SHAREHOLDERS’

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

SHAREHOLDERS’

NOTE 8 – SHAREHOLDERS’ EQUITY

Preferred Stock

On February 7, 2020, CGI Cellerate RX, an affiliate of Catalyst, converted its entire holdings of its 30-month $1,500,000 convertible promissory note and 1,136,815 shares of Series F Convertible Preferred Stock into shares of the Company’s common stock. The Company issued an aggregate of 2,452,731 shares of common stock in the conversions. Ronald T. Nixon, our Executive Chairman, is the founder and managing partner of Catalyst. Mr. Nixon and Catalyst, collectively with their affiliates, including CGI Cellerate RX, beneficially owned 3,519,019 shares of the Company’s common stock which represented 46.0% of the 7,676,662 shares of common stock outstanding as of December 31, 2021.

On December 30, 2020, the Company, following the approval of the Company’s board of directors, filed a Resolution Relating to a Series of Shares (the “Resolution”) with the Secretary of State of the State of Texas, which was effective upon filing, for the purpose of eliminating the Company’s Series F Convertible Preferred Stock. No shares of the Series F Convertible Preferred Stock were outstanding at the time the Resolution was filed. Following the filing of the Resolution, the shares previously authorized under the Series F Convertible Preferred Stock resumed the status of authorized but unissued shares of preferred stock of the Company.

Common Stock

On February 21, 2020, the Company filed a Registration Statement on Form S-8 which registered an aggregate of 2,000,000 shares of its common stock that may be issued under the Sanara MedTech Inc. 2014 Omnibus Long-Term Incentive Plan. The Registration Statement on Form S-8 also covers such additional and indeterminate number of securities as may become issuable pursuant to the provisions of the plan relating to adjustments for changes resulting from a share dividend, share split or similar change. At the Company’s Annual Meeting of Shareholders held on July 9, 2020, the Company approved the Restated 2014 Omnibus Long-Term Incentive Plan (the “LTIP Plan”) in which the Company’s directors, officers, employees and consultants are eligible to participate. A total of 308,209 shares had been issued under the LTIP Plan and 1,691,791 were available to issue as of December 31, 2021.

On January 18, 2021, the Company entered into an Equity Exchange Agreement (the “Exchange Agreement”), effective as of January 14, 2021, with two individuals who each owned 50% of the outstanding equity interests in Woundyne Medical, LLC (“Woundyne”). Pursuant to the Exchange Agreement, the Company acquired 100% of the issued and outstanding equity interests of Woundyne in exchange for the issuance of an aggregate of 29,536 shares of the Company’s common stock with a fair value of $1,000,000. The acquisition of the outstanding equity interests of Woundyne was accounted for as an asset acquisition. The primary asset acquired by the Company is the Woundyne software platform which allows data related to surgical and chronic wounds to be tracked, monitored, and interfaced with the software user’s electronic medical records. Woundyne has no other material assets, liabilities, or revenues. The issuance of these shares was capitalized as internal use software. The Company subsequently changed the name of Woundyne Medical, LLC to WounDerm, LLC.

On February 12, 2021, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Cantor Fitzgerald & Co. as representative of several underwriters named therein (collectively, the “Underwriters”), pursuant to which the Company agreed to issue and sell an aggregate of 1,100,000 shares of the Company’s common stock to the Underwriters at a price to the public of $25.00 per share, less underwriting discounts and commissions (the “Offering”). Pursuant to the Underwriting Agreement, the Company granted the Underwriters a 30-day option to purchase up to an additional 165,000 shares of common stock at the public offering price, less underwriting discounts and commissions, which the Underwriters exercised in full. The Offering, including the purchase of the 165,000 additional shares of common stock, closed on February 17, 2021.

The net proceeds to the Company from the Offering were $28.9 million, after (i) giving effect to the Underwriters’ full exercise of its option to purchase additional shares of common stock, and (ii) deducting the underwriting discounts and commissions and offering expenses payable by the Company. Through an insured cash sweep service, the net proceeds have been deposited in accounts insured by the Federal Deposit Insurance Corporation.

Following the closing of the Offering in February of 2021, the Company made the $750,000 Post Capital Raise Payment (as defined in the BIAKŌS License Agreement) to Rochal in the form of 20,834 shares of the Company’s common stock (see Notes 4 and 6 for more information).

On July 14, 2021, the Company entered into an asset purchase agreement with Rochal, effective July 1, 2021, pursuant to which the Company purchased certain assets of Rochal, including, among others, certain of Rochal’s intellectual property, furniture and equipment, supplies, rights and claims, other than certain excluded assets, all as more specifically set forth in the asset purchase agreement. In exchange for the acquired assets, the Company paid Rochal $496,100 in cash and (ii) 14,369 shares of the Company’s common stock and assumed certain net liabilities of $3,900. Based on the trading price of the Company’s common stock on July 14, 2021, the fair value of the equity consideration transferred was determined to be $584,244. See Note 3 for more information regarding this transaction.

Restricted Stock Awards

During the year ended December 31, 2021, the Company issued restricted share awards under the LTIP Plan which are subject to certain vesting provisions and other terms and conditions set forth in each recipient’s restricted stock agreement. The Company granted and issued 59,933 shares, net of forfeitures, of restricted common stock to Company employees, directors, and certain consultants of the Company. The fair value of these awards is based on the closing price of the Company’s common stock on the respective grant dates; then, is recognized as compensation expense on a straight-line basis over the vesting period of the award.

Share-based compensation expense of $2,668,892 was recognized in selling, general and administrative expenses during the year ended December 31, 2021, compared to $1,402,897 recognized during the year ended December 31, 2020. For the year ended December 31, 2021, our share-based compensation expense of $2,668,892 included $1,088,184 which was recorded as a liability at December 31, 2021 as the awards were to be settled in a variable number of shares at a future date. The related shares for this liability were issued in early 2022 and were reclassified into equity at that time.

At December 31, 2021, there was $1,704,130 of total unrecognized share-based compensation expense related to unvested share-based equity awards. Unrecognized share-based compensation expense is expected to be recognized over a weighted-average period of 0.7 years.

Below is a summary of restricted stock activity for the year ended December 31, 2021:

	For the Year Ended December 31, 2021
	Shares			Weighted Average Grant Date Fair Value
Non-vested at beginning of period		170,178		$	14.20
Granted		64,719			28.99
Vested		(68,661	)		18.99
Forfeited		(4,786	)		13.03
Non-vested at December 31, 2021		161,450		$	18.13

Stock Options

A summary of the status of outstanding stock options at December 31, 2021 and changes during the year then ended is presented below:

	For the Year Ended December 31, 2021
	Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Life
Outstanding at beginning of period		11,500	$	6.00
Granted		-		-
Exercised		-		-
Forfeited		-		-
Expired		-		-
Outstanding at December 31, 2021		11,500	$	6.00		1.0
Exercisable at December 31, 2021		11,500	$	6.00		1.0