# Creative Medical Technology Holdings, Inc.: Form 10-Q for the period ended Sep 30, 2021

- Company: [Creative Medical Technology Holdings, Inc.](/companies/celz.md) (CIK 1187953)
- Form: 10-Q
- Filed: 2021-11-15
- Accepted by EDGAR: Nov 15, 2021, 16:45 ET
- Period: 2021-09-30
- Accession: 0001477932-21-008404
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1187953/000147793221008404/celz_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1187953/000147793221008404/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2021-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2021-07-01 to 2021-09-30 | $10.0k | us-gaap:Revenues |
| Revenue | 9 months, 2021-01-01 to 2021-09-30 | $20.0k | us-gaap:Revenues |
| Cost of revenue | 3 months, 2021-07-01 to 2021-09-30 | $4.0k | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2021-01-01 to 2021-09-30 | $8.5k | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2021-07-01 to 2021-09-30 | $6.0k | us-gaap:GrossProfit |
| Gross profit | 9 months, 2021-01-01 to 2021-09-30 | $11.5k | us-gaap:GrossProfit |
| Research and development | 3 months, 2021-07-01 to 2021-09-30 | $59.2k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2021-01-01 to 2021-09-30 | $59.2k | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2021-07-01 to 2021-09-30 | $757.2k | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2021-01-01 to 2021-09-30 | $1.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2021-07-01 to 2021-09-30 | −$833.4k | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2021-01-01 to 2021-09-30 | −$1.7m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2021-07-01 to 2021-09-30 | $1.3m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2021-01-01 to 2021-09-30 | $1.9m | us-gaap:InterestExpense |
| Net income | 3 months, 2021-07-01 to 2021-09-30 | −$1.8m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2021-01-01 to 2021-09-30 | $23.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2021-07-01 to 2021-09-30 | −$0.75 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2021-01-01 to 2021-09-30 | $9.77 | us-gaap:EarningsPerShareDiluted |
| Diluted shares (weighted) | 9 months, 2021-01-01 to 2021-09-30 | 2,363,145 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2021-01-01 to 2021-09-30 | −$1.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2021-09-30 | $2.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2021-09-30 | $2.6m | us-gaap:AssetsCurrent |
| Total assets | at 2021-09-30 | $3.1m | us-gaap:Assets |
| Current liabilities | at 2021-09-30 | $3.5m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2021-09-30 | $5.1m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2021-09-30 | −$363.3k | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 19,827 characters.

*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, 2020, 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.

### 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 the following:

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.

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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 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.

We are currently primarily focused on expanding the commercial sale and use of our CaverStem® and FemCelz® products by physicians in the Unites States and Europe, and commercializing our StemSpine® treatment for lower back pain. We also recently filed an Investigational New Drug (IND) application with the FDA to treat stroke utilizing our ImmCelzTM technology. In the future, subject to the availability of capital, we will seek to further develop additional therapeutic products that utilize our proprietary intellectual property.

During the first nine months of 2021, we issued $498,800 in convertible notes with net proceeds of $435,040 to accredited investors.

During the nine-month period ending September 30, 2021, we incurred interest expense of $120,583 arising from the third-party notes of $498,800.

#### Plan of Operations

We commenced marketing disposable stem cell concentration kits for the CaverStem® erectile dysfunction treatment in the fourth quarter of 2017 and the FemCelz® female sexual dysfunction treatment in March of 2019. The Company also announced the commercialization of the StemSpine procedure for lower back pain in the fourth quarter of 2019. We also filed an Innovative New Drug (IND) application for the ImmCelz™ product to treat stroke. We have commenced physician recruitment to build a 100-patient treatment registry to support our StemSpine® commercialization. For the next 12 months our plan of operations is to continue to expand the market for the CaverStem® and FemCelz® procedures, build the StemSpine patient registry, and coordinate with the FDA to authorize the commencement of the ImmCelz Phase I trial. As of September 30, 2021, we had approximately $2,378,000 cash on hand. With an estimated monthly cash burn rate of approximately $200,000 based on historic trends and anticipated future revenues and expenses, management anticipates sufficient cash on hand and committed funds to meet operating expenses and costs of the current operations through at least January 2022. Historically, we have met our cash flow requirements through the sale of equity securities or borrowed funds. We intend to fund our business through sales of disposable stem cell concentration kits along with continuing to seek investments to meet our cash flow requirements, including both operating expenses and the balance of funding required to fund our sales efforts. The securities offered by us to potential investors have not been registered under the Securities Act of 1933, as amended (the “Act”), and may not be offered or sold in the U.S. absent registration or an applicable exemption from registration requirements. If we are unable to obtain further financing, we may seek alternative sources of funding or revise our business plan. We currently have no alternative sources for funding.

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### Results of Operations – For the Three-month Period Ended September 30, 2021 and 2020

***Gross Revenue.*** We generated $10,000 in gross revenue for the three-month period ended September 30, 2021, in comparison with $77,000 for the comparable quarter a year ago. The decrease of $67,000 or 87% reflects the ongoing negative impact of the COVID-19 pandemic.

***Cost of Goods Sold***. We generated $4,000 cost of goods sold for the three-month period ended September 30, 2021, in comparison with $17,600 for the comparable quarter a year ago. The decrease of $13,600 or 77% reflects the ongoing negative impact of the COVID-19 pandemic on sales.

***Gross Profit/(Loss)***. We generated $6,000 gross profit for the three-month period ended September 30, 2021, in comparison with $59,400 for the comparable quarter a year ago. The decrease of $53,400 or 90% is due to the reduced level of sales in the quarter.

***General and Administrative Expenses.*** General and administrative expenses for the three-month period ended September 30, 2021, totaled $757,235 in comparison with $285,100, for the comparable quarter a year ago. The increase of $472,135 or 166% is primarily due to increases of $78,357 in marketing expenses associated with a re-energized Caverstem® marketing campaign, $383,612 in stock-based compensation associated with the issued service provider warrants, and an increase of $58,697 in legal fees associated with the bridge loan and S-1 filing offset by a $80,742 reduction in commissions as a result of lower sales.

***Amortization Expenses.*** Amortization expenses for the three-month period ended September 30, 2021, totaled $23,021 in comparison with $16,771, for the comparable quarter a year ago. The increase of $6,250 or 37% is due to the added amortization of the $250,000 Jadi Cell asset.

***Research and Development Expenses.*** There was $59,180 in research and development expenses for the three-month period ended September 30, 2021 in comparison to no expenses for the comparable quarter a year ago. The expenses are associated with our efforts to respond to information requests from the FDA associated with our ImmCelz® IND filing for the treatment of stroke.

***Other Income / Expense.*** Other expense for the three-month period ended September 30, 2021, totaled $1,010,160 in comparison with a gain of $637,322, for the comparable quarter a year ago. The increased expense of $1,647,482, is primarily due to an increase of $1,016,163 in interest expense associated with the retirement of convertible debt identified in Note 2, a loss of $194,044 in derivative liabilities compared to a gain of $926,532 for the comparable quarter a year ago, offset by a gain of $489,157 on extinguished debt.

***Net Income/Loss.*** For the reasons stated above, our net loss for the three-month period ended September 30, 2021, totaled $1,843,596 in comparison to net income of $394,851 for the comparable quarter a year ago.

### Results of Operations – For the Nine-month Period Ended September 30, 2021 and 2020

***Gross Revenue.*** We generated gross revenue of $20,000 for the nine-month period ended September 30, 2021, in comparison with $147,000 for the comparable period a year ago. The decrease of $127,000 or 86% reflects the ongoing negative impact of the COVID-19 pandemic.

***Cost of Goods Sold***. We generated $8,500 cost of goods sold for the nine-month period ended September 30, 2021, in comparison with $42,596 for the comparable period a year ago. The decrease of $34,096 or 80% is due to the reduction in sales.

***Gross Profit/(Loss)***. We generated $11,500 gross profit for the nine-month period ended September 30, 2021, in comparison with $104,404 for the comparable period a year ago. The decrease of $92,904 or 89% is due to the reduction in sales.

***General and Administrative Expenses.*** General and administrative expenses for the nine-month period ended September 30, 2021, totaled $1,536,479 in comparison with $846,154, for the comparable period a year ago. The increase of $690,325 or 82% is primarily due to increases of $595,380 in stock-based compensation associated with recruitment of Scientific Advisory Board, service providers, and new employee members, $98,988 in legal fees associated with the bridge loan identified in Note 2 and the S-1 Filing identified in Subsequent Events, and an $68,902 increase in marketing expenses associated with a re-energized Caverstem marketing campaign offset by $86,242 in reduced commissions as a result of lower sales.

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***Amortization Expenses.*** Amortization expenses for the nine-month period ended September 30, 2021, totaled $69,063 in comparison with $50,021, for the comparable period a year ago. The increase of $19,042 or 38% is due to the added amortization of the $250,000 Jadi Cell asset.

***Research and Development Expenses.*** There was $59,180 in research and development expenses for the nine-month period ended September 30, 2021 in comparison to no expenses for the comparable period a year ago. The expenses are associated with our efforts to respond to information requests from the FDA associated with our ImmCelz® IND filing for the treatment of stroke.

***Other Income / Expense.*** Other income for the nine-month period ended September 30, 2021, totaled $24,740,463 in comparison with $3,086,539, for the comparable period a year ago. The increased income of $21,653,924, or 702% is primarily due to an increased gain in the fair value of derivative liabilities of $22,033,774 combined with a gain of $585,601 associated with gains on extinguishment of convertible notes.

***Net Income/Loss.*** For the reasons stated above, our net income for the nine-month period ended September 30, 2021, totaled $23,087,241 in comparison to $2,294,768, for the comparable period a year ago.

### Liquidity and Capital Resources

Our principal source of liquidity has been funds received from the sale of our common and preferred stock and issuance of notes including convertible notes. Historically, the lenders have been most likely to convert the debt into equity prior to or in lieu of full payment at maturity. Going forward, with all the convertible debt obligations having been fully met, our short-term funding needs are expected to be satisfied by equity investments, and revenues generated from our Caverstem® ED and FemCelz® vaginal rejuvenation procedures. Our long-term liquidity needs are expected to be satisfied from future offerings of our equity securities. We do not have any arrangements, agreements, or sources for long-term funding.

Our only commitments for expenditures relate to general and administrative costs. During the next 12 months we also anticipate incurring expenses related to marketing activities for our ED and vaginal rejuvenation treatments, building the StemSpine patient registry and initiating the ImmCelz Phase I clinical trial.

For the next 12 months our plan of operations is to market our disposable kits, partner with leading physicians to build the StemSpine patient registry and initiate the ImmCelz Phase I clinical trial. We believe that our current cash on hand would meet our cash flow requirements through January 2022. If we are unable to obtain further financing, we may seek alternative sources of funding or revise our business plan. We currently have no alternative sources for funding.

Our financial statements included with this report have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred substantial expenses and generated minimal revenues from operations during the periods covered by these financial statements. These factors raise substantial doubt about our ability to continue as a going concern. There is no assurance that we will be successful in meeting the continuing financial obligations of the company. Our financial statements do not include any adjustments that might result from the outcome of these uncertainties.

### 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 $1,054,446 for the nine-month period ended September 30, 2021 in comparison to $491,542 for the comparable period a year ago, an increase of $562,904 or 115%. The increase in cash used in operations was primarily related to a $299,900 increase in payments made to CMH and a $100,669 decrease in accrued expenses.

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***Net Cash used in Investing Activities.*** There was a $200,000 advance to a related party and no investing activity during the nine-month period ended September 30, 2021 and September 30, 2020, respectively.

***Net Cash From Financing Activities.*** In the nine-month period ended September 30, 2021, we raised $4,784,790 through the issuance of convertible debt, preferred stock and a short-term, non-convertible note. We spent $1,256,926 on re-payment of notes and debt issuance costs. In the nine-month period ended September 30, 2020, we raised $458,600 primarily through the issuance of convertible debt. The $3,092,764 or 700% increase in cash flows from financing activities were primarily related to the proceeds from a short-term, non-convertible note, issuance of convertible notes and the sale of preferred stock.

### Basis of Presentation / Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of September 30, 2021, the Company had $2,377,930 of available cash and a working capital deficit of $917,327. For the nine-month period ended September 30, 2021, the Company had $20,000 in revenue, $1,653,222 in operating loss and used net cash for operating activities of $1,054,446. These factors, among others, indicate that the Company may be unable to continue as a going concern for the next twelve months. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing as may be required, and ultimately to attain sufficient cash flow from operations to meet its obligations on a timely basis. Management is in the process of negotiating various financing plans including access to ongoing credit facilities and possible sale of capital stock either in private or in public offerings and believes these steps may generate sufficient cash flow for the Company to continue as a going concern. If the Company raises additional funds through offerings of shares of common stock or other securities, such offerings would cause dilution of current stockholders’ percentage ownership in the Company, which could be substantial. Future offerings could also have a material and adverse effect on the price of the Company’s common stock. If the Company is unsuccessful in these efforts, it may be required to substantially curtail or terminate its operations.

### Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity capital expenditures or capital resources.

## Controls and procedures

As filed, 1,632 characters.

### 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 September 30, 2021.

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.

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Filed Nov 15, 2021.
Source: SEC EDGAR, the filing index for accession 0001477932-21-008404. Last ingested by Listed: Nov 6, 2026, 17:49 ET. No prices; not investment advice.