smti_def14a
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
Filed
by the Registrant ☒
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Filed
by a Party other than the Registrant ☐
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Check
the appropriate box:
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Preliminary Proxy
Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive Proxy
Statement
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Definitive
Additional Materials
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Soliciting Material
Pursuant to §240.14a-12
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SANARA
MEDTECH INC.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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of Filing Fee (Check the appropriate box):
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and 0-11.
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of each class of securities to which transaction
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(2)
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Aggregate number of
securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
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(4)
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1200
Summit Ave
Suite
414
Fort
Worth, Texas 76102
(817)
529-2300
August
30, 2021
Dear
Shareholder:
You
are cordially invited to attend the Annual Meeting of Shareholders
(the “Annual Meeting”) of Sanara MedTech Inc., a Texas
corporation (the “Company”). The Annual Meeting will be
held on Thursday, September 30, 2021, at 10:00 a.m., Central
Daylight Time. In light of the ongoing COVID-19 pandemic, for the
safety of all, including our shareholders, and taking into account
federal, state and local guidance that has been issued, we have
determined that the Annual Meeting will be held in a virtual
meeting format only, via the Internet, with no physical in-person
meeting.
To
participate in the Annual Meeting virtually via the Internet, you
must register in advance at https://stctransfer.zoom.us/webinar/register/WN_o0XqvSFkSaqvDHHWddVINA
prior to the deadline of September 29, 2021 at 8:00 p.m. Central
Daylight Time. Upon completing your registration, you will receive
further instructions via email, including the link that will allow
you access to the Annual Meeting. You will not be able to attend
the Annual Meeting in person. Enclosed are the Notice of Annual
Meeting of Shareholders and Proxy Statement, which describe the
business that will be acted upon at the Annual Meeting, as well as
our 2020 Annual Report, which includes our audited financial
statements, and your proxy card, which contains instructions for
how to vote.
Your
vote is very important, regardless of the number of shares of our
voting securities that you own. As an alternative to voting online
during the Annual Meeting, you may vote in advance of the Annual
Meeting, via the Internet, or by signing, dating and returning the
enclosed proxy card. Whether or not you expect to attend the
virtual Annual Meeting, please read the enclosed Proxy Statement
carefully, and then vote your shares as promptly as possible to
ensure your representation and the presence of a quorum at the
Annual Meeting.
If
your shares are held in the name of a broker, trust, bank or other
nominee, and you receive these materials through your broker or
through another intermediary, please complete and return the
materials in accordance with the instructions provided to you by
such broker or other intermediary, or contact your broker directly
in order to obtain a proxy issued to you by your nominee holder to
attend the virtual Annual Meeting and vote your shares. Failure to
do so may result in your shares not being eligible to be voted by
proxy at the Annual Meeting. Only shareholders who held shares at
the close of business on the record date, August 16, 2021, may vote
at the Annual Meeting.
On
behalf of the Board of Directors, I urge you to submit your vote as
soon as possible, even if you currently plan to attend the meeting
virtually. Thank you for your support of our company. I look
forward to your virtual participation at the Annual
Meeting.
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Sincerely,
/s/
Ronald T. Nixon
Ronald
T. Nixon
Executive
Chairman
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SANARA
MEDTECH INC.
1200
Summit Ave
Suite
414
Fort
Worth, Texas 76102
(817)
529-2300
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
Be Held September 30, 2021
NOTICE
IS HEREBY GIVEN that the 2021 Annual Meeting of Shareholders (the
“Annual Meeting”) of Sanara MedTech Inc., a Texas
corporation (the “Company”), will be held
electronically as a virtual meeting on September 30, 2021, at 10:00
a.m. Central Daylight Time, to be conducted in a virtual format
only via live audio webcast.
To
participate in the Annual Meeting virtually via the Internet, you
must register in advance at https://stctransfer.zoom.us/webinar/register/WN_o0XqvSFkSaqvDHHWddVINA
prior to the deadline of September 29, 2021 at 8:00 p.m. Central
Daylight Time. Upon completing your registration, you will receive
further instructions via email, including the link that will allow
you access to the meeting. There is no physical location for the
2021 Annual Meeting.
At the
Annual Meeting, shareholders will consider and act on the following
items:
(1)
the election of
seven directors to serve as directors on the Board of Directors
with terms expiring at our 2022 annual meeting of shareholders or
until their successors have been duly elected and qualified;
and
(2)
such other
business as may arise and that may properly be conducted at the
Annual Meeting or any adjournment or postponement
thereof.
Shareholders are
referred to the proxy statement accompanying this notice (the
“Proxy Statement”) for more detailed information with
respect to the matters to be considered at the Annual
Meeting.
The
Board of Directors has fixed the close of business on August 16,
2021, as the record date (the “Record Date”) for the
Annual Meeting. Only holders of record of shares of our common
stock on the Record Date are entitled to receive notice of the
Annual Meeting and to vote at the Annual Meeting or at any
postponement(s) or adjournment(s) of the Annual Meeting. A complete
list of registered shareholders entitled to vote at the Annual
Meeting will be available for inspection at our offices during
regular business hours for at least ten (10) calendar days prior to
the Annual Meeting. The list will also be available online during
the Annual Meeting for inspection by shareholders. If you would
like to review the list, please contact our Investor Relations
department by emailing IR@sanaramedtech.com.
YOUR
VOTE AND PARTICIPATION IN THE COMPANY’S AFFAIRS ARE
IMPORTANT.
If your shares are registered in your
name, even if you plan to virtually attend the Annual
Meeting or any postponement or adjournment of the Annual Meeting,
please vote in advance of the Annual Meeting via the Internet, or
by completing, dating, and signing the proxy card and returning it
promptly in the enclosed prepaid envelope, in order to ensure that
your shares will be represented at the Annual Meeting. The enclosed
Proxy Statement and proxy card each contain detailed voting
instructions for voting your shares by Internet or by
mail.
If your shares are held in the name of a
broker, trust, bank or other nominee, and you receive these
materials through your broker or through another intermediary,
please complete and return the materials in accordance with the
instructions provided to you by such broker or other intermediary
or contact your broker directly in order to obtain a proxy issued
to you by your nominee holder to attend the Annual Meeting
virtually and vote during the meeting. Failure to do so may result
in your shares not being eligible to be voted by proxy at the
Annual Meeting.
August
30, 2021
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By
Order of the Board of Directors,
/s/ Ronald T.
Nixon
Ronald
T. Nixon
Executive
Chairman
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SANARA
MEDTECH INC.
1200
Summit Ave
Suite
414
Fort
Worth, Texas 76102
(817)
529-2300
PROXY
STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To
Be Held September 30, 2021
Unless
the context otherwise requires, references in this Proxy Statement
to “we,” “us,” “our,”
“the Company,” “Sanara,” or “Sanara
MedTech” refer to Sanara MedTech Inc., a Texas corporation,
and its consolidated subsidiaries as a whole. In addition, unless
the context otherwise requires, references to
“shareholders” are to the holders of our common stock,
par value $0.0001 per share.
The
accompanying proxy is solicited by the Board of Directors (the
“Board”) on behalf of Sanara MedTech Inc. to be voted
at the 2021 annual meeting of shareholders of the Company (the
“Annual Meeting”) to be held on September 30, 2021, at
the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders (the
“Notice”) and at any adjournment(s) or postponement(s)
of the Annual Meeting. This Proxy Statement and the accompanying
2020 annual report (the “Annual Report”) and proxy card
are expected to be first sent or given to shareholders on or about
August 30, 2021.
The
executive offices of the Company are located at, and the mailing
address of the Company is, 1200 Summit Ave, Suite 414, Fort Worth,
Texas 76102.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR
THE SHAREHOLDER MEETING TO BE HELD ON SEPTEMBER 30,
2021:
As
permitted by the “Notice and Access” rules of the
Securities and Exchange Commission (the “SEC”), we are
making this Proxy Statement, the proxy card, and our Annual Report
available to shareholders electronically via the Internet at the
following website:
http://onlineproxyvote.com/SMTI/
What
is a proxy?
A proxy
is another person that you legally designate to vote your stock. If
you designate someone as your proxy in a written document, that
document is also called a “proxy” or a “proxy
card.” If you are a “street name” holder, you
must obtain a proxy from your broker or nominee in order to vote
your shares at the Annual Meeting.
What
is a proxy statement?
A proxy
statement is a document that regulations of the SEC require that we
give to you when we ask you to sign a proxy card to vote your stock
at the Annual Meeting.
What
is the purpose of the Annual Meeting?
At our
Annual Meeting, shareholders will act upon the matters outlined in
the Notice, which include the following:
(1)
the election of
seven directors to the Board, to serve until our 2022 annual
meeting of shareholders or until their successors are duly elected
and qualified (“Proposal 1”); and
(2)
such other business
as may arise that may properly be conducted at the Annual Meeting
or any adjournment, postponement or recess thereof.
Management will
also be available to respond to questions from shareholders. To
promote fairness, efficient use of the Company’s resources
and ensure the most pertinent shareholder questions are able to be
addressed, questions should be submitted in advance of the Annual
Meeting. Please submit your questions by email to IR@sanaramedtech.com,
prior to 5:00 p.m. on September 28, 2021. If time allows,
management will also consider questions submitted by shareholders
during the Annual Meeting, which may be submitted by clicking on
the Q&A icon on the toolbar at the bottom of the virtual
meeting webpage.
What
should I do if I receive more than one set of voting
materials?
You may
receive more than set of voting materials, including multiple
copies of this proxy statement and multiple proxy cards or voting
instruction cards. For example, if you hold your shares in more
than one brokerage account, you will receive a separate voting
instruction card for each brokerage account in which you hold
shares. Similarly, if you are a shareholder of record and hold
shares in a brokerage account, you will receive a proxy card for
shares held in your name and a voting instruction card for shares
held in “street name.” Please follow the separate
voting instructions that you received for your shares of common
stock held in each of your different accounts to ensure that all of
your shares are voted.
Why
have a virtual meeting?
We are
excited to embrace the latest technology to provide expanded
access, improved communication and cost savings for our
shareholders and the Company. Hosting a virtual meeting enables
increased shareholder attendance and participation because
shareholders can participate from any location around the world. In
light of the ongoing COVID-19 pandemic in the United States and
abroad, we also believe that hosting a virtual meeting helps ensure
the health and safety of our shareholders, our Board and our
management.
What
do I need to do to attend the virtual Annual Meeting?
We will
be hosting the Annual Meeting online via live audio webcast. A
summary of the information you need to attend the Annual Meeting
online is provided below:
Record Holders. If you were a
shareholder of record (i.e., you held your shares through a
certificate registered in your name) on August 16, 2021, you may
virtually attend the Annual Meeting, but you must first register to
do so by visiting: https://stctransfer.zoom.us/webinar/register/WN_o0XqvSFkSaqvDHHWddVINA.
You will then be directed to a screen where you will enter your
registered name as found on the enclosed proxy card along with your
email address. Upon completion of registration, you will receive an
automated email confirming your registration, which will include a
link to access the virtual Annual Meeting, the meeting passcode,
and further instructions for joining the meeting. If you are a
shareholder of record and you have misplaced your proxy card, or
encounter any issues or difficulties with registration, please call
Securities Transfer Corporation at (469) 633-0101.
The
live webcast of the Annual Meeting will begin promptly at 10:00
a.m. Central Daylight Time. You may join the Annual Meeting by
accessing the Internet site provided to you at registration and
entering the passcode provided in your confirmation email. Online
access to the webcast will open approximately 30 minutes prior to
the start of the Annual Meeting to allow time for our shareholders
to log in and test their devices’ audio system. We encourage
our shareholders to access the meeting in advance of the designated
start time.
Beneficial Owners. If you were a
beneficial owner on August 16, 2021 (i.e., you held your shares in
“street name” through an intermediary, such as a
broker, bank or other nominee), you must register as described in
the preceding paragraph for record holders, and must provide proof
of ownership of your shares by email to Securities Transfer
Corporation at info@stctransfer.com.
A recent brokerage statement or letter from your broker, bank or
other nominee is an example of proof of ownership. Requests for
registration and submission of proof of ownership should be labeled
as “SMTI Registration” and must be received by
Securities Transfer Corporation no later than 8 p.m., Central time,
on September 29, 2021. If you have questions, please call
Securities Transfer Corporation at (469) 633-0101.
What
is the record date and what does it mean?
The
record date to determine the shareholders entitled to notice of and
to vote at the Annual Meeting is the close of business on August
16, 2021 (the “Record Date”). The Record Date is
established by the Board. On the Record Date, 7,626,705 shares of
common stock were issued and outstanding.
Who
is entitled to vote at the Annual Meeting?
Holders
of common stock at the close of business on the Record Date may
vote at the Annual Meeting.
What
are the voting rights of the shareholders?
Each
holder of common stock is entitled to one vote per share of common
stock on each matter to be acted upon at the Annual Meeting. Our
Certificate of Formation, as amended, prohibits cumulative voting
rights for the election of directors.
The
presence, in person or by proxy, of the holders of a majority of
the voting power of the shares entitled to vote at the Annual
Meeting is necessary and sufficient to constitute a quorum to
transact business. If a quorum is not present or represented at the
Annual Meeting, the shareholders entitled to vote at the meeting
may adjourn the meeting from time to time to another place, if any,
date or time. For the purposes of this virtual Annual Meeting,
presence “in person” is satisfied by attending the
virtual meeting online by following the instructions included in
your Notice of Internet Availability.
What
is the difference between a shareholder of record and a
“street name” holder?
If your
shares are registered directly in your name with Securities
Transfer Corporation, the Company’s stock transfer agent, you
are considered the shareholder of record with respect to those
shares. The proxy materials will be sent directly to you by the
Company.
If your
shares are held in a stock brokerage account or by a bank or other
nominee, the nominee is considered the record holder of those
shares. You are considered the beneficial owner of these shares,
and your shares are held in “street name.” The proxy
materials will be forwarded to you by your nominee. As the
beneficial owner, you have the right to direct your nominee
concerning how to vote your shares by using the voting instructions
the nominee included in the mailing or by following such
nominee’s instructions for voting.
What
is a broker non-vote?
A
broker non-vote occurs when a broker holding shares for a
beneficial owner does not vote on a particular proposal because the
broker does not have discretionary voting power with respect to
that item and has not received voting instructions from the
beneficial owner. In the absence of specific instructions from you,
your broker does not have discretionary authority to vote your
shares with respect to Proposal 1. Because brokers will not have
discretionary authority to vote on any of the matters to be brought
before the Annual Meeting, we do not expect there to be any broker
non-votes.
How
do I vote my shares?
If you
are a record holder, you may vote your shares at the Annual Meeting
in person or by proxy. To vote in person by virtually attending the
Annual Meeting, or to vote by proxy, you may choose one of the
following methods to vote your shares:
●
Voting at the Annual Meeting
You will have the right to vote during the Annual
Meeting at http://onlineproxyvote.com/STMI.
This is a separate website from the page that you will access to
attend the virtual Annual Meeting, but the voting site will only
record votes cast during the meeting from shareholders in
attendance at the meeting.
If you are a shareholder of record, you will need
to enter the 16-digit control number received with your proxy card
to vote at our Annual Meeting. If you are a beneficial owner, then
to vote at the Annual Meeting you will need to obtain a special
proxy from your broker, bank or other nominee that will allow you
to separately vote your shares. If you desire to vote during the
Annual Meeting, please be sure to contact your broker, bank or
other nominee to obtain your special proxy in advance of the Annual
Meeting and submit the special proxy to Securities Transfer
Corporation at info@stctransfer.com to
receive a 16-digit control number to vote during the Annual
Meeting. Please be advised that obtaining a special proxy may take
several days, and all submissions of a special proxies must be
received by Securities Transfer Corporation no later than
5:00 p.m., Central
Daylight Time, on September 29, 2021, in order to allow adequate time for your request
to be processed.
Even
if you plan to attend our Annual Meeting remotely, we recommend
that you also submit your proxy by voting in advance as described
above so that your vote will be counted if you later decide not to
attend our Annual Meeting. The shares voted electronically,
telephonically, or represented by the proxy cards received,
properly marked, dated, signed and not revoked, will be voted at
the Annual Meeting.
If you are a shareholder of record, you may submit
your proxy by going to http://onlineproxyvote.com/STMI
and following the instructions
provided in your proxy materials and on your proxy card. If your
shares are held with a broker, you will need to go to the website
provided on your voting instruction card. Have your proxy card or
voting instruction card in hand when you access the voting website.
On the Internet voting site, you can confirm that your instructions
have been properly recorded. If you vote on the Internet, you can
also request electronic delivery of future proxy materials.
Internet voting facilities are available now and will be available
24 hours a day until 11:59 p.m., Central
Daylight Time, on September 29, 2021.
●
Vote by Facsimile or Email
You may sign, date and submit your Proxy Card by
facsimile to (469) 633-0088, or sign, date, scan and email your
scanned Proxy Card to
proxyvote@stctransfer.com until 11:59 p.m., Central
Daylight Time, on September 29, 2021.
You may choose to vote by mail, by marking your
proxy card or voting instruction card, dating and signing it, and
returning it in the postage-paid envelope provided. If the envelope
is missing and you are a shareholder of record, please mail your
completed proxy card to Securities Transfer Corporation, 2901 N.
Dallas Parkway, Suite 380, Plano, Texas 75093, Attention: Proxy
Department. If the envelope is missing and your shares are held
with a broker, please mail your completed voting instruction card
to the address specified therein. Please allow sufficient time for
mailing if you decide to vote by mail as it must be received
by 11:59 p.m.,
Central Daylight Time, on September 29, 2021.
The
proxy is fairly simple to complete, with specific voting
instructions including on the proxy card. By completing and
submitting it, you will direct the designated persons (known as
“proxies”) to vote your stock at the Annual Meeting in
accordance with your instructions. The Board has appointed J.
Michael Carmena and Michael D. McNeil to serve as the proxies for
the Annual Meeting.
Your
proxy will be valid only if you complete and return it before the
Annual Meeting. If you properly complete and transmit your proxy
but do not provide voting instructions with respect to a proposal,
then the designated proxies will vote your shares
“FOR” each
proposal as to which you provide no voting instructions in
accordance with the Board’s recommendation. We do not
anticipate that any other matters will come before the Annual
Meeting, but if any other matters properly come before the meeting,
then the designated proxies will vote your shares in accordance
with applicable law and their judgment.
If you
hold some or all of your shares in “street name,” your
bank, broker or other nominee should provide to you a request for
voting instructions along with the Company’s proxy
solicitation materials. By completing the voting instruction card,
you may direct your nominee how to vote your shares. If you
partially complete the voting instruction but fail to complete one
or more of the voting instructions, then your nominee may be unable
to vote your shares with respect to the proposal as to which you
provided no voting instructions. See “What is a broker
non-vote?”
Who
counts the votes?
All
votes will be tabulated by Securities Transfer Corporation, the
inspector of election appointed for the Annual Meeting. Each
proposal will be tabulated separately.
Can
I vote my shares in person at the Annual Meeting?
Yes. If
you are a shareholder of record, you may vote your shares during
the virtual meeting by following the instructions under “How
do I vote my shares?”
If you
hold your shares in “street name,” you may vote your
shares during the virtual meeting by following the instructions
under “How do I vote my shares?”
Even if
you currently plan to attend the Annual Meeting virtually, we
recommend that you also return your proxy or voting instructions as
described above so that your votes will be counted if you later
decide not to attend the Annual Meeting or are unable to
attend.
What
are my choices when voting?
When
you cast your vote on:
Proposal
1:
You may vote for
all director nominees or may withhold your vote as to one or more
director nominees.
What
are the Board’s recommendations on how I should vote my
shares?
The
Board recommends that you vote your shares as follows:
Proposal
1:
“FOR” the election of each of the
director nominees.
What
if I do not specify how I want my shares voted?
If you
are a record holder who returns a completed proxy that does not
specify how you want to vote your shares on one or more proposals,
the proxies will vote your shares for each proposal as to which you
provide no voting instructions, and such shares will be voted in
the following manner:
“FOR” all of the director nominees
up for shareholder election under Proposal 1.
If you
are a “street name” holder and do not provide voting
instructions on one or more proposals, your bank, broker or other
nominee will be unable to vote those shares with respect to
Proposal 1.
Can
I change my vote?
Yes. If
you are a record holder, you may revoke your proxy at any time by
any of the following means:
●
Virtually attending
the Annual Meeting and voting again online during the Annual
Meeting. Your virtual attendance at the Annual Meeting will not by
itself revoke a proxy. You must vote your shares online during the
Annual Meeting to revoke your proxy.
●
Completing and
submitting a new valid proxy bearing a later date.
●
Voting again on a
later date via the Internet, email or facsimile (only your latest
proxy that is submitted prior to the Annual Meeting will be
counted).
●
Giving written
notice of revocation to the Company addressed to Michael D. McNeil,
the Company’s Chief Financial Officer, at the Company’s
address above, which notice must be received before 5:00 p.m.,
Central Daylight Time, on September 29, 2021. If you are a
“street name” holder, your bank, broker or other
nominee should provide instructions explaining how you may change
or revoke your voting instructions.
What
votes are required to approve each proposal?
Assuming the
presence of a quorum, with respect to Proposal 1, the affirmative
vote of the holders of a plurality of the votes cast at the Annual
Meeting is required for the election of the director nominees,
i.e., the seven director
nominees who receive the most votes will be elected.
How
are abstentions and broker non-votes treated?
Any
shareholder who is present at the Annual Meeting, either in person,
which would include virtual attendance at the Annual Meeting, or by
proxy, who abstains from voting, will still be counted for purposes
of determining whether a quorum exists for the meeting. If you hold
your shares in “street name” and you do not instruct
your bank, broker or other nominee how to vote, your shares will be
included in the determination of the number of shares present at
the Annual Meeting for determining a quorum at the meeting, but may
constitute broker non-votes, resulting in no votes being cast on
your behalf with respect to Proposal 1. See “What is a broker
non-vote?”
An
abstention or failure to instruct your broker how to vote with
respect to Proposal 1 will not be counted as an affirmative or
negative vote in the election of directors and will have no effect
on the outcome of the vote with respect to Proposal 1. Brokers who
have not received voting instructions from the beneficial owner do
not have discretionary authority to vote on the election of
directors in Proposal 1. Therefore, broker non-votes will not be
considered in the vote totals with respect to Proposal 1 and will
have no effect on the vote regarding the election of
directors.
Do
I have any dissenters’ or appraisal rights with respect to
any of the matters to be voted on at the Annual
Meeting?
No.
None of our shareholders has any dissenters’ or appraisal
rights with respect to the matters to be voted on at the Annual
Meeting.
What
are the solicitation expenses and who pays the cost of this proxy
solicitation?
The
Board is asking for your proxy and we will pay all of the costs of
asking for shareholder proxies. We will reimburse brokerage houses
and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses for forwarding solicitation material to the
beneficial owners of common stock and collecting voting
instructions. We may use officers and employees of the Company to
ask for proxies, as described below.
Is
this Proxy Statement the only way that proxies are being
solicited?
No. In
addition to the solicitation of proxies, officers and employees of
the Company may solicit the return of proxies, either by mail,
telephone, telecopy, e-mail or through personal contact. These
officers and employees will not receive additional compensation for
their efforts but will be reimbursed for out-of-pocket expenses.
Brokerage houses and other custodians, nominees and fiduciaries, in
connection with shares of the common stock registered in their
names, will be requested to forward solicitation material to the
beneficial owners of shares of common stock.
Are
there any other matters to be acted upon at the Annual
Meeting?
Management does not
intend to present any business at the Annual Meeting for a vote
other than the matters set forth in the Notice and has no
information that others will do so. If other matters requiring a
vote of the shareholders properly come before the Annual Meeting,
it is the intention of the persons named in the form of proxy to
vote the shares represented by the proxies held by them in
accordance with applicable law and their judgment on such
matters.
Where
can I find voting results?
We
expect to publish the voting results in a Current Report on Form
8-K, which we expect to file with the SEC within four business days
after the Annual Meeting.
Who
can help answer my questions?
The information provided above
in this “Question and Answer” format is for your
convenience only and is merely a summary of the information
contained in this Proxy Statement. We urge you to carefully read
this entire Proxy Statement, including the documents we refer to in
this Proxy Statement. If you have any questions, or need additional
materials, please feel free to contact our Chief Financial Officer,
Michael D. McNeil, at 817-529-2300.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board has nominated seven
directors, Ronald T. Nixon, J. Michael Carmena, Robert A.
DeStutter, Sara N. Ortwein, Ann Beal Salamone, James W. Stuckert,
and Kenneth E. Thorpe, for election at the Annual Meeting by the
shareholders (collectively, the Director Nominees and each, a
“Director Nominee”).
At the
Annual Meeting, our shareholders will consider and vote upon the
re-election of the Director Nominees, to serve as directors. If
re-elected, these Director Nominees will serve for a one-year term
that will expire at our 2022 annual meeting of shareholders or
until his or her successor is elected and qualified.
If a
quorum is present, the Director Nominees will be elected by a
plurality of the votes cast at the Annual Meeting. Abstentions and
broker non-votes have no effect on the vote. The seven Director
Nominees receiving the highest number of affirmative votes will be
elected directors of the Company. Shares of common stock
represented by executed proxies will be voted, if authority to do
so is not withheld, for the election of the seven Director
Nominees. Should any Director Nominee become unable or unwilling to
accept nomination or election, the proxy holders may vote the
proxies for the election, in his or her stead, of any other person
the Board may nominate or designate. Each Director Nominee has
agreed to serve, if elected, and the Board has no reason to believe
that any Director Nominee will be unable to serve.
The
Board believes that all of our current directors, which comprise
the seven Director Nominees for re-election, possess personal and
professional integrity, good judgment, a high level of ability and
business acumen.
Directors and Director Nominees
The
following table sets forth the name, position, age and year first
elected for the directors currently serving on our Board, all of
which are also Director Nominees:
Name
|
Position
and Offices
|
Age
|
Year
First Elected
|
Ronald
T. Nixon
|
Executive
Chairman
|
65
|
2019
|
J.
Michael Carmena
|
Vice
Chairman
|
66
|
2019
|
Robert
A. DeSutter
|
Director
|
53
|
2020*
|
Sara N.
Ortwein
|
Director
|
63
|
2020*
|
Ann
Beal Salamone
|
Director
|
70
|
2019
|
James
W. Stuckert
|
Director
|
83
|
2015
|
Kenneth
E. Thorpe
|
Director
|
65
|
2019
|
*
Appointed to the Board following the 2020 annual meeting of
shareholders.
The
biographies of the Director Nominees are as follows:
Ronald T. Nixon, age
65, has been a director of the Company since March 2019 and has
served as Executive Chairman of the Board since May 2019. As
Executive Chairman, he has been involved in strategy planning,
execution and identifying prospective partnerships and acquisition
opportunities for the Company. Mr. Nixon is the Founder and
Managing Partner of The Catalyst Group, Inc., a private investment
firm that provides growth capital and strategic advisory services
to private companies. Mr. Nixon serves on the board of directors of
LHC Group, Inc. as well as a number of private companies, including
Trilliant Surgical, LLC, Rochal
Industries, LLC, and Triad Life Sciences, Inc. Mr. Nixon
also serves on the Engineering Advisory Board for the Cockrell
School of Engineering at the University of Texas at Austin, where
he was the previous vice chairman. Mr. Nixon holds a
Bachelor’s degree in Mechanical Engineering from the
University of Texas at Austin and is a registered professional
engineer (inactive) in Texas. We believe that Mr. Nixon’s
extensive experience with acquisitions and the capital markets
contributes greatly to the composition of the Board and its ability
to oversee the Company’s strategic growth
strategy.
J. Michael Carmena,
age 66, has served as Vice Chairman of the Board and Principal
Executive Officer of the Company since May 2019, and served as
Chief Executive Officer from February 2018 to May 2019. He served
as Chief Financial Officer from December 2016 to April 2018. Prior
to joining the Company, Mr. Carmena served as Senior Director,
Business & Sales Operations of Smith and Nephew plc (successor
to Healthpoint Biotherapeutics) from 2010 to 2013. He served as
Senior Director, Finance & Administration of Healthpoint
Biotherapeutics from 2008 to 2010 and as Controller from 1998 to
2008, prior to which he held senior financial positions in a
company engaged in oil and gas exploration and production, ranching
and financial asset management. Mr. Carmena began his professional
career in 1978 with Arthur Andersen & Co. and became a CPA in
1981. Mr. Carmena earned a Bachelor of Business Administration
degree from Texas Christian University. Mr. Carmena’s
extensive wound care experience and leadership roles in finance,
operations, acquisitions, and divestitures make him a valuable
contributor to the Company’s Board.
Robert A. DeSutter,
age 53, is a managing director in Piper Sandler healthcare
investment banking. Mr. DeSutter has 28 years of investment banking
experience. He served as healthcare global group head from 2003 to
2018. Mr. DeSutter has decades of medical technology transaction
experience on numerous buy and sell-side, friendly and hostile,
strategic and financial buyer and public and private deals on a
global basis. Mr. DeSutter has completed financing transactions
involving public and private equity, convertible debt and
senior/sub debt. Mr. DeSutter was an investor and Board member for
his family’s sporting goods business, Great Plains Sporting
Goods LLC, from 2002 to 2009, which ultimately sold to a public
company. Mr. DeSutter is a graduate of the University of Minnesota
Carlson School of Management and the University of Virginia’s
Darden Graduate School of Business. Recognized as a global leader
in healthcare investment banking, we believe that Mr. DeSutter is
an invaluable contributing member of the Board.
Sara N. Ortwein, age
63, retired from ExxonMobil in March 2019, after a
thirty-eight-year career. [Ms. Ortwein has been engaged in personal
investing activities since February 2019.] Prior to retiring, she
was president of XTO Energy, a subsidiary of ExxonMobil, from
November 2016 through February 2019 and was responsible for
ExxonMobil’s unconventional oil and gas business. Ms. Ortwein
also served in various roles including president of ExxonMobil
Upstream Research Company, senior manager within ExxonMobil’s
U.S. production operations, and corporate upstream advisor to
senior management at ExxonMobil’s headquarters in Irving,
Texas. Ms. Ortwein earned a Bachelor of Science degree in civil
engineering at the University of Texas at Austin before joining
Exxon Company, U.S.A. in 1980. We believe that Ms. Ortwein’s
extensive leadership experience with a top five global company
contributes greatly to the composition of the Board.
Ann Beal Salamone,
M.S., age 70, has been a director of the Company since
August 2019. Ms. Salamone is a co-founder of Rochal Industries, LLC
(“Rochal”) and has served as its chairman since
September 2019, prior to which she served as its president from
1986 to September 2019. Ms. Salamone has been a consultant to the
Company since the Company’s acquisition of assets from Rochal
in July 2021. She is one of the principal inventors of
Rochal’s liquid bandages, antimicrobial compositions and skin
regeneration products for burn and wound treatment, and she has
participated in the development of products for electronics, water
purification, personal care and healthcare. Ms. Salamone has
co-founded six companies and invested in and served on the board of
directors of several private entrepreneurial companies. Ms.
Salamone is a member of the National Academy of Engineering and The
Academy of Medicine, Engineering & Science of Texas. We believe
that Ms. Salamone’s medical research and development
background, along with her company leadership experience provides a
valuable scientific and business perspective to the
Board.
James W. Stuckert,
age 83, has been a director of the Company since September 2015. He
has been engaged in personal investing activities since 2004. Mr.
Stuckert served as Chairman and Chief Executive Officer of J.J.B.
Hilliard, W.L. Lyons, LLC from December 1995 until December 2003,
prior to which he served in executive and broker positions from
1963. J.J.B. Hilliard, W.L. Lyons, LLC is a full-service financial
asset management firm headquartered in Louisville, Kentucky. Mr.
Stuckert was an initial investor and served 24 years on the board
of directors of Royal Gold, Inc. He previously has served as
chairman of SenBanc Fund; a director of DataBeam, Inc.; a board
member of the Securities Industry Association and chairman of its
regional firms committee; and a past member of the nominating
committee of the New York Stock Exchange. Mr. Stuckert has served
as a member of the board of trustees of the University of Kentucky
and as chairman of its Finance Committee and as chairman of its
Presidential Search Committee. He has also served as chairman of a
local hospital’s investment committee. Mr. Stuckert earned a
bachelor’s degree in Mechanical Engineering and a Master of
Business Administration degree from the University of Kentucky. We
believe that Mr. Stuckert’s experience as an accomplished
CEO, along with his many years of experience serving as a member of
numerous company boards make him a valuable contributor to the
Board.
Kenneth E. Thorpe,
Ph.D., age 65, has been a director of the Company since August
2019. He has been the Robert W. Woodruff Professor and Chair of the
Department of Health Policy & Management of the Rollins School
of Public Health of Emory University in Atlanta, Georgia since
1999. From 1983 to 1999 he held faculty positions in the public
health departments at Tulane University, the University of North
Carolina at Chapel Hill, Harvard University and Columbia
University. Since 2007 Dr. Thorpe has served as Chairman of the
Partnership to Fight Chronic Disease. He served on the board of
directors of LHC Group, Inc. in 2010; was a consultant in the
Governor’s Office and Legislature of West Virginia in 2011;
and was Co-Chair of the Partnership for the Future of Medicare in
2013. From 1993 to 1995, Dr. Thorpe served as Deputy Assistant
Secretary for Health Policy in the U.S. Department of Health and
Human Services where he coordinated all financial estimates and
program impacts of the Clinton administration’s healthcare
reform proposals. In 1991 he was awarded the Young Investigator
Award as the most promising health services researcher in the
country under age 40 by the Association for Health Services
Research. He has authored multiple articles and books on healthcare
financing, insurance and healthcare reform. Dr. Thorpe received his
Bachelor of Arts degree from the University of Michigan, Master of
Arts degree from Duke University, and Ph.D. from the Rand Graduate
School. We believe that Dr. Thorpe’s nationally recognized
expertise in health policy and value-based purchasing strategies
provides valuable insight to the Board.
Family
Relationships
Each
of our Director Nominees is currently serving on our Board. There
are no agreements or understandings between our directors and
executive officers or any other person pursuant to which they were
selected as a director or executive officer. In addition, there are
no family relationships between our directors and any of our
executive officers.
Required Vote and Board
Recommendation
If a
quorum is present, the seven Director Nominees receiving the
highest number of votes will be elected as directors. If you hold
your shares in your own name and abstain from voting on the
election of directors, your abstention will have no effect on the
vote. If you hold your shares through a broker and you do not
instruct the broker on how to vote for the seven Director Nominees,
your broker will not have the authority to vote your shares.
Abstentions will be counted as present for purposes of determining
the presence of a quorum but will not have any effect on the
outcome of the vote. We do not expect any broker non-votes at the
meeting.
The
Board recommends that you vote “FOR” each Director
Nominee.
Sanara MedTech, with the
oversight of the Board and its committees, operates within a
comprehensive plan of corporate governance for the purpose of
defining independence, assigning responsibilities, setting high
standards of professional and personal conduct and assuring
compliance with such responsibilities and standards. We regularly
monitor developments in the area of corporate
governance.
The Company adopted a Code of
Ethics and Business Conduct (“Code of Ethics”)
applicable to all directors, officers and employees. The Code of
Ethics addresses, among other things, honest and ethical conduct,
conflicts of interest, business opportunities, fair dealing,
confidentiality and disciplinary measures. The Code of Ethics can
be found on the Company’s website at www.sanaramedtech.com
under the Investors Relations tab. We intend to disclose any
amendments to our Code of Ethics on our website at www.sanaramedtech.com
under the Investors Relations tab.
Our Certificate of Formation
and Bylaws provide that the Board will consist of at least one and
no more than eight directors, with the authorized number of
directors to be fixed from time to time by resolution adopted by
the Board. The Board currently consists of seven directors. Any
vacancies or newly created directorships resulting from an increase
in the authorized number of directors may be filled by an
affirmative vote of at least a majority of the remaining directors
then in office, even if less than a quorum of the Board. Directors
are elected by the plurality vote of our shareholders at each of
our annual meetings.
We have
no formal policy regarding Board diversity. The Board believes that
each director should have a basic understanding of the principal
operational and financial objectives and plans and strategies of
the Company, our results of operations and financial condition and
relative standing in relation to our competitors. We take into
consideration the overall composition and diversity of the Board
and areas of expertise that director nominees may be able to offer,
including business experience, knowledge, abilities and customer
relationships. Generally, we will strive to assemble a Board that
brings to us a variety of perspectives and skills derived from
business and professional experience as we may deem are in our and
our shareholders’ best interests. In doing so, we will also
consider candidates with appropriate non-business
backgrounds.
We are
currently listed on the Nasdaq Capital Market and therefore rely on
the definition of “independence” set forth in the
Nasdaq Listing Rules (“Nasdaq Listing Rules”).
Under the Nasdaq Listing Rules,
independent directors must comprise a majority of a listed
company’s board of directors, subject to specified exceptions
and certain phase-in periods available to companies that do not yet
have a class of common stock registered under the Exchange Act of
1934, as amended (the “Exchange Act”). In addition,
Nasdaq Listing Rules require that, subject to specified exceptions,
each member of a listed company’s audit, compensation and
nominating and corporate governance committees be
independent.
Based
upon information requested from and provided by each director
concerning his or her background, employment, and affiliations,
including family relationships, we have determined that Robert A.
DeSutter, Sara N. Ortwein, James W. Stuckert and Kenneth E. Thorpe
have no material relationships with us that would interfere with
the exercise of independent judgment and are “independent
directors” as that term is defined in the Nasdaq Listing
Rules.
Board Committees, Meetings and
Attendance
During
2020, the Board held twelve meetings and acted four times by
unanimous written consent. We expect our directors to attend Board
meetings, meetings of any committees and subcommittees on which
they serve, and each annual meeting of shareholders, either in
person or by teleconference. During 2020, each director attended at
least seventy-five percent (75%) of the total number of meetings
held by the Board and Board committees of which such director was a
member. All five directors, which then comprised our Board,
attended our 2020 annual meeting of shareholders.
The
Board delegates various responsibilities and authority to different
Board committees. Committees regularly report on their activities
and actions to the full Board. Currently, the Board has established
an audit committee, a compensation committee and a nominating and
corporate governance committee. Committee assignments are
re-evaluated annually. Each of these committees operates under a
charter that has been approved by the Board. The current charter of
each of these committees is available on our website at
www.sanaramedtech.com in the Corporate Governance section
under the Investors Relations tab.
As of
August 16, 2021, the following tables set forth the membership of
each of the Board committees listed above.
|
|
|
Nominating
and Corporate Governance Committee
|
Mr.
DeSutter
|
Member
|
Member
|
Chairman
|
Ms.
Ortwein
|
|
Member
|
Member
|
Mr.
Stuckert
|
Chairman
|
|
Member
|
Mr.
Thorpe
|
Member
|
Chairman
|
Member
|
Audit Committee
We have
a standing audit committee established within the meaning of
Section 3(a)(58)(A) of the Exchange Act. Our audit committee
consists of Mr. DeSutter, Mr. Stuckert and Mr. Thorpe, with Mr.
Stuckert serving as chairman. Our Board has determined that each of
Mr. DeSutter, Mr. Stuckert and Mr. Thorpe are independent under
Nasdaq Listing Rules and Rule 10A-3(b)(1) of the Exchange Act. Our
Board has also reviewed the education, experience and other
qualifications of each member of the audit committee and determined
that each member can read and understand fundamental financial
statements in accordance with applicable requirements of the Nasdaq
Listing Rules and the SEC. The Board has also determined that Mr.
DeSutter qualifies as an “audit committee financial
expert” as defined by the applicable rules of the
SEC.
The
functions of the audit committee include, among other
things:
●
selecting a
qualified firm to serve as the independent registered public
accounting firm to audit our financial statements and prepare or
issue an audit report;
●
helping to ensure
the independence and performance of the independent registered
public accounting firm;
●
discussing the
scope and results of the audit with the independent registered
public accounting firm, and reviewing, with management and the
independent accountants, our annual and quarterly financial
statements, as well as all internal control reports;
●
establishing and
overseeing procedures for employees to submit concerns
confidentially and anonymously about questionable accounting or
auditing matters;
●
reviewing our
policies on risk assessment and risk management, including our
major financial risk exposures and cybersecurity
risks;
●
reviewing and
approving related-party transactions;
●
obtaining and
reviewing a report by the independent registered public accounting
firm that describes our internal quality-control procedures, any
material issues with such procedures, and any steps taken to deal
with such issues when required by applicable law; and
●
approving (or, as
permitted, pre-approving) all audit and all permissible non-audit
services, to be provided by the independent registered public
accounting firm.
During
the fiscal year ended December 31, 2020, the audit committee met
one time and all members of the audit committee attended the
meeting, such that each audit committee member attended at least
75% of the meetings held. A copy of the audit committee charter is
available on our website at www.sanaramedtech.com/corporate-governance/.
Compensation Committee
Our
compensation committee was established by unanimous written consent
of the Board on October 16, 2020. The compensation committee
consists of Mr. DeSutter, Ms. Ortwein and Mr. Thorpe, with Mr.
Thorpe serving as the chairman. The Board has determined that each
of Mr. DeSutter, Ms. Ortwein and Mr. Thorpe are independent under
Nasdaq Listing Rules and “non-employee directors” as
defined in Rule 16b-3 promulgated under the Exchange Act. The
compensation committee, with input from our Principal Executive
Officer, reviews and approves, or recommends that the Board
approve, the compensation of our executive officers. Prior to the
formation of the compensation committee, the Board reviewed and
approved both director and executive officer compensation, and the
Board continues to review and approve director
compensation.
The
functions of the compensation committee include, among other
things:
●
reviewing and
approving our goals and objectives applicable to the compensation
of our executive officers;
●
determining and
approving the compensation of our executive officers;
●
reviewing and
approving and, when appropriate, recommending that the Board
approve any employment agreements and any severance arrangements
for our executive officers;
●
reviewing,
administering and making recommendations to the Board with respect
to our incentive equity plans;
●
reviewing our
incentive compensation arrangements to determine whether they
encourage excessive risk-taking and evaluating compensation
policies and practices that could mitigate any such risk;
and
●
evaluating and
approving plans, policies, programs and arrangements relating to
compensation and benefits of our employees.
During the fiscal
year ended December 31, 2020, the compensation committee did not
meet, as the committee was not established until October of 2020. A
copy of the compensation committee charter is available on our
website at www.sanaramedtech.com/corporate-governance/.
Nominating and Corporate Governance Committee
Our
nominating and corporate governance committee was established by
unanimous written consent of the Board on October 16, 2020. The
corporate governance committee consists of Mr. DeSutter, Ms.
Ortwein, Mr. Stuckert and Mr. Thorpe, with Mr. DeSutter serving as
chairman.
The
functions of the nominating and corporate governance committee
include, among other things:
●
identifying
individuals qualified to serve on the Board and its committees
consistent with criteria approved by the Board;
●
recommending a
slate of director nominees for approval by the Board for election
by the shareholders of the Company at the annual
meeting;
●
recommending
director nominees to fill any vacancies on the Board, in accordance
with our Certificate of Formation, bylaws and Texas
law;
●
reviewing and
making recommendations regarding the structure and composition of
the committees of the Board;
●
developing and
making recommendations to the Board with regard to our corporate
governance guidelines applicable to us; and
●
developing and
recommending to the Board for approval the Principal Executive
Officer succession plan.
During
the fiscal year ended December 31, 2020, the nominating and
corporate governance committee did not meet, as the committee was
not established until October of 2020. A copy of the nominating and
corporate governance committee charter is available on our website
at www.sanaramedtech.
com/corporate-governance/.
Our
nominating and corporate governance committee is responsible for,
among other things, assisting our Board in identifying qualified
candidates to be recommended as director nominees and appointed to
stand for election at each annual meeting of shareholders. The
nominating and corporate governance committee may consider
candidates proposed by a consultant, an executive officer, by any
director or by any shareholder, in accordance with procedures
established by the nominating and corporate governance committee
from time to time. When evaluating director nominees, the Board may
consider, among other factors, the potential nominee’s
reputation, integrity, independence from the Company, skills and
business, government or other professional acumen, bearing in mind
the composition of the Board and the current state of the Company
and the industry generally. The Board may also consider the number
of other public companies for which the person serves as director
and the availability of the person’s time and commitment to
the Company. In the case of current directors being considered for
re-nomination, the Board will also consider the director’s
tenure as a member of the Board, the director’s history of
attendance at meetings of the Board and the director’s
preparation for and participation in such meetings.
The
Board believes that each director should have a basic understanding
of our principal operational and financial objectives and plans and
strategies, our results of operations and financial condition and
our relative standing in relation to our competitors.
In
identifying director nominees for recommendation to the Board, the
nominating and corporate governance committee will first evaluate
the current members of the Board willing to continue in service.
Current members of the Board with skills and experience that are
relevant to our business and who are willing to continue in service
will be considered for re-nomination.
If any
member of the Board does not wish to continue in service or if the
Board decides not to re-nominate a member for re-election, the
Board will identify another nominee with the desired skills and
experience described above. The Board takes into consideration the
overall composition and diversity of the Board and areas of
expertise that director nominees may be able to offer, including
business experience, knowledge, abilities and customer
relationships. Generally, the Board will strive to assemble a Board
that brings to us a variety of perspectives and skills derived from
business and professional experience as it may deem are in our and
our shareholders’ best interests. In doing so, the Board will
also consider candidates with appropriate non-business
backgrounds.
Board Leadership Structure
The leadership structure of the
Board provides that the positions of Chairman of the Board and
Principal Executive Officer of the Company are filled by two
separate individuals. The Board currently believes that this
leadership structure best serves the Board’s objectives of
oversight of management and the performance of its roles and
responsibilities on behalf of shareholders. This structure
facilitates the ability of the Executive Chairman to focus efforts
on strategic planning and growth of the Company and allows the
Principal Executive Officer to concentrate on management and
operations of the Company.
Risk
Management
The
Board is responsible for overseeing the Company’s management
and operations. The audit committee provides general oversight of
the integrity of the Company’s financial statements, the
Company’s compliance with legal and regulatory requirements,
the independent auditor’s qualifications and independence,
and risk assessment and management. We believe that the Board
provides effective oversight of risk management functions. On a
regular basis we perform a risk review wherein the management team
evaluates the risks we expect to face in the upcoming year and over
a longer-term horizon. Plans are then developed to address the
risks identified, if any. In addition, members of our management
team periodically present to the Board the strategies, issues and
plans for the areas of our business for which they are responsible.
While the Board oversees risk management, our management team is
responsible for the Company’s day-to-day risk management
processes. Additionally, the Board requires that management raise
exceptional issues to the Board. We believe this division of
responsibilities is the most effective approach for addressing the
risks we face, and that the Board’s leadership structure
supports this approach.
Shareholder Communications with
Directors
The Board welcomes
communication from our shareholders. Shareholders and other
interested parties who wish to communicate with a member or members
of the Board or a committee thereof may do so by addressing
correspondence to the Board member, members or committee, c/o
Corporate Secretary, Sanara MedTech Inc. 1200 Summit Avenue, Suite
414, Fort Worth, TX 76102. Our Corporate Secretary will review and
forward correspondence to the appropriate person or
persons.
All
communications received as set forth in the preceding paragraph
will be opened by our Corporate Secretary for the sole purpose of
determining whether the contents represent a message to our
directors. The communication must be clearly addressed to the Board
or to a specific director. If a response is desired, the individual
should also provide contact information such as name, address and
telephone number.
Any
contents that are not in the nature of advertising, promotions of a
product or service, patently offensive material or matters
completely unrelated to the Board’s functions, Company
performance, Company policies or that could not reasonably be
expected to affect the Company’s public perception will be
forwarded promptly to the addressee(s). In the case of
communications to the Board or any group or committee of directors,
our Corporate Secretary will make sufficient copies of the contents
to send to each director who is a member of the group or committee
to whom the communication is addressed. If the amount of
correspondence received through the foregoing process becomes
excessive, the Board may consider approving a process for review,
organization and screening of the correspondence by our Secretary
or another appropriate person.
Involvement in Certain Legal
Proceedings
There
have been no material legal proceedings that would require
disclosure under the federal securities laws that are material to
an evaluation of the ability or integrity of our directors or
executive officers, or in which any director, officer, nominee or
principal shareholder, or any affiliate thereof, is a party adverse
to us or has a material interest adverse to us.
Insider
Trading Policy; Prohibition on Hedges and Pledges
We
have an insider trading policy that prohibits our directors,
executive officers, employees, independent contractors, consultants
and their respective family members from the purchasing or selling
our securities while being aware of material, non-public
information about the Company as well as disclosing such
information to others who may trade in securities of the Company.
Our insider trading policy also prohibits our directors, executive
officers, employees and their respective family members from
engaging in hedging activities or other short-term or speculative
transactions in the Company’s securities such as short sales,
options trading, holding the Company’s securities in a margin
account or pledging the Company’s securities as collateral
for a loan, without the advance approval of our Chief Executive
Officer and Chief Financial Officer.
The
following table presents the total compensation for each
non-employee director during 2020.
Non-Employee
Director Compensation Table
|
Fees earned or paid in cash
|
|
|
|
|
|
|
|
|
Ronald
T. Nixon
|
-
|
80,603
|
-
|
80,603
|
Robert
A. DeSutter
|
-
|
-
|
-
|
-
|
S.
Oden “Denny” Howell Jr. (1)
|
-
|
80,603
|
-
|
80,603
|
Sara
N. Ortwein
|
-
|
-
|
-
|
-
|
Ann
Beal Salamone
|
-
|
26,872
|
-
|
26,872
|
James
W. Stuckert
|
-
|
80,603
|
-
|
80,603
|
Kenneth
E. Thorpe
|
-
|
26,872
|
-
|
26,872
|
(1)
S. Oden “Denny” Howell,
Jr. did not stand for reelection at the Company’s annual
meeting on July 9, 2020 and ceased being a director on that
date.
(2) In accordance with SEC
rules, this column represents the aggregate grant date fair value
of shares underlying stock awards, calculated based on the closing
price of the Company’s common stock on the date of grant in
accordance with ASC 718.
The
aggregate number of outstanding restricted stock awards held by
each director as of December 31, 2020, was as follows:
|
Shares of restricted stock
|
Ronald
T. Nixon
|
4,820
|
Robert
A. DeSutter
|
-
|
S.
Oden “Denny” Howell Jr.
|
-
|
Sara
N. Ortwein
|
-
|
Ann
Beal Salamone
|
1,607
|
James
W. Stuckert
|
4,820
|
Kenneth
E. Thorpe
|
1,607
|
We
reimburse each director for reasonable travel expenses related to
such director’s attendance at board of directors and
committee meetings. In 2020, certain non-employee directors
received restricted stock grants with three-year vesting
restrictions.
The
Company does not sponsor a pension benefits plan, a non-qualified
deferred compensation plan or a non-equity incentive plan for its
directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth, as of the Record Date, the number and
percentage of outstanding shares of our common stock owned by: (a)
each person who is known by us to be the beneficial owner of more
than 5% of our outstanding shares of common stock; (b) each of our
directors; (c) the named executive officers as defined in Item 402
of Regulation S-K; and (d) all current directors and executive
officers, as a group. As of the Record Date, there were 7,626,705
shares of common stock issued and outstanding and no shares of
preferred stock issued and outstanding.
Beneficial
ownership has been determined in accordance with Rule 13d-3 under
the Exchange Act. Under this rule, certain shares may be deemed to
be beneficially owned by more than one person (if, for example,
persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by
a person if the person has the right to acquire shares (for
example, upon exercise of an option or warrant) within 60 days of
the date as of which the information is provided. In computing the
percentage ownership of any person, the number of shares is deemed
to include the number of shares beneficially owned by such person
by reason of such acquisition rights. As a result, the percentage
of shares beneficially owned by a person as shown in the following
table does not necessarily reflect the person’s actual voting
power at any particular date.
Except
as noted in the footnotes below, we believe, based on information
provided to us, that the persons named in the table below have sole
voting and investment power with respect to all vested shares of
common stock beneficially owned by them and the business address
for each person is c/o Sanara MedTech Inc., 1200 Summit Ave, Suite
414, Fort Worth, Texas 76102.
|
|
|
Number of shares beneficially owned
|
Beneficial ownership percentage
|
Directors and Named Executive Officers
|
|
|
Ronald
T. Nixon (1)
|
3,516,609
|
46.1%
|
James
W. Stuckert (2)
|
946,403
|
12.4%
|
J.
Michael Carmena (3)
|
14,014
|
*
|
Zachary
Fleming (4)
|
10,353
|
*
|
Shawn
Bowman (5)
|
6,992
|
*
|
Michael
McNeil (6)
|
6,016
|
*
|
Ann
Beal Salamone (7)
|
1,606
|
*
|
Kenneth
E. Thorpe (8)
|
1,606
|
*
|
All directors and executive officers as a group (9
persons)
|
4,517,317
|
59.2%
|
Certain Beneficial Owners
|
|
|
S.
Oden “Denny” Howell Jr. (9)
|
490,394
|
6.4%
|
CGI
Cellerate RX, LLC (10)
|
2,452,731
|
32.2%
|
FA
Sanara, LLC (11)
|
963,856
|
12.6%
|
____
*
Less
than 1%.
(1) Mr.
Nixon is a director of the Company and a manager of Catalyst
Rochal, LLC, which owns 100% of the equity interest of CGI
Cellerate RX, LLC which owns 2,452,731 shares of the
Company’s common stock. Catalyst Rochal, LLC also controls
the voting of 95,203 shares owned by Rochal Industries, LLC. Mr.
Bradley J. Gurasich is also a manager of Catalyst Rochal, LLC and
may be deemed to share beneficial ownership of the shares of common
stock beneficially owned by CGI Cellerate RX, LLC and Catalyst
Rochal, LLC. FA Sanara, LLC owns 963,856 shares of the
Company’s common stock. FA Sanara, LLC is managed by Family
Alignment, LLC, which is managed by Catalyst Group, Inc. of which
Mr. Nixon is President. Mr. Nixon, through a relationship of
control of CGI Cellerate RX, LLC, Catalyst Rochal, LLC, and FA
Sanara, LLC, may be deemed to share beneficial ownership of the
shares of common stock beneficially owned by CGI Cellerate RX, LLC,
Rochal Industries, LLC and FA Sanara, LLC. The table above excludes
2,410 unvested, restricted shares held by Mr. Nixon which will vest
on January 1, 2022. Mr. Nixon may be deemed to have shared power to
vote and dispose of 3,511,790 shares, and sole power to vote and
dispose of 4,819 shares.
(2)
Excludes 2,410 unvested, restricted shares held by Mr. Stuckert,
which will vest on January 1, 2022.
(3)
Excludes 11,298 unvested, restricted shares held by Mr. Carmena,
which have various vesting dates. Includes stock options currently
exercisable for the purchase of 5,000 shares of Common
Stock.
(4)
Excludes 11,355 unvested, restricted shares held by Mr. Fleming,
which have various vesting dates. Includes stock options currently
exercisable for the purchase of 2,000 shares of Common
Stock.
(5)
Excludes 10,676 unvested, restricted shares held by Mr. Bowman,
which have various vesting dates.
(6)
Excludes 6,868 unvested, restricted shares held by Mr. McNeil,
which have various vesting dates. Includes stock options currently
exercisable for the purchase of 1,000 shares of Common
Stock.
(7)
Excludes 804 unvested, restricted shares held by Ms. Salamone,
which will vest on January 1, 2022.
(8)
Excludes 804 unvested, restricted shares held by Mr. Thorpe, which
will vest on January 1, 2022.
(9)
Based on the Schedule 13D/A filed by S. Oden “Denny”
Howell, Jr. on November 18, 2019 and certain other information
available to the Company.
(10)
Includes 2,452,731 shares held by CGI Cellerate RX, LLC. Mr. Nixon
and Mr. Gurasich are managers of Catalyst Rochal, LLC, which owns
100% of the equity interest of CGI Cellerate RX, LLC. Mr. Nixon and
Mr. Gurasich, through a relationship of control of CGI Cellerate
RX, LLC, may be deemed to share beneficial ownership of the shares
of common stock beneficially owned by CGI Cellerate RX, LLC and
have shared voting power to vote the shares held by CGI Cellerate
RX, LLC. This information is based on the Schedule 13D/A filed by
CGI Cellerate RX, LLC on February 12, 2020 and certain other
information available to the Company. The business address for CGI
Cellerate RX, LLC is 1375 Enclave Parkway Houston, Texas
77077.
(11) FA
Sanara, LLC is managed by Family Alignment, LLC, which is managed
by Catalyst Group, Inc. of which Mr. Nixon is President. Mr. Nixon,
through a relationship of control of FA Sanara, LLC, may be deemed
to share beneficial ownership of the shares of common stock
beneficially owned by FA Sanara, LLC and have shared voting power
to vote the shares held by FA Sanara, LLC. This information is
based on the Schedule 13D/A filed by FA Sanara, LLC on February 12,
2020 and certain other information available to the Company. The
business address for FA Sanara, LLC is 7500 Rialto Blvd. Bldg. II,
Suite 220 Austin, Texas 73735.
There
are no arrangements currently known to us, the operation of which
may at a subsequent date result in a change of control of the
Company.
DELINQUENT SECTION 16(A) REPORTS
Section
16(a) of the Exchange Act requires our directors, executive
officers and persons who own more than 10% of a registered class of
our equity securities to file with the SEC initial reports of
ownership and reports of changes in ownership of our common stock
and other equity securities. Officers, directors and
greater-than-10% shareholders are required by SEC regulations to
furnish us with copies of all Section 16(a) forms they file. To our
knowledge, based solely on a review of copies of such reports
furnished to us or filed with the SEC and written representations
that no other reports were required, all transactions of our
directors and officers were timely reported, while the Initial
Statement of Beneficial Ownership on Form 3 for Rebecca E. McMahon
was filed past the applicable due date. Other than as indicated
above, each of our directors, officers and ten percent shareholders
complied with all Section 16(a) filing requirements applicable to
them.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The
Company was a participant in the following transactions with
related parties since January 1, 2019.
CGI Cellerate RX, LLC
Upon
conversion of certain debt and equity securities in early 2020, CGI
Cellerate RX, LLC owned more than 30% of our common stock. CGI
Cellerate RX, LLC is an affiliate of The Catalyst Group Inc., whose
Founder and Managing Partner is our Executive Chairman, Mr.
Nixon.
Professional Services
Since
the formation of Cellerate, LLC in 2018, CGI Cellerate RX, LLC has
provided monthly professional services in inventory procurement for
the Company. Billings totaled approximately $117,000 in 2020 and
$174,000 in 2019.
Promissory Note
On
February 7, 2020, CGI Cellerate RX, LLC converted its $1,500,000
promissory note, including accrued interest of $111,911, into
179,101 shares of our common stock.
Rochal Industries, LLC
Rochal
currently owns 95,203 shares of our common stock, and Mr. Nixon,
our Executive Chairman, is, with respect to Rochal, a director, a
significant shareholder indirectly, and a majority shareholder with
the exercise of certain warrants. Additionally, Ms. Salamone, a
director of the Company, is Rochal’s Board Chairman and a
significant shareholder of Rochal.
Product License Agreements
On
July 7, 2019, the Company executed the BIAKŌS License
Agreement with Rochal whereby the Company acquired an exclusive
world-wide license to market, sell and further develop
antimicrobial products for the prevention and treatment of microbes
on the human body utilizing certain Rochal patents and pending
patent applications. The initial payment of $1,000,000 was made to
Rochal in 2019. In 2020, the Company made a $500,000 milestone
payment upon FDA clearance of BIAKŌS Antimicrobial Wound Gel.
Following the closing of the Company’s common stock 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 our common stock. Subsequent
payments pursuant to this license will be in the form of (i) a
2%-4% royalty on net sales of BIAKŌS products, subject to an
annual minimum of up to $150,000 and (ii) a 25% royalty on net
profit in excess of target up to an annual maximum of
$1,000,000.
On
October 1, 2019, the Company executed the ABF License
Agreement with Rochal whereby the Company acquired an
exclusive world-wide license to market, sell and further develop
certain antimicrobial barrier film and skin protectant products for
use in the human health care market utilizing certain Rochal
patents and pending patent applications. Currently, the products
covered by the ABF License Agreement are BIAKŌS Antimicrobial
Barrier Film and Curashield No Sting Skin Protectant. We made the
initial payment of $500,000 to Rochal in 2019. Subsequent payments
pursuant to this license will be in the form of (i) a 2%-4% royalty
on net sales of products covered in the ABF license, subject to an
annual minimum of up to $75,000 and (ii) a 25% royalty on net
profit in excess of target up to an annual maximum of
$500,000.
On
May 4, 2020, the Company executed the Debrider License
Agreement with Rochal, whereby the Company acquired an
exclusive world-wide license to market, sell and further
develop an autolytic debrider for human medical use to enhance
skin condition or treat or relieve skin disorders, excluding uses
primarily for beauty, cosmetic, or toiletry purposes. In 2020, we
made the initial payment of $600,000 to Rochal in cash. The
remaining $750,000 of the initial payment was made in the form of
60,000 shares of our common stock. Future milestone payments under
the Debrider License Agreement are as follows: (i) $600,000 for the
first good manufacturing practice run of product and (ii) $500,000
in cash and $1,000,000 payable in either cash or common stock upon
FDA clearance of Atterase Debrider product. Subsequent payments
pursuant to this license will be in the form of (i) a 2%-4% royalty
on net sales of products covered in the Debrider license, subject
to an annual minimum of up to $150,000 and (ii) a 25% royalty on
net profit in excess of target up to an annual maximum of
$1,000,000.
Manufacturing Services
The
Company purchased from Rochal approximately $285,000 of BIAKŌS
inventory in 2020 and $134,000 in 2019. On September 9, 2020, we
executed a manufacturing agreement with Rochal to formalize terms
with respect to manufacturing, packaging, and labeling all products
licensed from Rochal. The manufacturing agreement includes
customary terms and conditions. The term of the agreement is for a
period of five years unless extended by the mutual consent of the
parties.
Technical Services
The
Company incurred approximately $365,000 of technical services in
2020 and $61,000 in 2019 from Rochal. On September 9, 2020, we
executed a technical services agreement with Rochal to formalize
terms with respect to technical services provided by Rochal. Under
the terms of this agreement, Rochal provides its expertise on
technical projects identified by us for wound care, skin care and
surgical site care applications. The technical services agreement
includes customary terms and conditions for our industry. We may
terminate this agreement at any time.
Royalty
Pursuant
to the BIAKŌS product license agreement, the Company incurred
royalty expense of $100,000 in 2020 and approximately $1,000 in
2019. The royalty expense incurred in 2020 represented the annual
minimum royalty which did not apply in 2019.
Asset Purchase
On
July 14, 2021, the Company entered into an Asset Purchase Agreement
(the “Asset Purchase Agreement”), effective July 1,
2021, with Rochal pursuant to which the Company purchased certain
assets of Rochal, including, among others, Rochal’s
intellectual property, furniture and equipment, supplies, goodwill,
rights and claims, other than certain excluded assets
(collectively, the “Purchased Assets”) and assumed
certain Assumed Liabilities (as defined in the Asset Purchase
Agreement), upon the terms and subject to the conditions set forth
in the Asset Purchase Agreement (such transaction, the
“Rochal Asset Purchase”). The Purchased Assets were
purchased for an aggregate purchase price of approximately
$1,000,000 (the “Purchase Price”), consisting of (i)
approximately $500,000 in cash and (ii) 14,369 shares of the
Company’s common stock, representing an amount equal to
$500,000, based on the average closing sale price of the
Company’s common stock for the twenty (20) trading days
immediately preceding the closing of the Rochal Asset Purchase. The
Purchase Price is subject to post-closing adjustments pursuant to
the terms of the Asset Purchase Agreement, which such adjustments
must be agreed to by the parties no later than seventy-five (75)
days after July 1, 2021. The product license agreements, technical
services agreement and manufacturing agreements noted above were
retained by Rochal and were excluded from the Purchased
Assets.
Pursuant
to the Asset Purchase Agreement, for the three-year period after
July 1, 2021, Rochal is entitled to receive consideration for any
new product relating to the Business (as defined in the Asset
Purchase Agreement) that is directly and primarily based on an
invention conceived and reduced to practice by a member or members
of Rochal’s science team. For the three-year period after
July 1, 2021, Rochal is also entitled to receive an amount in cash
equal to twenty-five percent (25%) of the proceeds actually
received for any Grant (as defined in the Asset Purchase Agreement)
by either the Company or Rochal. In addition, the Company agreed to
use commercially reasonable efforts to perform Minimum Development
Efforts (as defined in the Purchase Agreement) with respect to
certain products under development, which if obtained will entitle
the Company to intellectual property rights from Rochal in respect
of such products.
In
connection with the Asset Purchase Agreement we made employment
offers to certain of Rochal’s employees on an “at
will” basis, with the terms of each such employment being
consistent with the Company’s current employment
agreements.
Consulting Agreement
Concurrent with the
Rochal Asset Purchase, on July 14, 2021, we entered into a
consulting agreement with Ms. Salamone pursuant to which Ms.
Salamone will provide us with consulting services with respect to,
among other things, writing new patents, conducting patent
intelligence, and participating in certain grant and contract
reporting. In consideration for the consulting services to be
provided to us, Ms. Salamone is entitled to receive an annual
consulting fee of $177,697, with payments to be paid once per
month. The consulting agreement has an initial term of three years,
unless earlier terminated by us and is subject to renewal. The
consulting agreement also contains customary provisions related to,
among other things, confidentiality, and termination for cause
provisions.
The following discussion provides compensation information pursuant
to the scaled disclosure rules applicable to “smaller
reporting companies” under SEC rules and may contain
statements regarding future individual and Company performance
targets and goals. These targets and goals are disclosed in the
limited context of the Company’s compensation programs and
should not be understood to be statements of management’s
expectations or estimates of results or other guidance. We
specifically caution shareholders not to apply these statements to
other contexts.
The
following table sets forth the names, ages and positions of our
executive officers as of August 30, 2021:
Name
|
Age
|
Position
|
J.
Michael Carmena
|
66
|
Principal Executive
Officer
|
Michael
D. McNeil
|
56
|
Chief
Financial Officer
|
Shawn
M. Bowman
|
46
|
Co-Chief Operating
Officer and President, Wound Care
|
Zachary
B. Fleming
|
46
|
Co-Chief Operating
Officer and President, Surgical
|
Rebecca
E. McMahon
|
35
|
President, Research
and Development
|
Christopher A.
Morrison
|
51
|
President,
Telehealth Services
|
J. Michael
Carmena serves as the Principal
Executive Officer of the Company and has served as an executive
officer of the Company since December 2016. His business experience
is discussed above in “Proposal 1: Election of
Directors.”
Michael D.
McNeil, age 56, has served as
the Company’s Chief Financial Officer since April 2018. Prior
to joining the Company, Mr. McNeil served as Controller for Smith
and Nephew’s U.S. Advanced Wound Management Division from
2012 to 2018. Mr. McNeil previously served as Controller and
Assistant Controller with Healthpoint Biotherapeutics from 1999 to
2012. Prior to his employment at Healthpoint, Mr. McNeil held
several finance and internal audit positions with Burlington
Resources, Snyder Oil Corporation, and Union Pacific Corporation.
Mr. McNeil earned his Bachelor of Science in Business
Administration from the University of Nebraska and is a Texas
certified public accountant.
Shawn M.
Bowman, age 46, has served as
President, Wound Care Division since May 2019, and was named
Co-Chief Operating Officer on January 28, 2020. Mr. Bowman
previously served as the Company’s Vice President and General
Manager, Wound Care since September 2018. Mr. Bowman will be
responsible for leading the strategic expansion of the
Company’s wound care division. Mr. Bowman has over eighteen
years of experience in the medical device, biologics and
pharmaceutical industries. Prior to joining Sanara MedTech, Mr.
Bowman built two successful teams as Senior Vice President of
Wellsense, and as a National Sales Director for Smith &
Nephew’s Advanced Wound Management Division. Mr. Bowman
earned a Bachelor of Science in Marketing from the University of
Connecticut.
Zachary B.
Fleming, age
46,
was appointed to the position of
President, Surgical Division on May 28, 2019, and was named
Co-Chief Operating Officer on January 28, 2020. Mr. Fleming joined
the Company as Vice President of Sales in November 2017 and was
promoted to Vice President, Surgical in September 2018. Mr. Fleming
will be responsible for the continued expansion and management of
the surgical sales force as well as new product introductions. Mr.
Fleming has spent over fourteen years in the medical industry with
Healthpoint Biotherapeutics, Smith & Nephew and Sanara MedTech.
Mr. Fleming earned a Bachelor of Science from Indiana
University.
Rebecca E.
McMahon, age 35, has served as
President, Research and Development since July 2021. Prior to
joining the Company, Dr. McMahon was President of Rochal Industries
where she was involved in wound care research and product
development, FDA interactions, and development of regulatory,
manufacturing and commercialization strategies. Prior to joining
Rochal in 2015, Dr. McMahon was a Postdoctoral Fellow at MD
Anderson Cancer Center in Houston. Dr. McMahon earned a Ph.D. in
Chemical Engineering from Texas A&M, an MBA from University of
Texas at San Antonio, and a dual BS degree in Chemical Engineering
and Science, Technology, and Society from Rensselaer Polytechnic
Institute.
Christopher
A. Morrison, M.D.,
age 51, has served as the President,
Telehealth Services since October 2020 and was designated as an
executive officer of the Company on February 8, 2021. Dr. Morrison
is board-certified by both the American Board of Family Medicine
and the American Board of Preventive Medicine. Dr. Morrison is the
founder and former CEO of Nautilus Health Care Group, where he
served in such capacity from 2000 until Nautilus Health Care Group
was acquired by Healogics, Inc. in 2012, where he then served as
President and Executive Medical Director of Healogics Specialty
Physicians. In 2018, Dr. Morrison founded MGroup Strategies, an
investment and consulting firm focused on helping health care
service and technology companies build innovative and
market-leading strategies with a focus on the complexities of
multi-state corporate practice of medicine requirements and the
positive influence of telemedicine in the future of health care.
Dr. Morrison earned a Bachelor of Science degree in Biology and a
Medical Doctorate degree from Indiana
University.
Executive Compensation Overview
The
compensation program for our executive officers, as presented in
the Summary Compensation Table below, is administered by our Board.
The intent of our compensation program is to align our
executives’ interests with those of our shareholders, while
providing reasonable and competitive compensation.
The
purpose of this Executive Compensation discussion is to provide
information about the material elements of compensation that we pay
or award to, or that is earned by: (i) the individuals who served
as our principal executive officer during fiscal 2020; (ii) our two
most highly compensated executive officers, other than the
individuals who served as our principal executive officer, who were
serving as executive officers, as determined in accordance with the
rules and regulations promulgated by the SEC, as of December 31,
2020, with compensation during fiscal year 2020 of $100,000 or
more; and (iii) up to two additional individuals for whom
disclosure would have been provided pursuant to clause (ii) but for
the fact that such individuals were not serving as executive
officers on December 31, 2020. We refer to these individuals as our
“named executive officers.” For 2020, our named
executive officers and the positions in which they served are
listed below. We have also included one additional individual on a
voluntary basis:
●
J. Michael Carmena,
our Principal Executive Officer;
●
Michael D. McNeil,
our Chief Financial Officer;
●
Zachary B. Fleming,
our Co-Chief Operating Officer and President, Surgical;
and
●
Shawn M. Bowman,
our Co-Chief Operating Officer and President, Wound
Care.
Summary
Compensation Table
The
following table and the accompanying notes provide summary
information for each of the last two fiscal years concerning cash
and non-cash compensation awarded to, earned by or paid to our
named executive officers (or those acting in a similar
capacity).
Name and Principal
Position
|
|
|
|
|
|
All other compensation
($)(4)
|
|
|
|
|
|
|
|
|
|
J.
Michael Carmena, Principal Executive Officer
|
|
2020
|
185,000
|
75,000
|
232,226
|
8,000
|
500,226
|
|
|
2019
|
200,000
|
75,000
|
-
|
9,600
|
284,600
|
|
|
|
|
|
|
|
Michael
D. McNeil, Chief Financial Officer
|
|
2020
|
161,875
|
87,500
|
153,519
|
6,837
|
409,731
|
|
|
2019
|
168,000
|
70,500
|
-
|
5,085
|
243,585
|
|
|
|
|
|
|
|
Zachary
B. Fleming, Co-Chief Operating Officer and President,
Surgical
|
|
2020
|
208,125
|
112,500
|
246,755
|
24,785
|
592,165
|
|
|
2019
|
204,167
|
115,000
|
-
|
11,746
|
330,913
|
|
|
|
|
|
|
|
Shawn
M. Bowman, Co-Chief Operating Officer and President, Wound
Care
|
|
2020
|
208,125
|
90,000
|
225,159
|
28,305
|
551,589
|
|
|
2019
|
204,167
|
105,000
|
-
|
11,746
|
320,913
|
Notes to Summary Compensation
Table
(1)
Represents the
amount of base salary actually earned by the named executive
officer. For additional information concerning our named executive
officer base salaries, see “Narrative Disclosure to Summary
Compensation Table” below.
(2)
Represents cash
bonuses earned in the respective years.
(3)
The amounts
reported in this column do not reflect the actual economic value
realized by our named executive officers. In accordance with SEC
rules, this column represents the aggregate grant date fair value
of shares underlying stock awards, calculated based on the closing
price of the Company’s common stock on the date of grant in
accordance with ASC 718.
(4)
Represents amounts
paid as reimbursement of certain income taxes, our 4% matching
contribution under our 401(k) savings plan, and the payment of
certain auto allowances.
Narrative
Disclosure to Summary Compensation Table
Executive Compensation Overview
Our
compensation committee determines and approves the compensation
provided to our executive officers. Executive compensation
typically consists of a base salary, an annual cash bonus and
longer-term incentive compensation of equity-based incentive
awards. The intent of our compensation program is to, among other
things, align our executives’ interests with those of our
shareholders, while providing reasonable and competitive
compensation. The compensation committee may invite such members of
management to its meetings as it deems appropriate. However, no
Executive Officer, may be present during compensation committee or
Board deliberations or voting at which his or her compensation is
discussed or determined. The compensation committee may, in its
sole discretion, retain or obtain the advice of a compensation
consultant, legal counsel or other adviser and shall be directly
responsible for the appointment, compensation, and oversight of the
work of any such Compensation Adviser. Any recommendations made by
such Compensation Adviser are nonbinding and authority to determine
compensation structure remains the sole responsibility of the
compensation committee.
Compensation Changes in Response to COVID-19
In response to the uncertainty surrounding the COVID-19 global
pandemic and in an effort to dampen its adverse financial effect on
the Company, we reduced the base salaries for employees holding
positions of senior manager and above by 10%, effective April 1,
2020. To offset the reduction in the base salaries and to encourage
retention and job performance, the Board determined in September
2020 to (i) award restricted stock to certain employees and (ii)
adopt an Employee Stock Purchase Plan, under our 2014 Omnibus Long
Term Incentive Plan, as amended and restated, where participating
employees were provided the opportunity to purchase our restricted
stock at a discounted price. See “Stock Awards” below
for more information.
Base
Salary
The base salaries of our named executive officers are described in
further detail below:
|
|
|
|
|
|
|
J. Michael Carmena
|
$200,000
|
$180,000
|
-10%
|
Michael D. McNeil
|
$175,000
|
$157,500
|
-10%
|
Zachary B. Fleming
|
$225,000
|
$202,500
|
-10%
|
Shawn M. Bowman
|
$225,000
|
$202,500
|
-10%
|
(1) Represents base salary in effect as of December 31,
2019.
(2) Represents base salary in effect following reduction effective
April 1, 2020.
As described above, the Company reduced the base salaries of our
named executive officers by 10% effective April 1,
2020.
Stock Awards
Following the base salary reductions described above, in September
2020, our board of directors granted the named executive officers
the following awards of restricted stock in an effort to encourage
enhanced job performance and provide retention
incentives:
Executive Officer
|
|
Shares of restricted stock(1)
|
J.
Michael Carmena
|
|
1,425
|
Michael
D. McNeil
|
|
1,247
|
Zachary
B. Fleming
|
|
1,603
|
Shawn
M. Bowman
|
|
1,603
|
(1) For each named executive officer, 50% of the shares vested on
January 1, 2021, and the other 50% will vest on July 1,
2021.
In February and April 2020, our board of directors approved the
following annual restricted stock grants to our named executive
officers:
Executive Officer
|
|
Shares of restricted stock(1)
|
J.
Michael Carmena
|
|
17,249
|
Michael
D. McNeil
|
|
10,637
|
Zachary
B. Fleming
|
|
18,105
|
Shawn
M. Bowman
|
|
16,065
|
(1) For each named executive officer, the shares of restricted
stock vest on various dates beginning in March 2020 and ending in
January 2023.
Cash Bonuses
In March 2021, the compensation committee approved discretionary
cash bonuses, as shown above in the Summary Compensation Table, for
our named executive officers based on Company and individual
performance in 2020.
Other Compensation
Benefits and Retirement
Plans. We provide company
benefits that we believe are standard in the industry to all of our
employees, including our named executive officers. These benefits
consist of a group medical insurance program for employees and
their qualified dependents, the majority of which is currently paid
for by the Company. We sponsor a 401(k) tax deferred savings plan,
whereby we match a portion of each employees’ contributions
in cash. Participation in the plan is voluntary and all employees
of the Company who are 18 years of age are eligible to participate.
The Company matches employee contributions dollar-for-dollar on the
first 4% of an employee’s pre-tax earnings, subject to
individual IRS limitations.
We
do not sponsor any pension benefit plans and none of our named
executive officers contribute to such a plan.
Non-Qualified Deferred
Compensation. We do not
sponsor any non-qualified defined compensation plans or other
non-qualified deferred compensation plans and none of our named
executive officers contribute to any such
plans.
Perquisites and
Indemnification. We do not
typically provide perquisites to our named executive officers that
are not available to employees generally. However, from time to
time, we may provide perquisites for recruitment or retention
purposes. We have agreed to pay Mr. Carmena an auto allowance of
$800 per month, and Messrs. Bowman and Fleming each receive auto
allowances in the amount of $900 per month. In addition, pursuant
to our organizational documents, we are required to indemnify, to
the fullest extent permitted by applicable law, any person who was
or is made, or is threatened to be made, a party, or is otherwise
involved in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, by reason of the fact
that he or she, or a person for whom he or she is a legal
representative, is or was a director or an officer of the Company,
including our named executive officers.
Employment
Agreements
We have
employment agreements with two of our named executive officers, Mr.
Bowman and Mr. Fleming. We do not have employment agreements with
Mr. Carmena or Mr. McNeil. Pursuant to our employment arrangements
with Messrs. Carmena and McNeil, we pay them an annual salary that
is subject to periodic adjustment by our compensation committee,
and our compensation committee may award them an annual
discretionary cash bonus and discretionary equity awards. Our
employment agreements with Mr. Bowman and Mr. Fleming are described
below.
Bowman and Fleming Agreements.
Effective June 1, 2019, we entered into employment agreements with
each of Mr. Bowman and Mr. Fleming. Each agreement provides for an
initial two-year term, with automatic one-year renewals unless
either party gives prior notice to the other party of its desire to
terminate the agreement. Each agreement provides for an initial
base salary of $225,000, a one-time bonus payment of $25,000, an
annual bonus opportunity equal to 50% of base salary, and an
initial stock grant equal to $112,500. The initial stock grant
vests in one-third increments for each year completed after the
date of issuance. In the event the executive is terminated by the
Company without cause, the executive shall be entitled to receive a
severance package which includes one year of base salary following
the effective date of termination, paid in twelve equal monthly
installments, and continued participation in any health care
benefits provided by the Company to its employees, provided the
executive delivers to the Company an executed release of
claims.
Long-Term
Incentive Plan
2014 LTIP. On May 9, 2014, our board of
directors approved the 2014 Omnibus Long-Term Incentive Plan (the
“LTIP”), which went into effect on September 3, 2014.
Our board of directors subsequently amended and restated the LTIP,
effective February 10, 2020 to, among other things, account for the
reverse stock split that was effected in May 2019. We may issue up
to 2,000,000 shares of common stock pursuant to awards under the
LTIP. The purpose of the LTIP is to (i) attract and retain skilled
and qualified officers, employees and directors who are expected to
contribute to our success by providing long-term incentive
compensation opportunities competitive with those made available by
other companies; (ii) motivate participants to achieve the
long-term success and growth of the Company; (iii) facilitate
ownership of shares of the Company; and (iv) align the interests of
the participants with those of our shareholders. Under the LTIP, we
are authorized to grant stock options, stock appreciation rights,
restricted stock, restricted stock units, and performance share
awards to our officers, directors, employees and consultants. The
LTIP is administered by our board of directors. The LTIP will
terminate on September 3, 2024, but previously granted awards will
remain outstanding until they expire by their terms or under the
terms of the LTIP.
Pursuant to the
terms of the LTIP, except as otherwise provided in an award
agreement, upon the occurrence of a Change in Control, all
outstanding stock options and all restricted share awards
immediately become fully exercisable and vested. Under the LTIP, a
“Change in Control” is defined as (i) a sale of all or
substantially all of the assets of the Company to any person or
entity that is not a wholly owned subsidiary of the Company; (ii) a
merger or consolidation to which the Company is a party if all
persons who were shareholders of the Company immediately prior to
the effective date of the merger or consolidation become beneficial
owners (as defined in Rule 13d-3 under the Exchange Act) of
securities having less than 50% of the total combined voting power
for election of directors (or comparable governing body) of the
surviving corporation or other entity following the effective date
of such merger or consolidation; or (iii) the approval by
shareholders of the Company of any plan or proposal for the
liquidation of the Company or its subsidiaries (other than into the
Company).
Change
of Control
Upon a
Change in Control of the Company, all restricted stock awards
become fully vested. No executive officers are otherwise entitled
to any payments as a result of a Change in Control of the
Company.
Outstanding
Equity Awards at Fiscal Year-End
The
following table provides information concerning outstanding equity
awards as of December 31, 2020, for our named executive officers.
Market value was determined using the last sale price of our common
stock on December 31, 2020, which was $49.90.
|
|
|
|
Number of
securities underlying
unexercised options
(Exercisable)
(#)
|
Number of
securities underlying
unexercised options
(Unexercisable)
(#)
|
Option
exercise
price
($)
|
|
Number of shares
or units of stock
that have not
vested
(#) (1)
|
Market value
of shares of
units of stock
that have not
vested ($)
|
Zachary
B. Fleming
|
2,000
|
-
|
6
|
12/31/2022
|
13,674
|
682,333
|
Shawn
M. Bowman
|
-
|
-
|
-
|
-
|
12,314
|
614,469
|
J.
Michael Carmena
|
5,000
|
-
|
6
|
12/31/2022
|
16,941
|
845,356
|
Michael
D. McNeil
|
1,000
|
-
|
6
|
4/13/2023
|
11,038
|
550,796
|
(1)
Represents restricted shares that will vest as
follows.
Name
|
|
Shares of restricted stock
|
|
Vesting Schedule
|
Zachary
B. Fleming
|
|
3,034
|
|
50%
on January 1, 2021 and on the next anniversary thereof
|
|
|
9,037
|
|
50%
on January 1, 2022 and on the next anniversary thereof
|
|
|
1,603
|
|
50%
on January 1, 2021 and six months thereafter
|
Shawn
M. Bowman
|
|
1,007
|
|
50%
on January 1, 2021 and on the next anniversary thereof
|
|
|
9,037
|
|
50%
on January 1, 2022 and on the next anniversary thereof
|
|
|
667
|
|
50%
on January 1, 2021 and on the next anniversary thereof
|
|
|
1,603
|
|
50%
on January 1, 2021 and six months thereafter
|
J.
Michael Carmena
|
|
3,467
|
|
50%
on January 1, 2021 and on the next anniversary thereof
|
|
|
12,049
|
|
33%
on January 1, 2021 and on each of the two subsequent anniversaries
thereof
|
|
|
1,425
|
|
50%
on January 1, 2021 and six months thereafter
|
Michael
D. McNeil
|
|
1,694
|
|
50%
on January 1, 2021 and on the next anniversary thereof
|
|
|
8,097
|
|
33%
on January 1, 2021 and on each of the two subsequent anniversaries
thereof
|
|
|
1,247
|
|
50%
on January 1, 2021 and six months thereafter
|
The
audit committee assists the Board of Directors in its general
oversight of the Company’s financial reporting processes. The
audit committee charter describes in greater detail the full
responsibilities of the audit committee. During each fiscal year,
the audit committee reviews the Company’s financial
statements, management reports, internal control over financial
reporting and audit matters. In connection with these reviews, the
audit committee meets with management and independent public
accountants to review and discuss annual audited financial
statements and quarterly financial statements. The audit committee
schedules its meetings with a view to ensuring that it devotes
appropriate attention to all of its tasks. These meetings include,
whenever appropriate, executive sessions in which the audit
committee meets separately with the independent public accountants,
financial management personnel and legal counsel.
As part
of its review of audit matters, the audit committee supervises the
relationship between the Company and its independent registered
public accountants, including: having direct responsibility for
their appointment, compensation and retention, reviewing the scope
of their audit services, approving audit and non-audit services and
confirming the independence of the independent public accountants.
Together with senior members of the Company’s financial
management team, the audit committee reviews the overall audit
scope and plans of the independent public accountants, the results
of external audit examinations and evaluations by management of the
Company’s internal control over financial reporting and the
quality of the Company’s financial reporting.
In
addition, the audit committee reviews key initiatives and programs
aimed at designing and maintaining an effective internal and
disclosure control structure. As part of this process, the audit
committee continues to monitor the scope and adequacy of the steps
taken to maintain the effectiveness of internal procedures and
controls.
In
performing all of these functions, the audit committee acts in an
oversight capacity. The audit committee reviews and discusses the
quarterly and annual consolidated financial statements with
management, and the Company’s independent public accountants
prior to their issuance. In its oversight role, the audit committee
relies on the work and assurances of the Company’s
management, which is responsible for establishing and maintaining
adequate internal control over financial reporting, preparing the
financial statements and other reports and maintaining policies
relating to legal and regulatory compliance, ethics and conflicts
of interest. MaloneBailey, LLP is responsible for performing an
independent audit of the consolidated financial statements and
expressing an opinion on the conformity of those financial
statements with accounting principles generally accepted in the
United States of America.
The
audit committee has reviewed with the independent public
accountants the matters required to be discussed by Statement on
Auditing Standards No. 1301, “Communication with audit
committees,” including a discussion with management and the
independent public accountants of the quality (and not merely the
acceptability) of the Company’s accounting principles, the
reasonableness of significant estimates and judgments and the
disclosures in the Company’s financial statements. In
addition, the audit committee reviewed and discussed with
MaloneBailey, LLP matters related to its independence, including a
review of audit and non-audit fees and the written disclosures in
the letter from MaloneBailey, LLP to the audit committee required
by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent public accountant’s
communications with the audit committee concerning independence.
The audit committee concluded that MaloneBailey, LLP is independent
from the Company and its management. The audit committee has
discussed with independent auditors all matters required to be
discussed by the Public Company Accounting Oversight Board and the
SEC.
Taking
all these reviews and discussions into account, the audit committee
recommended to the Board of Directors that the audited financial
statements be included in Sanara MedTech Inc.’s Annual Report
on Form 10-K for fiscal year ended December 31, 2020, for filing
with the SEC.
AUDIT
COMMITTEE
James
W. Stuckert, Chairman
Robert
A. DeSutter
Kenneth
E. Thorpe
The
Audit Committee Report set forth in this Proxy Statement shall not
be deemed to be “soliciting material” or to be
“filed” with the SEC or subject to Regulation 14A or
14C under the Exchange Act or to the liabilities of Section 18 of
the Exchange Act. In addition, it shall not be deemed incorporated
by reference by any statement that incorporates this Proxy
Statement by reference into any filing under the Securities Act of
1933, as amended, or the Exchange Act, except to the extent that
the Company specifically incorporates this information by
reference.
Fees to Independent Registered Public Accounting
Firm
MaloneBailey, LLP
has served as our independent registered public accounting firm
since 2014. No accountant has been selected or recommended to our
shareholders for election, approval or ratification for 2021 as our
management and the audit committee continue their evaluation. As a
result, the Company does not expect representatives of
MaloneBailey, LLP, or any other independent accounting firm, to be
present at the Annual Meeting, unless the audit committee
determines to retain MaloneBailey, LLP, or another independent
accounting firm, for fiscal year 2021 prior to the Annual
Meeting.
Audit Fees. We engaged MaloneBailey,
LLP to conduct annual audits and review of quarterly financial
statements for the years ended December 31, 2020 and December 31,
2019. Audit fees for services performed were $71,000 and $88,000,
respectively.
Audit-Related Fees. We engaged
MaloneBailey, LLP to provide consent for Registration Statements on
Form S-3 and Form S-8 filed in 2020. Audit-related fees totaled
$4,650 for the years ended December 31, 2020 and $0 in December 31,
2019.
Tax Fees. We engaged Haynie &
Company as our accountants for tax-related services for the years
ended December 31, 2020 and December 31, 2019, and paid $30,211 and
$24,951, respectively.
All Other Fees. We paid no other fees
to independent public accountants.
Pre-Approval Policies and
Procedures
The
Company’s audit committee is to pre-approve all audit,
audit-related and non-audit services provided by the independent
registered public accounting firm. These services may include audit
services, audit-related services and other services. The audit
committee may also pre-approve particular services on a
case-by-case basis. The independent public accountants are required
to periodically report to the audit committee regarding the extent
of services provided by the independent public accountants in
accordance with such pre-approval. The audit committee may also
delegate pre-approval authority to one or more of its members. Such
member(s) must report any decisions to the Board at the next
scheduled meeting of the Board.
The
Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come
before the Annual Meeting, the persons named in the accompanying
proxy will vote the proxy in accordance with applicable law and as
they may deem appropriate in their discretion, unless directed by
the proxy to do otherwise.
SUBMISSION OF FUTURE SHAREHOLDER
PROPOSALS
Pursuant to Rule
14a-8 under the Exchange Act (“Rule 14a-8”), a
shareholder who intends to present a proposal at our next annual
meeting of shareholders (the “2022 Annual Meeting”) and
who wishes the proposal to be included in the proxy statement and
form of proxy for that meeting must submit the proposal in writing
no later than May 2, 2022, after which date such shareholder
proposal will be considered untimely. Such proposal must be
submitted on or before the close of business to our corporate
offices at 1200 Summit Ave, Suite 414,
Fort Worth, Texas 76102, Attn: Corporate
Secretary.
A copy of our 2020 Annual Report on Form 10-K, as amended, is
available without charge (except for exhibits, which are available
upon payment of a reasonable fee) upon written request to Sanara
MedTech Inc., Attention: Corporate Secretary, 1200 Summit Ave, Suite 414, Fort Worth, Texas
76102.
Control
Number:
Number of
Shares:
Registered
Shareholder:
SANARA
MEDTECH INC.
1200
Summit Ave., Suite 414
Fort
Worth, Texas 76102
PROXY
Solicited
on Behalf of the Board of Directors for Annual Meeting of
Shareholders, September 30, 2021
The
undersigned hereby appoints J. Michael Carmena and Michael D.
McNeil, and each of them, as proxies with full power of
substitution, to represent and to vote as set forth herein all the
shares of the common stock of Sanara MedTech Inc. which the
undersigned is entitled to vote at the 2021 Annual Meeting of
Shareholders and any adjournments or postponements thereof, as
designated below. If no designation
is made, the proxy, when properly executed, will be voted: (i)
“FOR” the election of the director nominees named below
in Item 1 and (ii) in the discretion of the proxies upon such other
matters as may properly come before the Annual
Meeting.
Item 1
To approve the
election of seven directors to serve on the Company’s board
of directors until the 2022 annual meeting of shareholders or until
their successors are duly elected and qualified.
☐
FOR the election as
a director of the seven nominees listed below.
NOMINEES:
Ronald T. Nixon, J.
Michael Carmena, Robert A. DeSutter, Sara N. Ortwein, Ann Beal
Salamone, James W. Stuckert, Kenneth E. Thorpe
☐
WITHHOLD AUTHORITY
FOR ALL NOMINEES
☐
FOR the election as
a director of the seven nominees listed above, except for the
following nominees:
____________________________________________
INSTRUCTION: To
withhold authority to vote for any individual nominee(s), write
their name(s) on the line above.
In his
or her discretion, the proxy is authorized to vote upon any other
matters which may properly come before the Annual Meeting, or any
adjournment or postponement thereof.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED.
Dated:
___________________________________________, 2021
______________________________________________________
Signature
______________________________________________________
Signature (Joint
Owners)
Please
date and sign name exactly as it appears hereon. Executors,
administrators, trustees, etc. should so indicate when signing. If
the shareholder is a corporation, the full corporate name should be
inserted and the proxy signed by an officer of the corporation
indicating his/her title.
[SEE VOTING INSTRUCTIONS ON
REVERSE SIDE]
VOTING
INSTRUCTIONS
Please
sign, date and mail this Proxy Card promptly to the following
address in the enclosed postage-paid envelope:
Securities Transfer
Corporation
2901 N.
Dallas Parkway, Suite 380
Plano,
Texas 75093
Attention: Proxy
Department
OR
You may
sign, date and submit your Proxy Card by facsimile to (469)
633-0088.
OR
You my
sign, date, scan and email your scanned Proxy Card to
proxyvote@stctransfer.com.
OR
You may
vote online through the Internet:
1.
Go to http://onlineproxyvote.com/SMTI/
at any time 24 hours a day.
2.
Login using the
control number located in the top left-hand corner of this proxy
card.
3.
Access the proxy
voting link within that website to vote your proxy.
If
you vote your proxy on the Internet, you do not need to mail back,
fax or email your Proxy Card.
The
Proxy Statement, the form of Proxy Card and the Company’s
Annual Report to Shareholders are available at http://onlineproxyvote.com/SMTI/.