UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2022

 

Or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___________ to ___________

 

Commission File Number: 000-53500

 

CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

87-0622284

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

211 E Osborn Road, Phoenix, AZ

 

85012

(Address of principal executive offices)

 

(Zip Code)

 

(480) 399-2822

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

 

CELZ

 

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports). Yes ☒ No ☐

 

Indicate by check mark whether the registrant has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated Filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

 

The number of shares outstanding of the registrant’s common stock on August 12, 2022, was 14,070,279.

 

 

 

       

 

 

Page Number

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

 

 

 

Unaudited Condensed Consolidated Balance Sheets

 

3

 

 

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Operations

 

4

 

 

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Cash Flows

 

5

 

 

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Stockholder’ (Equity)

 

6

 

 

 

 

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

8

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

18

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

22

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

22

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

23

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

23

 

 

 

 

 

 

Item 6.

Exhibits

 

23

 

 

 
2

Table of Contents

 

CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

June 30, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash

 

$22,863,661

 

 

$10,723,870

 

Accounts receivable

 

 

-

 

 

 

2,485

 

Inventory

 

 

20,625

 

 

 

10,866

 

Prepaids and other current assets

 

 

64,960

 

 

 

-

 

Total Current Assets

 

 

22,949,246

 

 

 

10,737,221

 

 

 

 

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

 

 

 

Other assets

 

 

3,281

 

 

 

3,281

 

Licenses, net of amortization

 

 

481,637

 

 

 

527,679

 

TOTAL ASSETS

 

$23,434,164

 

 

$11,268,181

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Accounts payable

 

$310,681

 

 

$761,862

 

Accrued expenses

 

 

64,920

 

 

 

24,385

 

Management fee and patent liabilities - related parties

 

 

-

 

 

 

250,000

 

Advances from related party

 

 

14,194

 

 

 

14,194

 

Total Current Liabilities

 

 

389,795

 

 

 

1,050,441

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 50,000,000 authorized; 13,956,246 and 6,338,872 issued and 13,956,238 and 6,338,864 outstanding at June 30, 2022 and December 31, 2021, respectively

 

 

13,957

 

 

 

6,339

 

Additional paid-in capital

 

 

69,644,239

 

 

 

53,879,215

 

Accumulated deficit

 

 

(46,613,827)

 

 

(43,667,814)

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

23,044,369

 

 

 

10,217,740

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

$23,434,164

 

 

$11,268,181

 

                                                                                                                                                                           

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 
3

Table of Contents

 

CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 For the Three Months Ended

June 30, 2022

 

 

 For the Three Months Ended

June 30, 2021

 

 

 For the Six Months Ended

June 30, 2022

 

 

 For the Six Months Ended

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$-

 

 

$10,000

 

 

$15,000

 

 

$10,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

-

 

 

 

4,500

 

 

 

6,791

 

 

 

4,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

-

 

 

 

5,500

 

 

 

8,209

 

 

 

5,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

659,695

 

 

 

-

 

 

 

669,695

 

 

 

-

 

Selling, general and administrative

 

 

1,108,428

 

 

 

498,321

 

 

 

2,238,485

 

 

 

779,244

 

Amortization of patent costs

 

 

23,021

 

 

 

23,021

 

 

 

46,042

 

 

 

46,042

 

TOTAL EXPENSES

 

 

1,791,144

 

 

 

521,342

 

 

 

2,954,222

 

 

 

825,286

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(1,791,144)

 

 

(515,842)

 

 

(2,946,013)

 

 

(819,786)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME/(EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

(234,338)

 

 

-

 

 

 

(570,414)

Gain on extinguishment of convertible notes

 

 

-

 

 

 

96,444

 

 

 

-

 

 

 

96,444

 

Change in fair value of derivatives liabilities

 

 

-

 

 

 

(2,251,446)

 

 

-

 

 

 

26,224,593

 

Total other income (expense)

 

 

-

 

 

 

(2,389,340)

 

 

-

 

 

 

25,750,623

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES

 

 

(1,791,144)

 

 

(2,905,182)

 

 

(2,946,013)

 

 

24,930,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$(1,791,144)

 

$(2,905,182)

 

$(2,946,013)

 

$24,930,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC NET INCOME (LOSS) PER SHARE

 

$(0.20)

 

$(1.25)

 

$(0.38)

 

$11.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DILUTED NET INCOME (LOSS) PER SHARE

 

$(0.20)

 

$(1.25)

 

$(0.38)

 

$10.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC

 

 

9,011,248

 

 

 

2,320,084

 

 

 

7,739,696

 

 

 

2,242,318

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED

 

 

9,011,248

 

 

 

2,320,084

 

 

 

7,739,696

 

 

 

2,328,927

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 
4

Table of Contents

 

CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED CASH FLOWS

 

 

 

For the Six Months Ended

June 30, 2022

 

 

For the Six Months Ended

June 30, 2021

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income (loss)

 

$(2,946,013)

 

$24,930,837

 

Adjustments to reconcile net income (loss) to

 

 

 

 

 

 

 

 

net cash from operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

50,422

 

 

 

211,768

 

Amortization

 

 

46,042

 

 

 

46,042

 

Amortization of debt discounts

 

 

-

 

 

 

451,614

 

Change in fair value of derivatives liabilities

 

 

-

 

 

 

(26,224,593)

Increase in principal and accrued interest balances due to penalty provision

 

 

-

 

 

 

93,821

 

Gain on extinguishment of convertible notes

 

 

-

 

 

 

(96,444)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

2,485

 

 

 

-

 

Inventory

 

 

(9,759)

 

 

-

 

Prepaids and other current assets

 

 

(64,960)

 

 

-

 

Accounts payable

 

 

(451,181)

 

 

14,143

 

Accrued expenses

 

 

40,535

 

 

 

25,355

 

Management fee payable

 

 

-

 

 

 

(116,200)

Net cash used in operating activities

 

 

(3,332,429)

 

 

(663,657)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from sale of common stock and warrants, net of issuance costs

 

 

15,471,775

 

 

 

-

 

Proceeds from exercise of warrants

 

 

445

 

 

 

-

 

Proceeds from note payable

 

 

-

 

 

 

100,000

 

Proceeds from convertible notes payable

 

 

-

 

 

 

134,640

 

Proceeds from sale of preferred stock

 

 

-

 

 

 

462,000

 

Related party advances

 

 

-

 

 

 

226,500

 

Payments to settle convertible notes payable and warrants

 

 

-

 

 

 

(198,907)

Net cash provided by financing activities

 

 

15,472,220

 

 

 

724,233

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN CASH

 

 

12,139,791

 

 

 

60,576

 

BEGINNING CASH BALANCE

 

 

10,723,870

 

 

 

98,012

 

ENDING CASH BALANCE

 

$22,863,661

 

 

$158,588

 

 

 

 

 

 

 

 

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Conversion of notes payable, accrued interest and derivative liabilities into common stock

 

$-

 

 

$13,454,704

 

Conversion of management fees and patent liability into common stock

 

$250,000

 

 

$50,000

 

Discounts on convertible notes payable due to derivative liabilities

 

$-

 

 

$134,640

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
5

Table of Contents

 

CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

Series A Preferred Stock

 

 

Series B Preferred Stock

 

 

Series C Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

 Paid-in Capital 

 

 

Accumulated

Deficit

 

 

Total

Stockholders’

Equity 

 

December 31, 2021

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

6,338,864

 

 

$6,339

 

 

$53,879,215

 

 

$(43,667,814)

 

$10,217,740

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock and accompanying warrants, net of issuance costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,991,669

 

 

 

2,992

 

 

 

15,468,783

 

 

 

-

 

 

 

15,471,775

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for related party patent liabilities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

181,818

 

 

 

182

 

 

 

249,818

 

 

 

-

 

 

 

250,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for warrant exercise

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,443,887

 

 

 

4,444

 

 

 

(3,999)

 

 

-

 

 

 

445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

50,422

 

 

 

-

 

 

 

50,422

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,946,013)

 

 

(2,946,013)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2022

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

13,956,238

 

 

$13,957

 

 

$69,644,239

 

 

$(46,613,827)

 

$23,044,369

 

  

 

 

 Series A Preferred Stock

 

 

Series B Preferred Stock

 

 

Series C Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

 Paid-in Capital

 

 

Accumulated

Deficit

 

 

Total

Stockholders’

 Equity 

 

March 31, 2022

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

6,520,682

 

 

$6,521

 

 

$54,170,393

 

 

$(44,822,683)

 

$9,354,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock and accompanying warrants, net of issuance costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,991,669

 

 

 

2,992

 

 

 

15,468,783

 

 

 

-

 

 

 

15,471,775

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for warrant exercise

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,443,887

 

 

 

4,444

 

 

 

(3,999)

 

 

-

 

 

 

445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,062

 

 

 

-

 

 

 

9,062

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,791,144)

 

 

(1,791,144)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2022

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

13,956,238

 

 

$13,957

 

 

$69,644,239

 

 

$(46,613,827)

 

$23,044,369

 

 

 
6

Table of Contents

 

 

 

Series A Preferred Stock

 

 

Series B Preferred Stock

 

 

Series C Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

Paid-in

Capital

 

 

Accumulated

Deficit

 

 

Total

Stockholders’

Deficit 

 

December 31, 2020

 

 

3,000,000

 

 

$3,000

 

 

 

-

 

 

$-

 

 

 

-

 

 

$-

 

 

 

1,537,073

 

 

$1,537

 

 

$22,082,689

 

 

$(61,890,236)

 

$(39,803,010)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from sales of preferred stock

 

 

-

 

 

 

-

 

 

 

350

 

 

 

321,000

 

 

 

150

 

 

 

141,000

 

 

 

4,286

 

 

 

4

 

 

 

(4)

 

 

-

 

 

 

462,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for related party management liabilities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

89,286

 

 

 

89

 

 

 

49,911

 

 

 

-

 

 

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for conversion of convertible notes, accrued interest and derivative liabilities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

772,099

 

 

 

772

 

 

 

1,228,579

 

 

 

-

 

 

 

1,229,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Relief of derivative liabilities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

12,225,353

 

 

 

-

 

 

 

12,225,353

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends on preferred stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(20,752)

 

 

-

 

 

 

(20,752)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cashless exercise of warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

37,870

 

 

 

38

 

 

 

(38)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

211,768

 

 

 

-

 

 

 

211,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

24,930,837

 

 

 

24,930,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

3,000,000

 

 

$3,000

 

 

 

350

 

 

$321,000

 

 

 

150

 

 

$141,000

 

 

 

2,440,614

 

 

$2,440

 

 

$35,777,506

 

 

$(36,959,399)

 

$(714,453)

  

 

 

Series A Preferred Stock

 

 

Series B Preferred Stock

 

 

Series C Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

Paid-in

Capital

 

 

Accumulated

Deficit

 

 

Total

Stockholders’

Deficit 

 

March 31, 2021

 

 

3,000,000

 

 

$3,000

 

 

 

350

 

 

$326,600

 

 

 

150

 

 

$141,049

 

 

 

2,280,160

 

 

 

2,280

 

 

$31,138,715

 

 

$(34,054,217)

 

$(2,442,573)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for related party management liabilities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for conversion of convertible notes, accrued interest and derivative liabilities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

142,695

 

 

 

142

 

 

 

341,646

 

 

 

-

 

 

 

341,788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Relief of derivative liabilities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,100,498

 

 

 

-

 

 

 

4,100,498

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends on preferred stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,600)

 

 

-

 

 

 

(49)

 

 

-

 

 

 

-

 

 

 

(15,103)

 

 

-

 

 

 

(20,752)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cashless exercise of warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

17,759

 

 

 

18

 

 

 

(18)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

211,768

 

 

 

-

 

 

 

211,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,905,182)

 

 

(2,905,182)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

3,000,000

 

 

$3,000

 

 

 

350

 

 

$321,000

 

 

 

150

 

 

$141,000

 

 

 

2,440,614

 

 

$2,440

 

 

$35,777,506

 

 

$(36,959,399)

 

$(714,453)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
7

Table of Contents

 

CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization – Creative Medical Technologies Holdings, Inc. (the “Company”) is a commercial stage biotechnology company focused on immunology, urology, orthopedics and neurology using adult stem cell treatments. The Company was incorporated on December 3, 1998, in the State of Nevada under the name Jolley Marketing, Inc. On May 18, 2016, the Company closed a transaction which was accounted for as a recapitalization, reverse merger, under which Creative Medical Technologies, Inc., a Nevada corporation (“CMT”) became the Company’s wholly-owned subsidiary, and Creative Medical Health, Inc. (“CMH”), which was CMT’s sole stockholder prior to the merger, became the Company’s principal stockholder. In connection with this merger, the Company changed its name to Creative Medical Technologies Holdings, Inc. to reflect its current business.

 

CMT was originally created on December 30, 2015 (“Inception”), as the urological arm of CMH to monetize a patent and related intellectual property related to the treatment of erectile dysfunction (“ED”), which it acquired from CMH in February 2016. Subsequently, the Company has expanded its development and acquisition of intellectual property beyond urology to include therapeutic treatments utilizing “re-programmed” stem cells, and the treatment of neurologic disorders, lower back pain, type I diabetes, and heart, liver, kidney and other diseases using various types of stem cells through our ImmCelz, Inc., StemSpine, Inc. and AmnioStem LLC subsidiaries. However, neither ImmCelz Inc., StemSpine Inc. nor AmnioStem LLC have commenced commercial activities.

 

The Company currently conducts substantially all of its commercial operations through CMT, which markets and sells the Company’s CaverStem® and FemCelz® disposable kits utilized by physicians to perform autologous procedures that treat erectile dysfunction and female sexual dysfunction, respectively. In addition to its CaverStem® and FemCelz® products, the Company is currently in the process of recruiting clinical sites for its StemSpine® Regenerative Stem Cell Procedure for the Treatment of Degenerative Disc Disease, an autologous procedure that utilizes a patient’s own stem cells to treat lower back pain.

 

In 2020, through the Company’s ImmCelz Inc. subsidiary, the Company began exploring the development of treatments that utilize a patient’s own extracted immune cells that are then “reprogrammed” by culturing them outside the patient’s body with optimized stem cells. The immune cells are then re-injected into the patient from whom they were extracted. The Company believes this process endows the immune cells with regenerative properties that may be suitable for the treatment of stroke victims, among other indications. In contrast to other stem cell-based approaches, the immune cells are significantly smaller in size than stem cells and are believed to more effectively penetrate areas of the damaged tissues and induce regeneration.

 

Use of Estimates – The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Basis of Presentation - The consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position for the periods presented. The operations for the six-month period ended June 30, 2022, are not necessarily indicative of the operating results for the full year.

 

Risks and Uncertainties - The Company has a limited operating history and has only recently started to generate revenues from its planned principal operations.

 

 
8

Table of Contents

 

On January 30, 2020, the World Health Organization declared the COVID-19 outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the COVID-19 include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The COVID-19 and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While it is unknown how long these conditions will last and what the complete financial effect will be to the company, to-date, the Company has experienced a reduction in revenues due to the COVID-19 outbreak.

  

The Company’s business and operations are sensitive to general business and economic conditions in the U.S. and worldwide. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general condition of the U.S. and world economy. A host of factors beyond the Company’s control could cause fluctuations in these conditions, including the political environment and acts or threats of war or terrorism. Adverse developments in these general business and economic conditions, including through recession, downturn or otherwise, could have a material adverse effect on the Company’s financial condition and the results of its operations.

 

The Company has only recently started to generate sales and we have limited marketing and/or distribution capabilities. The Company has limited experience in developing, training or managing a sales force and will incur substantial additional expenses if it decides to market any of its current and future products and services with an internal sales organization. Developing a marketing and sales force is also time consuming and could delay launch of its future products and services. In addition, the Company will compete with many companies that currently have extensive and well-funded marketing and sales operations. The Company’s marketing and sales efforts may be unable to compete successfully against these companies. In addition, the Company has limited capital to devote to sales and marketing.

 

The Company’s industry is characterized by rapid changes in technology and customer demands. As a result, the Company’s products and services may quickly become obsolete and unmarketable. The Company’s future success will depend on its ability to adapt to technological advances, anticipate customer demands, develop new products and services and enhance the Company’s current products and services on a timely and cost-effective basis. Further, the Company’s products and services must remain competitive with those of other companies with substantially greater resources. The Company may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products and services or enhanced versions of existing products and services. Also, the Company may not be able to adapt new or enhanced products and services to emerging industry standards, and the Company’s new products and services may not be favorably received. In addition, the Company may not have the capital resources to further the development of existing and/or new ones.

  

On July 8, 2022, the Company received a letter from The Nasdaq Stock Market LLC advising us that we were not in compliance with Nasdaq Listing Rule 5550(a)(2) because the closing bid price of our common stock was below $1.00 per share for 30 consecutive business days. Pursuant to Nasdaq’s Listing Rules, the Company has a 180 day grace period, until January 4, 2023, during which the Company may regain compliance if the bid price of our common stock closes at $1.00 per share or more for a minimum of ten consecutive business days. In addition, the Company may be eligible for an additional 180-day grace period if we meet Nasdaq’s initial listing standards (other than with respect to minimum bid price) for The Nasdaq Capital Market. The Company intends to actively monitor the bid price for our common stock between now and January 4, 2023, and will consider available options to regain compliance with Nasdaq’s minimum bid price requirements. However, there can be no assurance that the Company will be able to regain compliance with Nasdaq’s Listing Rules and maintain our Nasdaq listing. The delisting of our shares of common stock from Nasdaq may have a material negative impact on the liquidity of our securities, as well as a material negative impact on our ability to raise capital in the future.

 

Revenue - The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from contracts with customers”. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Deferred revenue represents amounts which still have yet to be earned.

 

 
9

Table of Contents

 

The Company generates revenue from the sale of disposable stem cell concentration kits. Revenues are recognized when control of the promised goods or services are transferred to the customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services, which is generally on delivery to the customer.

 

Payments received for which the earnings process is not yet complete are deferred. As of June 30, 2022, the Company had no deferred revenue.

 

Concentration Risks - The Federal Deposit Insurance Corporation insures cash deposits in most general bank accounts for up to $250,000 per institution. The Company maintains its cash balances at two financial institutions. As of June 30, 2022, the Company’s balance exceeded the limit at both institutions.

 

Fair Value of Financial Instrument - The Company’s financial instruments consist of cash and cash equivalents, and payables. The carrying amount of cash and cash equivalents and payables approximates fair value because of the short-term nature of these items.

 

Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are required to be disclosed by level within the following fair value hierarchy:

 

Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

 

Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

 

Level 3 – Inputs lack observable market data to corroborate management’s estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

 

When determining fair value, whenever possible the Company uses observable market data, and relies on unobservable inputs only when observable market data is not available. As of June 30, 2022, the Company has no derivative liabilities.

 

Basic and Diluted Loss Per Share – The Company follows Financial Accounting Standards Board (“FASB”) ASC 260 Earnings per Share to account for earnings per share. Basic earnings per share (“EPS”) calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. Dilutive common share equivalents include the dilutive effect of in-the-money share equivalents, which are calculated, based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of an award, if any, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the estimated tax benefits that would be recorded in paid-in capital, if any, when an award is settled are assumed to be used to repurchase shares in the current period. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

 

 
10

Table of Contents

 

The following is a summary of outstanding securities which have been included in the calculation of diluted net income per share and reconciliation of net income to net income available to common stockholders for the six-months ended June 30, 2021.

 

 

 

For the Six-months Ended June 30,

2021

 

Weighted average common shares outstanding used in calculating basic earnings per share

 

 

2,242,318

 

Effect of Series B and C preferred stock

 

 

24,000

 

Effect of warrants

 

 

35,873

 

Effect of convertible notes payable

 

 

22,115

 

Effect of convertible related party management fee and patent liabilities

 

 

4,623

 

Weighted average common shares outstanding used in calculating diluted earnings per share

 

 

2,328,929

 

 

 

 

 

 

Net income as reported

 

$24,930,837

 

Add - Interest on convertible notes payable

 

 

117,649

 

Net income available to common stockholders

 

$25,048,486

 

 

The Company excluded 7 options and 18 warrants from the computation of diluted net income per share for the six-months ended June 30, 2021 as their exercise prices were in excess of the average closing market price of the Company’s common stock during that period.

 

During the six-months ended June 30, 2022, the Company had 111,824 options and 22,969,265 warrants to purchase shares of common stock which have been excluded from the dilutive net loss per share calculation as their effects are anti-dilutive.

 

Recent Accounting Pronouncements – The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.

 

NOTE 2 – LICENSING AGREEMENTS

 

ED Patent – The Company acquired a patent from CMH, a related company on February 2, 2016, in exchange for 431,111 shares of CMTH restricted common stock valued at $100,000. The patent expires in 2025 and the Company has elected to amortize the patent over a ten-year period on a straight-line basis. Amortization expense of $4,986 was recorded for the six-months ended June 30, 2022 and 2021. As of June 30, 2022, the carrying value of the patent was $36,000. The Company expects to amortize $9,972 annually through 2026 related to the patent costs.

 

Multipotent Amniotic Fetal Stem Cells License Agreement - On August 25, 2016, CMT entered into a License Agreement dated August 25, 2016, with a University. This license agreement grants to CMT the exclusive right to all products derived from a patent for use of multipotent amniotic fetal stem cells composition of matter throughout the world during the period ending on the expiration date of the longest-lived patent rights under the patent. The license agreement also permits CMT to grant sublicenses. Under the terms of the license agreement, CMT is required to diligently develop, manufacture, and sell any products licensed under the agreement. CMT paid the University an initial license fee within 30 days of entering into the agreement. CMT is also required to pay annual license maintenance fees on each anniversary date of the agreement, which maintenance fees would be credited toward any earned royalties for any given period. The License Agreement provides for payment of various milestone payments and earned royalties on the net sales of licensed products by CMT or any sub licensee. CMT is also required to reimburse the University for any future costs associated with maintaining the patent. CMT may terminate the license agreement for any reason upon 90 days’ written notice and the University may terminate the agreement in the event CMT fails to meet its obligations set forth therein, unless the breach is cured within 30 days of the notice from the University specifying the breach. CMT is also obligated to indemnify the University against claims arising due to the exercise of the license by CMT or any sub licensee. As of June 30, 2022, no amounts are currently due to the University.

 

 
11

Table of Contents

 

The Company estimates that the patent expires in February 2026 and has elected to amortize the patent through the period of expiration on a straight-line basis. Amortization expense of $586 was recorded for the six-months ended June 30, 2022 and 2021. As of June 30, 2022, the carrying value of the patent was $3,791. The Company expects to amortize approximately $1,172 annually through 2026 related to the patent costs. 

 

Lower Back Patent – The Company, through its subsidiary StemSpine, LLC, acquired a patent from CMH, a related company, on May 17, 2017, covering the use of various stem cells for the treatment of lower back pain from pursuant to a Patent Purchase Agreement, which was amended in November 2017. As amended, the agreement provides the following:

 

 

·

The Company is required to pay CMH $100,000 within 30 days of demand as an initial payment.

 

·

In the event the Company determines to pursue the technology via use of autologous cells, the Company will pay CMH:

 

 

o

$100,000 upon the signing agreement with a university for the initiation of an IRB clinical trial.

 

o

$200,000, upon completion of the IRB clinical trial.

 

o

$300,000 in the event we commercialize the technology via use of autologous cells by a physician without a clinical trial.

 

 

·

In the event the Company determines to pursue the technology via use of allogenic cells, the Company will pay CMH:

 

 

o

$100,000 upon filing an IND with the FDA.

 

o

$200,000 upon dosing of the first patient in a Phase 1-2 clinical trial.

 

o

$400,000 upon dosing the first patient in a Phase 3 clinical trial.

 

 

·

Payment may be made in cash or shares of our common at a discount of 30% to the lowest closing price within 20 business days prior to the conversion date.

 

·

In the event the Company’s shares of common stock trade below $0.01 per share for two or more consecutive trading days, the number of any shares issuable as payment doubles.

 

 

·

For a period of five years from the date of the first sale of any product derived from the patent, the Company is required to make royalty payments of 5% from gross sales of products, and 50% of sale price or ongoing payments from third parties for licenses granted under the patent to third parties.

 

The Company paid CMH the $100,000 obligation of the initial payment due under this agreement, by a $50,000 cash payment and the issuance of 6,667 shares of common stock on December 12, 2019. On January 8, 2021, following the Company’s announcement with respect to the clinical commercialization of the StemSpine technology, the Company paid CMH $50,000 of the $300,000 obligation due under this agreement through the issuance of 133 shares of common stock. On September 30, 2020, the Company paid CMH an additional $40,000 of the $300,000 obligation due under this agreement through the issuance of 84,656 shares of common stock, and in January 2021 the Company paid CMH an additional $50,000 of the $300,000 obligation due under this agreement through the issuance of 89,286 shares of common stock. The remaining portion of the $300,000 obligation was paid in cash in 2021.

 

The patent expires on May 19, 2027 and the Company has elected to amortize the patent over a ten-year period on a straight-line basis. Amortization expense of $5,000 was recorded for the six-month periods ended June 30, 2022 and 2021. As of June 30, 2022, the carrying value of the initial patent license was $50,000. The Company expects to amortize approximately $10,000 annually through 2027 related to the patent costs.

 

The Company has elected to amortize the increased obligation from the election to commercialize the StemSpine technology over a ten-year period on a straight-line basis. Amortization expense of $22,970 was recorded for the six-month periods ended June 30, 2022 and 2021. As of June 30, 2022, the carrying value of the patent was $179,344. The Company expects to amortize approximately $46,000 annually through 2027 related to the patent costs.

 

 
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ImmCelz™ - On December 28, 2020, ImmCelz, Inc. (“ImmCelz”), a newly formed Nevada corporation and wholly owned subsidiary of the Company, entered into a Patent License Agreement dated December 28, 2020 (the “Agreement”), with Jadi Cell, LLC. (“Jadi”), a company controlled by Dr. Amit Patel, a former director of the Company. The Agreement grants to ImmCelz™ the patent rights under U.S. Patent# 9,803,176 B2, “Methods and compositions for the clinical derivation of an allogenic cell and therapeutic uses”. The contract grants ImmCelz™ access to proprietary process of expanding the master cell bank of Jadi Cell LLC, as currently practiced by Licensor and as documented in standard operating procedures (SOPs) and other written documentation. The terms of the agreement are as follows:

 

 

·

Licensee shall pay Licensor a license fee of $250,000 (the “Upfront Royalty”), which can also be paid in CELZ stock at a discount of 25% of the closing price of $0.0037, which is based on the date of this agreement

 

·

Within thirty (30) days of the end of each calendar quarter during the term of this Agreement, Licensee will pay Licensor five percent (5%) of the Net Income of ImmCelz™. during such calendar quarter (the “Continuing Royalty”)

 

 

·

in one or a series of related transactions, of all or substantially all of the business or assets of Licensee ImmCelz, Inc. (“Sale of Assets”) will result in a one-time ten-percent allocation to the licensor, the Continuing Royalty will be calculated at five percent (5%) of the Net Income of Licensee in any calendar quarter in which the Net Income in such calendar quarter reflects the receipt of any consideration from such Sale of Assets.

 

To date, the Company has not made any payments to Jadi Cell under this agreement, other than the $250,000 initial license fee, which was paid by the issuance of 180,180 shares of common stock to Jadi Cell in February 2022.

 

The Company has elected to amortize the patent over a ten-year period on a straight-line basis. Amortization expense of $12,500 were recorded for the six-month periods ended June 30, 2022 and 2021. As of June 30, 2022, the carrying value of the patent was $212,500. The Company expects to amortize approximately $25,000 annually through 2030 related to the patent costs.

 

The following is a roll-forward of the Company’s licensing agreements for the six-months ended June 30, 2022.

  

 

 

Assets

 

 

Accumulated

Amortization

 

 

 

 

 

 

 

 

Balances at December 31, 2021

 

$760,000

 

 

$(232,321 )

Addition of new assets

 

 

 

 

 

 

-

 

Amortization

 

 

-

 

 

 

(46,042 )

Balances at June 30, 2022

 

$760,000

 

 

$(278,363 )

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

Management Reimbursement Agreement

 

On November 17, 2017, the Company entered into a Management Reimbursement Agreement with CMH, a related party whose directors and executive officers include the Company’s officers and directors. Pursuant to this agreement, during 2019 and 2020, and until September 16, 2021, the Company reimbursed CMH an aggregate of $45,000 per month for the services of management and consultants employed by CMH (including the Company’s Chief Executive Officer and Chief Financial Officer, and the Company’s former directors Dr. Patel and Dr. Ichim). The agreement provided that at the option of CMH, the reimbursable amounts may be paid from time to time in shares of common stock of the Company at a price equal to a 30% discount to the lowest closing price during the 20 trading days prior to time the notice is given. This agreement was terminated effective September 15, 2021. At June 30, 2022, no amounts were owed CMH under this agreement. At June 30, 2021, the Company owed CMH $52,582.

 

 
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Debt Settlement Agreement

 

On January 12, 2018, the Company entered into a Debt Settlement Agreement with Timothy Warbington, the Company’s Chief Executive Officer, under which the Company issued 3,000,000 shares of super-voting Series A Preferred Stock to Mr. Warbington in exchange for the cancellation of $150,000 of debt owed by the Company to CMH, which CMH in turn was obligated to pay Mr. Warbington. The Series A Preferred Stock previously provided Mr. Warbington with substantial control over all matters subject to a vote of the Company’s shareholders. Mr. Warbington surrendered the Series A Preferred Stock to the Company in December 2021 immediately prior to the closing of the Company’s public offering in exchange for $150,000 plus 8% interest on such amount from January 2018 until the date of surrender.

 

Jadi Cell License Agreement

 

On December 28, 2020, the Company entered into a patent license agreement with Jadi Cell, LLC, a company owned and controlled by Dr. Amit Patel, a former director of the Company. The agreement provides Company with an exclusive, worldwide license to U.S. Patent No. 9,803,176 “Methods and compositions for the clinical derivation of an allogenic cell and therapeutic uses” and the proprietary process of expanding the master cell bank of Jadi Cell LLC, in the field of enhancing autologous cells. The agreement is described in detail in Note 2 above. To date, the Company has not made any payments to Jadi Cell under this agreement, other than the $250,000 initial license fee, which was paid by the issuance of 181,818 shares of common stock to Jadi Cell in February 2022.

 

StemSpine Patent Purchase 

 

The Company acquired U.S. Patent No. 9,598,673 covering the use of various stem cells for the treatment of lower back pain from its affiliate CMH pursuant to a Patent Purchase Agreement dated May 17, 2017, which was amended in November 2017. The inventors of the patent were Thomas Ichim, PhD and Amit Patel, MD, former directors of the Company, and Annette Marleau, PhD. The Patent Purchase Agreement is described in detail in Note 2 above. Pursuant to the Patent Purchase Agreement, the Company paid CMH the $100,000 obligation of the initial payment due under this agreement, by a $50,000 cash payment and the issuance of 6,667 shares of common stock on December 12, 2020. On January 8, 2021, following the Company’s announcement with respect to the clinical commercialization of the StemSpine technology, the Company paid CMH $50,000 of the $300,000 obligation due under this agreement through the issuance of 133 shares of common stock. On September 30, 2020, the Company paid CMH an additional $40,000 of the $300,000 obligation due under this agreement through the issuance of 84,656 shares of common stock, and in January 2021 the Company paid CMH an additional $50,000 of the $300,000 obligation due under this agreement through the issuance of 89,286 shares of common stock. The remaining portion of the $300,000 obligation has been paid in cash.

 

Insider Loans

 

On May 28, 2021, Timothy Warbington, who is our CEO and Chairman; and Dr. Amit Patel, who was formerly a director of ours, advanced the Company $50,000 and $150,000 respectively. The two notes were repaid during the quarter ended September 30, 2021, did not have any conversion features, and bore interest at the rate of 5% per annum.

 

NOTE 4 – DEBT

 

As-of June 30, 2022, the Company had no outstanding loans and there was no loan activity during the six-months ended June 30, 2022.

 

During the six-months ended June 30, 2021, we issued $157,150 in convertible notes to accredited investors with net proceeds of $134,640. The notes matured during February of 2022 and bore interest at rate of 8%. The notes were convertible into shares of the Company’s common stock at conversion prices ranging from 60% to 71% of the average of the two lowest traded prices or the lowest trade price of the Company’s common stock during the previous 15 trading days preceding the conversion date. The Company was amortizing the discount due to derivative liabilities and on-issuance discount totaling $157,150 to interest expense using the straight-line method over the original terms of the loans.

 

 
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On May 28, 2021, our CEO, Mr. Timothy Warbington, and Board Member, Dr. Amit Patel, advanced the company $50,000 and $150,000 respectively. The two notes mature on August, 28 2021, and were repaid in full with an interest rate of 5%.

  

During the six-months ended June 30, 2021, the Company amortized $451,614 to interest expense. As of June 30, 2021, total discounts of $120,185 remained for which were planned to be expensed through February 2022.

 

During the six-months ended June 30, 2021, the Company issued an aggregate of 772,099 shares upon the conversion of 1,229,351 of outstanding principal, interest and fees on existing, outstanding notes and 37,870 shares upon the cashless exercise of 43,167 warrants.

 

During the six-months ended June 30, 2021, the Company extinguished $118,000 of principal or interest.

 

NOTE 5 – DERIVATIVE LIABILITIES

 

Derivative Liabilities

 

As-of June 30, 2022, the Company had no outstanding derivative liabilities and there was no derivative activity during the six-months ended June 30, 2022.

 

During the six-months ended June 30, 2021, the Company recorded initial derivative liabilities of $817,791 based upon the following Black-Scholes option pricing model average assumptions: an exercise price of $5.30 to $6.90 our stock price on the date of grant of $15.50 to $6.90, expected dividend yield of 0%, expected volatility of 98.14%, risk free interest rate of 0.10% and expected terms of 1.0 year. Upon initial valuation, the derivative liabilities exceeded the face values certain of the convertible notes payable by approximately $683,151, which was recorded as a day one loss in derivative liability.

 

On June 30, 2021, the derivative liabilities were revalued at $248,097 resulting in a loss of $2,251,446 and a gain of $262,224,593 related to the change in fair market value of the derivative liabilities during the three and six-months ended June 30, 2021, respectively. The derivative liabilities were revalued using the Black-Scholes option pricing model with the following average assumptions: an exercise price of $9.45 to $1,545.00, our stock price on the date of valuation ($17.50), expected dividend yield of 0%, expected volatility of 75.03% to 98.81%, risk-free interest rate of 0.46% to 0.70%, and expected terms ranging from 0.5 to 2.7 years.

 

In connection with convertible notes converted, as disclosed in Note 4, the Company reclassed derivative liabilities with a fair value of $12,225,353 to additional paid-in capital for the six-month period ended June 30, 2021. The Company revalued the derivative liabilities at each conversion date recording the pro-rata portion of the derivative liability as compared to the portion of the convertible note converted to the pre-conversion carrying value to additional paid-in capital.

 

NOTE 6 – STOCK-BASED COMPENSATION

 

On September 6, 2021, the Company’s Board of Directors and holders of a majority of the voting power of the Company’s stockholders approved the Company’s 2021 Equity Incentive Plan (the “2021 Plan”), and reserved 600,000 shares of common stock for the issuance of awards thereunder. The 2021 Plan provides for the granting to our employees, officers, directors, consultants and advisors of performance awards payable in shares of common stock, stock options (non-statutory and incentive), restricted stock awards, stock appreciation rights (“SARs”), restricted share units (“RSUs”) and other stock-based awards. The purpose of the 2021 Plan is to secure for the Company and its stockholders the benefits arising from capital stock ownership by eligible participants who are expected to contribute to the Company’s future growth and success.

 

 
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During the six-months ended June 30, 2022, Messrs. Warbington and Dickerson received 10-year options to purchase an aggregate of 111,187 shares of common stock with an exercise price of $1.69. The options vested immediately as to 25% of the shares subject to the option, and will vest in three equal installments of 25% of the shares subject to the option on each of the next three annual anniversary dates of the grant date. The value of the options was determined to be $145,525 based upon the Black-Scholes method, see variables used below.

 

 

 

Inputs

Used

 

 

 

 

 

Annual dividend yield

 

$-

 

Expected life (years)

 

 

10.0

 

Risk-free interest rate

 

 

0.81%

Expected volatility

 

 

92.95%

Common stock price

 

$1.69

 

 

During the six-months ended June 30, 2021, the fair market value of the options was insignificant to the financial statements.

 

Since the expected life of the options was greater than the Company’s historical stock information available, the Company determined the expected volatility based on price fluctuations of comparable public companies.

 

There were no options issued during the six-months ended June 30, 2021.

 

Option activity for the six-months ended June 30, 2022 consists of the following:

 

 

 

Stock

 Options

 

 

Weighted

Average

Exercise

 Price

 

 

Weighted

Average

 Life

 Remaining

 

Outstanding, December 31, 2021

 

 

7

 

 

$7,500

 

 

 

4.64

 

Issued

 

 

111,817

 

 

 

 

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

Expired

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding, June 30, 2022

 

 

111,824

 

 

$2.16

 

 

 

9.62

 

Vested, June, 30, 2022

 

 

27,961

 

 

$3.57

 

 

 

9.62

 

 

NOTE 7 – STOCKHOLDERS’ EQUITY

  

On May 3, 2022, the “Company” completed the sale of (i)2,991,669 shares of common stock, and pre-funded warrants to purchase 4,563,887 shares of common stock (the “Pre-Funded Warrants”), and (ii) accompanying warrants to purchase 15,111,112 shares of common stock (the “Common Warrants”), at a combined offering price of $2.25 per share of common stock/Pre-Funded Warrant and related Common Warrant, to a group of institutional investors (the “Purchasers”), pursuant to a Securities Purchase Agreement between the Company and the Purchasers dated as of April 28, 2022 (the “Purchase Agreement”), resulting in gross proceeds to the Company of approximately $17,000,000. The transaction was effected pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended and Rule 506(b) promulgated thereunder.

  

The Common Warrants have a five-year term, and an exercise price of $2.00 per share. The Pre-Funded Warrants do not expire, and have an exercise price of $0.0001 per share.

 

The Pre-Funded Warrants are classified as a component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, and permit the holders to receive a fixed number of shares of common stock upon exercise. In addition, the Pre-Funded Warrants do not provide any guarantee of value or return.

 

 
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Roth Capital Partners (“Roth”), acted as sole placement agent for the offering. The Company paid Roth a placement agent fee in the amount $1,360,000, and issued Roth a warrant to purchase 1,133,333 shares of Common Stock with the same terms as the Common Warrants issued to the Purchasers.

 

The issuances and exercises during the six-months ended June 30, 2022, are as follows:

  

Outstanding at December 31, 2021

 

 

6,604,820

 

Issuances

 

 

20,808,332

 

Exercises

 

 

(4,443,887 )

Outstanding at June 30, 2022

 

 

22,969,265

 

Weighted Average Price at June 30, 2022

 

$2.64

 

 

NOTE 8 – SUBSEQUENT EVENTS

 

In accordance with ASC 855, management reviewed all material events through May 15, 2022, for these financial statements and there are no material subsequent events to report.

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of our balance sheets and statements of operations. This section should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021, and our interim financial statements and accompanying notes to these financial statements included in this report. All amounts are in U.S. dollars.

 

Forward-Looking Statement Notice

 

This quarterly report on Form 10-Q contains forward-looking statements about our expectations, beliefs or intentions regarding, among other things, our product development efforts, business, financial condition, results of operations, strategies or prospects. In addition, from time to time, we or our representatives have made or may make forward-looking statements, orally or in writing. Forward-looking statements can be identified by the use of forward-looking words such as “believe,” “expect,” “intend,” “plan,” “may,” “should” or “anticipate” or their negatives or other variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical or current matters. These forward-looking statements may be included in, but are not limited to, various filings made by us with the SEC, press releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, those set forth in our most recent annual report referenced below.

 

This report identifies important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements.

 

All forward-looking statements attributable to us or persons acting on our behalf speak only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in this report. We undertake no obligations to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. In evaluating forward-looking statements, you should consider these risks and uncertainties.

 

 
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Overview

 

We are a commercial stage biotechnology company focused on immunology, urology, neurology and orthopedics using adult stem cell treatments and interrelated regenerative technologies for the treatment of multiple indications. Our existing and pipeline of therapies and products include of the following:

 

celz_10qimg1.jpg

Our subsidiary, Creative Medical Technologies, Inc. (“CMT”), was originally created to monetize U.S. Patent No. 8,372,797 and related intellectual property related to the treatment of erectile dysfunction (“ED”), which it acquired in February 2016. Subsequently, we have expanded our development and acquisition of intellectual property beyond urology to include therapeutic treatments utilizing “re-programmed” stem cells, and the treatment of neurologic disorders, lower back pain, type I diabetes, and heart, liver, kidney and other diseases using various types of stem cells through our ImmCelz, Inc., StemSpine, Inc. and AmnioStem LLC subsidiaries. However, neither ImmCelz Inc., StemSpine Inc. nor AmnioStem LLC have commenced commercial activities.

 

We currently conduct substantially all of our commercial operations through CMT, which markets and sells our CaverStem® and FemCelz® disposable kits utilized by physicians to perform autologous procedures that treat erectile dysfunction and female sexual dysfunction, respectively. Our CaverStem® and FemCelz® kits are currently available through physicians at eight locations in the United States.

 

In addition to our CaverStem® and FemCelz® products, we are currently in the process of recruiting clinical sites for our StemSpine® Regenerative Stem Cell Procedure for the Treatment of Degenerative Disc Disease. Our StemSpine® treatment is an autologous procedure that utilizes a patient’s own stem cells to treat lower back pain.

 

In 2020, through our ImmCelz Inc. subsidiary, we began exploring the development of treatments that utilize a patient’s own extracted immune cells that are then “reprogrammed” by culturing them outside the patient’s body with optimized stem cells. The immune cells are then re-injected into the patient from whom they were extracted. We believe this process endows the immune cells with regenerative properties that may be suitable for the treatment of multiple indications, among other indications. In contrast to other stem cell-based approaches, the immune cells are significantly smaller in size than stem cells and are believed to more effectively penetrate areas of the damaged tissues and induce regeneration.

  

We are currently primarily focused on expanding the commercial sale and use of our CaverStem® and FemCelz® products by physicians in the United States and further developing our StemSpine® treatment for lower back pain and OvaStem® treatment for Premature Ovarian Failure programs, including but not limited to disclosed Pilot Studies.. We also recently filed an Investigational New Drug (IND) application with the FDA to treat stroke utilizing our ImmCelzTM technology. We continue to further develop additional therapeutic products that utilize our proprietary intellectual property, including the collaboration with GreenStone Biosciences for the development of an Inducible Pluripotent Stem Cell (IPSC) line.

  

Results of Operations – For the Three-month Periods Ended June 30, 2022 and 2021

 

Gross Revenue. We generated no revenue for the three-month period ended June 30, 2022, in comparison with $10,000 for the comparable quarter a year ago.

  

Cost of Goods Sold. We generated no cost of goods sold for the three-month period ended June 30, 2022, in comparison with $4,500 cost of goods sold for the comparable quarter a year ago.

  

 
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Gross Profit/(Loss). We generated no gross profit for the three-month period ended June 30, 2022, in comparison with $5,500 for the comparable quarter a year ago.

  

General and Administrative Expenses. General and administrative expenses for the three-month period ended June 30, 2022, totaled $1,108,428 in comparison with $498,321, for the comparable quarter a year ago. The increase of $610,107 or 122% is primarily due to approximately $130,000 in director and officer insurance premiums that began in September 2021, an increase of approximately $180,000 in salary expenses from terminating the management service agreement in September 2021 and entering into direct employment arrangements with our CEO, CFO and other key leaders of the management team, an increase of approximately $164,000 in marketing expenses as we ramp-up our commercial activity, and an increase of $98,000 in outside consulting expenses focused on moving key elements of our programs forward.

  

Amortization Expenses. Amortization expenses for the three-month periods ended June 30, 2022 and 2021, totaled $23,021.

 

Research and Development Expenses. Research and development expenses for the three-month period ended June 30, 2022, totaled $659,695 in comparison with no expenses, for the comparable quarter a year ago. The increased research and development expenses reflects investments in in regulatory, research, laboratory and manufacturing resources required to move our programs forward.

  

Other Income/Expense. There was no other income or expense for the three-month period ended June 30, 2022, in comparison with $2,389,340 expense, for the comparable quarter a year ago. The decreased expense of $2,389,340, is primarily due to loss in the fair value of derivative liabilities of $2,251,446, zero interest expense versus $234,338, offset by a $96,444 gain on extinguishment of convertible notes for the comparable quarter a year ago.

 

Net Income/Loss. For the reasons stated above, our net loss for the three-month period ended June 30, 2022, totaled $1,791,144 in comparison to a loss of $2,905,182, for the comparable quarter a year ago.

 

Results of Operations – For the Six-month Periods Ended June 30, 2022 and 2021

 

Gross Revenue. We generated $15,000 in revenue for the six-month period ended June 30, 2022, in comparison with $10,000 in revenue for the comparable period a year ago.

  

Cost of Goods Sold. We generated $6,791 of goods sold for the six-month period ended June 30, 2022, in comparison with $4,500 cost of goods sold for the comparable period a year ago.

  

Gross Profit/(Loss). We generated a gross profit of $8,209 for the six-month period ended June 30, 2022, in comparison with $5,500 gross profit for the comparable period a year ago.

  

General and Administrative Expenses. General and administrative expenses for the six-month period ended June 30, 2022, totaled $2,238,485 in comparison with $779,244, for the comparable period a year ago. The increase of $1,459,241 or 187% is primarily due to approximately $305,000 in director and officer insurance premiums that began in September 2021, an increase of approximately $378,000 in net salary expenses offset by the termination of the management service agreement in September 2021 and entering into direct employment arrangements with our CEO, CFO and other key leaders of the management team, $226,000 in Board of Director expenses as a result of bringing on independent board members, an increase of approximately $279,000 in marketing expenses, and an increase of $235,000 in outside consulting expenses focused on moving key elements of our programs forward.

 

Amortization Expenses. Amortization expenses for the six-month periods ended June 30, 2022 and 2021, totaled $46,042.

 

 
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Research and Development Expenses. Research and development expenses for the six-month period ended June 30, 2022, totaled $669,694 in comparison with no expenses, for the comparable period a year ago. The increased research and development expenses reflects investments in regulatory, research, laboratory and manufacturing resources required to move our programs forward.

  

Other Income/Expense. There was no other income or expense for the six-month period ended June 30, 2022, in comparison with $25,750,623 income, for the comparable period a year ago. The decreased income of $25,750,623, is primarily due to a gain in the fair value of derivative liabilities of $26,224,593, offset by interest expense of $570,414 for the comparable period a year ago.

 

Net Income/Loss. For the reasons stated above, our net loss for the six-month period ended June 30, 2022, totaled $2,946,013 in comparison to net income of $24,930,837, for the comparable period a year ago.

 

Liquidity and Capital Resources

 

As of June 30, 2022, we had $22,863,661 of available cash and positive working capital of approximately $22,559,451. In comparison, as of December 31, 2021, we had approximately $10,723,870 of available cash and positive working capital of approximately $9,686,780.

 

On December 7, 2021, we sold an aggregate of 3,875,000 shares of our common stock, and accompanying warrants to purchase 3,875,000 shares of common stock at an exercise price of $4.13 per share, at a combined public offering price to the public of $4.13 per share of common stock and related Warrant, pursuant to an Underwriting Agreement we entered into with Roth Capital Partners, LLC. We received gross proceeds of $16,003,750, before deducting underwriting discounts and commissions of seven percent (7%) of the gross proceeds and offering expenses. We used a portion of the proceeds from the offering to (i) redeem our Bridge Notes described below, in the aggregate outstanding amount of $5,146,176, and (ii) repurchase the Company’s Series A Preferred Stock from the Company’s Chief Executive Officer for an aggregate purchase price of approximately $195,000.

 

In addition, on May 3, 2022 we completed the sale of (i) 2,991,669 shares of common stock and pre-funded warrants to purchase 4,563,887 shares of common stock, and (ii) accompanying warrants to purchase 15,111,112 shares of common stock, at a combined offering price of $2.25 per share of common stock/Pre-Funded Warrant and related Common Warrant, to a group of institutional investors, resulting in gross proceeds to the Company of approximately $17,000,000. 

 

Cash Flows

 

Net Cash used in Operating Activities. We used cash in our operating activities due to our losses from operations. Net cash used in operating activities was $3,332,429 for the six-month period ended June 30, 2022 in comparison to $663,657 for the comparable period a year ago, an increase of $2,668,772 or 402%. The increase in cash used in operations was primarily related to the increased expenses mentioned above.

 

Net Cash used in Investing Activities. There was no cash used in investing activities in the six-month period ended June 30, 2022 and June 30, 2021, respectively.

 

Net Cash From Financing Activities. We raised $15,472,220 during the six-month period ended June 30, 2022 through the issuance of common stock and pre-paid warrants, net of offering costs. We raised $724,233 through the issuance of convertible debt, preferred stock and a related party advance in the six-month period ended June 30, 2021.

 

Critical Accounting Policies and Estimates

 

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles accepted in the United States. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

 

 
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Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, we have elected not to provide the disclosure required by this item.

 

Item 4. Controls and Procedures

 

Evaluation of disclosure controls and procedures

 

As required by Rule 13a-15 under the Exchange Act, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2022.

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 15(d)-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in internal control over financial reporting

 

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
22

Table of Contents

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. As of June 30, 2022 we were not involved in any legal proceedings.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

In February 2022, we paid the initial Jadi Cell obligation of $250,000 through the issuance of 181,818 shares of common stock.

 

Item 6. Exhibits

 

SEC Ref. No.

 

Title of Document

 

 

 

3.1.1

 

Articles of Incorporation of Creative Medical Technology Holdings, Inc., a Nevada corporation (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2021).

3.1.2

 

Certificate of Designation of the Series A Preferred Stock of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 16, 2018).

3.1.3

 

Certificate of Amendment to Certificate of Designation of the Series A Preferred Stock Pursuant to NRS 78.1955, filed with the Secretary of State of the State of Nevada on March 11, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 12, 2021).

3.1.4

 

Certificate of Designation of the Series B Preferred Stock of the Company, filed March 30, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 12, 2021).

3.1.5

 

Certificate of Designation of the Series C Preferred Stock of the Company, filed March 30, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 2, 2021).

3.1.6

 

Certificate of Amendment to Articles of Incorporation Pursuant to NRS 78.385 and 78.390, as filed with the Secretary of State of the State of Nevada on November 2, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 5, 2021).

3.1.7

 

Certificate of Withdrawal of Certificate of Designation of Series B Convertible Preferred Stock, as filed with the Secretary of State of the State of Nevada on November 2, 2021 (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 5, 2021).

3.1.8

 

Certificate of Withdrawal of Certificate of Designation of Series C Convertible Preferred Stock, as filed with the Secretary of State of the State of Nevada on November 2, 2021 (incorporated by reference to Exhibit 3.3 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 5, 2021).

3.1.9

 

Certificate of Change Pursuant to NRS 78.209, as filed with the Secretary of State of the State of Nevada on November 8, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 9, 2021).

3.2

 

Bylaws of Creative Medical Technology Holdings, Inc., a Nevada corporation (incorporated by reference to Exhibit 3.2 to the Company’s Form 10 filed with the Securities and Exchange Commission on November 18, 2008).

31.1

 

Rule 13a-14(a) Certification by Principal Executive Officer

31.2

 

Rule 13a-14(a) Certification by Principal Financial Officer

32.1

 

Section 1350 Certification of Principal Executive Officer

32.2

 

Section 1350 Certification of Principal Financial Officer

101.INS

 

XBRL Instance Document

101.SCH

 

XBRL Taxonomy Extension Schema Document

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

 
23

Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Creative Medical Technology Holdings, Inc.

 

 

 

 

 

Date: August 12, 2022

By

/s/ Timothy Warbington

 

 

 

Timothy Warbington, Chief Executive Officer

 

 

 

(Principal Executive Officer) 

 

 

 

 

 

Date: August 12, 2022

By

/s/ Donald Dickerson

 

 

 

Donald Dickerson, Chief Financial Officer

 

 

 

(Principal Financial Officer)

 

 

 

24

 


celz_ex311.htm

 

EXHIBIT 31.1

 

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Timothy Warbington, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Creative Medical Technology Holdings, Inc. for the quarter ended June 30, 2022;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d)

Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

b)

Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 12, 2022

By:

/s/ Timothy Warbington

 

 

 

Timothy Warbington

 

 

 

Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

 


celz_ex312.htm

 

EXHIBIT 31.2

 

CERTIFICATION OF

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Donald Dickerson, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Creative Medical Technology Holdings, Inc. for the quarter ended June 30, 2022;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d)

Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

b)

Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 12, 2022

By:

/s/ Donald Dickerson

 

 

 

Donald Dickerson

 

 

 

Chief Financial Officer

 

 

 

(Principal Financial Officer)

 

 


celz_ex321.htm

 

EXHIBIT 32.1

 

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

 

In connection with this Quarterly Report of Creative Medical Technology Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Timothy Warbington, Chief Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

 

1.

Such Quarterly Report on Form 10-Q for the period ended June 30, 2022, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

 

2.

The information contained in such Quarterly Report on Form 10-Q for the period ended June 30, 2022 fairly presents, in all material respects, the financial condition and results of operations of Creative Medical Technology Holdings, Inc

 

Date: August 12, 2022

By:

/s/ Timothy Warbington

 

 

 

Timothy Warbington

 

 

 

Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

 


celz_ex322.htm

 

 EXHIBIT 32.2

 

CERTIFICATION OF

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

 

In connection with this Quarterly Report of Creative Medical Technology Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Donald Dickerson, Chief Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

 

1.

Such Quarterly Report on Form 10-Q for the period ended June 30, 2022, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

 

2.

The information contained in such Quarterly Report on Form 10-Q for the period ended June 30, 2022, fairly presents, in all material respects, the financial condition and results of operations of Creative Medical Technology Holdings, Inc.

 

Date: August 12, 2022

By:

/s/ Donald Dickerson

 

 

 

Donald Dickerson

 

 

 

Chief Financial Officer

 

 

 

(Principal Financial Officer)

 

 


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