CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC. - Quarter Report: 2022 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2022

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

For the transition period from ___________ to ___________

Commission File Number: 000-53500

CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada		87-0622284
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

211 E Osborn Road, Phoenix, AZ		85012
(Address of principal executive offices)		(Zip Code)

(480) 399-2822

(Registrant’s telephone number, including area code)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		CELZ		The Nasdaq Stock Market LLC

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

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

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

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

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

		Page Number
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Condensed Consolidated Balance Sheets	3

	Unaudited Condensed Consolidated Statements of Operations	4

	Unaudited Condensed Consolidated Statements of Cash Flows	5

	Unaudited Condensed Consolidated Statements of Stockholder’ (Equity)	6

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	22

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 6.	Exhibits	23

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CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2022			December 31, 2021
ASSETS
CURRENT ASSETS
Cash	$	22,863,661		$	10,723,870
Accounts receivable		-			2,485
Inventory		20,625			10,866
Prepaids and other current assets		64,960			-
Total Current Assets		22,949,246			10,737,221

OTHER ASSETS
Other assets		3,281			3,281
Licenses, net of amortization		481,637			527,679
TOTAL ASSETS	$	23,434,164		$	11,268,181

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable	$	310,681		$	761,862
Accrued expenses		64,920			24,385
Management fee and patent liabilities - related parties		-			250,000
Advances from related party		14,194			14,194
Total Current Liabilities		389,795			1,050,441

Commitments and contingencies

STOCKHOLDERS’ EQUITY (DEFICIT)
Common stock, $0.001 par value, 50,000,000 authorized; 13,956,246 and 6,338,872 issued and 13,956,238 and 6,338,864 outstanding at June 30, 2022 and December 31, 2021, respectively		13,957			6,339
Additional paid-in capital		69,644,239			53,879,215
Accumulated deficit		(46,613,827	)		(43,667,814	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		23,044,369			10,217,740

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	23,434,164		$	11,268,181

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

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CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended June 30, 2022			For the Three Months Ended June 30, 2021			For the Six Months Ended June 30, 2022			For the Six Months Ended June 30, 2021

Revenues	$	-		$	10,000		$	15,000		$	10,000

Cost of revenues		-			4,500			6,791			4,500

Gross profit		-			5,500			8,209			5,500

OPERATING EXPENSES
Research and development		659,695			-			669,695			-
Selling, general and administrative		1,108,428			498,321			2,238,485			779,244
Amortization of patent costs		23,021			23,021			46,042			46,042
TOTAL EXPENSES		1,791,144			521,342			2,954,222			825,286

Operating loss		(1,791,144	)		(515,842	)		(2,946,013	)		(819,786	)

OTHER INCOME/(EXPENSE)
Interest expense		-			(234,338	)		-			(570,414	)
Gain on extinguishment of convertible notes		-			96,444			-			96,444
Change in fair value of derivatives liabilities		-			(2,251,446	)		-			26,224,593
Total other income (expense)		-			(2,389,340	)		-			25,750,623

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		(1,791,144	)		(2,905,182	)		(2,946,013	)		24,930,837

Provision for income taxes		-			-			-			-

NET INCOME (LOSS)	$	(1,791,144	)	$	(2,905,182	)	$	(2,946,013	)	$	24,930,837

BASIC NET INCOME (LOSS) PER SHARE	$	(0.20	)	$	(1.25	)	$	(0.38	)	$	11.12

DILUTED NET INCOME (LOSS) PER SHARE	$	(0.20	)	$	(1.25	)	$	(0.38	)	$	10.76

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC		9,011,248			2,320,084			7,739,696			2,242,318

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED		9,011,248			2,320,084			7,739,696			2,328,927

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

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CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED CASH FLOWS

	For the Six Months Ended June 30, 2022			For the Six Months Ended June 30, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(2,946,013	)	$	24,930,837
Adjustments to reconcile net income (loss) to
net cash from operating activities:
Stock-based compensation		50,422			211,768
Amortization		46,042			46,042
Amortization of debt discounts		-			451,614
Change in fair value of derivatives liabilities		-			(26,224,593	)
Increase in principal and accrued interest balances due to penalty provision		-			93,821
Gain on extinguishment of convertible notes		-			(96,444	)
Changes in assets and liabilities:
Accounts receivable		2,485			-
Inventory		(9,759	)		-
Prepaids and other current assets		(64,960	)		-
Accounts payable		(451,181	)		14,143
Accrued expenses		40,535			25,355
Management fee payable		-			(116,200	)
Net cash used in operating activities		(3,332,429	)		(663,657	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used in investing activities		-			-

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock and warrants, net of issuance costs		15,471,775			-
Proceeds from exercise of warrants		445			-
Proceeds from note payable		-			100,000
Proceeds from convertible notes payable		-			134,640
Proceeds from sale of preferred stock		-			462,000
Related party advances		-			226,500
Payments to settle convertible notes payable and warrants		-			(198,907	)
Net cash provided by financing activities		15,472,220			724,233

NET INCREASE IN CASH		12,139,791			60,576
BEGINNING CASH BALANCE		10,723,870			98,012
ENDING CASH BALANCE	$	22,863,661		$	158,588

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Conversion of notes payable, accrued interest and derivative liabilities into common stock	$	-		$	13,454,704
Conversion of management fees and patent liability into common stock	$	250,000		$	50,000
Discounts on convertible notes payable due to derivative liabilities	$	-		$	134,640

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

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CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

	Series A Preferred Stock				Series B Preferred Stock				Series C Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity
December 31, 2021		-	$	-		-	$	-		-	$	-		6,338,864	$	6,339	$	53,879,215		$	(43,667,814	)	$	10,217,740

Issuance of common stock and accompanying warrants, net of issuance costs		-		-		-		-		-		-		2,991,669		2,992		15,468,783			-			15,471,775

Common stock issued for related party patent liabilities		-		-		-		-		-		-		181,818		182		249,818			-			250,000

Common stock issued for warrant exercise		-		-		-		-		-		-		4,443,887		4,444		(3,999	)		-			445

Stock-based compensation		-		-		-		-		-		-		-		-		50,422			-			50,422

Net loss		-		-		-		-		-		-		-		-		-			(2,946,013	)		(2,946,013	)

June 30, 2022		-	$	-		-	$	-		-	$	-		13,956,238	$	13,957	$	69,644,239		$	(46,613,827	)	$	23,044,369

	Series A Preferred Stock				Series B Preferred Stock				Series C Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity
March 31, 2022		-	$	-		-	$	-		-	$	-		6,520,682	$	6,521	$	54,170,393		$	(44,822,683	)	$	9,354,231

Issuance of common stock and accompanying warrants, net of issuance costs		-		-		-		-		-		-		2,991,669		2,992		15,468,783			-			15,471,775

Common stock issued for warrant exercise		-		-		-		-		-		-		4,443,887		4,444		(3,999	)		-			445

Stock-based compensation		-		-		-		-		-		-		-		-		9,062			-			9,062

Net loss		-		-		-		-		-		-		-		-		-			(1,791,144	)		(1,791,144	)

June 30, 2022		-	$	-		-	$	-		-	$	-		13,956,238	$	13,957	$	69,644,239		$	(46,613,827	)	$	23,044,369

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	Series A Preferred Stock				Series B Preferred Stock				Series C Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Deficit
December 31, 2020		3,000,000	$	3,000		-	$	-		-	$	-		1,537,073	$	1,537	$	22,082,689		$	(61,890,236	)	$	(39,803,010	)

Proceeds from sales of preferred stock		-		-		350		321,000		150		141,000		4,286		4		(4	)		-			462,000

Common stock issued for related party management liabilities		-		-		-		-		-		-		89,286		89		49,911			-			50,000

Common stock issued for conversion of convertible notes, accrued interest and derivative liabilities		-		-		-		-		-		-		772,099		772		1,228,579			-			1,229,351

Relief of derivative liabilities		-		-		-		-		-		-		-		-		12,225,353			-			12,225,353

Dividends on preferred stock		-		-		-		-		-		-		-		-		(20,752	)		-			(20,752	)

Cashless exercise of warrants		-		-		-		-		-		-		37,870		38		(38	)		-			-

Stock-based compensation		-		-		-		-		-		-		-		-		211,768			-			211,768

Net income		-		-		-		-		-		-		-		-		-			24,930,837			24,930,837

June 30, 2021		3,000,000	$	3,000		350	$	321,000		150	$	141,000		2,440,614	$	2,440	$	35,777,506		$	(36,959,399	)	$	(714,453	)

	Series A Preferred Stock				Series B Preferred Stock					Series C Preferred Stock					Common Stock
	Shares		Amount		Shares		Amount			Shares		Amount			Shares		Amount		Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Deficit
March 31, 2021		3,000,000	$	3,000		350	$	326,600			150	$	141,049			2,280,160		2,280	$	31,138,715		$	(34,054,217	)	$	(2,442,573	)

Common stock issued for related party management liabilities		-		-		-		-			-		-			-		-		-			-			-

Common stock issued for conversion of convertible notes, accrued interest and derivative liabilities		-		-		-		-			-		-			142,695		142		341,646			-			341,788

Relief of derivative liabilities		-		-		-		-			-		-			-		-		4,100,498			-			4,100,498

Dividends on preferred stock		-		-		-		(5,600	)		-		(49	)		-		-		(15,103	)		-			(20,752	)

Cashless exercise of warrants		-		-		-		-			-		-			17,759		18		(18	)		-			-

Stock-based compensation		-		-		-		-			-		-			-		-		211,768			-			211,768

Net loss		-		-		-		-			-		-			-		-		-			(2,905,182	)		(2,905,182	)

June 30, 2021		3,000,000	$	3,000		350	$	321,000			150	$	141,000			2,440,614	$	2,440	$	35,777,506		$	(36,959,399	)	$	(714,453	)

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

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CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	For the Six-months Ended June 30, 2021
Weighted average common shares outstanding used in calculating basic earnings per share		2,242,318
Effect of Series B and C preferred stock		24,000
Effect of warrants		35,873
Effect of convertible notes payable		22,115
Effect of convertible related party management fee and patent liabilities		4,623
Weighted average common shares outstanding used in calculating diluted earnings per share		2,328,929

Net income as reported	$	24,930,837
Add - Interest on convertible notes payable		117,649
Net income available to common stockholders	$	25,048,486

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

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

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

NOTE 2 – LICENSING AGREEMENTS

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

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

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

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

	·	The Company is required to pay CMH $100,000 within 30 days of demand as an initial payment.
	·	In the event the Company determines to pursue the technology via use of autologous cells, the Company will pay CMH:

	o	$100,000 upon the signing agreement with a university for the initiation of an IRB clinical trial.
	o	$200,000, upon completion of the IRB clinical trial.
	o	$300,000 in the event we commercialize the technology via use of autologous cells by a physician without a clinical trial.

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

	o	$100,000 upon filing an IND with the FDA.
	o	$200,000 upon dosing of the first patient in a Phase 1-2 clinical trial.
	o	$400,000 upon dosing the first patient in a Phase 3 clinical trial.

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

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

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

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

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

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

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

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

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

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

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

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

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

	Assets		Accumulated Amortization

Balances at December 31, 2021	$	760,000	$	(232,321	)
Addition of new assets				-
Amortization		-		(46,042	)
Balances at June 30, 2022	$	760,000	$	(278,363	)

NOTE 3 – RELATED PARTY TRANSACTIONS

Management Reimbursement Agreement

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

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Debt Settlement Agreement

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

Jadi Cell License Agreement

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

StemSpine Patent Purchase

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

Insider Loans

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

NOTE 4 – DEBT

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

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

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

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

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

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

NOTE 5 – DERIVATIVE LIABILITIES

Derivative Liabilities

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

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

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

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

NOTE 6 – STOCK-BASED COMPENSATION

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

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

	Inputs Used

Annual dividend yield	$	-
Expected life (years)		10.0
Risk-free interest rate		0.81	%
Expected volatility		92.95	%
Common stock price	$	1.69

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

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

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

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

	Stock Options		Weighted Average Exercise Price		Weighted Average Life Remaining
Outstanding, December 31, 2021		7	$	7,500		4.64
Issued		111,817				-
Exercised		-		-		-
Expired		-		-		-
Outstanding, June 30, 2022		111,824	$	2.16		9.62
Vested, June, 30, 2022		27,961	$	3.57		9.62

NOTE 7 – STOCKHOLDERS’ EQUITY

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

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

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

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

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

Outstanding at December 31, 2021		6,604,820
Issuances		20,808,332
Exercises		(4,443,887	)
Outstanding at June 30, 2022		22,969,265
Weighted Average Price at June 30, 2022	$	2.64

NOTE 8 – SUBSEQUENT EVENTS

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

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

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

Forward-Looking Statement Notice

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

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

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

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Overview

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Liquidity and Capital Resources

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

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

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

Cash Flows

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

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

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

Critical Accounting Policies and Estimates

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

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

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

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

Changes in internal control over financial reporting

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

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

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

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

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

Item 6. Exhibits

SEC Ref. No.		Title of Document

3.1.1		Articles of Incorporation of Creative Medical Technology Holdings, Inc., a Nevada corporation (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2021).
3.1.2		Certificate of Designation of the Series A Preferred Stock of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 16, 2018).
3.1.3		Certificate of Amendment to Certificate of Designation of the Series A Preferred Stock Pursuant to NRS 78.1955, filed with the Secretary of State of the State of Nevada on March 11, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 12, 2021).
3.1.4		Certificate of Designation of the Series B Preferred Stock of the Company, filed March 30, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 12, 2021).
3.1.5		Certificate of Designation of the Series C Preferred Stock of the Company, filed March 30, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 2, 2021).
3.1.6		Certificate of Amendment to Articles of Incorporation Pursuant to NRS 78.385 and 78.390, as filed with the Secretary of State of the State of Nevada on November 2, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 5, 2021).
3.1.7		Certificate of Withdrawal of Certificate of Designation of Series B Convertible Preferred Stock, as filed with the Secretary of State of the State of Nevada on November 2, 2021 (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 5, 2021).
3.1.8		Certificate of Withdrawal of Certificate of Designation of Series C Convertible Preferred Stock, as filed with the Secretary of State of the State of Nevada on November 2, 2021 (incorporated by reference to Exhibit 3.3 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 5, 2021).
3.1.9		Certificate of Change Pursuant to NRS 78.209, as filed with the Secretary of State of the State of Nevada on November 8, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 9, 2021).
3.2		Bylaws of Creative Medical Technology Holdings, Inc., a Nevada corporation (incorporated by reference to Exhibit 3.2 to the Company’s Form 10 filed with the Securities and Exchange Commission on November 18, 2008).
31.1		Rule 13a-14(a) Certification by Principal Executive Officer
31.2		Rule 13a-14(a) Certification by Principal Financial Officer
32.1		Section 1350 Certification of Principal Executive Officer
32.2		Section 1350 Certification of Principal Financial Officer
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

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

	Creative Medical Technology Holdings, Inc.

Date: August 12, 2022	By	/s/ Timothy Warbington
		Timothy Warbington, Chief Executive Officer
		(Principal Executive Officer)

Date: August 12, 2022	By	/s/ Donald Dickerson
		Donald Dickerson, Chief Financial Officer
		(Principal Financial Officer)