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12. SUBSEQUENT EVENTS
12 Months Ended
Dec. 31, 2018
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

In accordance with applicable accounting standards for the disclosure of events that occur after the balance sheet date but before the financial statements are issued, all significant events or transactions that occurred after December 31, 2018, are outlined below:

 

Effective January 31, 2019, John Siedhoff resigned as Chairman and member of the Board of Directors of Wound Management Technologies, Inc. (the “Company”). Mr. Siedhoff did not resign as a result of a disagreement with the Company. Mr. Jim Stuckert, a Company Board member since 2015 and retired Chairman and Chief Executive Officer of J.J.B. Hilliard, W.L. Lyons, LLC, assumed the role of Chairman effective February 1, 2019.

 

On March 13, 2019, the Company established a new series of preferred stock consisting of 1,200,000 shares of Series F Convertible Preferred Stock, par value of $10.00 per share. Each share of Series F Convertible Preferred Stock may be converted at the option of the holder, at any time, into 200 shares of common stock. Additionally, each holder of Series F Convertible Preferred Stock is entitled to vote on all matters submitted for a vote of the Company’s shareholders with votes equal to the number of shares of common stock into which such holder’s Series F shares could then be converted. The Series F Convertible Preferred Stock is senior to the Company’s common stock as to the payment of dividends (if any) and the distribution of assets. Upon liquidation of the Company, holders of Series F Convertible Preferred Stock are entitled to a liquidation preference of $5 per share. See Exhibit 4.6, Certificate of Designations, Voting Power, Preferences and Rights of Series F Convertible Preferred Stock.

 

 

On March 15, 2019, the Company acquired the remaining 50% interest in Cellerate, LLC not owned by the Company. The acquisition was made from an affiliate of The Catalyst Group, Inc. (CGI) of Houston, Texas in exchange for the issuance of 1,136,815 shares of the Company’s newly created Series F Convertible Preferred Stock. Based on the closing price of the Company’s common stock on March 15, 2019 and the conversion ratio of the Series F Preferred Stock, the fair value of the preferred shares issued to CGI was approximately $12.5 million. As of the transaction effective date of March 15, 2019, the Company owns 100% of Cellerate, LLC, and as a wholly-owned subsidiary will report its operations and financial results on a consolidated basis. See Exhibit 10.6, Share Exchange Agreement between CGI CellerateRX, LLC and WNDM Medical, Inc.

 

 

Following the closing of this transaction, Mr. Ron Nixon, Founder and Managing Partner of CGI, was elected to the Company’s Board of Directors effective March 15, 2019. Mr. Nixon currently serves on the board of directors for publicly traded LHC Group, Inc., Trilliant Surgical, LLC, Rochal Industries, LLC, Triad Life Sciences, Inc. and several other privately held companies. Mr. Nixon holds a bachelor’s degree in mechanical engineering from the University of Texas at Austin and is a registered professional engineer in Texas.

 

 

On March 21, 2019, the Company filed SEC Schedule 14C notifying shareholders of common stock that a majority of our capital stock entitled to vote (the “Majority Shareholders”) approved by written consent in lieu of a meeting of shareholders an amendment to the Company’s Certificate of Formation (the “Amendment”) to accomplish the following actions (the “Corporate Actions”):

 

 

(1) the effectuation of a 1-for-100 reverse stock split of the Company’s outstanding Common Stock such that every Shareholder shall receive one share of Common Stock for every 100 shares of Common Stock held (the “Reverse Stock Split”);

 

 

(2) upon the effectiveness of the Reverse Stock Split, the reduction of the authorized capital stock of the Company to 20,000,000 shares of Common Stock and 2,000,000 shares of preferred stock; and

 

 

(3) the change of the name of the Company to: Sanara MedTech, Inc.

 

The written consent of the Majority Shareholders constitutes the required approval of the Company’s Shareholders and is sufficient under the Texas Business Organizations Code (the “TBOC”) and the Company’s Certificate of Formation and Bylaws to approve the Corporate Actions described above. No further action is required from the remaining Shareholders. Accordingly, the Corporate Actions are not being submitted to these other Shareholders for a vote.

 

The Company anticipates that these changes will take effect near the end of April or early May, 2019. When it becomes effective, the reverse stock split will not change a shareholder's ownership percentage of the Company's common stock, except for the small effect where the reverse stock split would result in a shareholder owning a fractional share. No fractional shares will be issued as a result of the reverse split. Shareholders who would otherwise be entitled to receive a fractional share will instead receive a cash payment based on the market price of a share of common stock on the day after the reverse stock split becomes effective.

 

The conversion and voting provisions of the Company's Series F Convertible Preferred Stock will be proportionally adjusted by a factor of 100 to reflect the reverse stock split. All of the Company's outstanding stock options will also be proportionally adjusted to reflect the reverse split, in accordance with the terms of the plans, agreements or arrangements governing such securities.