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 March 31, 20212022
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 | |
( of | (I.R.S. Employer Identification No.) |
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( Address of |
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(833) 336-7636(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 |
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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 |
| Smaller reporting company | ☒ |
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| Emerging growth company |
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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 May 7, 2021,9, 2022, was 1,142,048,685.9,506,392.
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PART I – FINANCIAL INFORMATION |
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Item 1. | Financial Statements |
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| 4 |
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| 5 |
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| Unaudited Condensed Consolidated Statements of Stockholder’ |
| 6 |
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| Notes to Unaudited Condensed Consolidated Financial Statements |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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2 |
Table |
CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC. | CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC. | |||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||
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| March 31, 2021 |
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| December 31, 2020 |
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| March 31, 2022 |
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| December 31, 2021 |
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ASSETS |
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CURRENT ASSETS |
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Cash |
| $ | 275,134 |
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| $ | 98,012 |
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| $ | 9,146,977 |
| $ | 10,723,870 |
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Accounts receivable |
| 0 |
| 2,485 |
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Inventory |
| 14,150 |
| 10,866 |
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Prepaids and other current assets |
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| 64,960 |
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| 0 |
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Total Current Assets |
| 275,134 |
| 98,012 |
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| 9,226,087 |
| 10,737,221 |
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OTHER ASSETS |
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Other assets |
| 3,281 |
| 3,281 |
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Licenses, net of amortization |
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| 596,742 |
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| 619,763 |
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| 504,658 |
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| 527,679 |
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TOTAL ASSETS |
| $ | 871,876 |
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| $ | 717,775 |
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| $ | 9,734,026 |
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| $ | 11,268,181 |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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CURRENT LIABILITIES |
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Accounts payable |
| $ | 356,001 |
| $ | 350,899 |
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| $ | 335,681 |
| $ | 761,862 |
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Accrued expenses |
| 67,763 |
| 159,771 |
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| 29,920 |
| 24,385 |
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Management fee and patent liabilities - related parties |
| 255,082 |
| 468,782 |
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| 0 |
| 250,000 |
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Convertible notes payable, net of discount of $335,567 and $409,649, respectively |
| 327,225 |
| 788,701 |
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Advances from related party |
| 32,800 |
| 10,800 |
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| 14,194 |
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| 14,194 |
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Derivative liabilities |
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| 2,275,578 |
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| 38,741,832 |
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Total Current Liabilities |
| 3,314,449 |
| 40,520,785 |
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| 379,795 |
| 1,050,441 |
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Commitments and contingencies |
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STOCKHOLDERS' DEFICIT |
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Preferred stock, $0.001 par value, 7,000,000 and 7,000,000 shares authorized, no shares issued and outstanding at March 31, 2021 and December 31, 2020 |
| - |
| - |
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Series A preferred stock, $0.001 par value, 3,000,000 shares authorized, 3,000,000 shares issued and outstanding at March 31, 2021 and December 31, 2020 |
| 3,000 |
| 3,000 |
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Series B preferred stock, $0.001 par value, 1,000 shares authorized, 350 and 0 shares issued and outstanding at March 31, 2021 and December 31, 2020. Liquidation preference of $420,000. |
| 326,600 |
| - |
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Series C preferred stock, $0.001 par value, 500 shares authorized, 150 and 0 shares issued and outstanding at March 31, 2021 and December 31, 2020. Liquidation preference of $180,000. |
| 141,049 |
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Common stock, $0.001 par value, 6,000,000,000 shares authorized; 1,140,083,954 and 768,540,617 issued and 1,140,079,954 and 768,536,617 outstanding at March 31, 2021 and December 31, 2020, respectively |
| 1,140,080 |
| 768,536 |
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STOCKHOLDERS' EQUITY (DEFICIT) |
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Common stock, $0.001 par value, 50,000,000 and 50,000,000 shares authorized; 6,520,690 and 6,338,872 issued and 6,520,682 and 6,338,864 outstanding at March 31, 2022 and December 31, 2021, respectively |
| 6,521 |
| 6,339 |
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Additional paid-in capital |
| 30,000,915 |
| 21,315,690 |
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| 54,170,393 |
| 53,879,215 |
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Accumulated deficit |
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| (34,054,217 | ) |
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| (61,890,236 | ) |
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| (44,822,683 | ) |
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| (43,667,814 | ) |
TOTAL STOCKHOLDERS' DEFICIT |
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| (2,442,573 | ) |
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| (39,803,010 | ) | ||||||||
TOTAL STOCKHOLDERS' EQUITY |
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| 9,354,231 |
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| 10,217,740 |
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ | 871,876 |
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| $ | 717,775 |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ | 9,734,026 |
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| $ | 11,268,181 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3 |
Table |
CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC. | CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC. | |||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
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| For the Three Months Ended |
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| For the Three Months Ended |
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| For the Three Months Ended March 31, 2022 |
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| For the Three Months Ended March 31, 2021 |
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Revenues |
| $ | - |
| $ | 42,100 |
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| $ | 15,000 |
| $ | 0 |
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Cost of revenues |
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| 14,196 |
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| 6,791 |
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| 0 |
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Gross profit |
| - |
| 27,904 |
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| 8,209 |
| 0 |
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OPERATING EXPENSES |
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Research and development |
| 10,000 |
| 0 |
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Selling, general and administrative |
| 280,923 |
| 346,168 |
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| 1,130,057 |
| 280,923 |
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Amortization of patent costs |
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| 23,021 |
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| 16,772 |
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| 23,021 |
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| 23,021 |
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TOTAL EXPENSES |
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| 303,944 |
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| 362,940 |
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| 1,163,078 |
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| 303,944 |
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Operating loss |
| (303,944 | ) |
| (335,036 | ) |
| (1,154,869 | ) |
| (303,944 | ) | ||||
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OTHER INCOME/(EXPENSE) |
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Interest expense |
| (336,076 | ) |
| (323,223 | ) |
| 0 |
| (336,076 | ) | |||||
Gain loss on extinguishment of convertible notes |
| - |
| - |
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Change in fair value of derivatives liabilities |
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| 28,476,039 |
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| 4,400,739 |
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| 0 |
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| 28,476,039 |
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Total other income (expense) |
| 28,139,963 |
| 4,077,516 |
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| 0 |
| 28,139,963 |
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INCOME BEFORE PROVISION FOR INCOME TAXES |
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| 27,836,019 |
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| 3,742,480 |
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INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES |
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| (1,154,869 | ) |
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| 27,836,019 |
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Provision for income taxes |
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| - |
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| - |
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| 0 |
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| 0 |
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NET INCOME |
| $ | 27,836,019 |
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| $ | 3,742,480 |
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NET INCOME (LOSS) |
| $ | (1,154,869 | ) |
| $ | 27,836,019 |
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BASIC NET INCOME PER SHARE |
| $ | 0.02 |
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| $ | 0.09 |
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BASIC NET INCOME (LOSS) PER SHARE |
| $ | (0.18 | ) |
| $ | 12.22 |
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DILUTED NET INCOME PER SHARE |
| $ | 0.02 |
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| $ | 0.00 |
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DILUTED NET INCOME (LOSS) PER SHARE |
| $ | (0.18 | ) |
| $ | 11.18 |
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC |
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| 1,138,560,486 |
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| 40,746,192 |
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| 6,454,015 |
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| 2,277,121 |
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED |
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| 1,244,529,602 |
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| 776,604,919 |
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| 6,454,015 |
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| 2,489,059 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4 |
Table |
CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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| For the Three Months Ended |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
| $ | 27,836,019 |
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| $ | 3,742,480 |
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Adjustments to reconcile net loss to net cash from operating activities: |
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Amortization |
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| 23,021 |
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| 16,772 |
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Amortization of debt discounts |
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| 231,232 |
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| 289,825 |
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Change in fair value of derivatives liabilities |
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| (28,476,039 | ) |
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| (4,400,739 | ) |
Increase in principal and accrued interest balances |
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| 93,821 |
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| - |
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Changes in assets and liabilities: |
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Accounts receivable |
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| - |
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| (2,800 | ) |
Inventory |
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| - |
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| (2,800 | ) |
Accounts payable |
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| 5,102 |
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| 65,780 |
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Accrued expenses |
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| 9,026 |
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| 46,898 |
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Management fee payable |
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| (163,700 | ) |
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| 49,263 |
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Net cash used in operating activities |
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| (441,518 | ) |
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| (195,321 | ) |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Net cash used in investing activities |
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| - |
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| - |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from convertible notes payable |
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| 134,640 |
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| 145,000 |
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Proceeds from sale of preferred stock |
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| 462,000 |
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| - |
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Related party advances |
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| 22,000 |
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| - |
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Net cash provided from financing activities |
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| 618,640 |
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| 145,000 |
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NET INCREASE (DECREASE) IN CASH |
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| 177,122 |
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| (50,321 | ) |
BEGINNING CASH BALANCE |
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| 98,012 |
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| 88,648 |
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ENDING CASH BALANCE |
| $ | 275,134 |
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| $ | 38,327 |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Cash payments for interest |
| $ | - |
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| $ | 6,000 |
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Cash payments for income taxes |
| $ | - |
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| $ | - |
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NON-CASH INVESTING AND FINANCING ACTIVITIES: |
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Conversion of notes payable, accrued interest and derivative liabilities |
| $ | 9,012,418 |
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| $ | 1,101,764 |
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Conversion of management fees and patent liability into common stock |
| $ | 50,000 |
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| $ | 45,000 |
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Discounts on convertible notes payable due to derivative liabilities |
| $ | 134,640 |
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| $ | 145,000 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
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| For the Three Months Ended March 31, 2022 |
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| For the Three Months Ended March 31, 2021 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income (loss) |
| $ | (1,154,869 | ) |
| $ | 27,836,019 |
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Adjustments to reconcile net income (loss) to net cash from operating activities: |
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Stock-based compensation |
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| 41,360 |
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| 0 |
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Amortization |
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| 23,021 |
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| 23,021 |
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Amortization of debt discounts |
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| 0 |
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| 231,232 |
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Change in fair value of derivatives liabilities |
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| 0 |
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| (28,476,039 | ) |
Increase in principal and accrued interest balances due to penalty provision |
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| 0 |
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| 93,821 |
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Changes in assets and liabilities: |
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Accounts receivable |
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| 2,485 |
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| 0 |
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Inventory |
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| (3,284 | ) |
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| 0 |
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Prepaids and other current assets |
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| (64,960 | ) |
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| 0 |
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Accounts payable |
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| (426,181 | ) |
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| 5,102 |
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Accrued expenses |
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| 5,535 |
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| 9,026 |
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Management fee payable |
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| 0 |
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| (163,700 | ) |
Net cash used in operating activities |
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| (1,576,893 | ) |
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| (441,518 | ) |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Net cash used in investing activities |
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| 0 |
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| 0 |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from convertible notes payable |
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| 0 |
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| 134,640 |
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Proceeds from sale of preferred stock |
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| 0 |
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| 462,000 |
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Related party advances |
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| 0 |
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| 22,000 |
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Net cash provided by financing activities |
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| 0 |
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| 618,640 |
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NET INCREASE (DECREASE) IN CASH |
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| (1,576,893 | ) |
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| 177,122 |
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BEGINNING CASH BALANCE |
|
| 10,723,870 |
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|
| 98,012 |
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ENDING CASH BALANCE |
| $ | 9,146,977 |
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| $ | 275,134 |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Cash payments for interest |
| $ | 9,186 |
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| $ | 0 |
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Cash payments for income taxes |
| $ | 0 |
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| $ | 0 |
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NON-CASH INVESTING AND FINANCING ACTIVITIES: |
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Conversion of notes payable, accrued interest and derivative liabilities into common stock |
| $ | 0 |
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| $ | 9,012,418 |
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Conversion of management fees and patent liability into common stock |
| $ | 250,000 |
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| $ | 50,000 |
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Discounts on convertible notes payable due to derivative liabilities |
| $ | 0 |
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| $ | 134,640 |
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|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements. |
5 |
Table |
CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC. | ||||||||||||||||||||||||||||||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
|
| Series A Preferred Stock |
|
| Series B Preferred Stock |
|
| Series C Preferred Stock |
|
| Common Stock |
|
| Additional Paid-in |
|
| Accumulated |
|
| Total Stockholders’ |
| |||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Equity |
| |||||||||||
December 31, 2021 |
|
| - |
|
| $ | 0 |
|
|
| - |
|
| $ | 0 |
|
|
| - |
|
| $ | 0 |
|
|
| 6,338,864 |
|
| $ | 6,339 |
|
| $ | 53,879,215 |
|
| $ | (43,667,814 | ) |
| $ | 10,217,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for related party patent liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 181,818 |
|
|
| 182 |
|
|
| 249,818 |
|
|
| - |
|
|
| 250,000 |
|
Stock-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 41,360 |
|
|
| - |
|
|
| 41,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - | �� |
|
| - |
|
|
| (1,154,869 | ) |
|
| (1,154,869 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
| - |
|
| $ | 0 |
|
|
| - |
|
| $ | 0 |
|
|
| - |
|
| $ | 0 |
|
|
| 6,520,682 |
|
| $ | 6,521 |
|
| $ | 54,170,393 |
|
| $ | (44,822,683 | ) |
| $ | 9,354,231 |
|
|
| Series A Preferred Stock |
|
| Series B Preferred Stock |
|
| Series C Preferred Stock |
|
| Common Stock |
|
| Additional Paid-in |
|
| Accumulated |
|
| Total Stockholders' |
| |||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Deficit |
| |||||||||||
December 31, 2020 |
|
| 3,000,000 |
|
| $ | 3,000 |
|
|
| - |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
|
| 768,536,617 |
|
| $ | 768,536 |
|
| $ | 21,315,690 |
|
| $ | (61,890,236 | ) |
| $ | (39,803,010 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales of preferred stock |
|
| - |
|
|
| - |
|
|
| 350 |
|
|
| 321,000 |
|
|
| 150 |
|
|
| 141,000 |
|
|
| 2,142,857 |
|
|
| 2,143 |
|
|
| (2,143 | ) |
|
| - |
|
|
| 462,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for related party patent and management liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 44,642,847 |
|
|
| 44,643 |
|
|
| 5,357 |
|
|
| - |
|
|
| 50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of convertible notes, accrued interest and derivative liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 314,702,077 |
|
|
| 314,702 |
|
|
| 572,861 |
|
|
| - |
|
|
| 887,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relief of derivative liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 8,124,855 |
|
|
| - |
|
|
| 8,124,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on preferred stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,600 |
|
|
| - |
|
|
| 49 |
|
|
| - |
|
|
| - |
|
|
| (5,649 | ) |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cashless exercise of warrants |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 10,055,556 |
|
|
| 10,056 |
|
|
| (10,056 | ) |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 27,836,019 |
|
|
| 27,836,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021 |
|
| 3,000,000 |
|
| $ | 3,000 |
|
|
| 350 |
|
| $ | 326,600 |
|
|
| 150 |
|
| $ | 141,049 |
|
|
| 1,140,079,954 |
|
| $ | 1,140,080 |
|
| $ | 30,000,915 |
|
| $ | (34,054,217 | ) |
| $ | (2,442,573 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
|
| Series A Preferred Stock |
|
| Series B Preferred Stock |
|
| Series C Preferred Stock |
|
| Common Stock |
|
| Additional Paid-in |
|
| Accumulated |
|
| Total Stockholders’ |
| |||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Deficit |
| |||||||||||
December 31, 2020 |
|
| 3,000,000 |
|
| $ | 3,000 |
|
|
| - |
|
| $ | 0 |
|
|
| - |
|
| $ | 0 |
|
|
| 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 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 629,404 |
|
|
| 629 |
|
|
| 886,934 |
|
|
| - |
|
|
| 887,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relief of derivative liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 8,124,855 |
|
|
| - |
|
|
| 8,124,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on preferred stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,600 |
|
|
| - |
|
|
| 49 |
|
|
| - |
|
|
| - |
|
|
| (5,649 | ) |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cashless exercise of warrants |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 20,111 |
|
|
| 20 |
|
|
| (20 | ) |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 27,836,019 |
|
|
| 27,836,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021 |
|
| 3,000,000 |
|
| $ | 3,000 |
|
|
| 350 |
|
| $ | 326,600 |
|
|
| 150 |
|
| $ | 141,049 |
|
|
| 2,280,160 |
|
| $ | 2,279 |
|
| $ | 31,138,716 |
|
| $ | (34,054,217 | ) |
| $ | (2,442,573 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements. |
6 |
Table |
|
| Series A Preferred Stock |
|
| Series B Preferred Stock |
|
| Series C Preferred Stock |
|
| Common Stock |
|
| Additional Paid-in |
|
| Accumulated |
|
| Total Stockholders' |
| |||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Deficit |
| |||||||||||
December 31, 2019 |
|
| 3,000,000 |
|
| $ | 3,000 |
|
|
| - |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
|
| 22,489,046 |
|
| $ | 22,489 |
|
| $ | 17,468,018 |
|
| $ | (25,565,006 | ) |
| $ | (8,071,499 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for related party management liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,250,000 |
|
|
| 2,250 |
|
|
| 42,750 |
|
|
| - |
|
|
| 45,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of convertible notes, accrued interest and derivative liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 61,016,388 |
|
|
| 61,016 |
|
|
| 289,531 |
|
|
| - |
|
|
| 350,547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relief of derivative liabilities |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 751,217 |
|
|
| - |
|
|
| 751,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Difference in shares from reverse stock split |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,293 |
|
|
| 2 |
|
|
| (2 | ) |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,742,480 |
|
|
| 3,742,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020 |
|
| 3,000,000 |
|
| $ | 3,000 |
|
|
| - |
|
| $ | - |
|
|
| - |
|
| $ | - |
|
|
| 85,756,727 |
|
| $ | 85,757 |
|
| $ | 18,551,514 |
|
| $ | (21,822,526 | ) |
| $ | (3,182,255 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 20212022
Introductory Comment
Unless otherwise indicated, any reference to “our company”, “we”, “us”, or “our” refers to Creative Medical Technology Holdings, Inc., and as applicable to its wholly owned subsidiary, Creative Medical Technologies, Inc., a Nevada corporation (“CMT”).
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.
WeCMT 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 conductconducts substantially all of ourits commercial operations through CMT. CMT, which markets and sells our CaverStem®the Company’s CaverStem® and FemCelz® FemCelz® disposable kits utilized by physicians to perform autologous procedures that treat erectile dysfunction and female sexual dysfunction, respectively. Our CaverStem®In addition to its CaverStem® and FemCelz® kits areFemCelz® products, the Company is currently available through physicians at 14 locations in the United States and Europe.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, we formed ImmCelz, Inc., a wholly owned subsidiary of CMT. Through ourthrough the Company’s ImmCelz Inc. subsidiary, wethe 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. We believeThe Company believes this process endows the immune cells with regenerative properties that may be suitable for the treatment of stroke victims.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.
We are currently primarily focused on expanding the commercial sale and use of CaverStem® and FemCelz® by physicians in the Unites States, Europe and South America, commercializing our StemSpine® treatment for lower back pain and filing an Innovative New Drug (IND) application to the FDA utilizing our ImmCelz technology platform to treat stroke. In the future, subject to the availability of capital, we will seek to further develop additional therapeutic products such as Ovastem™ that utilize our proprietary intellectual property.
Table |
Use of Estimates – The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of AmericaU.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 accompanying unaudited condensed consolidated financial statements and accompanying notes have been prepared without audit.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, (whichwhich include only normal recurring adjustments)adjustments, necessary to present fairlyfor the fair presentation of the Company’s financial position results of operations and cash flows at March 31, 2021 and for the three-month period then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.periods presented. The operations for the three-month period ended March 31, 2021,2022, are not necessarily indicative of the operating results for the full year.
Going Concern – The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, during the three-month period ended March 31, 2021, the Company had negative cash flows from operating activities of $441,518 and had a working capital deficit of $3,039,315. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans or through additional sales of equity securities. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Risks and Uncertainties - The Company has a limited operating history and has only recently started to generate revenues from its planned principal operations.
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 is experiencing a reduction in revenues due to the prioritization of medical resources to address the COVID-19 outbreak. In several of our markets, all non-essential (including elective) procedures have been placed on hold. While this has a negative financial impact to our revenues, there have been the same reductions to our costs. Additionally, since the Company maintains nominimal inventory and requirerequires nearly all of customers to pre-pay, there is no risk to receivables or inventory write-downs. The companyCompany expects existing orders temporarily on hold and continued sales, training and patient treatments will resume once the physician’s offices are back to being fully operational.
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.
8 |
Table Of Contents |
Revenue - We have adopted the new revenue recognition standards that went into effect on January 1, 2019. AllThe Company recognizes revenues reported in 2019 and beyond reflect those standards. Adoptionaccordance with Accounting Standards Codification (“ASC”) 606, “Revenue from contracts with customers”. Revenues are recognized when control of the standardspromised 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.
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 March 31, 2022, the Company had no effect ondeferred 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 March 31, 2022, the Company’s revenues.balance exceeded the limit at both institutions.
Fair Value of Financial Instruments Instrument- The Company’s financial instruments consist of cash and cash equivalents, convertible notes, 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 March 31, 2021, and December 31, 2020,2022, the Company didn’t have any Level 1 or 2 financial instruments. The table below reflects the results of our Level 3 fair value calculations:has no derivative liabilities.
|
| Notes |
|
| Warrants |
|
| Total |
| |||
Derivative liability at December 31, 2020 |
| $ | 37,343,835 |
|
| $ | 1,397,997 |
|
| $ | 38,741,832 |
|
Addition of new conversion option derivatives |
|
| 817,791 |
|
|
| - |
|
|
| 817,791 |
|
Extinguishment/modification |
|
| - |
|
|
| - |
|
|
| - |
|
Conversion of note derivatives |
|
| (8,124,855 | ) |
|
| - |
|
|
| (8,124,855 | ) |
Change in fair value |
|
| (29,438,447 | ) |
|
| 279,257 |
|
|
| (29,159,190 | ) |
Derivative liability at March 31, 2021 |
| $ | 598,324 |
|
| $ | 1,677,254 |
|
| $ | 2,275,578 |
|
9 |
Table |
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.
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 three-months ended March 31, 2021.
|
| For the Three Months Ended March 31, 2021 |
| |
Weighted average common shares outstanding used in calculating basic earnings per share |
|
| 1,138,560,486 |
|
Effect of Series B and C preferred stock |
|
| 12,000,000 |
|
Effect of warrants |
|
| 64,785,779 |
|
Effect of convertible notes payable |
|
| 28,949,143 |
|
Effect of convertible related party management fee and patent liabilities |
|
| 234,194 |
|
Weighted average common shares outstanding used in calculating diluted earnings per share |
|
| 1,244,529,602 |
|
|
|
|
|
|
Net income as reported |
| $ | 27,836,019 |
|
Add - Interest on convertible notes payable |
|
| 53,718 |
|
Net income available to common stockholders |
| $ | 27,889,737 |
|
|
| For the Three Months Ended March 31, 2020 |
| |
Weighted average common shares outstanding used in calculating basic earnings per share |
|
| 40,746,192 |
|
Effect of warrants |
|
| 4,834,433 |
|
Effect of convertible notes payable |
|
| 562,263,144 |
|
Effect of convertible related party management fee and patent liabilities |
|
| 168,761,150 |
|
Weighted average common shares outstanding used in calculating diluted earnings per share |
|
| 776,604,919 |
|
|
|
|
|
|
Net income as reported |
| $ | 3,742,480 |
|
Add - Interest on convertible notes payable |
|
| 49,714 |
|
Net income available to common stockholders |
| $ | 3,792,194 |
|
10 |
Table Of Contents |
|
| For the Three Months Ended March 31, 2021 |
| |
Weighted average common shares outstanding used in calculating basic earnings per share |
|
| 1,138,560,486 |
|
Effect of Series B and C preferred stock |
|
| 12,000,000 |
|
Effect of warrants |
|
| 64,785,779 |
|
Effect of convertible notes payable |
|
| 28,949,143 |
|
Effect of convertible related party management fee and patent liabilities |
|
| 234,194 |
|
Weighted average common shares outstanding used in calculating diluted earnings per share |
|
| 1,244,529,602 |
|
|
|
|
|
|
Net income as reported |
| $ | 27,836,019 |
|
Add - Interest on convertible notes payable |
|
| 53,718 |
|
Net income available to common stockholders |
| $ | 27,889,737 |
|
The Company excluded 3,333 options and 8,920,779 warrants from the computation of diluted net income per share for the three-months ended March 31, 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 three-month periodthree-months ended March 31, 2020,2022, the Company had 3,333111,824 options and 209,8276,604,820 warrants to purchase common stock outstanding. In addition, the Company has various convertible notes payable which on March 31, 2020, are convertible into approximately 562,263,144 shares of common stock.stock which have been excluded from the dilutive net loss per share calculation as their effects are anti-dilutive.
11 |
Table Of Contents |
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.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 $2,493 was recorded for the three-month periodthree-months ended March 31, 2022 and 2021. As of March 31, 2021, and December 31, 2020,2022, the carrying value of the patent was $48,466 and $50,959, respectively.$38,494. The Company expects to amortize approximately $9,972 annually through 2026 related to the patent costs.
Multipotent Amniotic Fetal Stem Cells License Agreement - InOn 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 March 31, 2021, and December 31, 2020,2022, no amounts are currently due to the University.
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 $293 was recorded for the three-month periodthree-months ended March 31, 2022 and 2021. Amortization expense of $294 was recorded for the three-month period ended March 31, 2020. As of March 31, 2021, and December 31, 2020,2022, the carrying valuesvalue of the patent were $5,256 and $5,549, respectively.was $4,084. 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 | $ |
12 |
Table Of Contents |
· | In the event the Company determines to pursue the technology via use of |
In the event the Company determines to pursue the technology via use of allogenic cells, the Company will pay CMH:
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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
The Company has elected to amortize the patent over a ten-year period on a straight-line basis. Amortization expense of $6,250
The following is a rollforward of the Company’s licensing agreements for the three months ended March 31, 2022.
NOTE 3 – RELATED PARTY TRANSACTIONS
On November 17, 2017, the Company entered into 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 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
NOTE 4 – DEBT As-of March 31, 2022 the Company had no outstanding loans and there was no loan activity during the three-months ended March 31, 2022.
During the three-months ended March 31, 2021, we issued $157,150 in convertible notes to accredited investors with net proceeds of $134,640. The notes
During the three-months ended March 31, 2021,
During the three-months ended March 31, 2021, the Company issued an aggregate of
During the three-months ended March 31, 2021,
NOTE 5 – DERIVATIVE LIABILITIES
Derivative Liabilities
During the three-months ended March 31, 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
On March 31, 2021, the derivative liabilities were revalued at $2,275,578 resulting in a gain of $29,159,190 related to the change in fair market value of the derivative liabilities during the three months ended March 31, 2021. The derivative liabilities were revalued using the Black-Scholes option pricing model with the following average assumptions: an exercise price of
In connection with convertible notes converted, as disclosed in Note 4, the Company reclassed derivative liabilities with a fair value of $8,124,855 to additional paid-in capital for the three-month period ended March 31, 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.
During the three-months ended March 31, 2022 Messrs. Warbington and Dickerson received 10-year options to purchase an aggregate of 111,187 shares of common stock with
During the three-months ended March 31, 2021, the
Since the expected life of the
There were no options issued during the three months ended March 31, 2021. Option activity for the three-months ended March 31, 2022 consists of the following:
NOTE 7 – WARRANTS For the three-months ended March 31, 2022, the Company did not issue any warrants in connection with services, convertible notes payable or equity offerings. The issuances, exercises and pricing re-sets during the three months ended March 31,
NOTE 8 – SUBSEQUENT EVENTS
In accordance with ASC 855, management reviewed all material events through May
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. Roth Capital Partners (“Roth”), acted as sole placement agent for the Pursuant to the Purchase Agreement, the Company and the Purchasers entered into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which the Company has agreed to file a registration statement (the “Registration Statement”) with the Securities and Exchange Commission to register the resale of the shares of common stock issued in
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,
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.
Our subsidiary, Creative Medical Technologies, Inc.
We currently conduct substantially all of our commercial operations through In addition to our CaverStem® and
In 2020,
We are currently primarily focused on expanding the commercial sale and use of
Results of Operations – For the Three-month
Gross Revenue. We generated
Cost of Goods Sold. We generated
Gross Profit/(Loss). We generated
General and Administrative Expenses. General and administrative expenses for the three-month period ended March 31,
Amortization Expenses. Amortization expenses for the three-month periods ended March 31, 2022 and 2021, totaled $23,021.
Research and Development Expenses.
Other
Net Income/Loss. For the reasons stated above, our net
Liquidity and Capital Resources
On December 7, 2021, we sold an aggregate of 3,875,000 shares of our common
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
Net Cash used in Investing Activities. There was no cash used in investing activities in the three-month period ended March 31,
Net Cash From Financing Activities.
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 March 31,
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.
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.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
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.
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