeons and medical facilities during invasive surgical procedures. IONM has been well established as a standard of care and risk mitigation tool for various surgical verticals such as neurosurgery, spine, cardiovascular, orthopedic, ear, nose, and throat (“ENT”), and other surgical procures that place the nervous system at risk. Assure’s mission is to provide exceptional surgical care and help make invasive surgeries safer. Our strategy focuses on utilizing best of class personnel and partners to deliver outcomes that are beneficial to all stakeholders including patients, surgeons, hospitals, insurers, and stockholders.
During each procedure, Assure provides two types of services, the Technical Component and Professional Component of IONM. Our in-house Interoperative Neurophysiologists (“INP”) provide the Technical Component IONM services from the operating room throughout the procedure, while telehealth-oriented supervising practitioners provide a level of redundancy and risk mitigation in support of the onsite INPs and the surgical team. In addition, Assure offers a comprehensive suite of IONM services, including scheduling the INP and supervising practitioner, real time monitoring, patient advocacy and subsequent billing and collecting for services provided.
We have made substantial investments in our training and development of clinical staff and have created a training program to rigorously train new INPs.
28
The foundation of Assure’s business has been providing the Technical Component of IONM via our INP staff. We employ highly trained INPs, which provide a direct point of contact in the operating room during the surgeries to relay critical information to the surgical team. In this one-to-one business model, Assure pairs a team of INPs with third-party surgeons to promote a level of familiarity, comfort and efficiency between the surgeon and the INP. Each INP can support approximately 200 cases annually. Our INPs monitor the surgical procedure using state of the art, commercially available, diagnostic medical equipment. Assure INP’s are certified by a third-party accreditation board, ABRET Neurodiagnostic Credentialing and Accreditation (“ABRET”). The success of our service depends upon the timely recognition and successful interpretation of the data signals by our INPs and remote supervisors to quickly determine if the patient is experiencing a deficiency and advise the surgeon to determine if surgical intervention is required to positively impact the patient and surgery.
The Professional Component of IONM is provided via tele-neurology services under a one-to-many business model, and as a result, has a different financial profile than the Technical Component. Supervising practitioners provide tele-neurology services from an off-site location and maintain the ability to monitor multiple surgical cases simultaneously. As a result, each supervising practitioner has the ability to monitor approximately 2,500 or more cases annually.
Assure has made substantial investments to make its revenue cycle management function more data-driven, analytical, and automated. This modernization facilitated successful state-level arbitrations starting in 2022 and federal arbitrations starting in 2023. Many IONM competitors, particularly smaller peers that remain reliant on third-party billing companies lack the data analytics and transparency to similarly leverage opportunities presented by the arbitration process. The Company intends to continue to seek arbitration opportunities related to uncollected accounts receivable.
During the fourth quarter of 2022 and throughout 2023, the Company exited the majority of business under Assure’s legacy Managed Service Agreement (“MSA”) model in order to realize all revenue generated from services provided by the Professional Component of IONM. The Company expects the remaining MSA relationships to be terminated during 2024.
During September 2023, the Company’s Board of Directors initiated a process to explore strategic alternatives for the business. In consultation with financial and legal advisors, a comprehensive strategic review process began immediately and evaluated a broad range of options to maximize shareholder value. As part of this review process, Assure’s board agreed to conduct an auction process for the sale of its clinical operations. On March 26, 2024, Assure closed the sale transaction resulting in the sale of most of the Company’s clinical operations, equipment, and contracts. As of the filing date of this Quarterly Report on Form 10-Q, Assure is providing IONM services in limited markets, primarily Arizona and Montana.
On February 12, 2024, Assure entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Danam and Assure Merger Corp., a newly formed wholly owned subsidiary of Assure (“Assure Merger”). Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, including approval of the transaction by the stockholders of Assure and Danam, Assure Merger would have merged with and into Danam (the “Merger”), with Danam surviving the Merger as a wholly-owned subsidiary of Assure. The Merger was intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.
The parties were able to terminate the Merger Agreement upon mutual consent. Either party may have terminated the Merger Agreement (i) if any of the representations or warranties of the other party set forth in the Merger Agreement shall not be true and correct or if the other party failed to perform any covenant or agreement on the part of such party set forth in the Merger Agreement, (ii) the Merger was not consummated by the outside date (May 15, 2024), (iii) there was a governmental order prohibiting the Merger, and (iv) failure to obtain the stockholder vote. Danam was able to terminate the Merger Agreement if (i) the Board changes its recommendation to stockholders with respect to the Merger, (ii) the Board failed to reaffirm its recommendation to stockholders with respect to the Merger following a tender offer for Assure, (iii) the Board failed to reaffirm its recommendation to stockholders with respect to the merger following a publicly announced acquisition proposal for Assure, (iv) Assure breaches its non-solicitation provisions, or (v) the Board resolved to do any of the above. Assure was able to terminate the Merger Agreement for acceptance of a superior proposal.
In the event Danam or Assure terminated the Merger Agreement pursuant to certain of the sections set forth above, Assure was required to pay Danam a termination fee of $1,000,000, less any reimbursed expenses. Upon termination in other contexts in which a termination fee is not due, the breaching party would have owed the non-breaching party reimbursement of expenses up to $250,000.
On April 8, 2024, the Company entered into a partial waiver and amendment agreement (the “Waiver Agreement”) which waived and amended certain provisions of the Merger Agreement.
29
Pursuant to the terms and conditions of the Waiver Agreement, Danam partially waived its right to terminate the Merger Agreement pursuant to breaches of Section 6.8(a) and 6.20 of the Merger Agreement. The Waiver Agreement required the following:
g. | Assure obtain the Preliminary Shareholder Vote required by Section 6.20 of the Merger Agreement no later than April 30, 2024; |
h. | Assure file the proxy statement and registration statement on Form S-4 required by the Section 6.8(a) Covenant no later than April 26th, 2024; |
i. | Assure issues Danam a $1,000,000 convertible promissory note; |
j. | Assure receive shareholder approval for the Merger five (5) Business Days prior to the Termination Date and effects the Reverse Split prior to the Termination Date; |
k. | Assure was not in default under the Convertible Note; and |
l. | Assure was not in breach of any other covenants set forth in the Merger Agreement, subject to any necessary notice requirements and cure period set forth therein. |
Further the Waiver Agreement amended the Merger Agreement to change the definition of “Termination Date” to mean July 22, 2024.
In connection with the Waiver Agreement, on April 8, 2024, the Company issued a convertible note to Danam in principal amount of $1 million. 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. Upon the occurrence of certain events, the note is convertible into shares of common stock at the Nasdaq “Minimum Price” in accordance with Listing Rule 5635(d). The note will become immediately due and payable upon the occurrence of an event of default under the note, including but not limited to: a failure to pay, voluntary bankruptcy or insolvency of Assure, involuntary bankruptcy or insolvency proceedings of Assure, breach of the Merger Agreement or termination of the Merger Agreement.
On June 11, 2024, Assure delivered a letter to Danam pursuant to which Assure terminated the Merger Agreement with Danam and Assure Merger, pursuant to Section 8.1(b) thereof. According to the terms of the Merger Agreement, Danam may be entitled to a $1 million termination fee. Assure accrued the termination fee as of June 30, 2024, which is included as a component of the Accounts payable and accrued expenses balance in the accompanying condensed consolidated balance sheet. Additionally, the $1 million convertible note matured on July 22, 2024, and as of the date of this filing, is currently in default. The note is included as a component of the short-term promissory notes balance in the accompanying condensed consolidated balance sheet as of June 30, 2024.
Pursuant to Section 8.1(b) of the Merger Agreement, Assure terminated the Merger Agreement based on Assure’s assertion of certain misrepresentations by Danam regarding its representations and warranties set form in Article 4 of the Merger Agreement, including but not limited to, its representations regarding its financial condition and ability to complete the Acquisition Transactions, and the Company’s assertion that Danam was failing to perform its covenants under the Merger Agreement, including but not limited to its covenant to meet the closing condition to complete the Acquisition Transactions prior to or concurrent with the closing of the Merger and such breaches could not be cured within the time periods set forth in Section 8.1(b) thereof.
As a result of the termination of the Merger Agreement, in addition to reserving its right to seek other remedies, pursuant to Section 8.3(c) of the Merger Agreement, Assure is seeking reimbursement for all of its fees, costs and expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants) in relation to the Merger Agreement and its performance thereunder.
As of June 30, 2024, the Company has recorded $1 million of termination fees in accrued expenses and $1 million convertible note in short-term promissory notes within the condensed consolidated balance sheet based on the disclosure above.
The Company has financed its cash requirements primarily from revenues generated from its services, by utilizing debt facilities and from the sale of common stock.
30
RESULTS OF OPERATIONS
Three and Six Months Ended June 30, 2024, Compared to the Three and Six Months Ended June 30, 2023
Three Months Ended June 30, | Change | Change |
| Six Months Ended June 30, | Change | Change |
| ||||||||||||||||
| 2024 |
| 2023 |
| $ |
| % |
| 2024 |
| 2023 |
| $ |
| % |
| |||||||
Revenue | $ | 1 | $ | 67 | $ | (66) | (99) | % | $ | 10 | $ | 182 | $ | (172) | (95) | % | |||||||
Cost of revenue |
| 229 |
| 697 |
| (468) | (67) | % |
| 704 |
| 1,376 |
| (672) | (49) | % | |||||||
Gross margin |
| (228) |
| (630) |
| 402 | (64) | % |
| (694) |
| (1,194) |
| 500 | (42) | % | |||||||
Operating (income) expenses | |||||||||||||||||||||||
General and administrative |
| 1,160 |
| 3,208 |
| (2,048) | (64) | % |
| 5,071 |
| 6,422 |
| (1,351) | (21) | % | |||||||
Gain on settlement of accounts payable | — | — | — | 100 | % | (181) |
| — |
| (181) | 100 | % | |||||||||||
Total operating expenses | 1,160 | 3,208 | (2,048) | (64) | % |
| 4,890 |
| 6,422 |
| (1,532) | (24) | % | ||||||||||
Loss from operations |
| (1,388) |
| (3,838) |
| 2,450 | (64) | % |
| (5,584) |
| (7,616) |
| 2,032 | 27 | % | |||||||
Other income (expenses) | |||||||||||||||||||||||
Income from equity method investments | — | 13 | (13) | (100) | % |
| — |
| 38 |
| (38) | (100) | % | ||||||||||
Income from ERTC (Employee Retention Tax Credit) | 85 | — | 85 | 100 | % | 85 | — | 85 | 100 | % | |||||||||||||
Failed merger fees |
| (2,000) |
| — |
| (2,000) | 100 | % | (2,000) | — | (2,000) | 100 | % | ||||||||||
Interest expense |
| (591) |
| (491) |
| (100) | 20 | % |
| (1,118) |
| (992) |
| (126) | 13 | % | |||||||
Other income, net | 121 | 324 | (203) | (63) | % |
| 277 |
| 382 |
| (105) | (27) | % | ||||||||||
Accretion expense | (75) | (171) | 96 | (56) | % | (177) | (341) | 164 | 48 | % | |||||||||||||
Total other income (expense), net |
| (2,460) |
| (325) |
| (2,135) | 657 | % |
| (2,933) |
| (913) |
| (2,020) | 221 | % | |||||||
Loss from continuing operations before taxes |
| (3,848) |
| (4,163) |
| 315 | (8) | % |
| (8,517) |
| (8,529) |
| 12 | 0 | % | |||||||
Income tax benefit (expense) on continuing operations |
| — |
| (9) |
| 9 | (100) | % |
| — |
| 788 |
| (788) | (100) | % | |||||||
Loss from continuing operations | (3,848) | (4,172) | 324 | (8) | % | (8,517) | (7,741) | (776) | 10 | % | |||||||||||||
Income from discontinued operations, net of tax | 3,593 | (1,880) | 5,473 | (291) | % | 4,501 | (1,455) | 5,956 | (409) | % | |||||||||||||
Net loss | $ | (255) | $ | (6,052) | $ | 5,797 | (96) | % | $ | (4,016) | $ | (9,196) | $ | 5,180 | 56 | % | |||||||
Loss per share | |||||||||||||||||||||||
Loss from continuing operations, basic and diluted | $ | (7.68) | $ | (23.23) | $ | 15.55 | (67) | % | $ | (19.13) | $ | (64.82) | $ | 45.68 | 70 | % | |||||||
Income from discontinued operations, basic and diluted | $ | 7.18 | $ | (10.47) | $ | 17.65 | (169) | % | 10.11 | (12.18) | 22.29 | 183 | % | ||||||||||
Loss per share, basic and diluted | $ | (0.50) | $ | (33.70) | $ | 33.20 | (99) | % | $ | (9.02) | $ | (77.00) | $ | 67.98 | 88 | % | |||||||
Weighted average number shares – basic |
| 500,758 |
| 179,575 |
| 321,183 | 179 | % |
| 445,316 |
| 119,432 |
| 325,884 | 273 | % | |||||||
Weighted average number shares – diluted | 500,758 | 179,575 | 321,183 | 179 | % |
| 445,316 |
| 119,432 |
| 325,884 | 273 | % |
Revenue
Total revenue for the three months ended June 30, 2024, and 2023, were $1 thousand and $67 thousand, respectively, and $10 thousand and $182 thousand for the six months ended June 30, 2024, and 2023, respectively. Revenue is generated by our revenue cycle management team under legacy managed service agreements for billing and collecting for professional services provided by our business partners. The decrease in revenue is attributable to the Company’s efforts to exit the managed service arrangements during 2023.
Cost of revenues
Cost of revenues for the three months ended June 30, 2024, and 2023, were $229 thousand and $679 thousand, respectively, and $704 thousand and $1.4 million for the six months ended June 30, 2024, and 2023, respectively. Cost of revenues consist primarily of the cost of our internal billing and collection department and decreased slightly related to the decrease in headcount.
General and administrative
General and administrative expenses for the three months ended June 30, 2024, and 2023, were $1.2 million and $3.2 million, respectively, and $5.1 million and $6.4 million for the six months ended June 30, 2024, and 2023, respectively. The overall decrease is primarily related to decrease in employee compensation and benefits, including a stock-based compensation benefit related to the cancellation of stock options of terminated employees, partially offset by an increase in legal fees associated with the sale of clinical assets, the proposed merger and settlement.
31
Gain on settlement of accounts payable
During the six months ended June 30, 2024, the Company settled certain amounts of accounts payable for less than the original amounts owed which resulted in a gain of $181 thousand. There were no such transactions during the three and six months ended June 30, 2023.
Failed merger fees
As a result of the termination of the Merger Agreement, the Company recorded reverse merger fees of $2 million for the three and six months ended. There were no similar transactions during the three and six months ended June 30, 2023.
Interest expense
Interest expense was $591 thousand and $1.1 million for the three and six months ended June 30, 2024, compared to $491 thousand and $1 million for the three and six months ended June 30, 2023. The increase year-over-year is primarily due to higher outstanding debt balances.
Accretion expense
The Company recorded non-cash accretion expense of $75 thousand and $171 thousand for the three months ended June 30, 2024, and 2023, respectively, and $177 thousand and $341 thousand for the six months ended June 30, 2024, and 2023, respectively. The Company accretes the difference between the fair value of the convertible debt and the debenture and the face value of the convertible debt and the debenture over the term of the convertible debt and the debenture. Specifically, accretion expense was $nil and $95 thousand for three months ended June 30, 2024, and 2023, respectively, related to the convertible debt and $75 thousand and $76 thousand for three months ended June 30, 2024, and 2023, respectively, related to the Centurion debt. Accretion expense was $27 thousand and $191 thousand for six months ended June 30, 2024, and 2023, respectively, related to the convertible debt and $150 thousand for each of the six months ended June 30, 2024, and 2023related to the Centurion debt.
Income tax benefit
For the three and six months ended June 30, 2024, income tax benefit was $nil compared to a benefit of $9 thousand for the three months ended June 30, 2023, and expense of $788 thousand for the six months ended June 30, 2023. The Company’s estimated annual tax rate is impacted primarily by the amount of taxable income earned in each jurisdiction the Company operates in and permanent differences between financial statement carrying amounts and the tax basis.
32
Discontinued operations
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2024 |
| 2023 | 2024 |
| 2023 | ||||||
Revenue |
|
|
|
|
|
| |||||
Technical services | $ | 240 | $ | 98 | $ | 1,558 | $ | 1,332 | |||
Professional services | 3,684 | 490 | 4,995 | 2,364 | |||||||
Other |
| (21) |
| 507 |
| 17 |
| 836 | |||
Revenue, net | 3,903 | 1,095 | 6,570 | 4,532 | |||||||
Cost of revenues, excluding depreciation and amortization |
| 309 |
| 2,705 |
| 2,672 |
| 5,399 | |||
Gross margin |
| 3,594 |
| (1,610) |
| 3,898 |
| (867) | |||
Operating expenses | |||||||||||
Sales and marketing |
| 1 |
| 69 |
| 55 |
| 197 | |||
Depreciation and amortization |
| — |
| 183 |
| — |
| 365 | |||
Total operating expenses |
| 1 |
| 252 |
| 55 |
| 562 | |||
Income from discontinued operations |
| 3,593 |
| (1,862) |
| 3,843 |
| (1,429) | |||
Other income (expense) | |||||||||||
Gain on sale of assets | — | — | 666 | — | |||||||
Interest expense |
| — |
| (18) |
| (8) |
| (26) | |||
Total other income (expense) |
| — |
| (18) |
| 658 |
| (26) | |||
Income from discontinued operations | 3,593 | (1,880) | 4,501 | (1,455) | |||||||
Income tax expense | — | — | — | — | |||||||
Net income from discontinued operations | $ | 3,593 | $ | (1,880) | $ | 4,501 | $ | (1,455) |
Income from discontinued operations was $3.6 million and $4.5 million for the three and six months ended June 30, 2024, respectively, compared to loss from discontinued operations $1.9 million and $1.5 million for the three and six months ended June 30, 2023, respectively. The sale of assets resulted in a gain of $666 thousand for the three months ended March 31, 2024. Discontinued operations consist of the following activities:
Technical and professional service revenue is recognized in the period in which IONM services are rendered, at net realizable amounts due from third party payors when collections are reasonably assured and can be estimated. The majority of the Company’s services are rendered on an out-of-network basis and billed to third-party insurers. We estimate out-of-network technical and professional revenue per case based upon our historical cash collection rates from private health insurance carriers. Our revenue estimation process for out-of-network revenue is based on the collection experience from insurance cases that are between 1 and 24 months old as management believes the more recent collection experience is more indicative of future per case collection rates. The Company reserves accounts receivable beginning in the fifth quarter after date of service and continuing to increase the reserve percentage until the receivable is aged to 24 months and a day from the date of service at which point it is fully reserved.
Cost of revenues consist primarily of the cost of technologist and supervising practitioner wages, third-party supervising practitioner fees, and medical supplies. Technologist and supervising practitioner wages and medical supplies vary with the number of neuromonitoring cases. The decrease in costs of revenues is primarily related to the Company’s efforts focused on reducing the Company’s average cost of delivery in providing our services, both on the technologist and the remote neurology parts of the business.
Additionally, discontinued operations consist of sales and marketing expenses related to the generation of revenue and depreciation, amortization and implied interest expenses related to the medical equipment utilized in operations.
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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Funding Requirements
Our cash position as of June 30, 2024, was $45 thousand compared to the December 31, 2023, cash balance of $123 thousand. Working capital was negative $19.1 million as of June 30, 2024, compared to negative $15.5 million at December 31, 2023. Our working capital balance and our estimated cash flows from operations during 2024 will not support our operating activities and our obligations for the next 12 months. We intend to seek equity or debt financing and have implemented significant cost cutting measures to mitigate our going concern. Such financings may include the issuance of shares of common stock, warrants to purchase common stock, convertible debt or other instruments that may dilute our current stockholders. Financing may not be available to us on acceptable terms depending on market conditions at the time we seek financing. Furthermore, our independent registered public accountants have expressed that substantial doubt exists as to the Company’s ability to continue as a going concern.
We are also dependent on Centurion granting us certain add-backs and other one-time adjustments in the calculation of our financial covenants related to EBITDA related to the Centurion debt and if we are not granted such allowances, we may not meet our financial covenants which could result in a default on our obligations and the lender could foreclose on our assets if we cannot otherwise payoff the debt. We currently owe approximately $11 million in face amount on the Centurion debt. As of December 31, 2023, the Company was not in compliance with the Debenture debt covenants. As a result, Centurion may demand full repayment of the outstanding principal and interest. Additionally, approximately $3.0 million in convertible debentures, the majority of which have matured but have not been repaid according to the terms and conditions of the underlying note agreements and may be payable on demand.
Our near-term cash requirements relate primarily to payroll expenses, trade payables, debt payments, capital lease payments, and general corporate obligations.
Nasdaq Listing
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”).
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.
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.
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,
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.
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 is being quoted for trading under its current trading symbol “IONM” on the OTC Markets Pink Market 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 has 15 days after the date it received notice of the Panel’s decision (which is 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 forty-five calendar days after the Company was notified of the decision.
As a result of the delisting, the Company faces significant material adverse consequences, including:
● | a limited availability of market quotations for our securities; |
● | reduced liquidity for our securities; |
● | a determination that the common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
● | a limited amount of news and analyst coverage; and |
● | a decreased ability to issue additional securities or obtain additional financing in the future. |
Cash flows from operating activities
For the six months ended June 30, 2024, we collected approximately $6.6 million of receivables compared to collecting approximately $9.5 million in the same prior year period. As of June 30, 2024, accounts receivable, which are recorded net of implicit price concessions, was $3.3 million compared to $3.6 million at December 31, 2023.
Cash used in operating activities for the six months ended June 30, 2024, and 2023 was $3.3 million and $2.4 million, respectively. Cash was used to fund operations.
Cash flows from investing activities
Cash provided by investing activities of $2.3 million for the six months ended June 30, 2024, was related to the proceeds from the sale of clinical assets. Cash provided by investing activities of $37 thousand for the six months ended June 30, 2023, was related the professional entity distributions.
Cash flows from financing activities
Cash used in financing activities of $855 thousand for the six months ended June 30, 2024, resulted from proceeds from the issuance from short term notes of $1.7 million, repayment of short -term promissory notes of $173 thousand, debt repayment of $82 thousand, finance lease principal payments of $408 thousand and acquisition liability payments of $174 thousand. Cash provided by financing activities of $4.9 million for the six months ended June 30, 2023, resulted from a public offering and a private placement, partially offset by finance lease principal payments of $358 thousand and acquisition liability payments of $102 thousand.
Off-Balance Sheet Arrangements
We have no material undisclosed off-balance sheet arrangements that have or are reasonably likely to have, a current or future effect on our results of operations or financial condition.
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CRITICAL ACCOUNTING POLICIES
We prepare our consolidated financial statements in conformity with GAAP. Application of GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes and within this Management’s Discussion and Analysis of Financial Condition and Results of Operations section. We consider our most important accounting policies that require significant estimates and management judgment to be those policies with respect to revenue, accounts receivable, stock-based compensation, acquired intangible assets, goodwill, and income taxes, which are discussed below. Our other significant accounting policies are summarized in Note 2, “Basis of Presentation” and Note 3, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on April 26, 2024.
We continually evaluate the accounting policies and estimates used to prepare the consolidated financial statements. In general, our estimates are based on historical experience, evaluation of current trends, information from third-party professionals and various other assumptions that we believe to be reasonable under the known facts and circumstances. Estimates can require a significant amount of judgment, and a different set of assumptions could result in material changes to our reported results.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q for the six months ended June 30, 2024, an evaluation was carried out under the supervision of, and with the participation of the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, the CEO and the CFO have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective in ensuring that (i) information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Material Weaknesses
Management noted inadequate controls over the review of the accounting for complex transactions and financial reporting which management believes to be a material weakness.
A material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company’s financial reporting.
In response to the identified material weakness, during the fourth quarter of 2023 and through the first quarter of 2024, management has implemented a rigorous review process regarding the accounting for complex transactions and financial reporting.
Changes in Internal Control over Financial Reporting
There were no other changes in our internal control over financial reporting during the quarter ended June30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our Company or any of our subsidiaries, nor are we involved as a plaintiff in any other material proceeding or pending litigation. There are no other proceedings in which any of our directors, executive officers, or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
See the disclosure under Part II – Item 1 Legal Proceedings in the Company Quarterly Report of Form 10-Q for the period ended March 31, 2024, as filed with the Commission on June 7, 2024, for a description of legal proceedings reportable earlier in this fiscal year.
ITEM 1A. RISK FACTORS
Other than as set forth below, during the six months ended June 30, 2024, there were no material changes to the risk factors disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2023.
We have delisted from the NASDAQ.
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”).
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.
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.
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.
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.
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 intends to submit an application to the OTCQB for quotation of its common stock.
37
The Company has 15 days after the date it received notice of the Panel’s decision (which is 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 forty-five calendar days after the Company was notified of the decision.
As a result of the delisting, the Company faces significant material adverse consequences, including:
● | a limited availability of market quotations for our securities; |
● | reduced liquidity for our securities; |
● | a determination that the common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
● | a limited amount of news and analyst coverage; and |
● | a decreased ability to issue additional securities or obtain additional financing in the future. |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Items 2(b) and 2(c) - None.
Item 2(a) – Stock Issuances - All issuances of equity securities on an unregistered basis during the quarter ended June 30, 2024, were previously reported on a Current Report on Form 8-K.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
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.
Short-Term Promissory Notes
As discussed in Note 1 to the condensed consolidated financial statements, 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 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.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
38
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS
Exhibit Number | Description |
---|---|
2.1 | |
2.2 | |
3.1 | |
3.2 | |
4.1 | |
4.2 | |
4.3 | |
10.1 | |
10.2* | |
10.3 | |
10.4+ | |
10.5+ | |
31.1+ | Certification of the Principal Executive Officer pursuant to Rule 13a-14 of the Exchange Act |
31.2+ | Certification of the Principal Financial Officer pursuant to Rule 13a-14 of the Exchange Act |
32.1++ | |
32.2++ | |
101.INS+ | Inline XBRL Instance Document |
101.SCH+ | Inline XBRL Schema Document |
101.CAL+ | Inline XBRL Calculation Linkbase Document |
101.DEF+ | Inline XBRL Definition Linkbase Document |
101.LAB+ | Inline XBRL Label Linkbase Document |
101.PRE+ | Inline XBRL Presentation Linkbase Document |
104+ | The cover page of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, formatted in Inline XBRL (contained in Exhibit 101) |
+ | Filed herewith. |
++ | Furnished herewith. |
* Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.
39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ASSURE HOLDINGS CORP.
By: | /s/ John Farlinger | By | : /s/ Paul Webster | |
John Farlinger, Executive Chairman and Chief Executive Officer |
| Paul Webster, Chief Financial Officer | ||
(Principal Executive Officer) |
| (Principal Financial Officer) | ||
| ||||
Date: September 27, 2024 |
| Date: September 27, 2024 |
40