8-K: Assure Holdings Corp. Secures Merger Agreement Waiver, Issues Convertible Note and Equity

Sentiment:

Material Definitive Agreement 12 April 2024 5:12 PM

Assure Holdings Corp. has entered into a partial waiver and amendment agreement regarding its merger with Danam Health Inc., while also issuing a convertible note and executing share exchange agreements.

Delay expectedThe company failed to meet the original deadlines for filing the proxy statement and obtaining shareholder approval, necessitating a waiver and extension of the merger termination date.

Capital raiseThe company issued a $1,000,000 convertible promissory note to Danam Health Inc.The company issued 236,164 shares of common stock to Centurion Financial Trust in exchange for $140,989.91 of debt.The company issued 437,247 shares of common stock to Innovation Neuromonitoring LLC in exchange for canceling $270,000 of future payments.

Worse than expectedThe company needed a waiver for breaches of the merger agreement, indicating worse than expected progress.The company had to issue a convertible note with a high interest rate to secure the waiver, suggesting a weaker financial position than expected.

Summary

Assure Holdings Corp. has secured a partial waiver and amendment to its merger agreement with Danam Health Inc., extending the termination date to July 22, 2024.
To obtain the waiver, Assure issued a $1,000,000 convertible promissory note to Danam with a 10% annual interest rate, maturing on July 22, 2024.
The company also entered into an exchange agreement with Centurion Financial Trust, exchanging $140,989.91 of debt for 236,164 shares of common stock at a deemed price of $0.5970 per share.
Additionally, Assure entered into a subscription agreement with Innovation Neuromonitoring LLC, canceling $270,000 of future payments in exchange for 437,247 shares of common stock at a deemed price of $0.6175 per share.
The company's board of directors also approved amended and restated bylaws to address discrepancies with Nevada corporate law.

Sentiment

Score: 4

Explanation: The document reveals a company facing challenges, needing waivers and issuing debt, which is not a strong positive signal. While the company is taking steps to move forward, the overall tone suggests a degree of financial and operational strain.

Positives

The extension of the merger termination date provides more time to complete the transaction with Danam Health Inc.
The partial waiver avoids a potential termination fee of $1,000,000.
The exchange agreements reduce debt and convert it into equity, potentially improving the company's balance sheet.
The amended bylaws align the company with Nevada corporate law, improving corporate governance.

Negatives

The issuance of a $1,000,000 convertible note increases the company's debt obligations.
The convertible note has a high interest rate of 10% per annum.
The company is required to obtain shareholder approval for the merger and a reverse stock split before the termination date.
The company has breached certain covenants in the original merger agreement.

Risks

Failure to meet the conditions of the waiver agreement could lead to the termination of the merger agreement and a $1,000,000 termination fee.
The company must obtain shareholder approval for the merger and reverse stock split by July 22, 2024.
The convertible note could convert into shares of common stock, potentially diluting existing shareholders.
The company is subject to various risks and uncertainties related to the merger, as detailed in the cautionary statements.

Future Outlook

The company is focused on completing the merger with Danam Health Inc. by the new termination date of July 22, 2024, subject to shareholder approval and other conditions. The company also needs to obtain shareholder approval to increase its authorized capital from 9,000,000 shares of common stock to 250,000,000 shares of common stock.

Industry Context

The announcement reflects a company navigating complex financial and strategic challenges, common in the healthcare technology sector. The need for a waiver and amendment to the merger agreement suggests potential difficulties in meeting initial deadlines, which is not uncommon in M&A transactions. The use of convertible notes and share exchanges are typical methods for companies to manage debt and raise capital.

Comparison to Industry Standards

The use of convertible notes is a common financing tool for companies, especially those in the growth phase or facing financial constraints. The 10% interest rate on the convertible note is relatively high, which may reflect the perceived risk associated with the company.
The share exchange agreements are a way to reduce debt and convert it into equity, which can be a positive step for a company's balance sheet. However, the deemed prices of $0.5970 and $0.6175 per share may be below market value, which could be dilutive to existing shareholders.
The need for a waiver and amendment to the merger agreement suggests that the company may be facing challenges in meeting its obligations. This is not uncommon in M&A transactions, but it does highlight the importance of careful planning and execution.
Compared to other companies in the healthcare technology sector, Assure's actions are not unusual, but the specific terms of the agreements and the need for a waiver indicate a higher level of risk and complexity.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
bylaw_amendment	Section 2.9 was added to the bylaws to address the maintenance of books and records of the Corporation in accordance with Nevada law.	April 8, 2024	Ensures compliance with Nevada law regarding record keeping.
bylaw_amendment	Section 3.4.2. of the bylaws was amended to change the vote of stockholders required to remove a director from an ordinary resolution to require a vote of the holders of at least two-thirds of the voting power of the issued and outstanding stock entitled to vote.	April 8, 2024	Increases the threshold for removing a director, providing more stability to the board.
bylaw_amendment	Section 3.7 of the bylaws was amended to allow vacancies and newly created directorships to be filled by a majority vote of the remaining directors.	April 8, 2024	Streamlines the process for filling board vacancies.
bylaw_amendment	Section 8.4.1 of the bylaws was amended by adding a provision expressly permitting for shares of the Corporation to be issued in uncertificated form.	April 8, 2024	Allows for the issuance of uncertificated shares, potentially reducing administrative costs.
bylaw_amendment	Section 10.4 of the bylaws was amended to provide that notice of a meeting of the stockholders must be not less than 10 days nor more than 60 days before the date of the meeting.	April 8, 2024	Adjusts the notice period for shareholder meetings.
bylaw_amendment	Section 10.6 of the bylaws was amended to provide that the board may fix a record date for a meeting of the stockholders preceding the meeting date by not more than 60 days and not less than 10 days.	April 8, 2024	Adjusts the record date for shareholder meetings.
bylaw_amendment	Section 12.1 was amended to allow the bylaws to be altered, amended or repealed by the Corporations stockholders, or the Board.	April 8, 2024	Clarifies the process for amending the bylaws.

Stakeholder Impact

Shareholders face potential dilution from the issuance of new shares.
Shareholders are subject to the risks associated with the merger and the company's financial condition.
Creditors may be impacted by the debt exchange and the issuance of the convertible note.
Employees may be affected by the outcome of the merger and the company's financial stability.

Next Steps

Assure must obtain the Preliminary Shareholder Vote by April 30, 2024.
Assure must file the proxy statement and registration statement on Form S-4 by April 26, 2024.
Assure must receive shareholder approval for the merger five business days prior to the Termination Date.
Assure must effect the Reverse Split prior to the Termination Date.

Key Dates

Date	Description
February 12, 2024	Date of the original merger agreement between Assure Holdings Corp., Assure Acquisition Corp., and Danam Health Inc.
March 19, 2024	Danam provided notice to Assure of its failure to perform its obligations under Section 6.8(a) of the Merger Agreement.
April 8, 2024	Date of the partial waiver and amendment agreement, convertible note issuance, and share exchange agreements.
April 26, 2024	Deadline for Assure to file the proxy statement and registration statement on Form S-4.
April 30, 2024	Deadline for Assure to obtain the Preliminary Shareholder Vote required by Section 6.20 of the Merger Agreement.
July 22, 2024	New termination date for the merger agreement and maturity date of the convertible note.

Keywords

merger agreement, convertible note, share exchange, bylaws, shareholder approval, reverse stock split, Danam Health, Centurion Financial Trust, Innovation Neuromonitoring, equity financing

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