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SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2021

Shareholders' equity

NOTE 6 - SHAREHOLDERS' EQUITY

NOTE 6 – SHAREHOLDERS’ EQUITY

Preferred Stock

On February 7, 2020, CGI Cellerate RX, an affiliate of The Catalyst Group, Inc. (“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. As of September 30, 2021, Catalyst and its affiliates controlled the voting of a total of 3,519,019 shares of the Company’s common stock, which represents 46% of the 7,632,044 shares of common stock outstanding.

Common Stock

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 253,573 shares had been issued under the LTIP Plan and 1,746,427 were available for issuance as of September 30, 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 chronic and surgical 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 3 and 4 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 to Rochal (i) $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 9 for more information regarding this transaction.

Restricted Stock Awards

During the nine months ended September 30, 2021, the Company granted and issued 10,083 shares of restricted common stock to two employees under the LTIP Plan. The shares are subject to certain vesting provisions and other terms and conditions set forth in the employees’ respective restricted stock agreements. The fair value of these awards was $394,073 based on the closing prices of the Company’s common stock on the respective grant dates and is recognized as compensation expense on a straight-line basis over the vesting period of the awards.

Share-based compensation expense of $852,226 was recognized in selling, general and administrative expenses during the nine months ended September 30, 2021, compared to $872,662 recognized during the nine months ended September 30, 2020.

At September 30, 2021, there was $950,313 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 nine months ended September 30, 2021:

		For the Nine Months Ended
		September 30, 2021
						Weighted Average
		Shares				Grant Date Fair Value
Non-vested at beginning of period			170,178			$	14.20
Granted			10,083				39.08
Vested			(63,885	)			18.12
Forfeited			(4,786	)			13.03
Non-vested at September 30, 2021			111,590			$	14.26

Stock Options

A summary of the status of outstanding stock options at September 30, 2021 and changes during the nine-month period then ended is presented below:

		For the Nine Months Ended
		September 30, 2021
						Weighted Average				Weighted Average
		Options				Exercise Price				Remaining Contract Life
Outstanding at beginning of period			11,500			$	6.00
Granted			-				-
Exercised			-				-
Forfeited			-				-
Expired			-				-
Outstanding at September 30, 2021			11,500			$	6.00				1.3
Exercisable at September 30, 2021			11,500			$	6.00				1.3

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The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
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-Publisher FASB
-Name Accounting Standards Codification
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-Section S99
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-Publisher FASB
-Name Accounting Standards Codification
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