10-Q 1 ionm-20230930x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-40785

Graphic

ASSURE HOLDINGS CORP.

(Exact Name of Registrant as Specified in its Charter)

Nevada

82-2726719

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

7887 E. Belleview Ave., Suite 240 Denver, Colorado

80111

(Address of principal executive offices)

(Zip Code)

(720) 287-3093

(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par value per share 

 

IONM

 

Nasdaq Stock Market LLC (Nasdaq Capital Market)

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. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer Accelerated Filer Non-Accelerated Filer Smaller Reporting Company Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

The number of the registrant’s shares of common stock outstanding as of December 18, 2023 was 6,720,460.

ASSURE HOLDINGS CORP.

FORM 10Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS

PAGE

Part I – Financial Information

2

Item 1. Condensed Consolidated Financial Statements

2

Condensed Consolidated Balance Sheets

2

Condensed Consolidated Statements of Operations

3

Condensed Consolidated Statements of Cash Flows

4

Condensed Consolidated Statements of Changes in Shareholders’ Equity (Deficit)

5

Notes to Condensed Consolidated Financial Statements

6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3. Quantitative and Qualitative Disclosures About Market Risk

32

Item 4. Controls and Procedures

32

Part II – Other Information

32

Item 1. Legal Proceedings

32

Item 1A. Risk Factors

33

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

34

Item 3. Defaults Upon Senior Securities

34

Item 4. Mine Safety Disclosures

34

Item 5. Other Information

34

Item 6. Exhibits

35

Signatures

36

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ASSURE HOLDINGS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par amounts)

    

September 30, 

    

December 31, 

2023

2022

(unaudited)

ASSETS

Current assets

 

  

 

  

Cash

$

634

$

905

Accounts receivable, net

 

6,013

 

15,143

Other current assets

 

862

 

340

Due from MSAs

4,394

5,006

Assets held for sale

 

2,435

 

1,867

Total current assets

 

14,338

 

23,261

Equity method investments

 

262

 

310

Fixed assets

 

 

6

Operating lease right of use asset, net

692

672

Total assets

$

15,292

$

24,249

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

LIABILITIES

Current liabilities

Accounts payable and accrued liabilities

$

5,193

$

2,919

Current portion of debt

 

3,238

 

965

Current portion of lease liability

 

632

 

550

Current portion of acquisition liability

 

505

 

306

Other current liabilities

 

20

 

231

Total current liabilities

 

9,588

 

4,971

Lease liability, net of current portion

 

653

 

964

Debt, net of current portion

 

10,232

 

11,874

Acquisition liability, net of current portion

272

179

Deferred income taxes, net

 

616

 

796

Total liabilities

 

21,361

 

18,784

Commitments and contingencies (Note 10)

SHAREHOLDERS’ EQUITY (DEFICIT)

Common stock: $0.001 par value; 9,000,000 shares authorized; 6,720,460 and 1,051,098 shares issued and outstanding, as of September 30, 2023, and December 31, 2022, respectively

 

27

 

21

Additional paid-in capital

 

55,475

 

50,000

Accumulated deficit

 

(61,571)

 

(44,556)

Total shareholders’ equity (deficit)

 

(6,069)

 

5,465

Total liabilities and shareholders’ equity (deficit)

$

15,292

$

24,249

See accompanying notes to 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 September 30, 

Nine Months Ended September 30, 

2023

    

2022

2023

    

2022

Revenue, net

$

48

$

162

$

226

$

356

Cost of revenues

 

622

 

613

 

1,998

 

1,926

Gross margin

 

(574)

 

(451)

 

(1,772)

 

(1,570)

Operating expenses

General and administrative

 

3,544

 

3,339

 

10,105

 

11,176

Bad debt expense related to termination of managed service agreements

 

84

 

 

84

 

Depreciation and amortization

 

5

 

14

 

6

 

45

Total operating expenses

 

3,633

 

3,353

 

10,195

 

11,221

Loss from operations

 

(4,207)

 

(3,804)

 

(11,967)

 

(12,791)

Other income (expenses)

Income from equity method investments

 

 

13

 

38

18

Gain on Paycheck Protection Program loan forgiveness

1,665

Interest income

11

11

Interest expense

 

(519)

 

(452)

 

(1,511)

 

(1,254)

Other (expense) income, net

 

(53)

 

(42)

 

329

 

28

Accretion expense (Note 7)

(170)

(170)

(511)

(511)

Total other expense, net

 

(731)

 

(651)

 

(1,644)

 

(54)

Loss from continuing operations before income taxes

 

(4,938)

 

(4,455)

 

(13,611)

 

(12,845)

Income tax benefit on continuing operations

 

 

1,226

 

171

 

3,508

Loss from continuing operations

(4,938)

(3,229)

(13,440)

(9,337)

Income (loss) from discontinued operations, net of tax

(2,501)

1,796

(3,575)

719

Net loss

$

(7,439)

$

(1,433)

$

(17,015)

$

(8,618)

Loss per share

Basic

$

(1.23)

$

(1.88)

$

(4.89)

$

(12.59)

Diluted

$

(1.23)

$

(1.88)

$

(4.89)

$

(12.59)

Weighted average number of shares used in per share calculation – basic

 

6,043,356

 

761,047

 

3,480,014

 

684,334

Weighted average number of shares used in per share calculation – diluted

 

6,043,356

 

761,047

 

3,480,014

 

684,334

See accompanying notes to condensed consolidated financial statements.

3

ASSURE HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

    

Nine Months Ended September 30, 

2023

    

2022

Cash flows from operating activities

Net loss

$

(17,015)

$

(8,618)

Adjustments to reconcile net loss to net cash used in operating activities

Income from equity method investments

 

(38)

 

(18)

Stock-based compensation

 

(107)

 

464

Depreciation and amortization

 

6

 

408

Amortization of debt issuance costs

 

120

 

120

Bad debt provision

84

Provision for stock option fair value

 

 

(25)

Gain on Paycheck Protection Program loan forgiveness

(1,665)

Accretion expense

511

511

Net settlement of MSA agreements

98

Right of use assets

253

585

Deferred income taxes, net

 

(216)

 

(3,158)

Change in operating assets and liabilities

Accounts receivable, net

 

9,130

 

6,950

Prepaid expenses

(351)

(66)

Accounts payable and accrued liabilities

 

2,271

 

391

Due from MSAs

 

340

 

(716)

Lease liability

(182)

(540)

Other assets and liabilities

 

(210)

 

117

Operating cash flows from discontinued operations

484

Net cash used in operating activities

 

(4,822)

 

(5,260)

Cash flows from investing activities

Purchase of fixed assets

 

 

(26)

Net cash paid for acquisitions

 

(419)

 

(204)

Distributions received from equity method investments

 

60

 

69

Net cash used in investing activities

 

(359)

 

(161)

Cash flows from financing activities

Proceeds from exercise of stock options

 

 

4

Proceeds from share issuance, net

5,383

5,195

Finance lease principal payments

 

(243)

 

Payment of acquisition liability

 

(230)

 

Net cash provided by financing activities

 

4,910

 

5,199

Decrease in cash

 

(271)

 

(222)

Cash at beginning of period

 

905

 

4,020

Cash at end of period

$

634

$

3,798

Supplemental cash flow information

Interest paid

$

1,368

$

1,093

Income taxes paid

$

$

Supplemental non-cash flow information

Purchase of equipment with finance leases

$

$

79

Right-of-use asset in exchange for lease liability

$

42

$

Shares issued related to acquisition

$

205

$

See accompanying notes to condensed consolidated financial statements.

4

ASSURE HOLDINGS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share amounts)

(unaudited)

    

    

Additional

    

    

Total

Common Stock

paid-in

Accumulated

shareholders'

    

Shares

    

Amount

    

Capital

    

deficit

    

equity (deficit)

Balances, June 30, 2022

 

645,983

$

13

$

43,963

$

(21,629)

$

22,347

Share issuance, net

 

278,804

 

6

 

5,189

 

 

5,195

Stock-based compensation

 

843

 

 

(108)

 

 

(108)

Net loss

 

 

 

 

(1,433)

 

(1,433)

Balances, September 30, 2022

 

925,630

$

19

$

49,044

$

(23,062)

$

26,001

Balances, June 30, 2023

5,422,014

$

26

$

55,434

$

(54,132)

$

1,328

Exercise of warrants

 

750,000

Share issuance, acquisition related

 

547,946

1

204

 

205

Stock-based compensation

 

(163)

 

(163)

Net loss

 

 

 

 

(7,439)

 

(7,439)

Balances, September 30, 2023

 

6,719,960

$

27

$

55,475

$

(61,571)

$

(6,069)

    

    

Additional

    

    

Total

Common Stock

paid-in

Accumulated

shareholders'

    

Shares

    

Amount

    

Capital

    

deficit

    

equity (deficit)

Balances, December 31, 2021

 

645,943

$

13

$

43,387

$

(14,444)

$

28,956

Exercise of stock options

 

40

 

 

4

 

 

4

Share issuance, net

 

278,804

6

5,189

 

5,195

Stock-based compensation

 

843

 

 

464

 

 

464

Net loss

 

 

 

 

(8,618)

 

(8,618)

Balances, September 30, 2022

925,630

$

19

$

49,044

$

(23,062)

$

26,001

Balances, December 31, 2022

 

1,051,098

$

21

$

50,000

$

(44,556)

$

5,465

Exercise of warrants

 

750,000

 

 

 

 

Share issuance, net

4,091,667

5

5,378

5,383

Share issuance, acquisition related

 

547,946

 

1

 

204

 

 

205

Stock-based compensation

 

268,081

 

 

(107)

 

 

(107)

Fractional shares issued related to reverse split

 

11,168

 

 

 

 

Net loss

 

 

 

 

(17,015)

 

(17,015)

Balances, September 30, 2023

 

6,719,960

$

27

$

55,475

$

(61,571)

$

(6,069)

See accompanying notes to condensed consolidated financial statements.

5

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.NATURE OF OPERATIONS

Assure Holdings Corp. (“Assure” or the “Company”), through its two indirect wholly-owned subsidiaries, Assure Neuromonitoring, LLC (“Neuromonitoring”) and Assure Networks, LLC (“Networks”), provides technical and professional intraoperative neuromonitoring (“IONM”) surgical support services for neurosurgery, spine, cardiovascular, orthopedic, ear, nose, and throat, and other surgical procedures that place the nervous system at risk. These services have been recognized as the standard of care by hospitals and surgeons for risk mitigation. Assure Holdings, Inc., a wholly-owned subsidiary, employs most of the administrative employees and performs various corporate services on behalf of the Company. Assure Neuromonitoring employs interoperative neurophysiologists (“INP”) who utilize technical equipment and their technical training to monitor evoked potentials (”EPS”), electroencephalographic (“EEG”) and electromyography (“EMG”) signals during surgical procedures and to pre-emptively notify the underlying surgeon of any nervous related issues that are identified. The INPs perform their services in the operating room during the surgeries. The INPs are certified by a third-party accreditation agency.

The Company was originally incorporated in Colorado on November 7, 2016. In conjunction with a reverse merger, the Company was redomiciled in Nevada on May 16, 2017.

Neuromonitoring was formed on August 25, 2015, in Colorado and currently has multiple wholly-owned subsidiaries. The Company’s services are sold in the United States, directly through the Company.

Networks was formed on November 7, 2016, in Colorado and holds varying ownerships interests in numerous Provider Network Entities (“PE”), which are professional IONM entities. These entities are accounted for under the equity method of accounting. Additionally, Networks manages other PEs that Networks does not have an ownership interest and charges those PEs a management fee. The Company has been actively terminating these arrangements since 2022.

Strategic Shift in Business Strategy

During September 2023, the Company’s Board of Directors approved a plan to explore strategic alternatives. In consultation with financial and legal advisors, a comprehensive strategic review process began immediately and is evaluating a broad range of options to maximize shareholder value. As of September 30, 2023 the Company has decided to sell off the neuromonitoring portion of the business.

 

As part of this review process, Assure is exploring potential strategic alternatives that may include, but are not limited to, an acquisition, merger, business combination, sale of assets or other strategic or financial transaction. The review process is ongoing and there can be no assurance that this review process will result in pursuing a transaction or that any transaction, if pursued, will be completed.

Financial Reporting and Classification

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” 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 on our consolidated balance sheets as “held for sale” as of September 30, 2023, and December 31, 2022, and their results of operations are classified as “discontinued operations” in the consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022. Certain financial disclosures including major components of the assets and results of operations related to discontinued operations are provided in Note 4. Our billing and collections services and our publicly traded entity comprise our continuing operation and are presented as such for all periods presented herein and until such time a strategic transaction is completed. 

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ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

2.BASIS OF PRESENTATION

Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, and majority-owned entities. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the instructions to Form 10-Q and Article 8 of Regulation S-X for interim financial information, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. Accordingly, they do not include all of the information and notes required for complete financial statements prepared in conformity with GAAP. In our opinion, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. However, our results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. For entities in which management has determined the Company does not have a controlling financial interest but has varying degrees of influence regarding operating policies of that entity, the Company’s investment is accounted for using the equity method of accounting. All significant intercompany balances and transactions have been eliminated in consolidation.

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 Company has filed for a $3.2 million refund from the IRS under the CARES Act Employee Retention Credit program, however, there is no guarantee when, or if, these funds will be received. For these reasons, the Company is a going concern. 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.

Accounting Policies

There have been no changes to the Company’s significant accounting policies or recent accounting pronouncements during the three and nine months ended September 30, 2023, as compared to the significant accounting policies disclosed in the 10-K for the year ended December 31, 2022, as filed on March 31, 2023.

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 adoption of this standard did not have a material impact to the Company’s 2023 financial statements.

Common Stock Reverse Split

During March 2023, the Company effectuated a twenty -for-one reverse stock split. All share, stock option and warrant information has been retroactively adjusted to reflect the stock split. See Note 8 for additional discussion.

Reclassifications

Certain amounts for the three and nine months ended September 30, 2022, and as of December 31, 2022, have been reclassified to conform to the 2023 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.

7

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Credit Risk

Credit risk arises from cash and cash equivalents and trade and other receivables.  The exposure to credit risk was as follows (in thousands):

    

September 30, 

    

December 31, 

2023

2022

(unaudited)

Cash

$

634

$

905

Accounts receivable, net

 

6,013

 

15,143

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, net

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 24 months; as such, included in the Company’s allowance for implicit price concessions is an estimate of the likelihood that a portion of the Company’s accounts receivable may become uncollectible due to age. The Company continues collection efforts on claims aged over 24 months. Collections on claims are recorded as revenue in the period received as such collections represent a subsequent change to the initial estimation of the transaction price.

3. ACQUISITION

Acquisition of Certain Assets of Innovation Neuromonitoring, LLC

On August 2, 2023, Assure Networks Texas Holdings II, LLC (“Purchaser”), a wholly owned subsidiary of Assure Networks, LLC, a wholly owned subsidiary of Assure Holdings Corp., entered into an asset purchase agreement (the “Purchase Agreement”) with Innovation Neuromonitoring LLC (the “Seller”) and each of Anthony Casarez and Jason Ehrhardt (each a “Principal” and collectively, the “Principals”). Pursuant to the Purchase Agreement, Purchaser agreed to purchase certain assets of the Seller related to the Seller’s operating businesses that provide intraoperative neuromonitoring and related services (the “Business”). The acquired assets include, but are not limited to, tangible personal property, inventory, records, contracts, licenses, warranties, intellectual property, goodwill, software, (collectively, the “Assets”). The acquisition of the Assets closed on August 29, 2023 (the “Closing”).

 

8

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Subject to certain adjustments, the Assets were acquired for a purchase price of $1,200,000 payable as set forth below.

(1)$800,000 in cash installment payments, in accordance with the following payment schedule:
a.$100,000 was paid in cash in conjunction with the signing of the Letter of Intent and is subject to repayment if the transaction is not closed;
b.$200,000 was paid at the closing minus $131,422, the amount that has been pre-paid to Seller, and also minus $34,000 which was paid to a vendor, for amounts owed to the vendor by the Seller;
c.$500,000 shall be paid in cash in twenty-four equal monthly installments, with the first installment being due on or before September 1, 2023, and the remaining installments being due on the first business day of each month thereafter, with the monthly installment subject to adjustment based on the performance of the Assets as set forth in the Purchase Agreement; and
(2)$400,000 in common stock of the Company, calculated as of the date the purchase agreement was executed, which is subject a six-month lock-up.

Pursuant to the Purchase Agreement, the Company agreed to register the Shares under the Securities Act of 1933 on a registration statement on Form S-1 (the “Registration Statement”) with the Securities and Exchange Commission within 15 days of the Closing (collectively, the “Registrable Securities”) for resale by the Seller or Principals. The Company filed the registration statement on Form S-1 with the SEC (File No. 333-269759) during September 2023, and is working to have the SEC bring it effective.

The Purchase Agreement contains customary representations, warranties and covenants from each of the parties. Under the Purchase Agreement, the Seller have agreed to indemnify Assure for (a) any misrepresentation, omission, or breach by Seller and/or Principals of any representation or warranty contained in the Purchase Agreement or in any of the documents executed and delivered by Seller and/or Principals pursuant thereto; (b) any nonperformance, failure to comply, or breach of or default by Seller and/or Principals of any covenant, promise, or agreement of Seller and/or Principals contained in the Purchase Agreement or in any of the documents executed and delivered by Seller and/or Principals pursuant thereto; (c) any and all debts, obligations, duties, or liabilities (including taxes) of Seller and/or Principals relating to the Business or any of the Assets, that arise prior to the effective time of the Purchase Agreement, and any debts, obligations, duties, or liabilities of Seller relating to any asset retained by Seller, regardless of whether any notice, invoices, or bills for such debts, obligations, duties, or liabilities are received on or after the Closing Date; and (d) any material matter, act, thing, or occurrence caused by or resulting from any act or omission of Seller and/or Principals prior to the effective time of the Purchase Agreement. Under the Purchase Agreement, Purchaser has agreed to indemnify the Seller and Principals for (a) any misrepresentation, omission, or breach by Purchaser of any representation or warranty contained in the Purchase Agreement or in any of the documents executed and delivered by Purchaser pursuant thereto; (b) any nonperformance, failure to comply, or breach of or default by Purchaser of any covenant, promise, or agreement of Purchaser contained in the Purchase Agreement or in any of the documents executed and delivered by Purchaser pursuant thereto; (c) any and all debts, obligations, duties, or liabilities including, without limitation, those assumed by Purchaser hereunder, relating, directly or indirectly to the business activity of the Business that arise after the effective time of the Purchase Agreement; and (d) any matter, act, thing, or occurrence caused by or resulting from any act or omission of Purchaser.

Additionally, on August 2, 2023, Assure Networks Texas Holdings II, LLC entered into an equipment sale agreement with Innovation to purchase certain equipment from Innovation for $165,000.  This transaction closed on August 2, 2023. Due to the timing of this agreement, the purchase price and acquired equipment is included in the purchase price allocation below.

9

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table summarizes the allocation of the total consideration to the assets acquired, based on fair values as determined by the Company, as of the close date of the acquisition (stated in thousands):

Total purchase price

$

1,365

Less fair value of claw back provision

(37)

Less fair value adjustment for issuance of common shares

 

(195)

Net purchase price

1,133

Equipment

 

248

 Total assets acquired

248

Total goodwill

$

885

4. DISCONTINUED OPERATIONS

During September 2023, the Company’s Board of Directors approved a plan to explore strategic alternatives. In consultation with financial and legal advisors, a comprehensive strategic review process began immediately and is evaluating a broad range of options to maximize shareholder value.

 

As part of this review process, Assure is exploring potential strategic alternatives that may include, but are not limited to, an acquisition, merger, business combination, sale of assets or other strategic or financial transaction. The process is ongoing and there can be no assurance that this review process will result in pursuing a transaction or that any transaction, if pursued, will be completed.

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 are classified and reflected on our consolidated balance sheets as “held for sale” as of September 30, 2023, and December 31, 2022, and their results of operations are classified as “discontinued operations” in the consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022.

The following table presents the major classes of assets of the discontinued operations (stated in thousands)

    

September 30, 

    

December 31, 

2023

2022

ASSETS

Fixed assets

$

311

$

70

Finance lease right of use asset, net

118

382

Intangibles, net

 

98

 

390

Goodwill

 

1,910

 

1,025

Total assets

$

2,437

$

1,867

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES

SHAREHOLDERS’ EQUITY

Accumulated deficit

S

2,437

$

1,867

Total shareholders’ equity

 

2,437

 

1,867

Total liabilities and shareholders’ equity

$

2,437

$

1,867

10

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table summarizes the results of operations of the discontinued operations (stated in thousands): 

Three Months Ended September 30, 

Nine Months Ended September 30, 

2023

    

2022

2023

    

2022

Revenue

  

 

  

  

 

  

Technical services

$

$

1,685

$

1,332

$

2,654

Professional services

826

3,783

3,571

7,605

Other

 

103

 

574

 

939

 

1,936

Revenue, net

929

6,042

5,842

12,195

Cost of revenues, excluding depreciation and amortization

 

3,115

 

3,072

 

8,514

 

9,638

Gross margin

 

(2,186)

 

2,970

 

(2,672)

 

2,557

Operating expenses

Sales and marketing

 

87

 

198

 

284

 

688

Depreciation and amortization

 

218

 

229

 

583

 

716

Total operating expenses

 

305

 

427

 

867

 

1,404

(Loss) income from discontinued operations

 

(2,491)

 

2,543

 

(3,539)

 

1,153

Other expenses

Interest expense

 

(10)

 

(19)

 

(36)

 

(63)

Total other expense

 

(10)

 

(19)

 

(36)

 

(63)

(Loss) income from discontinued operations

(2,501)

2,524

(3,575)

1,090

Income tax expense

728

371

Net (loss) income from discontinued operations

$

(2,501)

$

1,796

$

(3,575)

$

719

5. 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.  

The Company’s revenue disaggregated by payor is as follows (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

2023

    

2022

2023

    

2022

  

 

  

  

 

  

Managed service agreements and other

$

48

$

162

$

226

$

356

Discontinued operations

 

929

 

6,042

 

5,842

12,195

11

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Accounts Receivable

A summary of the accounts receivable, net, by revenue stream is as follows (in thousands):

September 30, 

December 31,

    

2023

    

2022

Technical service

$

1,711

 

$

3,072

Professional service

4,302

11,829

Other

 

 

242

Total accounts receivable, net

$

6,013

$

15,143

Accounts receivable as of September 30, 2023 and December 31, 2022 is net of implicit price concessions of $12.2 million and $13.9  million, respectively

The concentration of accounts receivable, net, by payor as a percentage of total accounts receivable is as follows:

As of September 30,

As of December 31,

2023

    

2022

 

  

Commercial insurance

85

%

84

%

Facility billing

14

%

9

%

Other

1

%

7

%

Total

 

100

%

100

%

6. 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 on the 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 under an operating lease which expires October 31, 2025. The incremental borrowing rate for this lease was 10%.  

During April 2023, the Company entered into a lease for corporate offices space which expires May 2025.   The incremental borrowing rate for this lease was 7%

12

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Finance leases

The Company leases medical equipment under various financing leases with stated interest rates ranging from 5.2% — 13.4% per annum which expire at various dates through 2026. Finance lease assets are included in assets held for sale as of September 30, 2023, and December 31, 2022.

The condensed consolidated balance sheets include the following amounts for right-of-use (“ROU”) assets as of September 30, 2023, and December 31, 2022 (in thousands):

    

September 30, 

December 31, 

2023

    

2022

Operating

 

$

692

 

$

672

The following are the components of lease cost for operating and finance leases (in thousands). Finance lease costs are included in loss from discontinued operations in the consolidated statements of operations for the periods presented.

Nine Months Ended September 30, 

2023

    

2022

Lease cost:

Operating leases:

Amortization of ROU assets

$

253

$

231

Interest on lease liabilities

54

68

Total operating lease cost, included in general and administrative expenses

307

299

Finance leases:

Amortization of ROU assets

183

353

Interest on lease liabilities

36

64

Total finance lease cost, included in discontinued operations

219

417

Total lease cost

$

526

$

716

During the nine months ended September 30, 2023, the Company incurred operating and finance lease principal payments of $180 thousand and $243 thousand, respectively, and paid $90 thousand and $450 thousand related to operating and finance lease principal payments, respectively, during the nine months ended September 30, 2022.  

The following are the weighted average lease terms and discount rates for operating and finance leases:

As of

As of

    

September 30, 2023

September 30, 2022

Weighted average remaining lease term (years):

Operating leases

 

4.1

3.0

Finance leases

 

2.0

2.6

Weighted average discount rate (%):

Operating leases

 

9.9

10.0

Finance leases

 

7.9

7.8

13

Table of Contents

ASSURE HOLDINGS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Future minimum lease payments and related lease liabilities as of September 30, 2023, were as follows (in thousands):

    

    

    

Total

Operating

Finance

Lease

Leases

Leases

Liabilities

Remainder of 2023

$

106

$

81

$

187

2024

 

431

 

268

 

699

2025

 

352

 

153

 

505

2026

23

23

Total lease payments

 

889

 

525

 

1,414

Less: imputed interest

 

88

 

41

 

129

Present value of lease liabilities

801

484

1,285

Less: current portion of lease liabilities

 

366

 

266

 

632

Noncurrent lease liabilities

$

435

$

218

$

653

Note: Future minimum lease payments exclude short-term leases as well as payments to landlords for variable common area maintenance, insurance and real estate taxes.

7. DEBT

The Company’s debt obligations are summarized as follows:

September 30, 

December 31, 

    

2023

    

2022

Face value of convertible debt

$

3,450

$

3,450

Less: principal converted to common shares

(60)

(60)

Less: deemed fair value ascribed to conversion feature and warrants

 

(1,523)

 

(1,523)

Plus: accretion of implied interest

 

1,371

1,086

Total convertible debt

 

3,238

 

2,953

Face value of Centurion debt

11,000

11,000

Less: deemed fair value ascribed to warrants

(1,204)

(1,204)

Plus: accretion of implied interest