Creative Medical Technology Holdings signs warrant inducement for about $3.7 million gross proceeds

Creative Medical Technology Holdings, Inc. (Nasdaq: CELZ) agreed on March 6, 2025 to issue new warrants to holders who exercise existing warrants for cash. The exercise is expected to bring in approximately $3.7 million in gross proceeds, before financial advisory fees. The terms are in a Form 8-K filed March 7, 2025, which the company filed under Item 1.01 and Item 3.02.

How the inducement works

A warrant inducement offers holders a reward for exercising warrants now rather than later. The company entered into inducement offer letters with holders of warrants to buy an aggregate of 837,104 shares. Those warrants were originally issued on October 23, 2024. The holders agreed to exercise them at the current price of $4.42 per share. In return, the company agreed to issue new warrants, the inducement warrants, to buy an aggregate of 1,674,208 shares. That is twice the number of shares the holders are exercising for.

The 8-K does not name the holders. The inducement letter required each holder to sign and exercise in full for cash by 7:45 a.m. Eastern Time on March 6, 2025. It also required the company to issue a press release and file a Form 8-K by 9:00 a.m. Eastern Time on the date of the letter, if the documents were signed in time.

Terms of the new warrants

The inducement warrants have an exercise price of $3.75 per share. They cannot be exercised until the company obtains stockholder approval for the shares underlying them, as Nasdaq rules require. After that approval, they are exercisable for five years. The company issued them in a private placement under Section 4(a)(2) of the Securities Act of 1933, so neither the warrants nor the underlying shares are registered at the time of issue.

The company agreed to file a resale registration statement on Form S-3 within thirty days of the closing to register the shares issuable on exercise of the inducement warrants. The shares issuable on exercise of the existing warrants are registered on a Form S-1 (File No. 333-283091), declared effective on November 19, 2024.

The letter includes a beneficial ownership limit that restricts exercise above a set level, or 9.99% if the holder elects. It also requires the company to pay cash damages of $10 per trading day, rising to $20 per trading day after five trading days, for each $1,000 of new warrant shares if it is late in removing the restrictive legend. These are liquidated damages under the letter.

Advisers and fees

The 8-K says Roth Capital Partners, LLC acted as the company's financial advisor under a financial advisory agreement. The company agreed to pay Roth a financial advisory fee equal to 8% of the gross proceeds from the exercise of the existing warrants. It also agreed to reimburse Roth $40,000 for legal expenses and to issue Roth warrants equal to 5.0% of the shares issuable on exercise of the existing and inducement warrants, on substantially the same terms as the inducement warrants. The inducement letter names Roth Capital Partners, LLC as the placement agent. The filings do not name separate company counsel for the transaction.

What the company gets

The company says the net proceeds will go to working capital and general corporate purposes. The 8-K does not give a net figure, so the amount left after the 8% fee and the other costs cannot be read from the filing. It also gives no cash balance, so the proceeds cannot be set against the company's existing cash need.

The structure has a cost beyond the fee. Holders of warrants first issued in October 2024 would receive new warrants on twice the shares they exercise, at a lower price of $3.75 against the $4.42 they pay now. The filing gives no reason for the exercise price difference, and the new warrants would add to the shares that could be issued later.

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CELZCreative Medical Technology Holdings, Inc.NASDAQ · United StatesOpen the starter desk