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8. STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

STOCKHOLDERS EQUITY

Preferred Stock

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 was convertible at the option of the holder, at any time, into 2 shares of common stock. Additionally, each holder of Series F Convertible Preferred Stock was 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 Convertible Preferred shares could then be converted. The Series F Convertible Preferred Stock ranked 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 were entitled to a liquidation preference of $5.00 per share.

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. After the conversions, Catalyst and its affiliates controlled the voting of a total of 3,416,587 shares of the Company’s common stock, which represented 54.3% of the 6,297,008 shares of common stock outstanding as of December 31, 2020.

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 May 10, 2019 the Company effected a 1-for-100 reverse stock split of the Company’s issued and outstanding shares of common stock. Concurrent with the reverse stock split, the Company changed its corporate name from Wound Management Technologies, Inc. to Sanara MedTech Inc.

The reverse stock split was previously approved by shareholders of a majority of the Company’s outstanding voting stock on March 21, 2019. On May 10, 2019, the Company’s common stock began trading on the OTCQB market under the symbol “WNDMD” and traded under that symbol until June 6, 2019, at which time the Company changed its trading symbol to “SMTI”. The post-split common stock is traded under a new CUSIP number 79957L100. In connection with the reverse stock split, the Company also made a corresponding adjustment to the Company’s authorized capital stock to reduce the authorized common stock to 20,000,000 shares and the authorized preferred stock to 2,000,000 shares, effective May 10, 2019.

The reverse stock split did not change shareholders’ 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 were issued as a result of the reverse split. Shareholders who were otherwise entitled to receive a fractional share received a cash payment based on the market price of a share of the common stock on May 13, 2019.

On October 15, 2019, Company closed a private placement of 1,204,820 shares of its common stock at a price of $8.30 per share. All shares sold by the Company were newly issued shares. The purchasers in the offering were related party entities to three members of the Company’s board of directors.

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 248,276 shares had been issued under the LTIP Plan and 1,751,724 were available to issue as of December 31, 2020.

Restricted Stock Awards

During the year ended December 31, 2020, 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.

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The Company granted and issued 209,541 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.

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The Company also issued 3,735 restricted shares to certain employees under a restricted stock purchase program which was made available to all employees in April 2020. Share-based compensation expense related to the stock purchase program was determined as the fair value of the stock at purchase date in excess of its purchase price. The stock purchase program ended on December 31, 2020.

Share-based compensation expense of $1,402,897, of which $92,516 related to the stock purchase program, was recognized in selling, general and administrative expenses during the twelve months ended December 31, 2020. No share-based expense was recognized during the twelve months ended December 31, 2019.

At December 31, 2020, there was $1,470,827 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 0.9 years.

Below is a summary of restricted stock activity for the twelve months ended December 31, 2020:

		For the Year Ended
		December 31, 2020
		Shares				Weighted Average Grant Date Fair Value
Non-vested at beginning of period			-			$	-
Granted			214,894				14.05
Vested			(43,098	)			13.58
Forfeited			(1,618	)			11.15
Non-vested at December 31, 2020			170,178			$	14.20

Stock Options

A summary of the status of outstanding stock options at December 31, 2020 and changes during the twelve-month period then ended is presented below:

		For the Year Ended
		December 31, 2020
						Weighted Average				Weighted Average Remaining
		Options				Exercise Price				Contract Life
Outstanding at beginning of period			11,500			$	6.00
Granted			-				-
Exercised			-				-
Forfeited			-			$	-
Expired			-				-
Outstanding at December 31, 2020			11,500			$	6.00				2.0

Exercisable at December 31, 2020			11,500			$	6.00				2.0