UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
or
For the transition period from __________ to __________
Commission File No.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of a “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Yes ☐ No
As of November 14, 2023, the registrant had
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2023
TABLE OF CONTENTS
| Page | ||
| Special Note Regarding Forward-Looking Statements and Other Information Contained in this Report | ii | |
| PART I - FINANCIAL INFORMATION | 1 | |
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 2 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 14 |
| Item 4. | Controls and Procedures | 14 |
| PART II - OTHER INFORMATION | 15 | |
| Item 1. | Legal Proceedings | 15 |
| Item 1A. | Risk Factors | 15 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 16 |
| Item 3. | Defaults Upon Senior Securities | 16 |
| Item 4. | Mine Safety Disclosures | 16 |
| Item 5. | Other Information | 16 |
| Item 6. | Exhibits | 17 |
i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
AND
OTHER INFORMATION CONTAINED IN THIS REPORT
This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “would,” “should,” “could,” “may” or other similar expressions in this Form 10-Q. In particular, these include statements relating to future actions; prospective products, applications, customers and technologies; future performance or results of anticipated products; anticipated expenses; and projected financial results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
| ● | our ability to continue as a going concern; |
| ● | our operating expenses exceed our revenues and will likely continue to do so for the foreseeable future; |
| ● | our ability to obtain additional capital, which may be difficult to raise as a result of our limited operating history or any number of other reasons; |
| ● | our ability to provide digital content that is useful to users; |
| ● | our ability to retain existing users or add new users; |
| ● | competition from traditional media companies; |
| ● | general economic conditions and events and the impact they may have on us and our users; and |
| ● | other factors discussed in this Form 10-Q. |
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make or collaborations or strategic partnerships we may enter into.
You should read this Form 10-Q and the documents that we have filed as exhibits to this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Unless otherwise stated or the context otherwise requires, the terms “Creatd,” “we,” “us,” “our” and the “Company” refer collectively to Creatd, Inc. and its subsidiaries.
ii
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Creatd, Inc.
September 30, 2023
Index to the Condensed Consolidated Financial Statements
1
Creatd, Inc.
Condensed Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Deposits and other assets | ||||||||
| Operating lease right of use asset | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Convertible Notes, net of debt discount and issuance costs | ||||||||
| Current portion of operating lease payable | ||||||||
| Note payable, net of debt discount and issuance costs | ||||||||
| Deferred revenue | ||||||||
| Derivative liability | ||||||||
| Total Current Liabilities | ||||||||
| Non-current Liabilities: | ||||||||
| Note payable | ||||||||
| Operating lease payable | ||||||||
| Preferred stock liability | ||||||||
| Total Non-current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, $ | ||||||||
| Series E Preferred stock, $ | ||||||||
| Common stock par value $ | ||||||||
| Additional paid in capital | ||||||||
| Less: Treasury stock, | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Creatd, Inc. Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Non-controlling interest in consolidated subsidiaries | ( | ) | ||||||
| Total Creatd, Inc. Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-1
Creatd, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| For the Three Months Ended September 30, 2023 | For the Three Months Ended September 30, 2022 | For the Nine Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2022 | |||||||||||||
| Net revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross margin (loss) | ( | ) | ( | ) | ||||||||||||
| Operating expenses | ||||||||||||||||
| Compensation | ||||||||||||||||
| Research and development | ||||||||||||||||
| Marketing | ||||||||||||||||
| Stock based compensation | ||||||||||||||||
| Impairment of intangible assets | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Other income | - | |||||||||||||||
| Settlement of vendor liabilities | ( | ) | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Accretion of debt discount and issuance cost | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in derivative liability | ( | ) | ( | ) | ||||||||||||
| Impairment of investment | ( | ) | ||||||||||||||
| Loss on marketable securities | ( | ) | ( | ) | ||||||||||||
| Loss on extinguishment of debt | ( | ) | ( | ) | ||||||||||||
| Total other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income tax provision | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax provision | - | |||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Non-controlling interest in net loss | - | |||||||||||||||
| Net Loss attributable to Creatd, Inc. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Deemed dividend | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Comprehensive loss | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Currency translation gain (loss) | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Per-share data | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Weighted average number of common shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-2
Creatd, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit)
(Unaudited)
| Series
E Preferred Stock | Common Stock | Treasury stock | Additional Paid In | Accumulated | Non- Controlling | Other Comprehensive | Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Interest | Income | (Deficit) | ||||||||||||||||||||||||||||||||||
| Balance December 31, 2022 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for prepaid services | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for acquisition of non-controlling interest in consolidated subsidiaries | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| BCF issued with note payable | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Exercise of warrants to stock | ||||||||||||||||||||||||||||||||||||||||||||
| Cash received for common stock | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued upon conversion of notes payable | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Sale of minority interest in OG Collection INC | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Deemed dividend | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2023 | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance March 31, 2023 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for acquisition of non-controlling interest in consolidated subsidiaries | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Cash received for common stock | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued with notes payable | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued upon conversion of notes payable | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Deemed dividend | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended June 30, 2023 | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance June 30, 2023 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for acquisition of non-controlling interest in consolidated subsidiaries | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Shares issued for exercise of warrants | ||||||||||||||||||||||||||||||||||||||||||||
| Cash received for common stock | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued with notes payable | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued upon conversion of notes payable | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Deemed dividend | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended September 30, 2023 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balance September 30, 2023 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||||||||||||||||||||||
F-3
Creatd, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit)
(Unaudited)
| Series E | Additional | Non- | Other | |||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Treasury stock | Paid In | Accumulated | Controlling | Comprehensive | Stockholders' | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Interest | Income | Equity | ||||||||||||||||||||||||||||||||||
| Balance, January 1, 2022 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for prepaid services | ||||||||||||||||||||||||||||||||||||||||||||
| Cash received for common stock and warrants, net of $ | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued upon conversion of notes payable | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Dividends | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 20222 | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for prepaid services | ||||||||||||||||||||||||||||||||||||||||||||
| Stock warrants issued with note payable | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended June 30, 2022 | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for prepaid services | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for acquisition | ||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Cash received for common stock and warrants, net of $ | ||||||||||||||||||||||||||||||||||||||||||||
| Stock warrants issued with note payable | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Dividends | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended September 30, 2022 | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-4
Creatd, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| For the Nine Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Impairment of investment | ||||||||
| Impairment of intangible assets | ||||||||
| Accretion of debt discount and issuance cost | ||||||||
| Stock based compensation | ||||||||
| Currency translation | ||||||||
| Bad debt expense | ||||||||
| Loss on forgiveness of debt | ||||||||
| Settlement of vendor liabilities | ( | ) | ||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Loss on marketable securities | ||||||||
| Non cash lease expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses | ( | ) | ||||||
| Operating lease right of use asset | ||||||||
| Deposits and other assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Deferred revenue | ||||||||
| Operating lease liability | ( | ) | ||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash paid for property and equipment | ( | ) | ||||||
| Cash received from sale of interest in OGC | ||||||||
| Cash paid for investments in marketable securities | ( | ) | ||||||
| Sale of marketable securities | ||||||||
| Cash consideration for acquisition | ( | ) | ||||||
| Purchases of digital assets | ( | ) | ||||||
| Net Cash Provided by (Used In) Investing Activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from the exercise of warrant | ||||||||
| Proceeds from issuance of preferred stock (Vocal) | ||||||||
| Net proceeds from issuance of notes | ||||||||
| Repayment of notes | ( | ) | ( | ) | ||||
| Proceeds from issuance of convertible note | ||||||||
| Repayment of convertible notes | ( | ) | ( | ) | ||||
| Purchase of treasury stock | ( | ) | ||||||
| Proceeds from issuance of common stock and warrants | ||||||||
| Net Cash Provided By Financing Activities | $ | $ | ||||||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| Net Change in Cash | ( | ) | ( | ) | ||||
| Cash - Beginning of period | ||||||||
| Cash - End of period | $ | $ | ||||||
| SUPPLEMENTARY CASH FLOW INFORMATION: | ||||||||
| Cash Paid During the Year for: | ||||||||
| Income taxes | $ | $ | ||||||
| Interest | $ | $ | ||||||
| SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Settlement of vendor liabilities | $ | $ | ||||||
| Warrants issued with debt | $ | $ | ||||||
| Shares issued for the conversion of convertible notes payable | $ | $ | ||||||
| Beneficial conversion feature issued with convertible note | $ | $ | ||||||
| Shares issued with notes payable | $ | $ | ||||||
| Shares issued for prepaid services | $ | $ | ||||||
| Operating lease liability | $ | $ | ||||||
| Shares issued for acquisition of non-controlling interest in consolidated subsidiaries | $ | $ | ||||||
| Deemed dividend | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-5
Creatd, Inc.
September 30, 2023
Notes to the Condensed Consolidated Financial Statements
Note 1 – Organization and Operations
Creatd, Inc., formerly Jerrick Media Holdings, Inc. (“we,” “us,” the “Company,” or “Creatd”), is a technology company focused on providing economic opportunities for creators, which it accomplishes through its four main business pillars: Creatd Labs, Creatd Partners, Creatd Ventures, and Creatd Studios. Creatd’s flagship product, Vocal, delivers a robust long-form, digital publishing platform organized into highly engaged niche-communities capable of hosting all forms of rich media content. Through Creatd’s proprietary algorithm dynamics, Vocal enhances the visibility of content and maximizes viewership, providing advertisers access to target markets that most closely match their interests.
The Company was originally incorporated under the laws of the State of Nevada on December 30, 1999, under the name LILM, Inc. The Company changed its name on December 3, 2013, to Great Plains Holdings, Inc. as part of its plan to diversify its business.
On February 5, 2016 (the “Closing Date”),
GTPH, GPH Merger Sub, Inc., a Nevada corporation and wholly-owned subsidiary of GTPH (“Merger Sub”), and Jerrick Ventures,
Inc., a privately-held Nevada corporation headquartered in New Jersey (“Jerrick”), entered into an Agreement and Plan of Merger
(the “Merger”) pursuant to which the Merger Sub was merged with and into Jerrick, with Jerrick surviving as a wholly-owned
subsidiary of GTPH (the “Merger”). GTPH acquired, pursuant to the Merger, all of the outstanding capital stock of Jerrick
in exchange for issuing Jerrick’s shareholders (the “Jerrick Shareholders”), pro-rata, a total of
In connection with the Merger, on the Closing
Date, GTPH and Kent Campbell entered into a Spin-Off Agreement (the “Spin-Off Agreement”), pursuant to which Mr. Campbell
purchased from GTPH (i) all of GTPH’s interest in Ashland Holdings, LLC, a Florida limited liability company, and (ii) all of GTPH’s
interest in Lil Marc, Inc., a Utah corporation, in exchange for the cancellation of
Upon closing of the Merger on February 5, 2016, the Company changed its business plan to that of Jerrick.
Effective February 28, 2016, GTPH entered into an Agreement and Plan of Merger (the “Statutory Merger Agreement”) with Jerrick, pursuant to which GTPH became the parent company of Jerrick Ventures, LLC, a wholly-owned operating subsidiary of Jerrick (the “Statutory Merger”) and GTPH changed its name to Jerrick Media Holdings, Inc. to better reflect its new business strategy.
On September 11, 2019, the Company acquired
On September 9, 2020, the Company filed a certificate of amendment with the Secretary of State of the State of Nevada to change our name to “Creatd, Inc.”, which became effective on September 10, 2020.
On June 4, 2021, the Company acquired
On July 20, 2021, the Company acquired
On January 9, 2023, the Company acquired an additional
Between October 21, 2020, and August 16, 2021,
the Company acquired
On October 3, 2021, the Company acquired an additional
On January 25, 2023, the Company acquired an additional
F-6
On March 7, 2022, the Company acquired
On August 1, 2022, the Company acquired
On February 3, 2023, the Company acquired an additional
On September 13, 2022, the Company acquired
On December 13, 2022, an investor entered into
a Subscription Agreement whereby it purchased from OG Collection, Inc., a subsidiary of the Company (“OG”),
February 1, 2023, an investor entered into a Subscription
Agreement whereby it purchased from OG Collection, Inc., a subsidiary of the Company (“OG”),
On May 30, 2023, the Company acquired an additional
On June 30, 2023, the Company acquired an additional
On July 28, 2023, the Company acquired an additional
Note 2 – Significant Accounting Policies and Practices
Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by the accounting principles generally accepted in the United States of America.
Basis of Presentation
The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and following the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or any other interim period or for any other future year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2022, included in the Company’s 2022 Annual Report on Form 10-K filed with the SEC. The balance sheet as of December 31, 2022, has been derived from audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.
F-7
Use of Estimates and Critical Accounting Estimates and Assumptions
The preparation of Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. The Company uses estimates in accounting for, among other items, revenue recognition, allowance for doubtful accounts, stock-based compensation, income tax provisions, excess and obsolete inventory reserve, and impairment of intellectual property.
Actual results could differ from those estimates.
Principles of consolidation
The Company consolidates all majority-owned subsidiaries, if any, in which the parent’s power to control exists. All consolidated subsidiaries report based on a year ending of December 31.
| Name of combined affiliate | State or other jurisdiction of incorporation or organization | Company Ownership Interest | ||||
| Jerrick Ventures LLC | % | |||||
| Abacus Tech Pty Ltd | % | |||||
| Creatd Ventures LLC | % | |||||
| CEOBloc LLC | % | |||||
| Dune Inc. | % | |||||
| Vocal, Inc. | % | |||||
| WHE Agency, Inc. | % | |||||
| OG Collection, Inc. | % | |||||
| Orbit Media LLC | % | |||||
As of September 30, 2023, Creatd Ventures, LLC (formerly Creatd Partners, LLC) is operating three DBAs for Brave Foods, Plant Camp, and Basis (formerly Denver Bodega, LLC).
All other previously consolidated subsidiaries have been dissolved.
All inter-company balances and transactions have been eliminated.
Fair Value of Financial Instruments
The fair value measurement disclosures are grouped into three levels based on valuation factors:
| ● | Level 1 – quoted prices in active markets for identical investments |
| ● | Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs) |
| ● | Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments) |
F-8
The Company’s Level 1 assets/liabilities include cash, accounts receivable, marketable trading securities, accounts payable, marketable trading securities, prepaid and other current assets, line of credit and due to related parties. Management believes the estimated fair value of these accounts at September 30, 2023 approximate their carrying value as reflected in the balance sheets due to the short-term nature of these instruments or the use of market interest rates for debt instruments.
The Company’s Level 2 assets/liabilities include certain of the Company’s notes payable. Their carrying value approximates their fair values based upon a comparison of the interest rate and terms of such debt given the level of risk to the rates and terms of similar debt currently available to the Company in the marketplace.
The Company’s Level 3 assets/liabilities include derivative liabilities. Inputs to determine fair value are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities.
Fair Value Measurements as of
September 30, 2023
| Total | Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
| Liabilities: | ||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
At times, cash balances may exceed the Federal
Deposit Insurance Corporation (“FDIC”) or Financial Claims Scheme (“FCS”) insurable limits. The Company has never
experienced any losses related to these balances. The uninsured cash balance as of September 30, 2023, was $
Concentration of Credit Risk and Other Risks and Uncertainties
The Company provides credit in the normal course of business. The Company maintains allowances for credit losses on factors surrounding the credit risk of specific customers, historical trends, and other information.
The Company operates in Australia and holds total assets of $
F-9
Property and Equipment
Estimated Useful Life (Years) | ||||
| Computer equipment and software | ||||
| Furniture and fixtures | ||||