Debt and Liabilities:
Operational and Financial Efficiency:
Creatd, Inc. (OTC: CRTD), a leading creator-first technology company, today announced record financial results for the second quarter ended June 30, 2024.
Over the past quarter, Creatd has made significant strides in empowering creators and entrepreneurs through investments in technologies like community publishing platform Vocal, and the AI-driven, archival company OG Collection, Inc. On the heels of the recently-announced HWAL transaction, we will continue to seek out collaborations with like-minded creator-first companies, particularly in the public markets and trading on the OTC.
Moving forward, mergers and acquisitions will be crucial for our growth strategy, adding to our portfolio of other creator-related assets. This approach enhances net equity, strengthens balance sheets, and creates value for investors. By investing across artificially-distressed assets, we ensure a solid foundation for exponential growth.
As our financials indicate, we have strengthened our balance sheet by reducing convertible debt a record 90%, from $12 million to an implied $1.5 million, with half of that held by insiders and affiliates. The remaining debt is on friendly terms.
Having nearly eliminated all debt, we are left with a number of payables and accrued tax liabilities. About 25% of these liabilities are taxes, while another 50% is owed to our largest vendor, Meta, with whom we have a ten-year relationship.
With approximately $3.7 million of these liabilities on a pro-forma basis, the Company will vigorously pursue its M&A strategy to create net equity in excess of $5 million, by acquiring approximately $9 million in value. The $9 million covers both the $3.7 million in liabilities, creating the required $5 million of net equity to uplist, while lowering the cash needed to raise to less than $5m.
Balance Sheet: The company had historical positive gross margins while reducing debt and payables, and delivering on the company’s strategy to improve net equity through future acquisitions and operational efficiencies. Most recently with its completed stock swap with Hollywall Entertainment, Inc (HWAL).
Listing Status: As of July 30, 2024, Creatd had 3,807,292 shares of common stock outstanding. The Company is NOT AND HAS NEVER BEEN classified as a shell company under Rule 405 of the Securities Act of 1933 and Rule 12b-2 of the Exchange Act of 1934, therefore enabling the sale of eligible shares pursuant to Rule 144A. The Company expects to be current on the OTC by August 12th.
Revenues & Operating Expenses: Revenues remained relatively flat quarter over quarter at approximately $400,000. The Company reported historically low compensation and general and administrative expenses of approximately $1 million, down 50% quarter over quarter, bringing the company closer than it has ever been to cash flow breakeven. The company reported a historic increase in gross margins by $700,000. The company expects operating expenses to drop by another 15% in Q3 and revenues to potentially uptick in Q4.
On a non-GAAP adjusted basis, excluding non-cash and one-time expenses, the company’s loss from operations during the sixth months ending June 30 fell by a record 85%, from $5.9 million in 2023 to just over $894,000 in 2024. Additionally, the operational expenses fell by a record 69% between the same period in 2023 and 2024, from $6.2 million to $1.8 million year over year.
On a GAAP adjusted basis, the company’s working capital deficit reduced by $8.2 million, a 38% improvement. This is largely attributed to the reduction in convertible notes.
On a GAAP adjusted basis, the company has had a record 90% improvement in net loss year over year, from $20.4 million to $1.9 million. The company is operating at its most efficient fundamental and technical level since inception, both creatively and financially.
View the filing here: https://www.otcmarkets.com/otcapi/company/financial-report/408495/content
To keep up with company updates, please join Creatd's Investor Slack.
Forward Looking Statements
Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “intends,” “plans,” “believes” and “projects”) may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. We caution that the factors described herein could cause actual results to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. This press release is qualified in its entirety by the cautionary statements and risk factor disclosure contained in our Securities and Exchange Commission filings.