Creative Medical Technology Holdings, Inc. - Form 8-K Summary
Business Context and Reporting Period
This Current Report (Form 8-K) was filed on March 2, 2018, covering events occurring between January 1, 2018, and March 2, 2018. The registrant, Creative Medical Technology Holdings, Inc., is an emerging growth company incorporated in Nevada. The report primarily addresses unregistered sales of equity securities, specifically the issuance of a convertible promissory note and the conversion of existing debt and warrants into common stock.
Key Financial Metrics and Capital Structure
- New Debt Issuance: On February 15, 2018, the company issued a convertible promissory note with a face amount of $53,000, receiving gross proceeds of $53,000.
- Interest Terms: The note bears interest at 12% per annum, increasing to 22% upon an event of default.
- Equity Issuance: Between January 1, 2018, and March 2, 2018, the company issued an aggregate of 118,352,069 shares of common stock resulting from note conversions and cashless warrant exercises.
- Outstanding Shares: As of March 2, 2018, the company had 233,571,295 shares of common stock outstanding.
- Liquidity and Margins: The filing text does not provide clear values for revenue, profit, operating cash flow, or profit margins.
Material Changes and Transaction Details
The primary material change reported is the significant increase in outstanding common stock due to the conversion of debt and warrants. The new $53,000 note includes a conversion feature allowing conversion within 180 days at 61% of the average of the two lowest trading prices during the 15 trading days preceding the conversion date. The company also retains a redemption option with escalating premiums ranging from 115% to 140% of principal and interest depending on the timing of prepayment within the first 180 days.
Guidance, Risks, and Contingencies
The filing does not contain forward-looking guidance, management commentary on future operations, or specific risk factors beyond the terms of the debt instrument. The securities were sold pursuant to Rule 506(b) of Regulation D to accredited investors without general solicitation. No selling commissions were paid. A key contingency is the requirement for the company to maintain authorized and reserved shares equal to six times the number of shares issuable upon full conversion of the new note.
Investor Verification Checklist
- Verify the current market price of the common stock to assess the potential dilution impact of the 61% conversion discount on the new $53,000 note.
- Confirm the total number of authorized shares to ensure the company can meet the requirement of reserving six times the convertible shares.
- Review the company's cash position to determine its ability to service the 12% interest on the new note or exercise the redemption option if necessary.
- Check for any subsequent filings regarding the maturity date of February 15, 2019, or potential default events triggering the 22% interest rate.