Some convertible notes from last 10-Q : $60,000 Convertible Note - Global
March 9, 2018, the Company entered into a convertible note agreement with a third party for an aggregate principal amount of $60,000, in exchange for the extinguishment of the outstanding principal due on the convertible note dated June 26, 2017, see disclosure above for " $50,000 Secured Convertible Note - WBRE". No proceeds were received in conjunction with the exchange of this convertible note. Under the terms of the agreement, the convertible note incurs interest at 10% per annum and has a maturity date of March 9, 2019. The convertible note is convertible upon issuance and convertible into shares of the Company’s stock at a conversion price equal to 60% of the lowest traded price of the Company’s common stock during the previous 20 trading days preceding the conversion date. At no additional cost, we issued to the note holder 30,000,000 five-year warrants to purchase common stock at $0.01, subject to adjustment if we issue securities at less than the exercise price. The warrants are exercisable on a cashless basis.
The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions and any issuances of securities below the conversion price of the convertible note. On the date of issuance, the Company accounted for the conversion feature as a derivative liability, see Note 5. Derivative accounting applies as the conversion price is variable and does not have a floor as to the number of common shares in which could be converted. Thus, if the convertible note is not repaid prior to the note being converted significant pressure maybe put on the Company’s stock price and additional dilution of current shareholders may take place.
In the event of default, the holder has the right to require the Company to pay an amount equal to 150% multiplied by the then outstanding entire balance of the note, including principal and accrued unpaid interest. In addition, the default interest rate would increase to 24%.
The Company has the option to redeem the convertible notes within 180 days from the date of issuance at 120% of the principal and interest; and after 180 days the right of prepayment expires.
At the date of the agreement, the Company determined that the transactions qualified for extinguishment accounting whereby the transaction was accounted for at fair market value with the excess value between the fair value of the old note and new note was accounted for as an extinguishment loss of $154,284.
$115,000 Convertible Note – Auctus
On March 13, 2018, the Company entered into a convertible note agreement with a third party for an aggregate principal amount of $115,000, for which $97,250 in proceeds were received on March 19, 2018 . Under the terms of the agreement, the convertible note incurs interest at 10% per annum and has a maturity date of December 13, 2018. The convertible note is convertible upon issuance and convertible into shares of the Company’s stock at a conversion price equal to 60% of the average of the two lowest traded prices of the Company’s common stock during the previous 25 trading days preceding the conversion date. The Company is required at all times to reserve shares of the Company’s common stock equal to six times the number of common shares the convertible note is convertible into. The Company is amortizing the original issuance discount of $15,000 legal fees of $2,750 and the remaining discount of $97,250 due to the recording of a derivative liability as discussed in Note 5. The Company is amortizing the total discount of $115,000 to interest expense using the straight-line method over the term of the loan. During the three months ended March 31, 2018 the Company amortized $7,527 to interest expense. As of March 31, 2018, a discount of $107,473 remained.
The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions and any issuances of securities below the conversion price of the convertible note. On the date of issuance, the Company accounted for the conversion feature as a derivative liability, see Note 5. Derivative accounting applies as the conversion price is variable and does not have a floor as to the number of common shares in which could be converted. Thus, if the convertible note is not repaid prior to the note being converted significant pressure maybe put on the Company’s stock price and additional dilution of current shareholders may take place. As of March 31, 2018, there were 500,000,000 shares reserved with our transfer agent with a potential of up to 550,319,635 being reserved if and when the lender issues a request to our transfer agent.
In the event of default, the holder has the right to require the Company to pay an amount equal to 125% multiplied by the then outstanding entire balance of the note, including principal and accrued unpaid interest. In addition, the default interest rate would increase to 24%.
The Company has the option to redeem the convertible notes within 90 days from the date of issuance at 125% of the principal and interest; between 91 and to 180 days from the date of issuance at 140% of the principal and interest; and after 180 days the right of prepayment expires.
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$48,000 Convertible Note – GS
On March 15, 2018, the Company entered into a convertible note agreement with a third party for an aggregate principal amount of $48,000, for which $45,600 in proceeds were received on March 20, 2018 . Under the terms of the agreement, the convertible note incurs interest at 10% per annum and has a maturity date of March 15, 2019. The convertible note is convertible upon issuance and convertible into shares of the Company’s stock at a conversion price equal to 63% of the average of the two lowest traded prices of the Company’s common stock during the previous 12 trading days preceding the conversion date. The Company is required at all times to reserve shares of the Company’s common stock equal to six times the number of common shares the convertible note is convertible into. The Company is amortizing legal fees of $2,400 and the remaining discount of $45,600 due to the recording of a derivative liability as discussed in Note 5. The Company is amortizing the total discount of $48,000 to interest expense using the straight-line method over the term of the loan. During the three months ended March 31, 2018 the Company amortized $2,104 to interest expense. As of March 31, 2018, a discount of $45,896 remained.
The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions and any issuances of securities below the conversion price of the convertible note. On the date of issuance, the Company accounted for the conversion feature as a derivative liability, see Note 5. Derivative accounting applies as the conversion price is variable and does not have a floor as to the number of common shares in which could be converted. Thus, if the convertible note is not repaid prior to the note being converted significant pressure maybe put on the Company’s stock price and additional dilution of current shareholders may take place. As of March 31, 2018, there were 126,984,000 shares reserved with our transfer agent with a potential of up to 229,573,386 being reserved if and when the lender issues a request to our transfer agent.
In the event of default, the holder has the right to require the Company to pay an amount equal to 120% multiplied by the then outstanding entire balance of the note, including principal and accrued unpaid interest. In addition, the default interest rate would increase to 24%.
The Company has the option to redeem the convertible notes within 60 days from the date of issuance at 110% of the principal and interest; between 61 and to 120 days from the date of issuance at 124% of the principal and interest; between 121 days and to 180 days from the date of issuance at 138%; and after 180 days the right of prepayment expires.
As of March 31, 2018, future loan maturities are as follows:
For the year ended December 31,
2018 494,309
2019 262,500
Total $ 756,809
NOTE 5 – DERIVATIVE LIABILITIES
Derivative Liabilities
In connection with convertible notes payable, the Company records derivative liabilities for the conversion feature. In addition, the Company has warrants for which the exercise prices reset upon future events. These warrants are also considered to be derivative liabilities. The derivative liabilities are valued on the date the convertible note payable become convertible and revalued at each reporting period. The warrants are valued on the date of issuance and revalued at each reporting period. During the three months ended March 31, 2018, the Company recorded initial derivative liabilities of $752,230 based upon the following Black-Scholes option pricing model average assumptions: an exercise price of $0.00126 to $0.00564 our stock price on the date of grant of $0.0029 to $0.0097, expected dividend yield of 0%, expected volatility of 86% to 191%, risk free interest rate of 2.03% and expected terms ranging from 1.0 to 5.0 years. Upon initial valuation, the derivative liability exceeded the face value certain of the convertible note payables by approximately $502,000, which was recorded as a day one loss on derivative liability.
On March 31, 2018, the derivative liabilities were revalued at $7,045,971 resulting in a loss of $6,505,216 related to the change in fair market value of the derivative liabilities. The derivative liabilities were revalued using the Black-Scholes option pricing model with the following average assumptions: an exercise price of $0.0008 to $0.0023, our stock price on the date of valuation ($0.0097), expected dividend yield of 0%, expected volatility of 83% to 87%, risk-free interest rate of 2.03%, and an expected terms ranging from 0.5 to 2.1 years.
In connection with convertible notes converted, as disclosed in Note 5, the Company reclassed derivative liabilities with a fair of $1,669,207 to additional paid-in capital. 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
Future Potential Dilution
Most of the Company’s convertible notes payable contain adjustable conversion terms with significant discounts to market. As of March 31, 2018 the Company’s convertible notes payable are potentially convertible into an aggregate of approximately 479 million shares of common stock. In addition, due to the variable conversion prices on some of the Company’s convertible notes, the number of common shares issuable is dependent upon the traded price of the Company’s common stock.
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NOTE 6 – WARRANTS
From March 2017 through March 2018, the Company issued 33,116,667 warrants to two parties associated with the issuance of convertible notes. The issued warrants expire 5 years from the date of issuance and have anti-dilution and re-pricing features.
The fair value of each warrant is estimated using the Black-Scholes valuation model. Assumptions used in calculating the fair value at March 31, 2018 were as follows:
Weighted
Average
Inputs Used
Annual dividend yield $ -
Expected life (years) 4.2 to 4.9
Risk-free interest rate 2.03 %
Expected volatility 190.75 %
Common stock price $ 0.0097
Since the expected life of the options was greater than the Company’s historical stock information available, the Public Company determined the expected volatility based on price fluctuations of comparable public companies.
The issuances, exercises and pricing re-sets during the three months ended March 31, 2018 are as follows:
Outstanding at December 31, 2017 22,426,087
Issuances 32,750,000
Exercises (105,212,584 )
Anti-Dilution/Modification 159,727,241
Forfeitures/cancellations (15,200,000 )
Outstanding at March 31, 2018 95,490,744
Weighted Average Price at March 31, 2018 $ 0.00084
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NOTE 7 – SUBSEQUENT EVENTS
In accordance with ASC 855, management reviewed all material events through May 15, 2018, for these financial statements and there are no material subsequent events to report, except as follows:
$110,000 Convertible Note – Morningview
On April 3, 2018, the Company entered into a convertible note agreement with a third party for an aggregate principal amount of $110,000, for which $95,000 in proceeds were received on April 3, 2018 . Under the terms of the agreement, the convertible note incurs interest at 10% per annum and has a maturity date of March 29, 2019. The convertible note is convertible upon issuance and convertible into shares of the Company’s stock at a conversion price equal to 60% of the lowest traded price of the Company’s common stock during the previous 20 trading days preceding the conversion date. The Company is required at all times to reserve shares of the Company’s common stock equal to five times the number of common shares the convertible note is convertible into.
The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions and any issuances of securities below the conversion price of the convertible note. On the date of issuance, the Company accounted for the conversion feature as a derivative liability, see Note 5. Derivative accounting applies as the conversion price is variable and does not have a floor as to the number of common shares in which could be converted. Thus, if the convertible note is not repaid prior to the note being converted significant pressure maybe put on the Company’s stock price and additional dilution of current shareholders may take place.
In the event of default, the holder has the right to require the Company to pay an amount equal to 150% multiplied by the then outstanding entire balance of the note, including principal and accrued unpaid interest. In addition, the default interest rate would increase to 18%.
The Company has the option to redeem the convertible notes within 180 days from the date of issuance at 140% of the principal and interest. After 180 days the right of prepayment expires.
$110,000 Convertible Note – Fourth Man
On April 11, 2018, the Company entered into a convertible note agreement with a third party for an aggregate principal amount of $110,000, for which $100,000 in proceeds were received. Under the terms of the agreement, the convertible note incurs interest at 10% per annum and has a maturity 12 months from the effective date of payment. The convertible note is convertible upon issuance and convertible into shares of the Company’s stock at a conversion price equal to 60% of the lowest trading price of the Company’s common stock during the previous 20 trading days preceding the conversion date. The Company is required at all times to reserve shares of the Company’s common stock equal to three times the number of common shares the convertible note is convertible into.
The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions and any issuances of securities below the conversion price of the convertible note. On the date of issuance, the Company anticipates that it will account for conversion feature as a derivative liability. Derivative accounting applies as the conversion price is variable and does not have a floor as to the number of common shares in which could be converted. Thus, if the convertible note is not repaid prior to the note being converted significant pressure maybe put on the Company’s stock price and additional dilution of current shareholders may take place.
In the event of default, the holder has the right to require the Company to pay an amount equal to 150% multiplied by the then outstanding entire balance of the note, including principal and accrued unpaid interest. In addition, the default interest rate would increase to 18%.
The Company has the option to redeem the convertible notes within 180 days from the date of issuance at 140% of the principal and interest. After 180 days the right of prepayment expires.
$110,000 Convertible Note – Power Up
On April 13, 2018, the Company entered into a convertible note agreement with a third party for an aggregate principal amount of $110,000, for which $99,000 in proceeds were received. Under the terms of the agreement, the convertible note incurs interest at 10% per annum and has a maturity date of March 29, 2019. The convertible note is convertible upon issuance and convertible into shares of the Company’s stock at a conversion price equal to 60% of the lowest trading price of the Company’s common stock during the previous 20 trading days preceding the conversion date. The Company is required at all times to reserve shares of the Company’s common stock equal to three times the number of common shares the convertible note is convertible into.
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The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions and any issuances of securities below the conversion price of the convertible note. On the date of issuance, the Company anticipates that it will account for conversion feature as a derivative liability. Derivative accounting applies as the conversion price is variable and does not have a floor as to the number of common shares in which could be converted. Thus, if the convertible note is not repaid prior to the note being converted significant pressure maybe put on the Company’s stock price and additional dilution of current shareholders may take place.
In the event of default, the holder has the right to require the Company to pay an amount equal to 150% multiplied by the then outstanding entire balance of the note, including principal and accrued unpaid interest. In addition, the default interest rate would increase to 22%.
The Company has the option to redeem the convertible notes within 30 days from the date of issuance at 115% of the principal and interest; between 31 and to 60 days from the date of issuance at 120% of the principal and interest; between 61 and to 90 days from the date of issuance at 125% of the principal and interest; between 91 and to 120 days from the date of issuance at 130% of the principal and interest; between 121 and to 150 days from the date of issuance at 135% of the principal and interest; between 151 and to 180 days from the date of issuance at 140% of the principal and interest; and after 180 days the right of prepayment expires
Conversion Notice
During April and May of 2018 we issued $214,744,028 shares of common stock for the conversion of $401,372 in convertible notes
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During April and May 2018, we issued 50,769,355 shares of common stock for the exercise of 117,712,584 warrants.
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 income. This section should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017, 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 considered to be a commercial stage company, following the commencement of sales of stem cell separation equipment and disposable kits used in our Caverstem procedure to treat ED in the fourth quarter of 2017. Our fiscal year end is December 31st. We have acquired the licensing rights for our Amniostem amniotic-based stem cell, purchased the patent for our ED and lower back pain treatments, and filed patent applications for our neurological treatments.
During the first three months of 2018, we issued $287,500 in convertible notes with net proceeds of $254,350 to accredited investors. In addition, we issued $42,500 in convertible notes for services rendered and a $60,000 convertible note in exchange for a $50,000 convertible note.
During the three month period ending March 31, 2018, we incurred interest expense of $191,308 arising from the third party notes of $756,811.
Plan of Operations
We commenced marketing stem cell concentration machines and disposable kits for the Caverstem ED treatment in the fourth quarter of 2017. For the next 12 months our plan of operations is to market our stem cell concentration machines and disposable kits, complete the UCLA/LABiomed clinical trial and partner with leading researchers on investigator-initiated trials to advance our neurological programs. We estimate the costs to complete the clinical trials will be approximately $400,000, excluding overhead and other costs associated with maintaining our company structure. As of March 31, 2018, we had approximately $102,000 cash on hand. With an estimated monthly cash burn rate of approximately $65,000 based on historic trends and anticipated future revenues and expenses, management anticipates sufficient cash on hand and committed funds to meet operating expenses and costs of the current operations through at least June 2018. Historically, we have met our cash flow requirements through the sale of equity securities or borrowed funds. We intend to fund our business through sales of stem cell centration machines and disposable kits along with continuing to seek investments to meet our cash flow requirements, including both operating expenses and the balance of funding required to fund our sales efforts and compete our ED clinical trial. The securities offered by us to potential investors have not been registered under the Securities Act of 1933, as amended (the “ Act ”), and may not be offered or sold in the U.S. absent registration or an applicable exemption from registration requirements. If we are unable to obtain further financing, we may seek alternative sources of funding or revise our business plan. We currently have no alternative sources for funding.
Results of Operations – For the Three Month Period Ended March 31, 2018 and 2017
Gross Revenue. We generated $9,600 gross revenue for the three month period ended March 31, 2018 in comparison with $0 for the comparable quarter a year ago.
Cost of Goods Sold . We generated $2,400 cost of goods sold for the three month period ended March 31, 2018 in comparison with $0 for the comparable quarter a year ago.
Gross Profit/(Loss) . We generated $7,200 in gross profit for the three month period ended March 31, 2018 in comparison with $0 for the comparable quarter a year ago.
General and Administrative Expenses. General and administrative expenses for the three month period ended March 31, 2018, totaled $202,930, in comparison with $178,378, for the comparable quarter a year ago. The increase of $24,552, or 14% is primarily due to consulting services and marketing fees associated with debt issuances, public company reporting and commercialization of the Caverstem procedure.
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Research and Development Expenses. Research and development expenses for the three month period ended March 31, 2018, totaled $3,200 in comparison with $59,831, for the comparable quarter a year ago. The decrease of $56,631, or 95% is primarily due to a decrease of $46,007 in clinical research expenses associated with the erectile dysfunction trial and a reduction of $10,624 in laboratory expenses.
Other Income / Expense. Other expense for the three month period ended March 31, 2018, totaled $7,382,364 in comparison with other expense of $2,505, for the comparable quarter a year ago. The increase of $7,379,859, or 294,605% is primarily due to an increase of $188,803 in interest expense, $154,284 loss on extinguishment of convertible notes, and an expense of $7,036,772 associated with the change in the fair value of derivative liabilities.
Net Loss. For the reasons stated above, our net loss for the three month period ended March 31, 2018 totaled $7,586,580 in comparison to $243,351, for the comparable quarter a year ago.
Liquidity and Capital Resources
Our principal source of liquidity has been funds received from the sale of our common stock and issuance of notes including convertible notes. Our experience to-date indicates the lenders are most likely to convert the debt into equity prior to or in lieu of full payment at maturity. Going forward, our short-term funding needs are expected to be satisfied by funds to be loaned to us by third parties and revenues generated from our Caverstem ED procedure. Our long-term liquidity needs are expected to be satisfied from future offerings of our equity securities. It is possible that CMH may provide future financing for us. We do not have any arrangements, agreements, or sources for long-term funding.
Our only commitments for expenditures relate to the completion of the clinical study for the ED stem cell treatment and general and administrative costs, including reimbursements to our parent company for services performed by their executive officers on our behalf. During the next 12 months we also anticipate incurring expenses related to marketing activities for our ED treatment.
For the next 12 months our plan of operations is to market the stem cell separator and disposable kits associated with the Caverstem ED treatment and complete the UCLA/LABiomed clinical trial. We estimate the costs to complete the clinical trials will be approximately $400,000, excluding overhead and other costs associated with maintaining our company structure. We believe that our current cash on hand would meet our cash flow requirements for only a few more months. If we are unable to obtain further financing, we may seek alternative sources of funding or revise our business plan. We currently have no alternative sources for funding.
Our financial statements included with this report have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred substantial expenses and generated minimal revenues from operations during the periods covered by these financial statements. These factors raise substantial doubt about our ability to continue as a going concern. There is no assurance that we will be successful in meeting the continuing financial obligations of the company. Our financial statements do not include any adjustments that might result from the outcome of these uncertainties.
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 $164,937 for the three month period ended March 31, 2018 in comparison to $223,749 for the comparable period a year ago, a decrease of $58,812 or 26%. The decrease in cash used in operations was primarily related to payments towards an outstanding balance of management fees payable to a related party.
Net Cash used in Investing Activities. There was no cash used in investing activities in the three month period ended March 31, 2018 and the comparable period a year ago.
Net Cash From Financing Activities. In the three month period ended March 31, 2018 we raised $254,350 through the issuance of convertible and non-convertible debt. In the three month period ended March 31, 2017, we raised $100,000 through the sale of common stock. The increase in cash flows from financing activities was primarily related to our need to obtain additional capital due marketing expenses associated with the commercialization of the Caverstem ED procedure, increases in capital markets marketing costs and increased legal and accounting fees associated with public company reporting and audit requirements.
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Basis of Presentation / Going Concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2018, the Company had $102,310 of available cash and a working capital deficit of $8,109,483. For the three month period ended March 31, 2018, the Company had $9,600 in revenue, $7,200 in operating income and used net cash for operating activities of $164,937. These factors, among others, indicate that the Company may be unable to continue as a going concern for the next twelve months. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing as may be required, and ultimately to attain sufficient cash flow from operations to meet its obligations on a timely basis. Management is in the process of negotiating various financing plans including access to ongoing credit facilities and possible sale of capital stock either in private or in public offerings and believes these steps may generate sufficient cash flow for the Company to continue as a going concern. If the Company is unsuccessful in these efforts, it may be required to substantially curtail or terminate its operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity capital expenditures or capital resources.
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
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 13(a)-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 are 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.
PART II – OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Convertible Notes/Debentures
During the quarter ended March 31, 2018, we issued convertible promissory notes in the face amount of $390,000 to multiple lenders for which we received proceeds of $320,658 and the extinguishment of 100,000 warrants. The notes bear interest ranging form 8% to 12% which would increase to 24% in the event of default and have maturity dates ranging from December 2018 through March 2019. The notes are convertible at a rates ranging from 60% to 63% of the lowest traded or average of the two lowest traded prices of our common stock during prior trading days ranging from 12 to 25 days preceding the conversion date. On all but one loan, we have the option to redeem the notes, in whole or in part, up to 180 days from the date of issuance ranging from 110% to 140% of the principal and interest depending on the numbers of days following issuance up to 180 days from issuance. After 180 days the right of prepayment expires.
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Item 6. Exhibits
SEC Ref. No. Title of Document
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
SIGNATURE PAGE FOLLOWS
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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: May 21, 2018 By /s/ Timothy Warbington
Timothy Warbington, Chief Executive Officer
(Principal Executive Officer)
Date: May 21, 2018 By /s/ Donald Dickerson
Donald Dickerson, Chief Financial Officer
(Principal Financial Officer)
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