Item 1.01. Entry into a Material Definitive Agreement.
On December 7, 2021, Creative Medical Technology Holdings, Inc. (the “Company”) sold an aggregate of 3,875,000 shares of the Company’s common stock (“Common Stock”), and accompanying warrants to purchase 3,875,000 shares of Common Stock at an exercise price of $4.13 per share (“Warrants”), at a combined public offering price to the public of $4.13 per share of Common Stock and related Warrant (the “Offering”), pursuant to an Underwriting Agreement, dated as of December 3, 2021 (the “Underwriting Agreement”), by and between the Company and Roth Capital Partners, LLC (the “Underwriter” or “Roth”), as sole underwriter. In addition, pursuant to the Underwriting Agreement, the Company granted the Underwriter a 45-day option to purchase up to 581,250 additional shares of Common Stock, and/or 581,250 additional Warrants, to cover over-allotments in connection with the Offering.
The Common Stock and the Warrants were offered and sold to the public pursuant to the Company’s registration statement on Form S-1 (File No. 333-259834), filed by the Company with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), on September 28, 2021, as amended, which became effective on December 2, 2021.
The Company received gross proceeds of $16,003,750, before deducting underwriting discounts and commissions of seven percent (7%) of the gross proceeds and estimated Offering expenses, and intends to use the net proceeds from the Offering to (i) redeem the Company’s 15% Original Issue Discount Senior Notes due February 11, 2022, in the aggregate outstanding amount of $5,146,176, (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, (iii) hire marketing and sales personnel to support sales of the Company’s CaverStem® and FemCelz® products, (iv) proceed with a clinical study of 100 patients intended to support the safety and efficacy of the Company’s StemSpine® Regenerative Stem Cell Procedure for Treatment of Degenerative Disc Disease, (v) conduct a Phase I clinical trial for the treatment of stroke utilizing the Company’s ImmCelzTM technology, (vi) continue to develop other products and therapies, and (vii) fund working capital and general corporate purposes using any remaining amounts.
The Underwriting Agreement contains customary representations, warranties, and covenants by the Company. It also provides for customary indemnification by each of the Company and the Underwriter for losses or damages arising out of or in connection with the offering, including for liabilities under the Securities Act, other obligations of the parties and termination provisions. In addition, pursuant to the terms of the Underwriting Agreement, certain existing stockholders and the Company’s directors and executive officers entered into “lock-up” agreements with the Underwriter that generally prohibit the sale, transfer, or other disposition of securities of the Company for a period of 180 days following December 7, 2021. The Company has also agreed that it will not issue or announce the issuance or proposed issuance of any common stock or common stock equivalents for a period of 180 days following the closing date, other than certain exempt issuances.
A copy of the Underwriting Agreement has been filed as Exhibit 1.1 to this report, and is incorporated herein by reference. The provisions of the Underwriting Agreement, including the representations and warranties contained therein, are not for the benefit of any party other than the parties to such agreement and are not intended as a document for investors or the public to obtain factual information about the current state of affairs of the Company.
Pursuant to the Underwriting Agreement, the Company also agreed to issue to the Underwriter warrants (the “Underwriter’s Warrants”) to purchase up to a total of 348,750 shares of Common Stock (4.5% of the securities sold in the Offering). The Underwriter’s Warrants are immediately exercisable at $5.1625 per share of Common Stock and have a term of five years from the commencement of sales. The Underwriter’s Warrants are subject to a lock-up for 180 days from the commencement of sales in the Offering in accordance with FINRA Rule 5110(e). A copy of the form of the Underwriter’s Warrant has been filed as Exhibit 4.1 to this report, and is incorporated herein by reference.
The total expenses of the offering are estimated to be approximately $1,500,000, which includes Roth’s expenses relating to the offering.
On December 7, 2021, the Company also entered into a Warrant Agency Agreement with vStock Transfer LLC (“Warrant Agency Agreement”), pursuant to which vStock Transfer LLC agreed to act as warrant agent with respect to the Warrants. A copy of the Warrant Agency Agreement has been filed as Exhibit 10.1 to this report, and is incorporated herein by reference.
The final prospectus relating to the Offering has been filed with the SEC and is available on the SEC’s web site at http://www.sec.gov. Copies of the final prospectus relating to the offering may be obtained from Roth Capital Partners, 888 San Clemente, Newport Beach, CA 92660, Attn: Prospectus Department, telephone: 800-678-9147, or email at rothecm@roth.com, or from the above-mentioned SEC website.
The foregoing summary of the terms of the Underwriting Agreement, Warrant Agency Agreement (including the Warrant) and the Underwriter’s Warrant are subject to, and qualified in their entirety by reference to, copies of the Underwriting Agreement, Warrant Agency Agreements (including the Warrants) and the Representative’s Warrant that are filed as exhibits to this Current Report on Form 8-K and are incorporated herein by reference.