CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.

(CELZ)
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Delayed Nasdaq  -  05/24 10:25:38 am EDT
0.9999 USD   -1.00%
05/13CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)
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CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

05/13/2022 | 04:23pm EDT

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

Forward-Looking Statement Notice

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

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

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



Overview


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




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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 United 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.

Results of Operations - For the Three-month Periods Ended March 31, 2022 and 2021

Gross Revenue. We generated $15,000 in revenue for the three-month period ended March 31, 2022, in comparison with no revenue for the comparable quarter a year ago. The increase of $15,000 reflects the restart of commercial sales following a reduction in the ongoing negative impacts of the COVID-19 pandemic.

Cost of Goods Sold. We generated $6,791 of goods sold for the three-month period ended March 31, 2022, in comparison with no cost of goods sold for the comparable quarter a year ago. The increase of $6,791 reflects the restart of commercial sales following a reduction in the ongoing negative impacts of the COVID-19 pandemic.

Gross Profit/(Loss). We generated a gross profit of $8,209 for the three-month period ended March 31, 2022, in comparison with no gross profit for the comparable quarter a year ago. The increase of $8,209 reflects the restart of commercial sales following a reduction in the ongoing negative impacts of the COVID-19 pandemic.

General and Administrative Expenses. General and administrative expenses for the three-month period ended March 31, 2022, totaled $1,130,057 in comparison with $280,293, for the comparable quarter a year ago. The increase of $849,134 or 302% is primarily due to approximately $176,000 in director and officer insurance premiums that began in September 2021, an increase of approximately $200,000 in salary expenses from terminating the management service agreement in September 2021 and entering into direct employment arrangements with our CEO, CFO and other key leaders of the management team, an increase of approximately $120,000 in marketing expenses, and an increase of $138,000 in outside consulting expenses focused on moving key elements of our programs forward.

Amortization Expenses. Amortization expenses for the three-month periods ended March 31, 2022 and 2021, totaled $23,021.

Research and Development Expenses. Research and development expenses for the three-month period ended March 31, 2022, totaled $10,000 in comparison with no expenses, for the comparable quarter a year ago.

Other Income/Expense. There was no other income or expense for the three-month period ended March 31, 2022, in comparison with $28,139,963 income, for the comparable quarter a year ago. The decreased income of $28,139,963, is primarily due to a gain in the fair value of derivative liabilities of $28,476,039, offset by interest expense of $336,076 for the comparable quarter a year ago.




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Net Income/Loss. For the reasons stated above, our net loss for the three-month period ended March 31, 2022, totaled $1,154,869 in comparison to net income of $27,836,019, for the comparable quarter a year ago.

Liquidity and Capital Resources

As of March 31, 2022, we had $9,146,977 of available cash and positive working capital of approximately $8,846,292. In comparison, as of December 31, 2021, we had approximately $10,723,870 of available cash and positive working capital of approximately $9,686,780.

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

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



Cash Flows


Net Cash used in Operating Activities. We used cash in our operating activities due to our losses from operations. Net cash used in operating activities was $1,576,893 for the three-month period ended March 31, 2022 in comparison to $441,518 for the comparable period a year ago, an increase of $1,135,375 or 257%. The increase in cash used in operations was primarily related to the increased expenses mentioned above.

Net Cash used in Investing Activities. There was no cash used in investing activities in the three-month period ended March 31, 2022 and March 31, 2021, respectively.

Net Cash From Financing Activities. We did not raise any funds during the three-month period ended March 31, 2022. We raised $618,640 through the issuance of convertible debt, preferred stock and a related party advance in the three-month period ended March 31, 2021.

Critical Accounting Policies and Estimates

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




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Financials (USD)
Sales 2022 0,21 M - -
Net income 2022 -6,42 M - -
Net Debt 2022 - - -
P/E ratio 2022 -1,22x
Yield 2022 -
Capitalization 9,60 M 9,60 M -
Capi. / Sales 2022 46,6x
Capi. / Sales 2023 17,1x
Nbr of Employees 4
Free-Float 64,3%
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Timothy Warbington Chief Executive Officer & Director
Thomas E. Ichim President & Director
Donald F. Dickerson Chief Financial Officer, Director & Senior VP
Amit Nilkanth Patel Director
Annette Marleau Senior Vice President
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