Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

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 operations. This section should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, 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 a commercial stage biotechnology company dedicated to the advancement of identifying and translating novel biological therapeutics in the fields of immunotherapy, endocrinology, urology, neurology and orthopedics. Our platforms, therapies and products include the following:

Our subsidiary, Creative Medical Technologies, Inc. ("CMT"), was originally created to monetize U.S. Patent No. 8,372,797 and related intellectual property related to the treatment of erectile dysfunction ("ED"), which it acquired in February 2016. Subsequently, we have expanded our development and acquisition of intellectual property beyond urology to include therapeutic treatments utilizing "re-programmed" stem cells, and the treatment of neurologic disorders, lower back pain, Type-1 diabetes, and heart, liver, kidney, and other diseases using various types of stem cells through our ImmCelz, Inc., StemSpine, Inc. and AlloCelz LLC subsidiaries. However, neither ImmCelz Inc., nor AlloCelz LLC have commenced commercial activities.

In 2020, through our ImmCelz Inc. subsidiary, we began developing treatments under our ImmCelz™ platform (CELZ-100), that utilize a patient's own extracted immune cells that are then "reprogrammed/supercharged" by culturing them outside the patient's body with optimized cell-free factors. The immune cells are then re-injected into the patient from whom they were extracted. We believe this process endows the immune cells with regenerative properties (or "supercharges" them) providing them with the ability to treat multiple indications. We have validated this ability through the third-party studies described below that were independently conducted on selected human donor patient cells for accuracy and reproducibility. In contrast to other stem cell-based approaches, the immune cells are significantly smaller in size than stem cells and are believed to more effectively penetrate areas of the damaged tissues and induce regeneration.

In June 2022, we signed an agreement with Greenstone Biosciences Inc. ("Greenstone") for the development of a human induced pluripotent stem cell (iPSC) pipeline for our ImmCelz™ platform. This project was identified as iPScelz™. The efforts by Greenstone are expected to complement and expand our current work on novel therapeutic cell lines. In May 2023, we announced that we had received confirmation that Greenstone had successfully developed a human induced pluripotent stem cell (iPSC). We estimate that the development of this cell line will save the Company two to three years in research and development time along with associated expenses. The final iPScelz™ results in a viral-free cell line which has great potential for differentiation into therapeutic biologics both for the cellular and cell-free programs along with targeted drug discovery. Greenstone's developments were confirmed by an independent, industry-leading research firm.

In October 2022, we announced the development of our AlloStem™ Clinical Cell Line (CELZ-200), a proprietary allogenic cell line which includes a Master Cell Bank and a Drug Master File. We believe we will able to use this cell line for many of our programs, including our ImmCelz^™ immunotherapy platform for multiple diseases, OvaStem^™ for Premature Ovarian Failure, Type I Diabetes (CELZ-201 CREATE-1), AlloStemSpine^® Chronic Lower Back Pain (CELZ-201 ADAPT), and IPScelz™ inducible pluripotent stem cell program in ongoing development with Greenstone.

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In November 2022, we announced that the FDA had cleared the Company's Type I Diabetes (CELZ-201 CREATE-1) Investigational New Drug (IND) application for the treatment of Type 1 Diabetes utilizing our AlloStem™ Clinical Cell Line, which will allow us to begin a Phase I/II clinical trial. The primary objective of the study will be to evaluate CELZ-201 treatment in patients with newly diagnosed Type 1 Diabetes. The trial has also received Institutional Board Review (IRB) approval for the trial to proceed as well as approval of the patient recruitment material. Patient recruitment was initiated in September 2023.

In February 2023, we reported positive three-year follow-up data for its StemSpine^® pilot study. The three-year data demonstrates continued efficacy of the StemSpine^® procedure for treating chronic lower back pain without any serious adverse effects reported.

In March 2023, we reported the following results of independent studies:

	·	ImmCelz™ (CELZ-100) platform required 75% fewer donor patient cells compared to industry standard.
	·	The purity of the final ImmCelz™ (CELZ-100) product was greater than 95% compared to the industry standard of greater than 80%.
	·	ImmCelz™ (CELZ-100) demonstrated a greater than 200% reduction in functional suppression of effector T cells, which are a critical concern for patients with autoimmune issues, while still possessing a high number of functional T regulatory cells.
	·	The ability to verify repeated potency of the final ImmCelz™(CELZ-100) product.

We believe these results show that we will be able to substantially reduce production costs, while allowing for the manufacture of the best clinical product for patients with immune disorders, which will enable us to accelerate our clinical applications and encourage potential collaborations with respect to our ImmCelz™ platform.

In March 2023, we announced that we had filed an application with the FDA to receive Orphan Drug Designation ("ODD") for the treatment of Brittle Type 1 Diabetes using its ImmCelz™ (CELZ-100) platform. In March 2024 we received the ODD from the FDA. This designation provides multiple important benefits to support the therapy's development including tax advantages, user fee exemptions, and the opportunity for market exclusivity following approval.

In April 2023, we reported positive one-year follow-up data and significant efficacy using CELZ-001 to treat patients with Type 2 Diabetes. There were no safety concerns related to CELZ-001 at one year follow-up utilizing the same infusion procedure as in the currently U.S. FDA cleared Type I Diabetes (CELZ-201 CREATE-1) clinical trial. There were 30 patients in the study, 15 received CELZ-001 and the rest received optimized medical therapy. At one year, there was an overall efficacy of 93% in the treated patients demonstrating at least a 50% reduction in insulin requirement.

In September 2023, we received FDA clearance to initiate a Phase I/II clinical trial of AlloStemSpine^® Chronic Lower Back Pain (CELZ-201 ADAPT) using AlloStem™ (CELZ-201-DDT) for the treatment of lower back pain. The first in country study, which will enroll 30 individuals suffering from chronic lower back pain, is designed to evaluate the safety, efficacy, and tolerability of AlloStem™ (CELZ-201-DDT). The minimally invasive procedure uses ultrasound for the targeted delivery of the cell product, and thus prevents radiation exposure to the patient or the injecting physician. This trial, protected by issued patents, is a huge milestone for the Company and for patients suffering from this debilitating problem and their need for opioids for pain.

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In October 2023, we filed for and received approval from an institutional review board (IRB) to proceed with the Phase I/II clinical trial for the treatment of chronic lower back pain with its AlloStemSpine^® procedure using AlloStem™ (CELZ-201-DDT ADAPT) cell therapy. The clinical trial is registered on www.clinicaltrials.gov. From November 2023 through July 2024, we:

	·	Selected a clinical research site.
	·	Vetted and contracted with a Contract Research Organization to assist with trial oversight.
	·	Established a Data Safety Monitoring Board (DSMB) and received authorization to proceed with the trial.
	·	Initiated patient recruitment and started dosing study subjects.

In March 2024, we secured FDA authorization for an expanded access therapy using CELZ-201, in managing abnormal glucose tolerance and preventing Type I Diabetes in high-risk individuals. The therapy uses CELZ-201 to potentially prevent Type I Diabetes onset and is believed to be a first in medical history. This personalized medicine approach, focuses on a single high-risk patient. CELZ-201 has a multi-target mechanism to address abnormal glucose tolerance, a Type I Diabetes precursor, at the cellular level.

In June 2024, we announced that we had successfully generated human induced pluripotent stem cells (iPSCs)-derived islet cells that produce human insulin. We believe this development has the potential for not only clinical translation of the human Islet Cells, but also the stand-alone human insulin which is produced by these cells.

In July 2024, we announced the initiation of a program to diagnose and treat patients exposed to biological and chemical weapons by combining artificial intelligence (AI) with our proprietary iPSC". This iPSC clinically derived line is part of our iPSCelz^® program. The program is designed to utilize the predictive capabilities of AI to identify damage to patients exposed to biological or chemical weapons and, based on a clinical diagnosis supported by that assessment, use our validated iPSCelz, ImmCelz™ (CELZ-100) and/or AlloStem™ (CELZ-201-DDT) to develop optimized therapeutic options. The use of AI strengthens the Company's research efficiency, precision, and innovation. In drug discovery, AI accelerates the identification of potential targets and optimizes biological screenings, significantly shortening development timelines. This model enables the Company to accelerate development for civilian and military options for biological optimization of on-site and remote therapeutic interventions. Along with Greenstone Biosciences Inc., the Company continues to evaluate other collaborators, partners and business opportunities to accelerate development without taking away from the core clinical programs.

In November 2024, we announced the successful completion of an independent interim safety review by the Data Safety Monitoring Board (DSMB) of our CELZ-201 ADAPT clinical trial. The DSMB reviewed safety data from the first five dosed patients concluding that the trial may proceed as planned, underscoring the safety profile of CELZ-201 and supporting the advancement of this innovative therapy. This positive review follows the completion of a rigorous 30-day dose-limiting toxicity (DLT) assessment per patient, an important milestone as CELZ-201 moves closer to potentially transformative therapeutic outcomes for patients.

In January 2025, we announced promising initial data from the first cohort of the CELZ-201 ADAPT clinical trial. The first cohort of 10 participants (8 receiving CELZ-201-DDT and 2 receiving placebo) completed the study phase without any dose-limiting toxicities or serious adverse events. Blinded preliminary data suggest encouraging therapeutic potential in alleviating back pain and restoring functionality. Following a comprehensive safety review, the independent Data Safety Monitoring Board (DSMB) recommended the trial proceed to the next cohort as planned

Key Milestones Achieved:

	·	Safety Confirmed: CELZ-201-DDT demonstrated an excellent safety profile, with no serious adverse events reported in the first cohort.
	·	Preliminary Efficacy Signals: Blinded data suggest potential therapeutic benefit in addressing chronic back pain associated with degenerative disc disease.
	·	DSMB Endorsement: The DSMB approved continuation of the study, validating the safety and integrity of the trial design.

We completed dosing the second cohort of 10 patients (total of 20 to-date) in this trial in the second quarter of 2025. Additional comprehensive data from the second and third cohorts will guide future clinical and regulatory plans.

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On March 6, 2025, we entered into warrant exercise inducement offer letters (the "Inducement Letters") with the holders (the "Holders") of warrants to purchase an aggregate of 837,104 shares of our Common Stock originally issued on October 23, 2024 (collectively, the "Existing Warrants"), pursuant to which the Holders agreed to exercise the Existing Warrants at their current exercise price of $4.42 per share, in exchange for our agreement to issue the Holders new warrants to purchase an aggregate of 1,674,208 shares of common stock (the "Inducement Warrants"). The Inducement Warrants have an exercise price of $3.75 per share, became granted and exercisable when we obtained stockholder approval for the issuance of the shares of Common Stock underlying the Inducement Warrants on May 5, 2025, and are exercisable for a period of five years following approval date. The transaction closed on March 6, 2025, resulting in total net proceeds to the Company of approximately $3.7 million after deducting placement agent fees and other costs of the offering. Following stockholder approval, the Company recorded a value of approximately $3.9 million, representing the difference between the fair market value of the Existing Warrants and Inducement Warrants on the date of the transaction, as both an increase and decrease to additional paid-in capital, for no net impact, as the Inducement Warrants were considered offering costs.

We were incorporated on December 3, 1998, in the State of Nevada under the name Jolley Marketing, Inc. On May 18, 2016, we completed a reverse merger transaction under which Creative Medical Technologies, Inc. became our wholly owned subsidiary. In connection with this merger, we changed our name to Creative Medical Technologies Holdings, Inc. to reflect our current business.

Our principal executive offices are located at 211 E Osborn Road, Phoenix, AZ 85012.

Results of Operations - For the Three-month Periods Ended September 30, 2025, and 2024

Gross Revenue. There was no revenue generated for the three-month periods ended September 30, 2025 and 2024.

Cost of Goods Sold. There was no cost of goods sold for the three-month periods ended September 30, 2025 and 2024.

Gross Profit/(Loss). There were no gross profits for the three-month periods ended September 30, 2025 and 2024.

Selling, General and Administrative Expenses. General and administrative expenses for the three-months ended September 30, 2025, totaled $776,821, in comparison with $498,607 for the comparable period a year ago. The increase of $278,214, or 56% is primarily due to an increase of $206,306 in compensation due to timing of bonus payouts, and marketing expense increase of $118,909, offset by decreases in public company and professional fee expenses.

Amortization Expenses. Amortization expenses for the three-months ended September 30, 2025 totaled $31,059 in comparison with $29,271 for the comparable period a year ago.

Research and Development Expenses. Research and development expenses for the three-months ended September 30, 2025, totaled $465,154 in comparison to $581,796 for the comparable period a year ago. The decrease of $116,642, or 20% was primarily due to a decrease of $114,140 in research and development associated with the AlloStemSpine^® Chronic Lower Back Pain (CELZ-201 ADAPT) trial approaching the completion of subject recruitment.

Operating Loss. For the reasons stated above, our operating loss for the three-months ended September 30, 2025, was $1,273,034 in comparison with $1,109,674 for the comparable period a year ago.

Other Income. Other income for the three-months ended September 30, 2025, totaled $37,100 in comparison with $69,539 for the comparable period a year ago. The decreased income of $32,439 is primarily due to lower short-term investment balances and a slight decrease in interest rates.

Net Income/Loss. For the reasons stated above, our net loss for the three-months ended September 30, 2025, was $1,235,934 in comparison with a net loss of $1,040,135 for the comparable period a year ago.

Results of Operations - For the Nine-month Periods Ended September 30, 2025, and 2024

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Gross Revenue. There was $3,000 in revenue generated for the nine-months ended September 30, 2025 in comparison with $8,000 in revenues for the comparable period a year ago.

Cost of Goods Sold. There was $1,200 in cost of goods sold for the nine-months ended September 30, 2025 in comparison with $3,200 in cost of goods sold for the comparable period a year ago.

Gross Profit/(Loss). There was $1,800 in gross profits for the nine-months ended September 30, 2025 in comparison with $4,800 in gross profits for the comparable period a year ago.

Selling, General and Administrative Expenses. General and administrative expenses for the nine-months ended September 30, 2025, totaled $2,396,735, in comparison with $1,846,177 for the comparable period a year ago. The increase of $550,558, or 30% is primarily due to an increase of $288,122 in marketing expenses, $191,478 associated with the timing of bonus payouts, and the timing of a $50,512 general liability contract renewal.

Amortization Expenses. Amortization expenses for the nine-months ended September 30, 2025 totaled $92,378 in comparison with $87,813 for the comparable period a year ago.

Research and Development Expenses. Research and development expenses for the nine-months ended September 30, 2025, totaled $1,709,719 in comparison to $1,928,937 for the comparable period a year ago. The decrease of $219,218, or 11% was primarily due to a decrease of $454,432 in general research combined with a $164,729 decrease in expenses associated with the Type I Diabetes (CELZ-201 CREATE-1) clinical trial, offset by an increase of $166,193 on the AlloStemSpine^® Chronic Lower Back Pain (CELZ-201 ADAPT) trial as we continue to recruit and dose study subjects, and an increase of $233,340 associated with clinical research fees.

Operating Loss. For the reasons stated above, our operating loss for the nine-months ended September 30, 2025, was $4,197,032 in comparison with $3,858,127 for the comparable period a year ago.

Other Income. Other income for the nine-months ended September 30, 2025, totaled $89,698 in comparison with $218,720 for the comparable period a year ago. The decreased income of $129,022 is primarily due to lower short-term investment balances and a slight decrease in interest rates.

Net Income/Loss. For the reasons stated above, our net loss for the nine-months ended September 30, 2025, was $4,107,334 in comparison with a net loss of $3,639,407 for the comparable period a year ago.

Liquidity and Capital Resources

As of September 30, 2025, we had $5,375,511 of available cash and US Treasuries and positive working capital of approximately $5,150,188. In comparison, as of December 31, 2024, we had $5,940,402 of available cash, certificates of deposit and US Treasuries and positive working capital of $5,807,659.

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 $3,918,891 for the nine-months ended September 30, 2025, in comparison to $3,351,756 for the comparable period a year ago, an increase of $567,135 or 17%. The increase in cash used in operations was primarily related to an increase in research and development investments, corporate marketing and timing of employee bonus payouts.

Net Cash Received From Investing Activities. There was no cash received or spent in investing activities during the nine-months ended September 30, 2025, in comparison to $6,320,191 of cash received from $6,520,191 in net redemptions of certificates of deposit offset by a $200,000 payment on a patent purchase obligation for the comparable period a year ago.

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Net Cash from Financing Activities.

Cash received in financing activities for the nine-months ended September 30, 2025 was $3,354,000 in proceeds from the exercise of warrants net of issuance costs, in comparison to $174,864 in cash spent from the purchase of treasury stock for the comparable period a year ago.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles accepted in the United States. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.