Creative Medical Technology Holdings Inc (CELZ)

[uvaphd]

“Other Income / Expense. Other expense for the three-month period ended March 31, 2019, totaled $546,667 in comparison with other expense of $7,382,364 , for the comparable quarter a year ago. The decrease of $6,835,697 , or 92% is primarily due to a decrease of $7,301,939 in the change in the fair value of derivative liabilities, offset by an increase of $263,234 in interest expense.

Net Loss. For the reasons stated above, our net loss for the three-month period ended March 31, 2019 totaled $797,366 in comparison to $7,586,580 , for the comparable quarter a year ago.”

If I am understanding this correctly, the reduction in net loss is a function of the reduced PPS y/y. The current PPS is roughly 10% of what it was this time last year. Thus ON PAPER the loss looks substantially better (by the roughly 90% inverse factor)—although these derivative-based losses are nothing like “true losses,” such as come from operational and other business issues.

Please correct me if I’m wrong, but I THINK it works like this: Company X issues a warrant for a certain number of convertible shares at a certain price. If the PPS of the stock rises, the warrants (which are still on their books) will now show a LOSS because they are convertible at a higher PPS than was established in the warrant.

This was my understanding a year ago when I remarked about the $15M “loss” associated with the INCREASE in our PPS to .07 (a GOOD thing!). This continues to be my understanding based on further reading tonight—but, as always, I’m happy to have a finer edge put on my argument.