Creative Medical Technology Holdings, Inc. - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Creative Medical Technology Holdings, Inc. on April 2, 2021, covering events occurring on March 30 and March 31, 2021. The filing details the entry into a material definitive agreement and the issuance of unregistered equity securities.
Key Financial Metrics and Transaction Details
- Capital Raised: $150,000 aggregate purchase price.
- Securities Issued: 150 shares of newly designated Series C Preferred Stock and 642,857 shares of Common Stock (Commitment Shares).
- Purchaser: Fourth Man, LLC.
- Preferred Stock Terms: Stated value of $1,200.00 per share; convertible at $0.05 per share (subject to reduction to $0.035 upon a "Triggering Event").
- Dividends: 10% per annum, payable quarterly in cash or additional shares at the Company's option.
- Redemption: Company may redeem shares with a premium ranging from 5% to 20% depending on the timing of redemption relative to issuance.
- Liquidity and Debt: The filing text does not provide clear values for overall company liquidity, debt levels, or operating cash flow.
Material Changes
The primary material change is the capitalization structure resulting from the issuance of Series C Preferred Stock and the associated Common Stock commitment shares. This transaction alters the rights of security holders, granting Series C holders liquidation preference over Common Stock holders.
Outlook, Risks, and Contingencies
The transaction was effected pursuant to Section 4(a)(2) of the Securities Act of 1933 and Rule 506 of Regulation D. The filing incorporates by reference the Certificate of Designation and Purchase Agreement for full terms. No specific forward-looking guidance or management commentary regarding future operations is provided in this filing. Risks include the dilutive effect of the convertible preferred stock and the potential for increased redemption costs if the Company exercises its redemption option.
Investor Verification Checklist
- Verify the definition of a "Triggering Event" in the Certificate of Designation (Exhibit 3.1) that reduces the conversion price to $0.035.
- Review the full Securities Purchase Agreement (Exhibit 10.1) for any additional covenants or restrictions.
- Confirm the Company's current cash position to assess its ability to pay the 10% quarterly dividends in cash if elected.
- Check for any subsequent filings regarding the redemption of the Series C Preferred Stock.