Note 10 - Equity

3 Months Ended

Mar. 31, 2024

Stockholders' Equity Note [Abstract]

Equity

Note 10 – Equity

Common Stock

On January 2, 2024 and April 5, 2024, the Company issued 11,945 and 29,452 shares of common stock, respectively, to one of its directors in lieu of such director’s cash retainers. The foregoing shares were issued under the Company’s Amended and Restated 2020 Equity Incentive Plan (the “Plan”).

Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock, in one or more series, with a $0.01 par value per share, of which 20,000 shares have been designated as Series A preferred stock, $0.01 par value per share (the “Series A preferred stock”).

As of March 31, 2024 and December 31, 2023, the Company had 500 shares of Series A preferred stock outstanding, all of which were assumed from MedAmerica Properties Inc. (“MedAmerica”) upon completion of the initial mergers on December 27, 2019 (the “Initial Mergers”). The holders of Series A preferred stock are entitled to receive, out of funds legally available for that purpose, cumulative, non-compounded cash dividends on each outstanding share of Series A preferred stock at the rate of 10.0% of the $100 per share issuance price (“Series A preferred dividends”). The Series A preferred dividends are payable semiannually to the holders of Series A preferred stock, when and as declared by the Company’s board of directors, on June 30 and December 31 of each year, that shares of Series A preferred stock are outstanding; provided that due and unpaid Series A preferred dividends may be declared and paid on any date declared by the Company’s board of directors. As of March 31, 2024, less than $0.1 million of Series A preferred dividends were undeclared.

Noncontrolling Interest

As of each of March 31, 2024 and December 31, 2023, the Company owned an 85.7% interest in the Operating Partnership.

Amended and Restated 2020 Equity Incentive Plan

On September 15, 2021, the Company’s board of directors approved the Plan, which increased the number of shares of the Company’s common stock reserved for issuance under the Plan by 1,500,000 shares, from 3,620,000 shares to 5,120,000 shares.
The Plan provides for the grant of stock options, share awards (including restricted stock and restricted stock units), share appreciation rights, dividend equivalent rights, performance awards, annual cash incentive awards and other equity-based awards, including LTIP units, which are convertible on a one-for-one basis into Common OP units. As of March 31, 2024, there were 392,931 shares available for future issuance under the Plan, subject to certain adjustments set forth in the Plan. Each share subject to an award granted under the Plan will reduce the available shares under the Plan on a one-for-one basis. The Plan is administered by the compensation committee of the Company’s board of directors.

On April 9, 2024, the Company’s board of directors approved a further amendment and restatement of the Plan, which increased the number of shares of the Company's common stock reserved for issuance under the Plan by 1,400,000 shares, from 5,120,000 shares to 6,520,000 shares.

Restricted Stock

Awards of restricted stock are awards of the Company’s common stock that are subject to restrictions on transferability and other restrictions as established by the Company’s compensation committee on the date of grant that are generally subject to forfeiture if employment (or service as a director) terminates prior to vesting. Upon vesting, all restrictions would lapse. Except to the extent restricted under the award agreement, a participant awarded restricted stock will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote and the right to receive dividends on the shares. The value of the awards is determined

based on the market value of the Company’s common stock on the date of grant. The Company expenses the cost of restricted stock ratably over the vesting period.

The following table summarizes the stock-based award activity under the Plan for the three months ended March 31, 2024 and 2023.

	Restricted Stock Awards			Weighted-Average Grant Date Fair Value Per Restricted Stock Award
Outstanding as of December 31, 2023		775,369		$	0.99
Vested		(190,665	)		1.20
Outstanding as of March 31, 2024		584,704		$	0.92

	Restricted Stock Awards			Weighted-Average Grant Date Fair Value Per Restricted Stock Award
Outstanding as of December 31, 2022		159,439		$	2.24
Vested		(59,607	)		2.25
Forfeitures		(6,695	)		2.95
Outstanding as of March 31, 2023		93,137		$	2.23

Of the restricted shares that vested during the three months ended March 31, 2024, 27,087 shares were surrendered by certain employees to satisfy their tax obligations.

Compensation expense related to these share-based payments for each of the three months ended March 31, 2024 and 2023 was approximately $0.1 million and less than $0.1 million, respectively, and was included in general and administrative expenses on the condensed consolidated statements of operations. The remaining unrecognized costs from stock-based awards as of March 31, 2024 was approximately $0.3 million and will be recognized over a weighted-average period of 0.9 years.

On April 18, 2024, the Company granted 894,154 restricted shares of common stock to certain employees, which will vest ratably on January 2, 2025, January 2, 2026, and January 4, 2027, subject to continued service through such dates. The total value of these awards is calculated to be approximately $0.4 million.

Restricted Stock Units

The Company’s restricted stock unit (“RSU”) awards represent the right to receive unrestricted shares of common stock based on the achievement of Company performance objectives as determined by the Company’s compensation committee. Grants of RSUs generally entitle recipients to shares of common stock equal to 0% up to 300% of the number of units granted on the vesting date. RSUs are not eligible to vote or to receive dividends prior to vesting. Dividend equivalents are credited to the recipient and are paid only to the extent that the RSUs vest based on the achievement of the applicable performance objectives.

On October 1, 2021, the Company granted certain employees RSUs with an aggregate target number of 1,220,930 RSUs, of which 0% to 300% will vest based on the Company’s Implied Equity Market Capitalization (defined as (i) the sum of (a) the number of shares of common stock of the Company outstanding and (b) the number of Common OP units outstanding (not including Common OP units held by the Company), in each case, as of the last day of the applicable performance period, multiplied by (ii) the value per share of common stock at the end of the performance period) on December 31, 2024, the end of the performance period, subject to the executive’s continued service on such date. If, however, the maximum amount of the award is not earned as of December 31, 2024, the remaining RSUs may be earned based on the Company’s Implied Equity Market Capitalization as of December 31, 2025. To the extent performance is between any two designated amounts, the percentage of the target award earned will be determined using a straight-line linear interpolation between the two designated amounts. The value of the awards is determined by using a Monte Carlo simulation model in estimating the market value of the RSUs as of the date of grant. The Company expenses the cost of RSUs ratably over the vesting period. On February 28, 2023, 232,558 RSUs were forfeited as a result of an employee’s resignation. The remaining unrecognized costs from RSU awards as of March 31, 2024 was approximately $1.7 million and will be recognized over 1.8 years.

Option Awards

In connection with the completion of the Initial Mergers, the Company assumed option awards previously issued to directors and officers of MedAmerica. Details of these options for the three months ended March 31, 2023 are presented in the tables below:

	Number of Shares Underlying Options		Weighted Average Exercise Price Per Share		Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Life		Intrinsic Value
Balance at December 31, 2022		10,000	$	6.00	$	—		0.45	$	—
Options granted		—		—		—		—		—
Options exercised		—		—		—		—		—
Options expired		—		—		—		—		—
Balance at March 31, 2023		10,000	$	6.00	$	—		0.20	$	—

The fair values of stock options are estimated using the Black-Scholes method, which takes into account variables such as estimated volatility, expected holding period, dividend yield, and the risk-free interest rate. The risk-free interest rate is the five-year treasury rate at the date of grant. The expected life is based on the contractual life of the options at the date of grant. All 10,000 outstanding options at March 31, 2023 were fully vested at grant date. The intrinsic value was not material. There were no outstanding options at March 31, 2024.