Note 8 - Equity

9 Months Ended

Sep. 30, 2021

Stockholders Equity Note [Abstract]

Equity

Note 8 - Equity  

Noncontrolling Interest

As of September 30, 2021, the Company owned a 91.1% interest in the Operating Partnership and investors in the Broad Street Entities receiving OP units as consideration for the Initial Mergers collectively owned an 8.9% interest in the Operating Partnership. Commencing on the 12-month anniversary of the date on which the OP units were issued, each limited partner of the Operating Partnership (other than the Company) has the right, subject to certain terms and conditions, to require the Operating Partnership to redeem all or a portion of the OP units held by such limited partner in exchange for cash based on the market price of the Company’s common stock or, at the Company’s option and sole discretion, for shares of the Company’s common stock on a one-for-one basis. As of September 30, 2021, no OP units have been redeemed.

Amended and Restated 2020 Equity Incentive Plan

On September 15, 2021, the Company’s board of directors approved the Company’s Amended and Restated 2020 Equity Incentive Plan (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 OP units. As of September 30, 2021, there were 4,876,283 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.

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 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 nine months ended September 30, 2021. There was no activity during the nine months ended September 30, 2020.

	Restricted Stock Awards			Weighted-Average Grant Date Fair Value Per Restricted Stock Award
Outstanding as of December 31, 2020		153,200		$	0.55
Granted		90,517			2.95
Vested		(30,172	)		2.95
Outstanding as of September 30, 2021		213,545		$	1.23

Of the restricted shares that vested during the nine months ended September 30, 2021, 7,136 shares were surrendered by certain employees to satisfy their tax obligations.

Compensation expense related to these share-based payments for the three and nine months ended September 30, 2021 was approximately $0.1 million and approximately $0.2 million, respectively, and was included in general and administrative expenses on the consolidated statement of operations. The remaining unrecognized costs from stock-based awards as of September 30, 2021 was approximately $0.1 million and will be recognized over a weighted-average period of 0.4 years.  

On October 1, 2021, the Company granted 58,140 restricted shares of common stock to executives, which will vest ratably on January 1, 2022, January 1, 2023, and January 1, 2024, subject to continued service through such dates. The total value of these awards is calculated to be approximately $0.1 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 at 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 the RSUs vest based on the achievement of the applicable performance objectives.

On October 1, 2021, the Company granted executives 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 (as defined in the performance award of stock units agreements pursuant to which the RSUs were granted) at the end of the performance period ending on December 31, 2024, 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.

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 nine months ended September 30, 2021 and 2020 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, 2020		70,000	$	7.71	$	-		1.76	$	-
Options granted		-		-		-		-		-
Options exercised		-		-		-		-		-
Options expired		-		-		-		-		-
Balance at September 30, 2021		70,000	$	7.71	$	-		1.01	$	-

	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, 2019		70,000	$	7.71	$	-		2.76	$	-
Options granted		-		-		-		-		-
Options exercised		-		-		-		-		-
Options expired		-		-		-		-		-
Balance at September 30, 2020		70,000	$	7.71	$	-		2.01	$	-

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 70,000 outstanding options were fully vested at grant date. The exercise price of the outstanding options exceeded the closing price of the Company’s common stock at September 30, 2021. The intrinsic value is not material.

Warrants

On June 4, 2021, the Company issued to Lamont Street warrants to purchase 200,000 shares of the Company’s common stock at an exercise price of $2.50 per share (the “Warrants”). The Warrants were issued in connection with Lamont Street’s contribution of the Lamont Street Preferred Investment described in Note 6 under the heading “—Lamont Street Preferred Interest.”