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CREATD, INC.

Date Filed : Jan 10, 2023

As filed with the Securities and Exchange Commission on January 10,2023

RegistrationNo. 333-                 

 

 

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

 

FORMS-1

REGISTRATIONSTATEMENT UNDER

THESECURITIES ACT OF 1933

 

CREATD,INC.

(Exactname of registrant as specified in its charter)

 

Nevada   7819   87-0645394
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

 

419Lafayette Street

6thFloor

NewYork, NY 10003

(201)258-3770

(Address,including zip code and telephone number, including area code, of registrant’s principal executive offices)

 

JeremyFrommer

ChiefExecutive Officer

419Lafayette Street, 6th Floor

NewYork, NY 10003

Telephone:(201) 258-3770

(Name,address, including zip code and telephone number, including area code, of agent for service)

 

Copiesof all communications, including communications sent to agent for service, should be sent to:

 

Joseph M. Lucosky, Esq.

Scott E. Linsky, Esq.

Lucosky Brookman LLP

101 Wood Avenue South, 5th Floor

Iselin, NJ 08830

(732) 395-4400 

 

Approximatedate of commencement of proposed sale to the public:

Assoon as practicable after the effective date of this registration statement.

 

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under theSecurities Act of 1933 check the following box. ☒

 

Ifthis Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the followingbox and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

 

Indicateby 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 “large accelerated filer,” “accelerated filer,” “smallerreporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Acceleratedfiler ☐
Non-acceleratedfiler ☒ Smallerreporting company 
  Emerging growth company 

 

Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

 

Theregistrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until theregistrant shall file a further amendment which specifically states that this registration statement shall thereafter become effectivein accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such dateas the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. 

 

 

 

 

 

 

Theinformation in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registrationstatement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securitiesand we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION,DATED JANUARY 10, 2023

 

PRELIMINARYPROSPECTUS

 

 

 

11,056,636 Shares of Common Stock

 

This prospectus relates to the resale, from timeto time, of up to 11,056,636 shares (the “Shares”) of our common stock, par value $0.001 per share (“Common Stock”),by the selling stockholders identified in this prospectus under “Selling Stockholders” (the “Offering”), comprisedof:

 

  (i) up to  2,406,367 Shares, pursuant to securities purchase agreements the Company entered into and closed on with six (6) Selling Stockholders on July 25, 2022 (as amended, collectively, the “July Purchase Agreements”), which includes (a) up to 1,720,000 shares of Common Stock issuable upon conversion of debentures in the principal amount of $2,150,000 (the “Debentures”), (b) 1,075,000 shares of Common Stock issuable upon exercise of Series E Common Stock Purchase Warrants (the “Series E Warrants”), and (c) 1,075,000 Series F Common Stock Purchase Warrants (the “Series F Warrants,” and together with the Series E Warrants, the “July Warrants”),

 

  (ii) up to 1,817,019 Shares, which underly warrants, issued pursuant to that certain letter agreement dated November 18, 2022 (the “Letter Agreement”), between the Company and the respective holders of an aggregate of 471,953 warrants described in the Prospectus (the “November Warrants”), exercisable immediately, for a term of 60 months, at a price of $0.77, subject to customary adjustment provisions; and

 

  (iii) up to 4,333,250 Shares, pursuant to the securities purchase agreement the Company entered into and closed on October 24, 2022 with one accredited investor (the “October Investor”), whereby the October Investor purchased from the Company for an aggregate of $1,500,000 in subscription amount, an unsecured debenture in the principal amount of $1,666,650 (the “October Debenture”);  
     
  (iii) up to 2,500,000 Shares, pursuant to the securities purchase agreement the Company entered into and closed on December 12, 2022 with the October Investor, whereby the October Investor purchased from the Company for an aggregate of $750,000 in subscription amount, an unsecured debenture in the principal amount of $750,000 (the “December Debenture”);    

 

We are not selling any shares of our Common Stockunder this prospectus and will not receive any proceeds from the sale of the Shares. We will, however, receive proceeds from any warrantsthat are exercised through the payment of the exercise price in cash. The Selling Stockholders will bear all commissions and discounts,if any, attributable to the sale of the Shares. We will bear all costs, expenses and fees in connection with the registration of the Shares.

  

Our common stock is quoted on the OTCQB Marketplace operated by OTCMarkets Group Inc. (“OTCQB”) under the symbol “CRTD.” On January 9, 2023, the last reported sale price of ourcommon stock on OTCQB was $0.80 per share.

  

Investing in our securities involves risks.See “Risk Factors” beginning on page 12 of this prospectus. We and our board of directors are not making any recommendationregarding the exercise of your rights.

 

No securities may be sold without delivery ofthis prospectus and the applicable prospectus supplement describing the method and terms of the offering of such securities.

 

Neither the Securities and Exchange Commissionnor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus.Any representation to the contrary is a criminal offense.

 

The date of this prospectus is January 10, 2023.

 

 

 

 

TABLEOF CONTENTS

 

    Page
PROSPECTUS SUMMARY   1
RISK FACTORS   12
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS   26
USE OF PROCEEDS   27
CAPITALIZATION   28
MARKET FOR COMMON STOCK AND DIVIDEND POLICY   29
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   30
BUSINESS   46
MANAGEMENT   58
EXECUTIVE COMPENSATION   63
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS   66
PRINCIPAL STOCKHOLDERS   68
DESCRIPTION OF SECURITIES   71
PLAN OF DISTRIBUTION   72
LEGAL MATTERS   73
EXPERTS   73
WHERE YOU CAN FIND ADDITIONAL INFORMATION   73

 

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Unlessthe context requires otherwise, references in this prospectus to “Creatd,” “our company,” “we,” “our”“us” and similar terms refer to Creatd, Inc., a Nevada corporation, and its subsidiaries, unless the context otherwise requires.

 

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PROSPECTUSSUMMARY

 

Thefollowing summary highlights selected information contained in this prospectus. Because the following is only a summary, it does notcontain all of the information you should consider before investing in our securities. Before making an investment decision, you shouldcarefully read all of the information contained in this prospectus, including the risks described under “Risk Factors” andour consolidated financial statements and the related notes from our 2021 Annual Report and most recent Form 10-Q, before making an investmentdecision.

 

Overview

 

Creatd,Inc. provides economic opportunities to creators and brands by multiplying the impact of platforms, technology, and people.

 

TheCompany has four main revenue lines, all directly related to its flagship technology platform, Vocal. The business lines complement oneanother, creating a flywheel effect. Working together, they provide shared data and resources to holistically leverage and organicallygrow the Company. Revenues are generated from creator subscriptions, consumer product sales, branded content, and IP development. 

 

Creator-CentricStrategy

 

Creatd’snorth star metric is to empower creators by providing best-in-class tools, supportive communities, and opportunities for monetizationand audience expansion. This creator-first approach is the foundation of our culture and mission. 

 

CreatorSubscriptions

 

Creatd’smost scalable stream of revenues are derived from its flagship technology platform, Vocal. 

 

Vocalwas built to serve as a home base for creators. This robust, proprietary technology platform provides digital tools and resources, safeand curated communities, and monetization opportunities that enable creators to find a receptive audience and be rewarded for their content.Creators of all types call Vocal their home, from bloggers to social media influencers, to podcasters, founders, musicians, photographers,and more.

 

Sinceits initial launch in 2016, Vocal has grown to over 1.5 million registered creators and is one of the premier technology platforms forcontent creators of all shapes and sizes. Creators can opt to use Vocal for free, or upgrade to the premium membership tier, Vocal+.Upon joining Vocal, either as a freemium or premium member, creators can immediately begin to utilize Vocal’s storytelling toolsto create and publish their stories, as well as benefit from Vocal’s monetization features. Creatd facilitates creators’monetization on Vocal in many ways, including i) rewarding creators for each ‘read’ their story receives; ii) via Vocal Challenges,or writing contests through which creators can win cash and other rewards; iii) by awarding Bonuses; iv) by connecting creators withbrands for opportunities to collaborate on Vocal for Brands branded content campaigns; v) through ‘Subscribe,’ which enablescreators to receive payment directly from their audience via monthly subscriptions and one-off microtransactions; vi) via Vocal’sAmbassador Program, which enables creators to receive additional rewards whenever they refer a new Vocal+ member. The Vocal app is availablefor both iOS and Android on the Apple App store and the Google Play store.

 

Vocal’sproprietary technology is built on Keystone, the same underlying open-source framework used by industry leaders in the software as aservice (SaaS) space. Some of the differentiating elements of Vocal’s technology are speed, sustainability, and scalability. TheCompany continues to invest heavily in research and development to continuously improve and innovate its platform, with the goal of optimizingthe user experience for creators, brands and their audiences. Additionally, the Vocal platform and its underlying technology maintainan advantageous capital-light infrastructure. By using cloud service providers and data segment specialists, we are able to focus onbuilding the platform, community, and revenue rather than building and maintaining the costly internal infrastructures that have materiallyaffected so many legacy media platforms.

 

Vocal’stechnology has been specifically designed to significantly scale without a material corresponding increase in operational costs. Whileour users can embed rich media, such as video, audio, and product links, into their Vocal stories, the rich media content is hosted elsewhere(such as YouTube, Instagram, Vimeo, Shopify, and Spotify). The Vocal platform can accommodate content of all kinds without bearing thefinancial or operational costs associated with hosting the media itself. Creatd maintains a number of partnerships and initiatives withthe primary content distribution and hosting platforms. In addition to the benefits this framework affords to the Company, it providesthe additional benefit to our content creators, in that a creator can increase their monetization; for example, a creator can embed theirYouTube video into a Vocal story and thus derive earnings from both platforms when their video is viewed.

 

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ConsumerProducts Group

 

Creatd’sportfolio of internally owned and operated e-commerce businesses and associated technology and infrastructure make up the majority ofthe company’s second most scalable revenue line. The Company supports founders by providing a host of services including designand development, marketing and distribution, and go-to-market strategies. The Company expects to broaden its portfolio through the acquisitionof up and coming brands that are aligned and easily consolidated into its shared supply chain, resources, and infrastructure. 

 

Thisportfolio includes:

 

  Camp, a direct-to-consumer (DTC) food brand which creates healthy upgrades to classic comfort food favorites. Each of Camp’s products are created with servings of vegetables and contain Vitamins A, C, D, E, B1 + B6. Since its launch in 2020, Camp continues to add new products to its line of healthy, veggie-based, family-friendly foods, with flavors including Classic Cheddar Mac ‘N’ Cheese, White Cheddar Mac ‘N’ Cheese, Vegan Cheezy Mac, and Twist Veggie Pasta.

 

  Dune Glow Remedy (“Dune”), which the Company purchased and brought to market in 2021, is a beverage brand focused on promoting wellness and beauty from within. Each beverage in Dune’s product line is meticulously crafted with functional ingredients that nourish skin from the inside out and enhance one’s natural glow. During 2022, Dune has continued to advance its retail and wholesale distribution strategy, securing numerous partnerships including with lifestyle retailer Urban Outfitters, Equinox, and the Los Angeles-based Erewhon Market.

 

  Basis, a hydrating electrolyte drink mix formulated using rehydration therapies developed by the World Health Organization. Acquired by the Company in first quarter 2022, Basis has a history of strong sales volume both on the brand’s website as well as through third-party distribution channels such as Amazon.

 

  Brave, a plant-based food company that provides convenient and healthy breakfast food products. On September 13, 2022, the Company acquired 100% of the membership interests of Brave Foods, LLC, a Maine limited liability company (“Brave”). What started as a search for a better morning routine evolved into a business serving thousands of go-getters of every type.

 

BrandedContent

 

Thebranded content revenue line is driven primarily by its Vocal for Brands offering, the Company’s internal content studio. The businessline works with premier brands developing best-in-class organic marketing campaigns. In addition to content creation, the Company generatesrevenues from its influencer and performance marketing agency opportunities.

  

Brandshave a story to tell. They leverage Vocal’s creator communities to help them tell it. Vocal for Brands’ content marketingstudio specializes in pairing leading brands with Vocal creators, as well as discovering new talent and introducing them to the Vocalplatform. The branded content business produces marketing campaigns on the platform that are non-interruptive, engaging, and direct-responsedriven. Additionally, brands can opt to collaborate with Vocal on sponsored Challenges, prompting the creation of thousands of high-qualitystories that are centered around the brand’s mission and further disseminated through creators’ respective social channelsand promotional outlets. Vocal for Brands campaigns leverage Vocal’s first-party audience insights, which enables the creationof highly targeted, segmented audiences and optimized campaign results.

 

IPDevelopment and Production

 

Creatd’sfourth revenue stream is driven by partnering with its top creators to produce stories for TV, film, podcasts, and print. The Vocal platformis perpetually generating intellectual property sourced and curated by a combination of human let moderation and machine learning models.With millions of compelling stories in its midst, Creatd’s Vocal technology surfaces the best candidates for transmedia adaptations,through a deep analysis of community, creator, and audience insights.  

 

In2022, Creatd announced a series of newly released and upcoming production projects, including:

 

  “Write Here, Write Now,” the Company’s first-ever podcast showcasing select Vocal creators and stories; a partnership with UK-based publisher, Unbound, for the publication of books featuring stories sourced from Vocal; the formation of a new graphic novel development arm which in Fall 2022 will release its first title, Steam Wars, created by artist and independent filmmaker Larry Blamire.

 

  OG Gallery: The OG Collection is an extensive library of original artwork and imagery from the archives of some of the most iconic magazines of the 20th century. OG Gallery is an exploratory initiative aimed at identifying opportunities to propel the OG Collection into a new technological sphere: the NFT marketplace.

 

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Applicationof First-Party Data

 

Creatd’sshared business intelligence and marketing teams identify and target individual creators, communities, and brands, utilizing empiricaldata harnessed from the Vocal technology platform. The team’s ability to apply its proprietary first-party data works to reduceacquisition costs for new creators and to help provide brands with conversions and an ideal targeted audience. In this way, our abilityto apply first-party data is one of the value-drivers for the Company across its four business pillars. The internal teams work acrossthe Company’s portfolio of technology product and service revenue lines.

 

Creatduses its first party data to improve the Vocal platform. Specifically, data helps understand the behaviors and attributes that are commonamong the creators, brands, and audiences within the platform’s ecosystem. Pairing first-party Vocal data with third-party datafrom distribution platforms such as Instagram, Tiktok, Twitter, and Snapchat provide a more granular profile of creators, brands, andaudiences. It is through generating this valuable first-party data that the Company can continually enrich and refine its targeting capabilitiesfor branded content marketing and creator acquisition, and specifically, to reduce creator acquisition costs (CAC) and subscriber acquisitioncosts (SAC).

 

CompetitiveAdvantage

 

Theidea for Vocal came as a response to what Creatd’s founders recognized as systemic flaws inherent to the digital media industryand its operational infrastructures. The depreciating value of digital media business models built on legacy technology platforms thatdid not efficiently access and apply data, created a unique opportunity for the development of a new type of creator-centric platform.Key to building a platform that could appeal to a global community was utilizing that data to create a win-win proposition for all constituentsincluding creators, audiences and the brands that want to access them. The proprietary nature of Creatd’s technology and its processgive the company a competitive advantage in acquiring undervalued technology assets that can be rapidly assimilated into the greatercollective, thus exponentially driving future EBITDA.

 

Creatd’sfounders built the Vocal platform upon the general thesis that a closed and safe ecosystem utilizing first-party data to increase efficienciescould create a sustainable and defensible business model. Vocal was strategically developed to provide value for content creators, readers,and brands, and to serve as a home for the ever-increasing amount of digital content being produced and the libraries of digital assetslying dormant.

 

AcquisitionStrategy

 

Creatd’shybrid finance and design culture is key to its acquisition strategy. Acquisition targets are companies that meet a set of opportunisticor financial standards or that are part of specific digital environments. Transactions are mainly accretive and targets can seamlesslyintegrate into Creatd’s existing revenue lines. Creatd will continue to make strategic acquisitions when presented with opportunitiesthat are in the interest of long term shareholder value.

 

RecentDevelopments

 

December 2022 SecuritiesPurchase Agreement

 

On December 12, 2022,the Company entered into and closed a securities purchase agreement (the “Purchase Agreement”) with one accredited investor(the “Investor”), whereby the Investor purchased from the Company for an aggregate of $750,000 in subscription amount, anunsecured debenture in the principal amount of $750,000 (the “Debenture”). The Company and the Investor also entered intoa registration rights agreement pursuant to the Purchase Agreement.

 

The Debenture has a termof six months with a maturity date of June 12, 2023, which may be extended by six months at the Company’s option subject to certainconditions and monthly redemption options at the election of the holder and are convertible into shares of Common Stock at a conversionprice of $0.20 per share, subject to adjustment upon certain events.

 

November 2022 WarrantAmendment and Issuance

 

On November 18, 2022, the Company entered intothat certain letter agreement dated November 18, 2022 (the “Letter Agreement”) with the respective holders of an aggregateof 471,953 warrants issued as placement agent fees in connection with the Company’s entry into securities purchase agreements with33 accredited investors, whereby, at the closing, the Investors agreed to purchase from the Company an aggregate of (i) 7,778 shares ofthe Company’s Series E Convertible Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”); and(ii) 2,831,721 warrants to purchase shares of the Company’s common stock, pursuant to which the exercise price of such warrantswas amended and such warrants were immediately exercised. Additionally, pursuant to the Letter Agreement, the Company issued to such warrantholders 471,953 new warrants, exercisable immediately, for a term of 60 months, at a price of $0.77 per share, subject to customary adjustmentprovisions. As a result of the triggering of such adjustment provisions, the number of warrants increased to 1,817,019 and the exerciseprice decreased to $0.20.

 

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Appointmentof Erica Wagner to Board; Resignation of Joanna Bloor

 

OnNovember 16, 2022, Erica Wagner was appointed to the Company’s Board of Directors. Ms. Wagner, age 55, joins the Board with over25 years of experience as a journalist, broadcaster, editor and author. From 2016 through 2021, Ms. Wagner was a Lecturer, and laterSenior Lecturer, at Goldsmith’s College, University of London, where she taught creative writing. Ms. Wagner was previously LeadEditorial Innovator for Creatd, Inc., has previously and currently held roles as a freelance editor, journalist, and contributing writerfor numerous outlets both in the U.K. and the U.S., including The New StatesmanHarper’s Bazaar, the Economist,the Observer, the New York Times. Ms. Wagner is also a freelance literary and creative consultant for Chanel,as well as the host of their branded podcast. She has twice been a judge of the Booker Prize and has been judge and Chair of the GoldsmithsPrize. In 2015, Ms. Wagner was awarded an Honorary PhD by the University of East Anglia, and currently Goldsmith’s College DistinguishedWriters’ Centre Fellow. She has an undergraduate degree from University of Cambridge, a Master’s degree from Universityof East Anglia, and an Honorary PhD from the University of East Anglia. As a member of Creatd’s board of directors, Ms. Wagnerwill add significant expertise with respect to informing the Company’s literary and creative direction, having worked closely withnews organizations, commercial companies and publishers, to advise their creative direction and its application towards commercial success.

OnNovember 17, 2022, the Board received notice from Joanna Bloor of her resignation as a director and from all committees of the Boardon which she served, effective as of such date. Such resignation is not the result of any disagreement with the Company on any matterrelating to the Company’s operations, policies or practices.

 

Appointmentof Peter Majar to the Board; Resignation of Lorraine Hendrickson

 

OnNovember 2, 2022, the Board appointed Peter Majar to the Board. Mr. Majar, age 55, Founder and Managing Member of Majar Advisors, combinesover 25 years of experience in investment banking, financial services and technology, and management consulting, having held numeroussenior management and executive positions including Chief Financial Officer, Head of Financial Technology, Head of Strategy, as wellas several Managing Director positions. From 2015 to 2017, Mr. Majar served as Managing Director in Investment Banking and co-Head ofDiversified Financial Services at Piper Jaffray & Co. (now Piper Sandler Companies). From 2017 to 2018, Mr. Majar provided managementconsulting services through his self-established firm, Majar Advisors LLC, which remains in operation through the present. From 2018to 2021, Mr. Majar served as Managing Director, Head of Financial Technology at New York-based investment banking and financial advisoryfirm, TAP Advisors, LLC. Between 2021 and 2022, Mr. Majar served as Chief Financial Officer at information technology company Hoyos IntegrityCorp., having previously served as a longtime advisor to the firm. Mr. Majar holds an undergraduate degree from University of Washingtonand an MBA from Columbia University. As a board director, Mr. Majar will add considerable value, including through his comprehensiveand diverse investment management experience, deep knowledge of financial technology services and transactions, and broad experiencewith corporate development, strategy consulting, and executive leadership.

 

OnNovember 1, 2022, the Board received notice from Lorraine Hendrickson of her resignation as a director and from all committees of theBoard on which she served, effective as of such date. Ms. Hendrickson’s resignation as a member of the Board is not the resultof any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

 

NasdaqDelisting 

 

OnSeptember 2, 2022, the Company received a letter from the staff of The Nasdaq Capital Market notifying the Company that the Nasdaq HearingsPanel has determined to delist the Company’s common stock from the Exchange, based on the Company’s failure tocomply with the listing requirements of Nasdaq Rule 5550(b)(1) as a result of the Company’s shareholder equity deficit for theperiod ended June 30, 2022, as demonstrated in Company’s Quarterly Report on Form 10-Q filed on August 15, 2022, following theCompany having not complied with the market value of listed securities requirement in Nasdaq Rule 5550(b)(2) on March 1, 2022, whilethe Company was under a Panel Monitor, as had been previously disclosed. Suspension of trading in the Company’s shares onthe Exchange became effective at the opening of business on September 7, 2022, at which time the Company’s common stock, underthe symbol “CRTD,” and publicly-traded warrants, under the symbol “CRTDW,” was quoted on the OTCPink marketplaceoperated by OTC Markets Group Inc.  

 

Followingpassage of the proscribed 15-day time period for appeal as stated in the Letter, on October 26, 2022, Nasdaq completed the delistingby filing a Form 25 Notification of Delisting with the Securities and Exchange Commission.

 

TheCompany’s common stock, under the symbol “CRTD,” is quoted on the OTCQB marketplace operated by OTC Markets Group Inc.effective as of September 26, 2022. The Company’s publicly-traded warrants, under the symbol “CRTDW,” are quoted onthe OTCPink marketplace operated by OTC Markets Group Inc.

 

SecuritiesPurchase Agreement; Side Letter

 

On October 24, 2022, the Company entered into and closed a securitiespurchase agreement (the “Purchase Agreement”) with one accredited investor (the “Investor”), whereby the Investorpurchased from the Company for an aggregate of $1,500,000 in subscription amount, an unsecured debenture in the principal amount of $1,666,650(the “Debenture”). The Company and the Investor also entered into a registration rights agreement (each, a “RegistrationRights Agreement”) pursuant to the Purchase Agreement.

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TheDebenture has an original issue discount of 10%, has a term of six months with a maturity date of April 24, 2023, may be extended bysix months at the Company’s option subject to certain conditions, and are convertible into shares of Common Stock at a conversionprice of $0.20 per share, subject to adjustment upon certain events.

 

Inconnection with its entry into the Purchase Agreement and issuance of the Debenture, the Company also entered into a side letter agreement(the “Letter Agreement”) with the holders of debentures of the Company, the Series C Warrants and Series D Warrants issuedas of May 31, 2022 (the “May Investors”) and the holders of debentures of the Company, the Series E Warrants and Series FWarrants issued as of July 25, 2022 (the “July Investors”). Pursuant to the Letter Agreement each of the May Investors andthe July Investors have entered into a lock-up agreement whereby they may not sell any such debentures, warrants, the shares into whichsuch debentures may be converted, or certain shares underlying such warrants until the date that is 30 days after the date on which theregistration statement registering for resale the shares of the Company’s common stock underlying the Debenture is declared effectiveby the Securities and Exchange Commission. Additionally, the Letter Agreement, provides that the May Investors and July Investors haveagreed to a further lock up of such shares for a further 30 days upon the receipt of a certain amount of the proceeds from future potentialissuances of debentures, common stock or similar securities by the Company. Further additionally, pursuant to the Letter Agreement, theMay Investors and the July Investors have agreed to exchange and return for cancellation the Series C Warrants, Series D Warrants, SeriesE Warrants and Series F Warrants, receiving replacement warrants from the Company (the “Replacement Warrants”), in considerationfor (i) the Company’s payment of $750,000 of the proceeds from the sale of the Debenture to the May Investors and July Investorson a pro rata basis and (ii) the Company’s agreement to pay, on a pro rata basis to the May Investors and July Investors, the greaterof (x) $750,000 and (y) 50% of the gross proceeds raised in a subsequent financing. The Replacement Warrants reflect a reduction in thenumber of Series C and Series D Warrants from 1,550,000 in each class to 1,536,607 in each class and a reduction in the number of SeriesE and Series F Warrants from 1,075,000 in each class to 807,143 in each class, and the initial exercise date for the Replacement Warrantsare unchanged from the date as set forth in the respective exchanged Series C, Series D, Series E or Series F Warrant.

 

CommonStock Purchase Agreement, Securities Purchase Agreement and Promissory Note

 

OnOctober 20, 2022, the Company entered into a Common Stock Purchase Agreement (the “Investment Agreement”) with an otherwiseunaffiliated third party (the “Investor”). Pursuant to the terms of the Investment Agreement, for a period of thirty-six(36) months commencing on the trading day immediately following date of effectiveness of the Registration Statement (as defined below),the Investor purchase up to $15,000,000 of the Company’s common stock, par value $0.001 per share (the “Shares”), pursuantto Drawdown Notices (as defined below), covering the Registrable Securities (as defined below). The purchase price of the Shares underthe Investment Agreement is equal to 82% of the lowest volume weighted average price (VWAP) during the last ten trading days after theCompany delivers to the Investor a Put notice (a “Drawdown Notice”) in writing requiring Investor to purchase shares of theCompany, subject to the terms of the Investment Agreement.

 

OnOctober 20, 2022, the Company also entered into a Securities Purchase Agreement (the “Purchase Agreement”) with the Investor,pursuant to which the Company issued to the Investor on that date a Promissory Note (the “Note”) in the principal amountof $300,000 in exchange for a purchase price of $255,000, which the Investor funded on October 20,2022.  The proceeds of the Notewill be used by the Company for general working capital purposes.  

 

TheNote bears interest at the rate of 10% per annum.  Starting on the fifth month anniversary of the funding of the Note, and for thenext six months thereafter, the Company will make seven equal monthly payments of $47,142.85 to the Investor.

 

OnOctober 20, 2022, in connection with the entry by the Company and the Investor into the economic agreements, (i.e., the InvestmentAgreement, the Purchase Agreement, and the Note and the funding thereof), the Company issued 800,000 shares of its common stock to theInvestor.

 

SecuritiesPurchase Agreement

 

OnSeptember 15, 2022, Creatd, Inc., entered into a securities purchase agreement (the “Purchase Agreement”) with five accreditedinvestors resulting in the raise of $800,000 in gross proceeds to the Company. Pursuant to the terms of the Purchase Agreement, the Companyagreed to sell in a registered direct offering (the “Offering”) an aggregate of 4,000,000 shares of the Company’s commonstock, par value $0.001 per share (the “Common Stock”). In a concurrent private placement, the Company issued to such investorswarrants to purchase up to 4,000,000 shares of Common Stock, representing 100% of the shares of common stock purchased in the Offering(the “Warrants”). The Warrants and the shares of common stock issuable upon the exercise of the Warrants (the “WarrantShares”) are not being registered under the Securities Act of 1933, as amended.

 

TheOffering is expected to close on or about September 19, 2022, subject to the satisfaction of customary closing conditions as set forthin the Purchase Agreement. The Company expects the gross proceeds from the Offering to be $800,000, before deducting Offering expenses,which will be used for general corporate purposes, including working capital.

 

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Theshares of Common Stock were offered and sold by the Company pursuant to a prospectus supplement, which will be filed with the Securitiesand Exchange Commission in connection with a takedown from the Company’s effective shelf registration statement on Form S-3, whichwas filed with the Commission on November 25, 2020 and subsequently declared effective on April 23, 2021 (File No. 333-250982) (the “ShelfRegistration Statement”).

 

TheWarrants are immediately exercisable for a term of five years until September 15, 2027. The Warrants are exercisable at an exercise priceof $0.20, subject to adjustment upon certain events. The Warrants provide for cashless exercise to the extent that there is no registrationstatement available for the underlying shares of Common Stock. The shares underlying the Warrants are to be registered within 10 tradingdays of the date of the Purchase Agreement.

 

Therepresentations and warranties contained in the Purchase Agreement were made by the parties to, and solely for the benefit of, the otherin the context of all of the terms and conditions of the Purchase Agreement and in the context of the specific relationship between theparties. The provisions of the Purchase Agreement, including the representations and warranties contained therein, are not for the benefitof any party other than the parties to the Purchase Agreement. The Purchase Agreement is not intended for investors and the public toobtain factual information about the current state of affairs of the parties.

 

RestructuringAgreement

 

OnSeptember 15, 2022, in connection with the Offering, the Company entered into an agreement with the holders of certain of the Company’spreviously issued securities (the “Restructuring Agreement”).

 

TheRestructuring Agreement, among other things, modified certain provisions of the following securities of the Company:

 

(i)Original Issue Discount Senior Convertible Debentures issued on May 31, 2022 (the “May 2022 Debentures”);

 

(ii)Original Issue Discount Senior Convertible Debentures issued on July 25, 2022 (the “July 2022 Debentures” and, together with the May 2022 Debentures, the “Debentures”);

 

(iii)Common Stock Purchase Warrants issued on February 28, 2022 (the “February 2022 Warrants”);

 

(iv)Common Stock Purchase Warrants issued on March 9, 2022 (the “March 2022 Warrants”);

 

(v)Series C Common Stock Purchase Warrants issued on May 31, 2022 (the “Series C Warrants”);

 

(vi)Series D Common Stock Purchase Warrants issued on May 31, 2022 (the “Series D Warrants”);

 

(vii)Series E Common Stock Purchase Warrants issued on July 25, 2022 (the “Series E Warrants”);

 

(viii)Series F Common Stock Purchase Warrants issued on July 25, 2022 (the “Series F Warrants” and, together with the February 2022 Warrants, the March 2022 Warrants, Series C Warrants, Series D Warrants and Series E Warrants, the “Restructured Warrants”);

   

Pursuantto the Restructuring Agreement, the Company and the Holders agreed to, among other things, to (i) reduce the conversion price of theDebentures down to $0.20, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similartransactions of the Common Stock; (ii) reduce the exercise price of the Restructured Warrants down to $0.20, subject to adjustment forsubject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of theCommon Stock; (iii) extend the maturity dates for the Debentures to March 31, 2023; (iv) permit the Company’s contemplated rightsoffering to proceed, provided that the per share offering price in the rights offering is not less than $0.20; and (v) require that theCompany’s cash burn rate not exceed $600,000 per month; provided, however, that with the prior written consent of a majority ininterest of the Holders, such permitted monthly burn rate can be increased by $150,000, provided such additional amount is used for marketingpurposes.

 

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Additionally,in connection with the Restructuring Agreement, (i) the Company entered into a Registration Rights Agreement (“Registration RightsAgreement”), providing for the filing of a registration statement covering the Restructured Warrants and shares underlying theWarrants by not later than 10 trading days after the date of the Registration Rights Agreement or the earliest practical date on whichthe Company is permitted by Commission guidance to file such registration statement; (ii) the Company and its subsidiaries entered intoa Security Agreement (the “Security Agreement”), whereby the Company granted a first priority security interest in all oftheir respective assets to the Holders and (iii) the subsidiaries of the Company delivered a guarantee (the “Guarantee”)in favor of the Holders whereby each such subsidiary guaranteed the full payment and performance of all obligations of the Company pursuantto the Debentures.

 

Eachof our directors and officers have entered into lock-up agreements (the “Lock-up Agreements”) in favor of the Holders, wherebythey have agreed not to offer, sell, agree to sell, directly or indirectly, or otherwise dispose of any shares of Common Stock or anysecurities convertible into or exchangeable for shares of Common Stock without the prior written consent of the Holders for a periodof 180 days after the date of the Restructuring Agreement. The Lock-up Agreements provide limited exceptions and their restrictions maybe waived at any time by the Holders.

 

Resignationof Brad Justus

 

OnSeptember 21, 2022, the Board of Directors of Creatd, Inc. received notice from Brad Justus of his resignation as a member of the Board,chair of the Nominating & Corporate Governance Committee, a member of the Audit Committee and a member of the Compensation Committee,with such resignation to become effective on September 30, 2022. Such resignation is not the result of any disagreement with the Companyon any matter relating to the Company’s operations, policies or practices.

 

Resignationof Chief Executive Officer and Director

 

OnAugust 9, 2022, Laurie Weisberg, the Company’s Chief Executive Officer and a member of the Board, notified the Company of her intentionto resign from the positions of Chief Executive Officer, director, and any other positions held with the Company or any of its subsidiaries,regardless of whether Ms. Weisberg had been appointed. Such resignations are to become effective on a date to be determined followingfurther discussion with the Board, but in no event later than August 31, 2022. On September 2,2022, the Company entered into an Executive Separation Agreement with Laurie Weisberg the Company’s Chief Executive Officer andmember of the Board of Directors setting forth the terms and conditions related to the Executive’s resignation for good reasonas Chief Executive Officer, Director and any other positions held with the Company or any subsidiary.

 

Appointmentof Director

 

Effectiveupon Ms. Weisberg’s resignation as a director, Justin Maury, currently the Company’s President and Chief Operating Officer,will be appointed to the Board, pursuant to the Board’s approval.

 

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JustinMaury

 

Mr.Maury has served as our President since January 2019 and was appointed Chief Operating Officer in August 2021. A full-stack designerand product developer by training, Mr. Maury partnered with Jeremy Frommer and founded the Company in 2013, having brought with him 10years of experience in the creative industry. Since joining Creatd in 2013, Mr. Maury has been an instrumental force in the Company’sbusiness and revenue expansion, and has overseen the Company’s product development since inception, including overseeing the design,development, launch, and ongoing growth of the Company’s flagship product, Vocal, the innovative creator that, under Mr. Maury’sleadership, has grown to a community of over 1.5 million users with a total audience reach of over 175 million.

 

Asa director, we believe Mr. Maury will add considerable value, including through by providing a unique perspective into Creatd’sproduct performance and evolution and by providing invaluable direct input to help guide the Company’s ongoing refinement of itstechnology roadmap and maturation of its business model.

 

Triggerof Price Reset

 

OnJuly 29, 2022, the Company announced that it was not moving forward with its previously announced Rights Offering. In doing so, it triggereda price reset in the July 2022 Financing and the May 2022 Securities Purchase Agreement. As a result of this price reset, the May 2022Securities Purchase Agreement debentures now have a conversion price of $1.00, and both the Series C and Series D warrants have exerciseprices of $0.96. As a result of the price reset, the July 2022 Financing debentures now have a conversion price of $1.25, and both theSeries E and Series F warrants have exercise prices of $1.01.

 

July2022 Financing

 

OnJuly 25, 2022 (the “Effective Date”), the Company entered into and closed securities purchase agreements (each, a “PurchaseAgreement”) with five accredited investors (the “Investors”), whereby the Investors purchased from the Company foran aggregate of $1,935,019 in subscription amount (i) debentures in the principal amount of $2,150,000 (the “Debentures”);(ii) 1,075,000 Series E Common Stock Purchase Warrants to purchase shares of the Common Stock (the “Series E Warrants”);and (iii) 1,075,000 Series F Common Stock Purchase Warrants to purchase shares of Common Stock (the “Series F Warrants”,and collectively with the Series E Warrants, the “Warrants”). The Company and the Investors also entered into registrationrights agreements (each, a “Registration Rights Agreement”) pursuant to the Purchase Agreement.

 

TheDebentures have an original issue discount of 10%, have a maturity date of November 30, 2022, may be extended by six months at the Company’soption subject to certain conditions, and are convertible into shares of Common Stock at a conversion price of $2.00 per share, subjectto adjustment upon certain events including a one-time adjustment to the price of the Common Stock offered in the Rights Offering (asdefined therein), with such adjusted conversion price not to be lower than $1.25.

 

TheWarrants are immediately exercisable for a term of five years until July 25, 2027. The Series E Warrants are exercisable at an exerciseprice of $3.00, subject to adjustment upon certain events including a one-time adjustment to the price of the Common Stock offered inthe Rights Offering, with such adjusted exercise price not to be lower than $1.01. The Series F Warrants are exercisable at an exerciseprice of $6.00 subject to adjustment upon certain events including a one-time adjustment to the price of the Common Stock offered inthe Rights Offering, with such adjusted exercise price not to be lower than $1.01. The Warrants provide for cashless exercise to theextent that there is no registration statement available for the underlying shares of Common Stock. The shares underlying the Debentures,the Series E Warrants and the Series F Warrants are to be registered within 90 days of the Effective Date.

 

Therepresentations and warranties contained in the Purchase Agreement were made by the parties to, and solely for the benefit of, the otherin the context of all of the terms and conditions of the Purchase Agreement and in the context of the specific relationship between theparties. The provisions of the Purchase Agreement, including the representations and warranties contained therein, are not for the benefitof any party other than the parties to the Purchase Agreement. The Purchase Agreement is not intended for investors and the public toobtain factual information about the current state of affairs of the parties.

 

Additionally,in connection with the Purchase Agreements, the subsidiaries of the Company delivered a guarantee (the “Guarantee”) in favorof the Investors whereby each such subsidiary guaranteed the full payment and performance of all obligations of the Company pursuantto the Purchase Agreement.

 

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May2022 Securities Purchase Agreement

 

OnMay 31, 2022, the Company entered into and closed securities purchase agreements (each, a “Purchase Agreement”) with eightaccredited investors (the “Investors”), whereby the Investors purchased from the Company for an aggregate of $3,600,036 insubscription amount (i) debentures in the principal amount of $4,000,000 (the “Debentures”); (ii) 2,000,000 Series C CommonStock Purchase Warrants to purchase shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”)(the “Series C Warrants”); and (iii) 2,000,000 Series D Common Stock Purchase Warrants to purchase shares of Common Stock(the “Series D Warrants”, and collectively with the Series C Warrants, the “Warrants”). The Company and the Investorsalso entered into registration rights agreements (each, a “Registration Rights Agreement”) pursuant to the Purchase Agreement.

 

TheDebentures have an original issue discount of 10%, have a term of six months with a maturity date of November 30, 2022, may be extendedby six months at the Company’s option subject to certain conditions, and are convertible into shares of Common Stock at a conversionprice of $2.00 per share, subject to adjustment upon certain events including a one-time adjustment to the price of the Common Stockoffered in the Rights Offering (as defined therein), with such adjusted conversion price not to be lower than $1.00.

 

TheWarrants are exercisable for a term of five years from the initial exercise date of November 30, 2022, until November 30, 2027. The SeriesC Warrants are exercisable at an exercise price of $3.00, subject to adjustment upon certain events including a one-time adjustment tothe price of the Common Stock offered in the Rights Offering, with such adjusted exercise price not to be lower than $0.96. The SeriesD Warrants are exercisable at an exercise price of $6.00 subject to adjustment upon certain events including a one-time adjustment tothe price of the Common Stock offered in the Rights Offering, with such adjusted exercise price not to be lower than $0.96. The Warrantsprovide for cashless exercise to the extent that there is no registration statement available for the underlying shares of Common Stock.The shares underlying the Debentures, the Series C Warrants and the Series D Warrants are to be registered within 90 days of the EffectiveDate.

 

Additionally,in connection with the Purchase Agreements, the subsidiaries of the Company delivered a guarantee (the “Guarantee”) in favorof the Investors whereby each such subsidiary guaranteed the full payment and performance of all obligations of the Company pursuantto the Purchase Agreement.

 

TheDebentures, Warrants, Common Stock underlying the Debentures and the Common Stock underlying the Warrants were not registered under theSecurities Act, but qualified for exemption under Section 4(a)(2) and Rule 506 promulgated thereunder. The Company is relying on thisexemption from registration for private placements based in part on the representations made by Investors, including representationswith respect to each Investor’s status as an accredited investor, as such term is defined in Rule 501(a) of the Securities Act,and each Investor’s investment intent.

 

OurCorporate History

 

Creatd,Inc., formerly Jerrick Media Holdings, Inc. (“we,” “us,” the “Company,” or “Creatd”),is a technology company focused on the development of digital communities, marketing branded digital content, and e-commerce opportunities.Creatd’s content distribution platform, Vocal, delivers a robust long-form, digital publishing platform organized into highly engagedniche-communities capable of hosting all forms of rich media content. Through Creatd’s proprietary algorithm dynamics, Vocal enhancesthe visibility of content and maximizes viewership, providing advertisers access to target markets that most closely match their interests.

 

TheCompany was originally incorporated under the laws of the State of Nevada on December 30, 1999 under the name LILM, Inc. The Companychanged its name on December 3, 2013 to Great Plains Holdings, Inc. (“GTPH”) as part of its plan to diversify its business.

 

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OnFebruary 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 ofthe outstanding capital stock of Jerrick in exchange for issuing Jerrick’s shareholders (the “Jerrick Shareholders”),pro-rata, a total of 475,000 shares of GTPH’s common stock. In connection therewith, GTPH acquired 33,415 shares of Jerrick’sSeries A Convertible Preferred Stock (the “Jerrick Series A Preferred”) and 8,064 shares of Series B Convertible PreferredStock (the “Jerrick Series B Preferred”).

 

Inconnection 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 liabilitycompany, and (ii) all of GTPH’s interest in Lil Marc, Inc., a Utah corporation, in exchange for the cancellation of 13,030 sharesof GTPH’s Common Stock held by Mr. Campbell. In addition, Mr. Campbell assumed all debts, obligations and liabilities of GTPH,including any existing prior to the Merger, pursuant to the terms and conditions of the Spin-Off Agreement.

 

Uponclosing of the Merger on February 5, 2016, the Company changed its business plan to that of Jerrick.

 

EffectiveFebruary 28, 2016, GTPH entered into an Agreement and Plan of Merger (the “Statutory Merger Agreement”) with Jerrick, pursuantto which GTPH became the parent company of Jerrick Ventures, LLC, a wholly-owned operating subsidiary of Jerrick (the “StatutoryMerger”) and GTPH changed its name to Jerrick Media Holdings, Inc. to better reflect its new business strategy.

 

OnSeptember 11, 2019, the Company acquired 100% of the membership interests of Seller’s Choice, LLC, a New Jersey limited liabilitycompany (“Seller’s Choice”), a digital e-commerce agency.

 

OnSeptember 9, 2020, the Company filed a certificate of amendment with the Secretary of State of the State of Nevada to change our nameto “Creatd, Inc.”, which became effective on September 10, 2020.

 

OnJune 4, 2021, the Company acquired 89% of the membership interests of Plant Camp, LLC, a Delaware limited liability company (“PlantCamp”), which the Company subsequently rebranded as Camp. Plant Camp is a direct-to-consumer (DTC) food brand which creates healthyupgrades to classic comfort food favorites. The results of Plant Camp’s operations have bene included since the date of acquisitionin the Statements of Operations.

 

OnJuly 20, 2021, the Company acquired 44% of the membership interests of WHE Agency, Inc. WHE Agency, Inc, is a talent managementand public relations agency based in New York. WHE Agency, Inc, has been consolidated due to the Company’s ownership of 55%voting control, and the results of operations have been included since the date of acquisition in the Statements of Operations.

 

BetweenOctober 21, 2020, and August 16, 2021, the Company acquired 21% of the membership interests of Dune, Inc. Dune, Inc. is a direct-to-consumerbrand focused on promoting wellness through its range of health-oriented beverages.

 

OnOctober 3, 2021, the Company acquired 29% of the membership interests of Dune, Inc. bring our total membership interests to 50%.Dune, Inc. is a direct-to-consumer brand focused on promoting wellness through its range of health-oriented beverages. Dune, Inc, hasbeen consolidated due to the Company’s ownership of 50% voting control, and the results of operations have been included sincethe date of acquisition in the Statements of Operations. 

 

OnMarch 7, 2022, the Company acquired 100% of the membership interests of Denver Bodega, LLC, d/b/a Basis, a Colorado limited liabilitycompany (“Basis”). Basis is a direct-to-consumer functional beverage brand that makes high-electrolyte mixes meant to aidhydration. Denver Bodega, LLC has been consolidated due to the Company’s ownership of 100% voting control, and the results of operationshave been included since the date of acquisition in the Statement of Operations.

 

OnAugust 1, 2022 the Company entered into a Membership Interest Purchase (the “Agreement”) with Zachary Shenkman, Wuseok Jung,Wesley Petry, Nicholas Scibilia, Gary Rettig, Brandon Fallin (collectively the “Sellers”), whereby the Company purchaseda majority stake in Orbit Media LLC, a New York limited liability company whose product is an app-based stock trading platform designedto empower a new generation of investors, providing users with a like-minded community as well as access to tools, content, and otherresources to learn, train, and excel in the financial markets. Pursuant to the Agreement, Creatd acquired fifty one percent (51%) ofthe issued and outstanding membership interests of Orbit Media LLC for consideration of forty-four thousand dollars ($44,000) in cashand 57,576 shares of the Company’s Common Stock.

 

OnSeptember 13, 2022, the Company acquired 100% of the membership interests of Brave Foods, LLC, a Maine limited liability company. Braveis a plant-based food company that provides convenient and healthy breakfast food products. Brave Foods, LLC has been consolidateddue to the Company’s ownership of 100% voting control, and the results of operations have been included since the date ofacquisition in the Statement of Operations.

 

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SUMMARYOF THE OFFERING

 

This prospectus relates to the resale, from timeto time, of up to 11,056,636 shares (the “Shares”) of our common stock, par value $0.001 per share (“Common Stock”),by the selling stockholders identified in this prospectus under “Selling Stockholders” (the “Offering”), comprisedof (i) up to 2,406,267 Shares, pursuant to securities purchase agreements the Company entered into and closed on with six (6) SellingStockholders on July 25, 2022 (as amended, collectively, the “July Purchase Agreements”), comprised of (a) up to 1,327,795Shares issuable upon conversion of debentures in the aggregate principal amount of $2,150,000 (the “Debentures”), (b) 539,286Shares underlying Series E Common Stock Purchase Warrants (the “Series E Warrants”), and (c) 539,286 Shares underlying SeriesF Common Stock Purchase Warrants (the “Series F Warrants,” and together with the Series E Warrants, the “July Warrants”),(ii) up to 1,817,019 Shares, which underly warrants, issued pursuant to that certain letteragreement dated November 18, 2022 (the “Letter Agreement”), between the Company and the respective holders of an aggregateof 471,953 warrants described in the Prospectus (the “November Warrants”), exercisable immediately, for a term of 60 months,at a price of $0.77, subject to customary adjustment provisions the effect of which has increased the number of warrants to 1,817,019and reduced the exercise price to $0.20;; (iii) up to 4,333,250 Shares, pursuant to the securitiespurchase agreement the Company entered into and closed on October 24, 2022 with one accreditedinvestor (the “October Investor”), whereby the October Investor purchased from the Company for an aggregate of $1,500,000in subscription amount, an unsecured debenture in the principal amount of $1,666,650 (the “October Debenture”); and (iv) upto 2,500,000 Shares, pursuant to the securities purchase agreement the Company entered into and closed on December 12, 2022 withthe October Investor, whereby the October Investor purchased from the Company for an aggregate of $750,000 in subscription amount, anunsecured debenture in the principal amount of $750,000 (the “December Debenture”).

 

Weare not selling any shares of our Common Stock under this prospectus and will not receive any proceeds from the sale of the Shares. Wewill, however, receive proceeds from any warrants that are exercised through the payment of the exercise price in cash. The Selling Stockholderswill bear all commissions and discounts, if any, attributable to the sale of the Shares. We will bear all costs, expenses and fees inconnection with the registration of the Shares.

 

Issuer   Creatd, Inc.
     
Shares of Common Stock offered by us   None
     
Shares of Common Stock offered by the Selling Stockholders   11,056,636 shares (1)
     
Shares of Common Stock outstanding before the Offering   39,024,070 shares (2)
     
Shares of Common Stock outstanding after completion of this offering, assuming the sale of all shares offered hereby   50,080,706 shares (2) 
     
Use of proceeds   We will not receive any proceeds from the resale of the common stock by the Selling Stockholders.
     
Market for Common Stock   Our common stock is quoted on OTCQB under the symbol “CRTD.”
     
Risk Factors   Investing in our securities involves a high degree of risk. See the “Risk Factors” section of this prospectus on page 12 and in the documents we incorporate by reference in this prospectus for a discussion of factors you should consider carefully before deciding to invest in our securities.

 

(1)This amount consists of (i) upto 1,327,795 shares of Common Stock issuable upon conversion of the July Debentures, (ii) up to 539,286 shares of Common Stock issuableupon exercise of the Series E Warrants; (iii) up to 539,286 shares of Common Stock issuable upon exercise of the Series F Warrants; (iv)up to 1,817,019 shares of Common Stock issuable upon exercise of the November Warrants, (v) up to 4,333,250 shares of Common Stock issuableupon conversion of the October Debenture; and (vi) up to 2,500,000 shares of Common Stock issuable upon conversion of the December Debenture.

 

(2)The number of shares of CommonStock outstanding before and after the Offering is based on 39,024,070 shares outstanding as of January 5, 2023 and excludes the following:

 

  4,408,267 shares of Common Stock issuable upon the exercise of outstanding stock options having a weighted average exercise price of $3.93 per share;

 

  17,300,983 shares of common stock issuable upon the exercise of outstanding warrants having a weighted average exercise price of $2.06 per share;

 

  30,833,250 shares of common stock issuable upon the conversion of convertible promissory notes having a conversion price of $0.20 per share.

 

  990,000 shares of common stock issuable upon the conversion of convertible promissory notes having a conversion price of $1.00 per share.

 

  274,342 shares of common stock issuable upon the conversion of convertible promissory notes having a conversion price of $0.38 per share.

 

  159,788 shares of common stock issuable upon the conversion of convertible promissory notes having a conversion price of $0.32 per share.

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RISKFACTORS

 

Investingin our securities involves a high degree of risk. You should consider and read carefully all of the risks and uncertainties describedbelow, as well as other information contained in this prospectus, before making an investment decision with respect to our securities.The occurrence of any of the following risks or those incorporated by reference, or additional risks and uncertainties not presentlyknown to us or that we currently believe to be immaterial could materially and adversely affect our business, financial condition, resultsof operations or cash flows. In any such case, the trading price of common stock and the trading price of Series A warrants, if any,could decline, and you may lose all or part of your investment. This prospectus also contains forward-looking statements and estimatesthat involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statementsas a result of specific factors, including the risks and uncertainties described below and those incorporated by reference.

 

RisksRelated to our Business

 

TheCompany is a development stage business and subject to the many risks associated with new businesses.

 

Ourcurrent line of business has a limited operating history and our business is subject to all of the risks inherent in the establishmentof a new business enterprise. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complicationsand delays frequently encountered in connection with development and expansion of a new business enterprise. We have incurred lossesand may continue to operate at a net loss for at least the next several years as we execute our business plan. We had a net loss of approximately$37.0 million for the year ended December 31, 2021, and a working capital deficit and accumulated deficit of approximately $0.9 millionand approximately $109.6 million, respectively.

 

Ourfinancial situation creates doubt whether we will continue as a going concern.

 

Therecan be no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations orobtain funding or additional financing through private placements, public offerings and/or bank financing necessary to support our workingcapital requirements. To the extent that funds generated from any private placements, public offerings and/or bank financing are insufficient,we will have to raise additional working capital and no assurance can be given that additional financing will be available, or if available,will be on acceptable terms. These conditions raise substantial doubt about our ability to continue as a going concern. If adequate workingcapital is not available, we may be forced to discontinue operations, which would cause investors to lose their entire investment.

 

Basedon the report from our independent auditors dated April 6, 2022, management stated that our financial statements for the yearended December 31, 2021, were prepared assuming substantial doubt about the Company’s ability to continue as a going concern fora period of one year from the issuance of these financial statements. The Company’s consolidated financial statements have beenprepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidationof liabilities in the normal course of business.

 

Weare not profitable and may never be profitable.

 

Sinceinception through the present, we have been dependent on raising capital to support our working capital needs. During this same period,we have recorded net accumulated losses and are yet to achieve profitability. Our ability to achieve profitability depends upon manyfactors, including our ability to develop and commercialize our websites. There can be no assurance that we will ever achieve any significantrevenues or profitable operations. 

 

Ouroperating expenses exceed our revenues and will likely continue to do so for the foreseeable future.

 

Weare in an early stage of our development and we have not generated sufficient revenues to offset our operating expenses. Our operatingexpenses will likely continue to exceed our operating income for the foreseeable future, until such time as we are able to monetize ourbrands and generate substantial revenues, particularly as we undertake payment of the increased costs of operating as a public company.

 

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Wehave assumed a significant amount of debt and our operations may not be able to generate sufficient cash flows to meet our debt obligations,which could reduce our financial flexibility and adversely impact our operations.

 

Currentlythe Company has considerable obligations under notes, related party notes and lines of credit outstanding with various lenders. Our abilityto make payments on such indebtedness will depend on our ability to generate cash flow. The Company may not generate sufficient cashflow from operations to enable us to repay this indebtedness and to fund other liquidity needs, including capital expenditure requirements.Such indebtedness could affect our operations in several ways, including the following:

 

  a significant portion of our cash flows could be required to be used to service such indebtedness;
     
  a high level of debt could increase our vulnerability to general adverse economic and industry conditions;
     
  any covenants contained in the agreements governing such outstanding indebtedness could limit our ability to borrow additional funds, dispose of assets, pay dividends and make certain investments;
     
  a high level of debt may place us at a competitive disadvantage compared to our competitors that are less leveraged and, therefore, our competitors may be able to take advantage of opportunities that our indebtedness may prevent us from pursuing; and
     
  debt covenants to which we may agree may affect our flexibility in planning for, and reacting to, changes in the economy and in our industry.

 

Ahigh level of indebtedness increases the risk that we may default on our debt obligations. We may not be able to generate sufficientcash flows to pay the principal or interest on our debt. If we cannot service or refinance our indebtedness, we may have to take actionssuch as selling significant assets, seeking additional equity financing (which will result in additional dilution to stockholders) orreducing or delaying capital expenditures, any of which could have a material adverse effect on our operations and financial condition.If we do not have sufficient funds and are otherwise unable to arrange financing, our assets may be foreclosed upon which could havea material adverse effect on our business, financial condition and results of operations.

 

Wewill need additional capital, which may be difficult to raise as a result of our limited operating history or any number of other reasons.

 

Weexpect that we will need to raise additional capital within the next 12 months. However, in the event that we exceed our expected growth,we would need to raise additional capital. There is no assurance that additional equity or debt financing will be available to us whenneeded, on acceptable terms, or even at all. Our limited operating history makes investor evaluation and an estimation of our futureperformance substantially more difficult. As a result, investors may be unwilling to invest in us or such investment may be offered onterms or conditions that are not acceptable. In the event that we are not able to secure financing, we may have to scale back our growthplans or cease operations.

 

Weface intense competition. If we do not provide digital content that is useful to users, we may not remain competitive, and our potentialrevenues and operating results could be adversely affected.

 

Ourbusiness is rapidly evolving and intensely competitive, and is subject to changing technologies, shifting user needs, and frequent introductionsof new products and services. Our ability to compete successfully depends heavily on providing digital content that is useful and enjoyablefor our users and delivering our content through innovative technologies in the marketplace.

 

Weface competition from others in the digital content creation industry and media companies. Our current and potential competitors rangefrom large and established companies to emerging start-ups. Established companies have longer operating histories and more establishedrelationships with customers and users, and they can use their experience and resources in ways that could affect our competitive position,including by making acquisitions, investing aggressively in research and development, aggressively initiating intellectual property claims(whether or not meritorious) and competing aggressively for advertisers and websites. Emerging start-ups may be able to innovate andprovide products and services faster than we can.

 

Additionally,our operating results would suffer if our digital content is not appropriately timed with market opportunities, or if our digital contentis not effectively brought to market. As technology continues to develop, our competitors may be able to offer user experiences thatare, or that are seen to be, substantially similar to or better than, ours. This may force us to compete in different ways and expendsignificant resources in order to remain competitive. If our competitors are more successful than we are in developing compelling contentor in attracting and retaining users and advertisers, our revenues and operating results could be adversely affected.

 

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Ifwe fail to retain existing users or add new users, or if our users decrease their level of engagement with our products, our revenue,financial results, and business may be significantly harmed.

 

Thesize of our user base and our user’s level of engagement are critical to our success. Our financial performance will be significantlydetermined by our success in adding, retaining, and engaging active users of our products, particularly Vocal. We anticipate that ouractive user growth rate will generally decline over time as the size of our active user base increases, and it is possible that the sizeof our active user base may fluctuate or decline in one or more markets, particularly in markets where we have achieved higher penetrationrates. If people do not perceive Vocal to be useful, reliable, and trustworthy, we may not be able to attract or retain users or otherwisemaintain or increase the frequency and duration of their engagement. A number of other content management systems and publishing platformsthat achieved early popularity have since seen their active user bases or levels of engagement decline, in some cases precipitously.There is no guarantee that we will not experience a similar erosion of our active user base or engagement levels. Our user engagementpatterns have changed over time, and user engagement can be difficult to measure, particularly as we introduce new and different productsand services. Any number of factors could potentially negatively affect user retention, growth, and engagement, including if:

 

Usersincreasingly engage with other competitive products or services;

 

Wefail to introduce new features, products or services that users find engaging or if we introduce new products or services, or make changesto existing products and services, that are not favorably received;

 

Userbehavior on any of our products changes, including decreases in the quality and frequency of content shared on our products and services;

 

Thereare decreases in user sentiment due to questions about the quality or usefulness of our products or our user data practices, or concernsrelated to privacy and sharing, safety, security, well-being, or other factors;

 

Weare unable to manage and prioritize information to ensure users are presented with content that is appropriate, interesting, useful,and relevant to them;

 

Weare unable to obtain or attract engaging third-party content;

 

Usersadopt new technologies where our products may be displaced in favor of other products or services, or may not be featured or otherwiseavailable;

 

Thereare changes mandated by legislation, regulatory authorities, or litigation that adversely affect our products or users;

 

Technicalor other problems prevent us from delivering our products in a rapid and reliable manner or otherwise affect the user experience, suchas security breaches or failure to prevent or limit spam or similar content;

 

Weadopt terms, policies, or procedures related to areas such as sharing, content, user data, or advertising that are perceived negativelyby our users or the general public;

 

Weelect to focus our product decisions on longer-term initiatives that do not prioritize near-term user growth and engagement;

 

Wemake changes in how we promote different products and services across our family of apps;

 

Initiativesdesigned to attract and retain users and engagement are unsuccessful or discontinued, whether as a result of actions by us, third parties,or otherwise;

 

Wefail to provide adequate customer service to users, marketers, developers, or other partners;

 

We,developers whose products are integrated with our products, or other partners and companies in our industry are the subject of adversemedia reports or other negative publicity, including as a result of our or their user data practices; or

 

Ourcurrent or future products, such as our development tools and application programming interfaces that enable developers to build, grow,and monetize mobile and web applications, reduce user activity on our products by making it easier for our users to interact and shareon third-party mobile and web applications.

 

Ifwe are unable to maintain or increase our user base and user engagement, our revenue and financial results may be adversely affected.Any decrease in user retention, growth, or engagement could render our products less attractive to users, marketers, and developers,which is likely to have a material and adverse impact on our revenue, business, financial condition, and results of operations. If ouractive user growth rate continues to slow, we will become increasingly dependent on our ability to maintain or increase levels of userengagement and monetization in order to drive revenue growth. 

 

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Weface competition from traditional media companies, and we may not be included in the advertising budgets of large advertisers, whichcould harm our operating results.

 

Inaddition to internet companies, we face competition from companies that offer traditional media advertising opportunities. Most largeadvertisers have set advertising budgets, a very small portion of which is allocated to Internet advertising. We expect that large advertiserswill continue to focus most of their advertising efforts on traditional media. If we fail to convince these companies to spend a portionof their advertising budgets with us, or if our existing advertisers reduce the amount they spend on our programs, our operating resultswould be harmed.

 

Acquisitionsmay disrupt growth.

 

Wemay pursue strategic acquisitions in the future. Risks in acquisition transactions include difficulties in the integration of acquiredbusinesses into our operations and control environment, difficulties in assimilating and retaining employees and intermediaries, difficultiesin retaining the existing clients of the acquired entities, assumed or unforeseen liabilities that arise in connection with the acquiredbusinesses, the failure of counterparties to satisfy any obligations to indemnify us against liabilities arising from the acquired businesses,and unfavorable market conditions that could negatively impact our growth expectations for the acquired businesses. Fully integratingan acquired company or business into our operations may take a significant amount of time. We cannot assure you that we will be successfulin overcoming these risks or any other problems encountered with acquisitions and other strategic transactions. These risks may preventus from realizing the expected benefits from acquisitions and could result in the failure to realize the full economic value of a strategictransaction or the impairment of goodwill and/or intangible assets recognized at the time of an acquisition. These risks could be heightenedif we complete a large acquisition or multiple acquisitions within a short period of time.

 

Ourbusiness depends on strong brands and relationships, and if we are not able to maintain our relationships and enhance our brands, ourability to expand our base of users, advertisers and affiliates will be impaired and our business and operating results could be harmed.

 

Maintainingand enhancing our brands’ profiles may require us to make substantial investments and these investments may not be successful.If we fail to promote and maintain the brands’ profiles, or if we incur excessive expenses in this effort, our business and operatingresults could be harmed. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brands’profiles may become increasingly difficult and expensive. Maintaining and enhancing our brands will depend largely on our abilityto be a technology leader and to continue to provide attractive products and services, which we may not do successfully.

 

Wedepend on our key management personnel and the loss of their services could adversely affect our business.

 

Weplace substantial reliance upon the efforts and abilities of Jeremy Frommer, our Chairman of the Board of Directors, and our other executiveofficers and directors. Though no individual is indispensable, the loss of the services of these executive officers could have a materialadverse effect on our business, operations, revenues or prospects. We do not currently maintain key man life insurance on the lives ofthese individuals.

 

Ifwe are unable to protect our intellectual property, the value of our brands and other intangible assets may be diminished, and our businessmay be adversely affected.

 

Werely and expect to continue to rely on a combination of confidentiality, assignment, and license agreements with our employees, consultants,and third parties with whom we have relationships, as well as trademark, copyright, patent, trade secret, and domain name protectionlaws, to protect our proprietary rights. In the United States and internationally, we have filed various applications for protectionof certain aspects of our intellectual property, and we currently hold a number of registered trademarks and issued patents in multiplejurisdictions and have acquired patents and patent applications from third parties. Third parties may knowingly or unknowingly infringeour proprietary rights, third parties may challenge proprietary rights held by us, and pending and future trademark and patent applicationsmay not be approved. In addition, effective intellectual property protection may not be available in every country in which we operateor intend to operate our business. In any or all of these cases, we may be required to expend significant time and expense in order toprevent infringement or to enforce our rights. Although we have generally taken measures to protect our proprietary rights, there canbe no assurance that others will not offer products or concepts that are substantially similar to ours and compete with our business.In addition, we regularly contribute software source code under open source licenses and have made other technology we developed availableunder other open licenses, and we include open source software in our products. If the protection of our proprietary rights is inadequateto prevent unauthorized use or appropriation by third parties, the value of our brands and other intangible assets may be diminishedand competitors may be able to more effectively mimic our products, services, and methods of operations. Any of these events could havean adverse effect on our business and financial results 

 

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We are subject to payment processing risk.

 

We accept payments using a variety of differentpayment methods, including credit and debit cards and direct debit. We rely on third parties to process payments. Acceptance and processingof these payment methods are subject to certain certifications, rules and regulations. To the extent there are disruptions in our or third-partypayment processing systems, material changes in the payment ecosystem, failure to recertify and/or changes to rules or regulationsconcerning payment processing, we could be subject to fines and/or civil liability, or lose our ability to accept credit and debit cardpayments, which would harm our reputation and adversely impact our results of operations. 

 

We are subject to risk as it relates tosoftware that we license from third parties.

 

We license software from third parties,much of which is integral to our systems and our business. The licenses are generally terminable if we breach our obligations under thelicense agreements. If any of these relationships were terminated or if any of these parties were to cease doing business or cease tosupport the applications we currently utilize, we may be forced to spend significant time and money to replace the licensed software.

 

Failures or reduced accessibility of third-partysoftware on which we rely could impair the availability of our platform and applications and adversely affect our business.

 

We license software from third partiesfor integration into our Vocal platform, including open source software. These licenses might not continue to be available to us on acceptableterms, or at all. While we are not substantially dependent upon any third-party software, the loss of the right to use all or a significantportion of our third-party software required for the development, maintenance and delivery of our applications could result in delaysin the provision of our applications until we develop or identify, obtain and integrate equivalent technology, which could harm our business.

 

Any errors or defects in the hardware or softwarewe use could result in errors, interruptions, cyber incidents or a failure of our applications. Any significant interruption in the availabilityof all or a significant portion of such software could have an adverse impact on our business unless and until we can replace the functionalityprovided by these applications at a similar cost. Furthermore, this software may not be available on commercially reasonable terms, orat all. The loss of the right to use all or a significant portion of this software could limit access to our platform and applications.Additionally, we rely upon third parties’ abilities to enhance their current applications, develop new applications on a timelyand cost-effective basis and respond to emerging industry standards and other technological changes. We may be unable to effect changesto such third-party technologies, which may prevent us from rapidly responding to evolving customer requirements. We also may be unableto replace the functionality provided by the third-party software currently offered in conjunction with our applications in the eventthat such software becomes obsolete or incompatible with future versions of our platform and applications or is otherwise not adequatelymaintained or updated.

 

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We need to manage growth in operations tomaximize our potential growth and achieve our expected revenues and our failure to manage growth will cause a disruption of our operations,resulting in the failure to generate revenue.

 

In order to maximize potential growth in our currentand potential markets, we believe that we must expand our marketing operations. This expansion will place a significant strain on ourmanagement and our operational, accounting, and information systems. We expect that we will need to continue to improve our financialcontrols, operating procedures, and management information systems. We will also need to effectively train, motivate, and manage our employees.Our failure to manage our growth could disrupt our operations and ultimately prevent us from generating the revenues we expect.

 

In order to achieve the general strategies ofour company we need to maintain and search for hard-working employees who have innovative initiatives, while at the same time, keep aclose eye on any and all expanding opportunities in our marketplace.

 

We plan to generate a significant portionof our revenues from advertising and affiliate sales relationships, and a reduction in spending by or loss of advertisers and generaldecrease in online spending could adversely harm our business.

 

We plan to generate a substantial portion of ourrevenues from advertisers. Our advertisers may be able to terminate prospective contracts with us at any time. Advertisers will not continueto do business with us if their investment in advertising with us does not generate sales leads, and ultimately customers, or if we donot deliver their advertisements in an appropriate and effective manner. If we are unable to remain competitive and provide value to ouradvertisers, they may stop placing ads with us, which would adversely affect our revenues and business. In addition, expenditures by advertiserstend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. Adverse macroeconomic conditions can alsohave a material negative impact on the demand for advertising and cause our advertisers to reduce the amounts they spend on advertising,which could adversely affect our revenues and business.

 

Security breaches could harm our business.

 

Security breaches have become more prevalent inthe technology industry. We believe that we take reasonable steps to protect the security, integrity and confidentiality of the informationwe collect, use, store and disclose, but there is no guarantee that inadvertent (e.g., software bugs or other technical malfunctions,employee error or malfeasance, or other factors) or unauthorized data access or use will not occur despite our efforts. Although we havenot experienced any material security breaches to date, we may in the future experience attempts to disable our systems or to breach thesecurity of our systems. Techniques used to obtain unauthorized access to personal information, confidential information and/or the systemson which such information are stored and/or to sabotage systems change frequently and generally are not recognized until launched againsta target. As a result, we may be unable to anticipate these techniques or to implement adequate preventative measures.

 

If an actual or perceived security breach occurs,the market perception of our security measures could be harmed, and we could lose sales and customers and/or suffer other negative consequencesto our business. A security breach could adversely affect the digital content experience and cause the loss or corruption of data, whichcould harm our business, financial condition and operating results. Any failure to maintain the security of our infrastructure could resultin loss of personal information and/or other confidential information, damage to our reputation and customer relationships, early terminationof our contracts and other business losses, indemnification of our customers, financial penalties, litigation, regulatory investigationsand other significant liabilities. In the event of a major third-party security incident, we may incur losses in excess of their insurancecoverage.

 

Moreover, if a high-profile security breach occurswith respect to us or another digital entertainment company, our customers and potential customers may lose trust in the security of ourbusiness model generally, which could adversely impact our ability to retain existing customers or attract new ones.

 

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The laws and regulations concerning dataprivacy and data security are continually evolving; our or our platform providers’ actual or perceived failure to comply with theselaws and regulations could harm our business.

 

Customers view our content online, using third-partyplatforms and networks and on mobile devices. We collect and store significant amounts of information about our customers—both personallyidentifying and non-personally identifying information. We are subject to laws from a variety of jurisdictions regarding privacy and theprotection of this player information. For example, the European Union (EU) has traditionally taken a broader view than the United Statesand certain other jurisdictions as to what is considered personal information and has imposed greater obligations under data privacy regulations.The U.S. Children’s Online Privacy Protection Act (COPPA) also regulates the collection, use and disclosure of personal informationfrom children under 13 years of age. While none of our content is directed at children under 13 years of age, if COPPA were to apply tous, failure to comply with COPPA may increase our costs, subject us to expensive and distracting government investigations and could resultin substantial fines.

 

Data privacy protection laws are rapidly changingand likely will continue to do so for the foreseeable future. The U.S. government, including the Federal Trade Commission and the Departmentof Commerce, is continuing to review the need for greater regulation over the collection of personal information and information aboutconsumer behavior on the Internet and on mobile devices and the EU has proposed reforms to its existing data protection legal framework.Various government and consumer agencies worldwide have also called for new regulation and changes in industry practices. In addition,in some cases, we are dependent upon our platform providers to solicit, collect and provide us with information regarding our playersthat is necessary for compliance with these various types of regulations.

 

Customer interaction with our content is subjectto our privacy policy and terms of service. If we fail to comply with our posted privacy policy or terms of service or if we fail to complywith existing privacy-related or data protection laws and regulations, it could result in proceedings or litigation against us by governmentalauthorities or others, which could result in fines or judgments against us, damage our reputation, impact our financial condition andharm our business. If regulators, the media or consumers raise any concerns about our privacy and data protection or consumer protectionpractices, even if unfounded, this could also result in fines or judgments against us, damage our reputation, and negatively impact ourfinancial condition and damage our business.

 

In the area of information security and data protection,many jurisdictions have passed laws requiring notification when there is a security breach for personal data or requiring the adoptionof minimum information security standards that are often vaguely defined and difficult to implement. Our security measures and standardsmay not be sufficient to protect personal information and we cannot guarantee that our security measures will prevent security breaches.A security breach that compromises personal information could harm our reputation and result in a loss of confidence in our products andultimately in a loss of customers, which could adversely affect our business and impact our financial condition. This could also subjectus to liability under applicable security breach-related laws and regulations and could result in additional compliance costs, costs relatedto regulatory inquiries and investigations, and an inability to conduct our business.

 

Changes to federal, state or internationallaws or regulations applicable to our company could adversely affect our business.

 

Our business is subject to a variety of federal,state and international laws and regulations, including those with respect privacy, data, and other laws. These laws and regulations,and the interpretation or application of these laws and regulations, could change. In addition, new laws or regulations affecting ourbusiness could be enacted. These laws and regulations are frequently costly to comply with and may divert a significant portion of management’sattention. If we fail to comply with these applicable laws or regulations, we could be subject to significant liabilities which couldadversely affect our business. 

 

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If any of our relationships with internetsearch websites terminate, if such websites’ methodologies are modified or if we are outbid by competitors, traffic to our websitescould decline.

 

We depend in part on various internet searchwebsites, such as Google.com, Bing.com, Yahoo.com and other websites to direct a significant amount of traffic to our websites. Searchwebsites typically provide two types of search results, algorithmic and purchased listings. Algorithmic listings generally are determinedand displayed as a result of a set of unpublished formulas designed by search engine companies in their discretion. Purchased listingsgenerally are displayed if particular word searches are performed on a search engine. We rely on both algorithmic and purchased searchresults, as well as advertising on other internet websites, to direct a substantial share of visitors to our websites and to direct trafficto the advertiser customers we serve. If these internet search websites modify or terminate their relationship with us or we are outbidby our competitors for purchased listings, meaning that our competitors pay a higher price to be listed above us in a list of searchresults, traffic to our websites could decline. Such a decline in traffic could affect our ability to generate advertising revenue andcould reduce the desirability of advertising on our websites.

 

Our business involves risks of liabilityclaims arising from our media content, which could adversely affect our ability to generate revenue and could increase our operating expenses.

 

As a distributor of media content, we face potentialliability for defamation, invasion of privacy, negligence, copyright or trademark infringement, obscenity, violation of rights of publicityand/or obscenity laws and other claims based on the nature and content of the materials distributed. These types of claims have been brought,sometimes successfully, against broadcasters, publishers, online services and other disseminators of media content. Any imposition ofliability that is not covered by insurance or is in excess of our insurance coverage could have a material adverse effect on us. In addition,measures to reduce our exposure to liability in connection with content available through our internet websites could require us to takesteps that would substantially limit the attractiveness of our internet websites and/or their availability in certain geographic areas,which could adversely affect our ability to generate revenue and could increase our operating expenses.

 

Intellectual property litigation could exposeus to significant costs and liabilities and thus negatively affect our business, financial condition and results of operations.

 

We may be subject to claims of infringement ofthird-party patents and trademarks and other violations of third-party intellectual property rights. Intellectual property disputes aregenerally time-consuming and expensive to litigate or settle and the outcome of such disputes is uncertain and difficult to predict. Theexistence of such disputes may require us to set-aside substantial reserves and has the potential to significantly affect our overallfinancial standing. To the extent that claims against us are successful, they may subject us to substantial liability, and we may haveto pay substantial monetary damages, change aspects of our business model, and/or discontinue any of our services or practices that arefound to be in violation of another party’s rights. Such outcomes may severely restrict or hinder ongoing business operations andimpact the value of our business. Successful claims against us could also result in us having to seek a license to continue our practices.Under such conditions, a license may or may not be offered or otherwise made available to us. If a license is made available to us, thecost of the license may significantly increase our operating burden and expenses, potentially resulting in a negative effect on our business,financial condition and results of operations.

 

Although we have been and are currently involvedin multiple areas of commerce, internet services, and high technology where there is a substantial risk of future patent litigation, wehave not obtained insurance for patent infringement losses. If we are unsuccessful at resolving pending and future patent litigation ina reasonable and affordable manner, it could disrupt our business and operations, including by negatively impacting areas of commerceor putting us at a competitive disadvantage.

 

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If we are unable to obtain or maintain keywebsite addresses, our ability to operate and grow our business may be impaired.

 

Our website addresses, or domain names, are criticalto our business. We currently own more than 415 domain names. However, the regulation of domain names is subject to change, and it maybe difficult for us to prevent third parties from acquiring domain names that are similar to ours, that infringe our trademarks or thatotherwise decrease the value of our brands. If we are unable to obtain or maintain key domain names for the various areas of our business,our ability to operate and grow our business may be impaired.

 

We may have difficulty scaling and adaptingour existing network infrastructure to accommodate increased traffic and technology advances or changing business requirements, whichcould cause us to incur significant expenses and lead to the loss of users and advertisers.

 

To be successful, our network infrastructure hasto perform well and be reliable. The greater the user traffic and the greater the complexity of our products and services, the more computerpower we will need. We could incur substantial costs if we need to modify our websites or our infrastructure to adapt to technologicalchanges. If we do not maintain our network infrastructure successfully, or if we experience inefficiencies and operational failures, thequality of our products and services and our users’ experience could decline. Maintaining an efficient and technologically advancednetwork infrastructure is particularly critical to our business because of the pictorial nature of the products and services providedon our websites. A decline in quality could damage our reputation and lead us to lose current and potential users and advertisers. Costincreases, loss of traffic or failure to accommodate new technologies or changing business requirements could harm our operating resultsand financial condition.

 

Operating a network open to all internetusers may result in legal consequences.

 

Our Terms and Conditions clearly state that ournetwork and services are only to be used by users who are over 13 years old. Although we will terminate accounts that are known to beheld by persons age 13 or younger, it is impractical to independently verify that all activity occurring on our network fits into thisdescription. As such, we run the risk of federal and state law enforcement prosecution.

 

Unfavorable global economic, business, or political conditionscould adversely affect our business, financial condition or results of operations.

 

Our results of operations could be adversely affectedby general conditions in the global economy and in the global financial markets, including conditions that are outside of our control,including the impact of health and safety concerns, such as those relating to the current COVID-19 coronavirus (“COVID-19”)pandemic.

 

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The continuing global COVID-19 pandemic has createdsignificant volatility, uncertainty and economic disruption. The extent to which the COVID-19 pandemic continues to impact our business,operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: theduration and scope of the pandemic; governmental, business and individuals’ actions, including vaccination requirements, that havebeen and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity and actions taken in response;and any future variants that may arise and its effects on the overall response to the pandemic. The COVID-19 coronavirus and actions takento mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries,including the geographical area in which the Company operates.

 

Our direct-to-consumer brands experienced supply-chainissues as a direct result of the COVID-19 pandemic, resulting in delayed growth within these business lines. Additionally, the globalfinancial crisis in connection with the COVID-19 pandemic has caused extreme volatility and disruptions in the capital and credit markets.A severe or prolonged economic downturn could result in a variety of risks to our business, including weakened demand for our Vocal platformand our ability to raise additional capital when needed on acceptable terms, if at all. Any of the foregoing could harm our business andwe cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business.

 

Risks Related To Our Common Stock 

 

Risks Relating to our Common Stock and the Offering

 

Future sales or potential sales of our commonstock in the public market could cause our share price to decline.

 

If the existing holders of our common stock, particularlyour directors and officers, sell a large number of shares, they could adversely affect the market price for our common stock. Sales ofsubstantial amounts of our common stock in the public market, or the perception that these sales could occur, could cause the market priceof our common stock to decline.

 

Because we will not pay dividends on ourcommon stock in the foreseeable future, stockholders will only benefit from owning common stock if it appreciates.

 

We have never paid cash dividends on our commonstock, and we do not intend to do so in the foreseeable future. We intend to retain any future earnings to finance our growth. Accordingly,any potential investor who anticipates the need for current dividends from his investment should not purchase our common stock.

 

Our share price has been, and will likelycontinue to be, volatile, and you may be unable to resell your shares at or above the price at which you acquired them.

 

The trading price of our common stock has been,and is likely to continue to be, highly volatile and could be subject to wide fluctuations in response to various factors, some of whichare beyond our control.

 

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The market price for our securities maybe influenced by many factors that are beyond our control, including, but not limited to:

 

variationsin our revenue and operating expenses;

 

marketconditions in our industry and the economy as a whole;

 

actualor expected changes in our growth rates or our competitors’ growth rates;

 

developmentsor disputes concerning patent applications, issued patents or other proprietary rights;

 

developmentsin the financial markets and worldwide or regional economies;

 

variationsin our financial results or those of companies that are perceived to be similar to us;

 

announcementsby the government relating to regulations that govern our industry;

 

salesof our common stock or other securities by us or in the open market;

 

changesin the market valuations of other comparable companies;

 

generaleconomic, industry and market conditions; and

 

  the other factors described in this “Risk Factors” section.

 

The trading price of our shares might also declinein reaction to events that affect other companies in our industry, even if these events do not directly affect us. Each of these factors,among others, could harm the value of your investment in our securities. In the past, following periods of volatility in the market, securitiesclass-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantialcosts and diversion of management’s attention and resources, which could materially and adversely affect our business, operatingresults and financial condition.

 

Because our shares of common stock are subjectto the penny stock rules, it is more difficult to trade our shares.

 

The SEC has adopted rules that regulate broker-dealerpractices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00,other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems,provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system.The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to delivera standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effectingany transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination thatthe penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receiptof a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy ofa written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary marketfor our common stock, and therefore stockholders may have difficulty selling their shares.

 

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The price of our common stock may be subject to wide fluctuations.

 

Even though we have our shares quoted with TheOTCQB, the market price of our Common Stock may be highly volatile and subject to wide fluctuations in response to a variety of factorsand risks, many of which are beyond our control. In addition to the risks noted elsewhere in this Form 10-K, some of the other factorsaffecting our stock price may include:

 

Variationsin our operating results;

 

Thelevel and quality of securities analysts’ coverage of our Common Stock;

 

Announcementsby us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;

 

Announcementsby third parties of significant claims or proceedings against us; and

 

Futuresales of our Common Stock.

 

For these reasons, comparing our operating resultson a period-to-period basis may not be meaningful, and you should not rely on past results as an indication of future performance. Inthe past, following periods of volatility in the market price of a public company’s securities, securities class action litigationhas often been instituted against the public company. Regardless of its outcome, this type of litigation could result in substantial coststo us and a likely diversion of our management’s attention.

 

You may lose all of your investment.

 

Investing in our common stock involves a highdegree of risk. As an investor, you might never recoup all, or even part of, your investment and you may never realize any return on yourinvestment. You must be prepared to lose all your investment.

 

We may, in the future, issue additionalshares of common stock, which would reduce investors’ percent of ownership and dilute our share value

 

Our Second Amended and Restated Articles of Incorporation authorizethe issuance of 100,000,000 shares of common stock, and 20,000,000 shares of preferred stock. Currently the Company has 450 shares ofPreferred Series E stock outstanding. Additionally, as of January 10, 2023 there are outstanding (i) warrants to purchase 17,300,983 sharesof our common stock; (ii) options exercisable into 4,408,267 shares of our common stock; (iii) 109,223 shares underlying the conversionof Preferred Series E shares; and (iv) 32,257,380 shares underlying the conversion of convertible notes.

 

Assumingall of the Company’s currently outstanding warrants and options are exercised and all convertible notes and preferred shares are converted, the Company would have to issue an additional 54,075,853 sharesof common stock representing 139% of our current issued and outstanding common stock. The future issuance of this common stock would resultin substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any Common Stock issuedin the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may havethe effect of diluting the value of the shares held by our investors and might have an adverse effect on any trading market for our commonstock.

 

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Liability of directors for breach of dutyis limited under Nevada law.

 

Nevada law provides that directors must dischargetheir duties as a director in good faith and with a view to the interests of the corporation. Under Nevada law, directors owe a fiduciaryduty to the corporation, which is generally comprised of the duty of care and duty of loyalty to the corporation. Except under limitedcircumstances set forth in NRS 78.138(7), or unless our Second Amended and Restated Articles of Incorporation or an amendment theretoprovide for greater individual liability (which ours does not provide), a director or officer is not individually liable to the corporationor its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officerunless it is proven that the director’s or officer’s act or failure to act constituted a breach of his or her fiduciary dutiesas a director or officer, and the breach of those duties involved intentional misconduct, fraud or a knowing violation of law. Ourstockholders’ ability to recover damages for fiduciary breaches may be reduced by this statute.

 

We do not anticipate paying any cash dividendson our common stock in the foreseeable future and, as such, capital appreciation, if any, of our common stock will be your sole sourceof gain for the foreseeable future.

 

We do not anticipate paying any cash dividendson our common stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the developmentand growth of our business. In addition, and any future loan arrangements we enter into may contain, terms prohibiting or limiting theamount of dividends that may be declared or paid on our common stock. As a result, capital appreciation, if any, of our common stock willbe your sole source of gain for the foreseeable future.

 

Sales of a substantial number of sharesof our common stock in the public market by certain of our stockholders could cause our stock price to fall.

 

Sales of a substantial number of shares of ourcommon stock in the public market or the perception that these sales might occur, could depress the market price of our common stock andcould impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that salesmay have on the prevailing market price of our common stock.

 

We may issue additional shares of preferredstock in the future that may adversely impact your rights as holders of our common stock.

 

Pursuant to our Second Amended and Restated Articlesof Incorporation, the aggregate number of shares of capital stock which we are authorized to issue is 120,000,000 shares, of which 100,000,000shares are common stock, and 20,000,000 shares are “blank check” preferred stock with such designations, rights and preferencesas may be determined from time to time by our board of directors. Our board of directors is empowered, without stockholder approval, toissue one or more series of preferred stock with dividend, liquidation, conversion, voting or other rights which could dilute the interestof, or impair the voting power of, our common stockholders. As of the date of this filing, we do have 450 shares of Preferred Series Estock outstanding.

 

The issuance of a series of preferred stock couldbe used as a method of discouraging, delaying or preventing a change in control. For example, it would be possible for our board of directorsto issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control ofour Company. In addition, advanced notice is required prior to stockholder proposals, which might further delay a change of control. Additionally,our board of directors could authorize the issuance of a series of preferred stock that would grant to holders preferred rights toour assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock, and the rightto the redemption of such preferred shares, together with a premium, prior to the redemption of the common stock. To the extent that wedo issue such additional shares of preferred stock, your rights as holders of common stock could be impaired thereby, including, withoutlimitation, dilution of your ownership interests in us.

 

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Each of our Second Amended and RestatedArticles of Incorporation and our Amended and Restated Bylaws provide that the Eighth Judicial District Court of Clark County, Nevadawill be the sole and exclusive forum for certain disputes which could limit stockholders’ ability to obtain a favorable judicialforum for disputes with the Company or its directors, officers, employees or agents.

 

Each of our Second Amended and Restated Articlesof Incorporation and our Amended and Restated Bylaws provide that unless the Company consents in writing to the selection of an alternativeforum, the Eighth Judicial District Court of Clark County, Nevada shall be the sole and exclusive forum for state law claims with respectto: (i) any derivative action or proceeding brought in the name or right of the Company or on its behalf, (ii) any action assertinga claim for breach of any fiduciary duty owed by any director, officer, employee or agent of the Company to the Company or the Company’sstockholders, (iii) any action arising or asserting a claim arising pursuant to any provision of Nevada Revised Statutes Chapters 78 or92A or any provision of the Company’s Second Amended and Restated Articles of Incorporation or Amended and Restated Bylaws or (iv) anyaction asserting a claim governed by the internal affairs doctrine, including, without limitation, any action to interpret, apply, enforceor determine the validity of the Company’s Second Amended and Restated Articles of Incorporation or Amended and Restated Bylaws.This exclusive forum provision would not apply to suits brought to enforce any liability or duty created by the Securities Act or theExchange Act or any other claim for which the federal courts have exclusive jurisdiction. To the extent that any such claims may be basedupon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any dutyor liability created by the Exchange Act or the rules and regulations thereunder.

 

Section 22 of the Securities Act creates concurrentjurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or therules and regulations thereunder. However, each of our Second Amended Articles of Incorporation and our Amended and Restated Bylaws containa federal forum provision which provides that unless the Company consents in writing to the selection of an alternative forum, the federaldistrict courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of actionarising under the Securities Act. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of theCompany are deemed to have notice of and consented to this provision. As this provision applies to Securities Act claims, there may beuncertainty whether a court would enforce such a provision.

 

These choice of forum provisions may limit a stockholder’sability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or its directors, officers or otheremployees, which may discourage such lawsuits against the Company and its directors, officers and other employees. Alternatively, if acourt were to find our choice of forum provisions contained in either our Second Amended and Restated Articles of Incorporation or Amendedand Restated Bylaws to be inapplicable or unenforceable in an action, the Company may incur additional costs associated with resolvingsuch action in other jurisdictions, which could harm its business, results of operations, and financial condition.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statementswithin the meaning of Section 27A of the Securities Act of 1933 or the Securities Act, Section 21E of the Securities Exchange Act of 1934or the Exchange Act, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that reflect our currentviews with respect to future events and financial performance, and all statements other than statements of historical fact are statementsthat are, or could be, deemed forward-looking statements. In some cases, you can identify forward-looking statements by terms such as“may,” “might,” “will,” “intend,” “should,” “could,” “can,”“would,” “believe,” “expect,” “seek,” “anticipate,” “intend,”“estimate,” “plan,” “target,” “project,” “forecast,” “envision”or the negative of these terms, and other similar phrases. All statements contained in this prospectus and any prospectus supplement regardingfuture financial position, sales, costs, earnings, losses, cash flows, other measures of results of operations, capital expenditures ordebt levels and plans, objectives, outlook, targets, guidance or goals are forward-looking statements.

 

You should not place undue reliance on our forward-lookingstatements because they are not guarantees of future performance or expectations, and involve risks and uncertainties. Our forward-lookingstatements are based on the information currently available to us and speak only as of the date on the cover of this prospectus, the dateof any prospectus supplement, or, in the case of forward-looking statements incorporated by reference, the date of the filing that includesthe statement. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statementsrelate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties and otherfactors that may cause our actual results, performance or achievements to be materially different from any future results, performanceor achievements expressed or implied by these forward-looking statements. Except as required by applicable law, we assume no obligation,and disclaim any obligation, to update forward-looking statements whether as a result of new information, events or otherwise.

 

The forward-looking statements contained in thisprospectus are set forth principally in “Risk Factors” above, and in “Risk Factors,” “Management’sDiscussion and Analysis of Financial Condition and Results of Operations,” “Business” and other sectionsin our 2021 Annual Report and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”“Risk Factors” and other sections in our Latest Form 10-Q. In addition, there may be events in the future that we arenot able to predict accurately or control which may cause actual results to differ materially from expectations expressed or implied byforward-looking statements. Please consider our forward-looking statements in light of these risks as you read this prospectus.

 

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USE OF PROCEEDS

 

All proceeds from the resale of the shares ofour Common Stock offered by this prospectus will belong to the Selling Shareholders. We will not receive any proceeds from the resaleof the shares of our Common Stock by the Selling Shareholders.

 

We will receive proceeds from any cash exerciseof the Warrants. If all 539,286 of the Series E Warrants, 539,286 of the Series F Warrants, and 1,817,019 of the December Warrants areexercised on a cash basis, the Company would receive gross cash proceeds of $579,118, subject to adjustment upon certain events. Weexpect to use the proceeds from the exercise of such warrants, if any, for general corporate purposes. General corporate purposes mayinclude providing working capital, funding capital expenditures, or paying for acquisitions. We currently do not have any arrangementsor agreements for any acquisitions. We cannot precisely estimate the allocation of the net proceeds from any exercise of the warrantsfor cash. Accordingly, in the event the Warrants are exercised for cash, our management will have broad discretion in the applicationof the net proceeds of such exercises. There is no assurance that the Warrants will ever be exercised for cash.

 

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CAPITALIZATION

 

The table below sets forth our cash and cashequivalents and capitalization as of September 30, 2022 on an actual basis and on a pro forma basis to reflect our issuance of theshares of our Common Stock offered by this prospectus and our receipt and application of the proceeds in the amount of approximately$579,000 from the exercise of warrants, after deducting our estimated offering expenses. This table should be read in conjunctionwith “Use of Proceeds” above and our consolidated audited and unaudited financial statements and the notesthereto set forth in this prospectus.

 

       September 30,
2022
 
   Actual   Adjustments   Pro Forma as
Adjusted
 
Cash  $439,539    453,362   $892,901 
Marketable Securities   96    -    96 
Notes Payable   1,787,099    -    1,787,099 
Convertible Notes Payable   6,062,926    -    6,062,926 
Common stock - par value $0.001; 100,000,000 shares authorized;  24,469,675 issued and 24,380,218 outstanding as of September 30, 2022   24,470    2,896    27,366 
Additional paid-in capital   124,667,772    450,466    125,118,238 
Accumulated deficit   (133,762,800)   -    (133,762,800)
Accumulated other comprehensive income (loss)   (143,991)   -    (143,991)
Treasury Stock   (76,106)   -    (76,106)
Stockholders’ equity   (8,613,461)   453,362    (8,160,099)
Total capitalization   (763,436)   453,362    (310,074)

 

The table above excludes:

 

4,408,267 shares of CommonStock issuable upon the exercise of outstanding stock options having a weighted average exercise price of $3.93 per share;

 

  17,300,983 shares of common stock issuable upon the exercise of outstanding warrants having a weighted average exercise price of $2.06 per share;

 

  30,833,250 shares of common stock issuable upon the conversion of convertiblepromissory notes having a conversion price of $0.20 per share.

 

990,000 shares of common stock issuable upon the conversion of convertiblepromissory notes having a conversion price of $1.00 per share.

 

  274,342 shares of common stock issuable upon the conversion of convertiblepromissory notes having a conversion price of $0.38 per share.

 

  159,788 shares of common stock issuable upon the conversion of convertiblepromissory notes having a conversion price of $0.32 per share.

 

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 MARKET FOR COMMONSTOCK AND DIVIDEND POLICY

 

Our common stock is quoted on the OTCQB under the symbol “CRTD.”As of January 9, 2023, the last reported sale price of the common stock as reported on OTCQB was $0.80 per share. As of January 10, 2023,there were approximately 381 holders of record of common stock. The actual number of shareholders is greater than this number of recordholders and includes shareholders who are beneficial owners but whose shares are held in street name by brokers and other nominees (includingany mobile investment platform).

 

To date, we have not paid cash dividends on ourcommon stock and do not plan to pay such dividends in the foreseeable future. Our board of directors will determine our future dividendpolicy on the basis of many factors, including results of operations, capital requirements, and general business conditions. Dividends,under the Nevada Revised Statutes, may only be paid from our net profits or surplus.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis shouldbe read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this prospectus. In additionto historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions.Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, includingbut not limited to those set forth in “Risk Factors.”

 

This prospectus and otherreports filed by Creatd, Inc. (the “Company”), from time to time with the SEC (collectively, the “Filings”) containor may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, theCompany’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to placeundue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in theFilings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,”“intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or theCompany’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect tofuture events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’sbusiness, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize,or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated,expected, intended, or planned.

 

Although the Companybelieves that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results,levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States,the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statementsare prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principlesrequire us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which werely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. Theseestimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statementsas well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to theextent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particulartransaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areasin which management’s judgment in selecting any available alternative would not produce a materially different result. The followingdiscussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this prospectus.

 

We intend for this discussionto provide information that will assist in understanding our financial statements, the changes in certain key items in those financialstatements, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financialstatements. This discussion should be read in conjunction with our financial statements and accompanying notes for the year ended December31, 2021, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC on April 6, 2022 and the Company’sQuarterly Report on Form 10-Q that was filed with the SEC on November 16, 2022.

 

Overview

 

Creatd, Inc. provideseconomic opportunities to creators and brands by multiplying the impact of platforms, technology, and people.

 

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The Company has fourmain revenue lines, all directly related to its flagship technology platform, Vocal. The business lines complement one another, creatinga flywheel effect. Working together, they provide shared data and resources to holistically leverage and organically grow the Company.Revenues are generated from creator subscriptions, consumer product sales, branded content, and IP development. 

 

Creator-Centric Strategy

 

Creatd’s northstar metric is to empower creators by providing best-in-class tools, supportive communities, and opportunities for monetization and audienceexpansion. This creator-first approach is the foundation of our culture and mission. 

 

Creator Subscriptions

 

Creatd’s most scalablestream of revenues are derived from its flagship technology platform, Vocal. 

 

Vocal was built to serveas a home base for creators. This robust, proprietary technology platform provides digital tools and resources, safe and curated communities,and monetization opportunities that enable creators to find a receptive audience and be rewarded for their content. Creators of all typescall Vocal their home, from bloggers to social media influencers, to podcasters, founders, musicians, photographers, and more.

 

Since its initial launchin 2016, Vocal has grown to over 1.5 million registered creators and is one of the premier technology platforms for content creators ofall shapes and sizes. Creators can opt to use Vocal for free, or upgrade to the premium membership tier, Vocal+. Upon joining Vocal, eitheras a freemium or premium member, creators can immediately begin to utilize Vocal’s storytelling tools to create and publish theirstories, as well as benefit from Vocal’s monetization features. Creatd facilitates creators’ monetization on Vocal in manyways, including i) rewarding creators for each ‘read’ their story receives; ii) via Vocal Challenges, or writing conteststhrough which creators can win cash and other rewards; iii) by awarding Bonuses; iv) by connecting creators with brands for opportunitiesto collaborate on Vocal for Brands branded content campaigns; v) through ‘Subscribe,’ which enables creators to receive paymentdirectly from their audience via monthly subscriptions and one-off microtransactions; vi) via Vocal’s Ambassador Program, whichenables creators to receive additional rewards whenever they refer a new Vocal+ member. The Vocal app is available for both iOS and Androidon the Apple App store and the Google Play store.

 

Vocal’s proprietarytechnology is built on Keystone, the same underlying open-source framework used by industry leaders in the software as a service (SaaS)space. Some of the differentiating elements of Vocal’s technology are speed, sustainability, and scalability. The Company continuesto invest heavily in research and development to continuously improve and innovate its platform, with the goal of optimizing the userexperience for creators, brands and their audiences. Additionally, the Vocal platform and its underlying technology maintain an advantageouscapital-light infrastructure. By using cloud service providers and data segment specialists, we are able to focus on building the platform,community, and revenue rather than building and maintaining the costly internal infrastructures that have materially affected so manylegacy media platforms.

 

Vocal’s technologyhas been specifically designed to significantly scale without a material corresponding increase in operational costs. While our userscan embed rich media, such as video, audio, and product links, into their Vocal stories, the rich media content is hosted elsewhere (suchas YouTube, Instagram, Vimeo, Shopify, and Spotify). The Vocal platform can accommodate content of all kinds without bearing the financialor operational costs associated with hosting the media itself. Creatd maintains a number of partnerships and initiatives with the primarycontent distribution and hosting platforms. In addition to the benefits this framework affords to the Company, it provides the additionalbenefit to our content creators, in that a creator can increase their monetization; for example, a creator can embed their YouTube videointo a Vocal story and thus derive earnings from both platforms when their video is viewed.

 

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Consumer ProductsGroup

 

Creatd’s portfolioof internally owned and operated e-commerce businesses and associated technology and infrastructure make up the majority of the company’ssecond most scalable revenue line. The Company supports founders by providing a host of services including design and development, marketingand distribution, and go-to-market strategies. The Company expects to broaden its portfolio through the acquisition of up and coming brandsthat are aligned and easily consolidated into its shared supply chain, resources, and infrastructure. 

 

This portfolio includes:

 

Camp, a direct-to-consumer(DTC) food brand which creates healthy upgrades to classic comfort food favorites. Each of Camp’s products are created with servingsof vegetables and contain Vitamins A, C, D, E, B1 + B6. Since its launch in 2020, Camp continues to add new products to its line of healthy,veggie-based, family-friendly foods, with flavors including Classic Cheddar Mac ‘N’ Cheese, White Cheddar Mac ‘N’Cheese, Vegan Cheezy Mac, and Twist Veggie Pasta.

 

Dune Glow Remedy (“Dune”),which the Company purchased and brought to market in 2021, is a beverage brand focused on promoting wellness and beauty from within.Each beverage in Dune’s product line is meticulously crafted with functional ingredients that nourish skin from the inside outand enhance one’s natural glow. During 2022, Dune has continued to advance its retail and wholesale distribution strategy, securingnumerous partnerships including with lifestyle retailer Urban Outfitters, Equinox, and the Los Angeles-based Erewhon Market.

 

Basis, a hydrating electrolytedrink mix formulated using rehydration therapies developed by the World Health Organization. Acquired by the Company in first quarter2022, Basis has a history of strong sales volume both on the brand’s website as well as through third-party distribution channelssuch as Amazon.

 

Brave, a plant-basedfood company that provides convenient and healthy breakfast food products. On September 13, 2022, the Company acquired 100% of the membershipinterests of Brave Foods, LLC, a Maine limited liability company (“Brave”). What started as a search for a better morningroutine evolved into a business serving thousands of go-getters of every type.

 

Branded Content

 

The branded content revenueline is driven primarily by its Vocal for Brands offering, the Company’s internal content studio. The business line works with premierbrands developing best-in-class organic marketing campaigns. In addition to content creation, the Company generates revenues from itsinfluencer and performance marketing agency opportunities.

  

Brands have a story totell. They leverage Vocal’s creator communities to help them tell it. Vocal for Brands’ content marketing studio specializesin pairing leading brands with Vocal creators, as well as discovering new talent and introducing them to the Vocal platform. The brandedcontent business produces marketing campaigns on the platform that are non-interruptive, engaging, and direct-response driven. Additionally,brands can opt to collaborate with Vocal on sponsored Challenges, prompting the creation of thousands of high-quality stories that arecentered around the brand’s mission and further disseminated through creators’ respective social channels and promotionaloutlets. Vocal for Brands campaigns leverage Vocal’s first-party audience insights, which enables the creation of highly targeted,segmented audiences and optimized campaign results.

 

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IP Development andProduction

 

Creatd’s fourthrevenue stream is driven by partnering with its top creators to produce stories for TV, film, podcasts, and print. The Vocal platformis perpetually generating intellectual property sourced and curated by a combination of human let moderation and machine learning models.With millions of compelling stories in its midst, Creatd’s Vocal technology surfaces the best candidates for transmedia adaptations,through a deep analysis of community, creator, and audience insights.  

 

In 2022, Creatd announceda series of newly released and upcoming production projects, including:

 

“Write Here, Write Now,”the Company’s first-ever podcast showcasing select Vocal creators and stories; a partnership with UK-based publisher, Unbound,for the publication of books featuring stories sourced from Vocal; the formation of a new graphic novel development arm which in Fall2022 will release its first title, Steam Wars, created by artist and independent filmmaker Larry Blamire.

 

OG Gallery: The OG Collectionis an extensive library of original artwork and imagery from the archives of some of the most iconic magazines of the 20th century. OGGallery is an exploratory initiative aimed at identifying opportunities to propel the OG Collection into a new technological sphere:the NFT marketplace.

 

Application of First-PartyData

 

Creatd’s sharedbusiness intelligence and marketing teams identify and target individual creators, communities, and brands, utilizing empirical data harnessedfrom the Vocal technology platform. The team’s ability to apply its proprietary first-party data works to reduce acquisition costsfor new creators and to help provide brands with conversions and an ideal targeted audience. In this way, our ability to apply first-partydata is one of the value-drivers for the Company across its four business pillars. The internal teams work across the Company’sportfolio of technology product and service revenue lines.

 

Creatd uses its firstparty data to improve the Vocal platform. Specifically, data helps understand the behaviors and attributes that are common among the creators,brands, and audiences within the platform’s ecosystem. Pairing first-party Vocal data with third-party data from distribution platformssuch as Instagram, Tiktok, Twitter, and Snapchat provide a more granular profile of creators, brands, and audiences. It is through generatingthis valuable first-party data that the Company can continually enrich and refine its targeting capabilities for branded content marketingand creator acquisition, and specifically, to reduce creator acquisition costs (CAC) and subscriber acquisition costs (SAC).

 

Competitive Advantage

 

The idea for Vocal cameas a response to what Creatd’s founders recognized as systemic flaws inherent to the digital media industry and its operationalinfrastructures. The depreciating value of digital media business models built on legacy technology platforms that did not efficientlyaccess and apply data, created a unique opportunity for the development of a new type of creator-centric platform. Key to building a platformthat could appeal to a global community was utilizing that data to create a win-win proposition for all constituents including creators,audiences and the brands that want to access them. The proprietary nature of Creatd’s technology and its process give the companya competitive advantage in acquiring undervalued technology assets that can be rapidly assimilated into the greater collective, thus exponentiallydriving future EBITDA.

 

Creatd’s foundersbuilt the Vocal platform upon the general thesis that a closed and safe ecosystem utilizing first-party data to increase efficienciescould create a sustainable and defensible business model. Vocal was strategically developed to provide value for content creators, readers,and brands, and to serve as a home for the ever-increasing amount of digital content being produced and the libraries of digital assetslying dormant.

 

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Acquisition Strategy

 

Creatd’s hybridfinance and design culture is key to its acquisition strategy. Acquisition targets are companies that meet a set of opportunistic or financialstandards or that are part of specific digital environments. Transactions are mainly accretive and targets can seamlessly integrate intoCreatd’s existing revenue lines. Creatd will continue to make strategic acquisitions when presented with opportunities that arein the interest of long term shareholder value.

 

Recent Developments  

 

December 2022 SecuritiesPurchase Agreement

 

On December 12, 2022,the Company entered into and closed a securities purchase agreement (the “Purchase Agreement”) with one accredited investor(the “Investor”), whereby the Investor purchased from the Company for an aggregate of $750,000 in subscription amount, anunsecured debenture in the principal amount of $750,000 (the “Debenture”). The Company and the Investor also entered intoa registration rights agreement pursuant to the Purchase Agreement.

 

The Debenture has a termof six months with a maturity date of June 12, 2023, which may be extended by six months at the Company’s option subject to certainconditions and monthly redemption options at the election of the holder and are convertible into shares of Common Stock at a conversionprice of $0.20 per share, subject to adjustment upon certain events.

 

November 2022 WarrantAmendment and Issuance

 

On November 18, 2022, the Company entered intothat certain letter agreement dated November 18, 2022 (the “Letter Agreement”) with the respective holders of an aggregateof 471,953 warrants issued as placement agent fees in connection with the Company’s entry into securities purchase agreements with33 accredited investors, whereby, at the closing, the Investors agreed to purchase from the Company an aggregate of (i) 7,778 shares ofthe Company’s Series E Convertible Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”); and(ii) 2,831,721 warrants to purchase shares of the Company’s common stock, pursuant to which the exercise price of such warrantswas amended and such warrants were immediately exercised. Additionally, pursuant to the Letter Agreement, the Company issued to such warrantholders 471,953 new warrants, exercisable immediately, for a term of 60 months, at a price of $0.77 per share, subject to customary adjustmentprovisions. As a result of the triggering of such adjustment provisions, the number of warrants increased to 1,817,019 and the exerciseprice decreased to $0.20.

 

Appointment of Erica Wagner to Board; Resignationof Joanna Bloor

 

On November 16, 2022, Erica Wagner was appointedto the Company’s Board of Directors. Ms. Wagner, age 55, joins the Board with over 25 years of experience as a journalist, broadcaster,editor and author. From 2016 through 2021, Ms. Wagner was a Lecturer, and later Senior Lecturer, at Goldsmith’s College, Universityof London, where she taught creative writing. Ms. Wagner was previously Lead Editorial Innovator for Creatd, Inc., has previously andcurrently held roles as a freelance editor, journalist, and contributing writer for numerous outlets both in the U.K. and the U.S., including TheNew StatesmanHarper’s Bazaar, the Economist, the Observer, the New York Times.Ms. Wagner is also a freelance literary and creative consultant for Chanel, as well as the host of their branded podcast. She has twicebeen a judge of the Booker Prize and has been judge and Chair of the Goldsmiths Prize. In 2015, Ms. Wagner was awarded an Honorary PhDby the University of East Anglia, and currently Goldsmith’s College Distinguished Writers’ Centre Fellow. She has an undergraduatedegree from University of Cambridge, a Master’s degree from University of East Anglia, and an Honorary PhD from the University ofEast Anglia. As a member of Creatd’s board of directors, Ms. Wagner will add significant expertise with respect to informing theCompany’s literary and creative direction, having worked closely with news organizations, commercial companies and publishers, toadvise their creative direction and its application towards commercial success.

 

On November17, 2022, the Board received notice from Joanna Bloor of her resignation as a director and from all committees of the Board on which sheserved, effective as of such date. Such resignation is not the result of any disagreement with the Company on any matter relating to theCompany’s operations, policies or practices.

 

Appointment of Peter Majar to the Board;Resignation of Lorraine Hendrickson

 

On November 2, 2022, the Board appointed PeterMajar to the Board. Mr. Majar, age 55, Founder and Managing Member of Majar Advisors, combines over 25 years of experience in investmentbanking, financial services and technology, and management consulting, having held numerous senior management and executive positionsincluding Chief Financial Officer, Head of Financial Technology, Head of Strategy, as well as several Managing Director positions. From2015 to 2017, Mr. Majar served as Managing Director in Investment Banking and co-Head of Diversified Financial Services at Piper Jaffray& Co. (now Piper Sandler Companies). From 2017 to 2018, Mr. Majar provided management consulting services through his self-establishedfirm, Majar Advisors LLC, which remains in operation through the present. From 2018 to 2021, Mr. Majar served as Managing Director, Headof Financial Technology at New York-based investment banking and financial advisory firm, TAP Advisors, LLC. Between 2021 and 2022, Mr.Majar served as Chief Financial Officer at information technology company Hoyos Integrity Corp., having previously served as a longtimeadvisor to the firm. Mr. Majar holds an undergraduate degree from University of Washington and an MBA from Columbia University. As a boarddirector, Mr. Majar will add considerable value, including through his comprehensive and diverse investment management experience, deepknowledge of financial technology services and transactions, and broad experience with corporate development, strategy consulting, andexecutive leadership.

 

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On November 1, 2022, the Board received noticefrom Lorraine Hendrickson of her resignation as a director and from all committees of the Board on which she served, effective as of suchdate. Ms. Hendrickson’s resignation as a member of the Board is not the result of any disagreement with the Company on any matterrelating to the Company’s operations, policies or practices.

 

NasdaqDelisting 

 

On September2, 2022, the Company received a letter from the staff of The Nasdaq Capital Market notifying the Company that the Nasdaq Hearings Panelhas determined to delist the Company’s common stock from the Exchange, based on the Company’s failure to complywith the listing requirements of Nasdaq Rule 5550(b)(1) as a result of the Company’s shareholder equity deficit for the period endedJune 30, 2022, as demonstrated in Company’s Quarterly Report on Form 10-Q filed on August 15, 2022, following the Company havingnot complied with the market value of listed securities requirement in Nasdaq Rule 5550(b)(2) on March 1, 2022, while the Company wasunder a Panel Monitor, as had been previously disclosed. Suspension of trading in the Company’s shares on the Exchange becameeffective at the opening of business on September 7, 2022, at which time the Company’s common stock, under the symbol “CRTD,”and publicly-traded warrants, under the symbol “CRTDW,” was quoted on the OTCPink marketplace operated by OTC Markets GroupInc.  

 

Followingpassage of the proscribed 15-day time period for appeal as stated in the Letter, on October 26, 2022, Nasdaq completed the delisting byfiling a Form 25 Notification of Delisting with the Securities and Exchange Commission.

 

The Company’scommon stock, under the symbol “CRTD,” is quoted on the OTCQB marketplace operated by OTC Markets Group Inc. effective asof September 26, 2022. The Company’s publicly-traded warrants, under the symbol “CRTDW,” are quoted on the OTCPink marketplaceoperated by OTC Markets Group Inc.

 

Securities PurchaseAgreement; Side Letter

 

On October 24, 2022, the Company entered into and closed a securitiespurchase agreement (the “Purchase Agreement”) with one accredited investor (the “Investor”), whereby the Investorpurchased from the Company for an aggregate of $1,500,000 in subscription amount, an unsecured debenture in the principal amount of $1,666,650(the “Debenture”). The Company and the Investor also entered into a registration rights agreement (each, a “RegistrationRights Agreement”) pursuant to the Purchase Agreement.

 

The Debenture has anoriginal issue discount of 10%, has a term of six months with a maturity date of April 24, 2023, may be extended by six months at theCompany’s option subject to certain conditions, and are convertible into shares of Common Stock at a conversion price of $0.20 pershare, subject to adjustment upon certain events.

 

In connection with itsentry into the Purchase Agreement and issuance of the Debenture, the Company also entered into a side letter agreement (the “LetterAgreement”) with the holders of debentures of the Company, the Series C Warrants and Series D Warrants issued as of May 31, 2022(the “May Investors”) and the holders of debentures of the Company, the Series E Warrants and Series F Warrants issued asof July 25, 2022 (the “July Investors”). Pursuant to the Letter Agreement each of the May Investors and the July Investorshave entered into a lock-up agreement whereby they may not sell any such debentures, warrants, the shares into which such debentures maybe converted, or certain shares underlying such warrants until the date that is 30 days after the date on which the registration statementregistering for resale the shares of the Company’s common stock underlying the Debenture is declared effective by the Securitiesand Exchange Commission. Additionally, the Letter Agreement, provides that the May Investors and July Investors have agreed to a furtherlock up of such shares for a further 30 days upon the receipt of a certain amount of the proceeds from future potential issuances of debentures,common stock or similar securities by the Company. Further additionally, pursuant to the Letter Agreement, the May Investors and the JulyInvestors have agreed to exchange and return for cancellation the Series C Warrants, Series D Warrants, Series E Warrants and Series FWarrants, receiving replacement warrants from the Company (the “Replacement Warrants”), in consideration for (i) the Company’spayment of $750,000 of the proceeds from the sale of the Debenture to the May Investors and July Investors on a pro rata basis and (ii)the Company’s agreement to pay, on a pro rata basis to the May Investors and July Investors, the greater of (x) $750,000 and (y)50% of the gross proceeds raised in a subsequent financing. The Replacement Warrants reflect a reduction in the number of Series C andSeries D Warrants from 1,550,000 in each class to 1,536,607 in each class and a reduction in the number of Series E and Series F Warrantsfrom 1,075,000 in each class to 807,143 in each class, and the initial exercise date for the Replacement Warrants are unchanged from thedate as set forth in the respective exchanged Series C, Series D, Series E or Series F Warrant.

 

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Common Stock PurchaseAgreement, Securities Purchase Agreement and Promissory Note

 

On October 20, 2022,the Company entered into a Common Stock Purchase Agreement (the “Investment Agreement”) with an otherwise unaffiliated thirdparty (the “Investor”). Pursuant to the terms of the Investment Agreement, for a period of thirty-six (36) months commencingon the trading day immediately following date of effectiveness of the Registration Statement (as defined below), the Investor purchaseup to $15,000,000 of the Company’s common stock, par value $0.001 per share (the “Shares”), pursuant to Drawdown Notices(as defined below), covering the Registrable Securities (as defined below). The purchase price of the Shares under the Investment Agreementis equal to 82% of the lowest volume weighted average price (VWAP) during the last ten trading days after the Company delivers to theInvestor a Put notice (a “Drawdown Notice”) in writing requiring Investor to purchase shares of the Company, subject to theterms of the Investment Agreement.

 

On October 20, 2022,the Company also entered into a Securities Purchase Agreement (the “Purchase Agreement”) with the Investor, pursuant to whichthe Company issued to the Investor on that date a Promissory Note (the “Note”) in the principal amount of $300,000 in exchangefor a purchase price of $255,000, which the Investor funded on October 20,2022.  The proceeds of the Note will be used by the Companyfor general working capital purposes.  

 

The Note bears interestat the rate of 10% per annum.  Starting on the fifth month anniversary of the funding of the Note, and for the next six months thereafter,the Company will make seven equal monthly payments of $47,142.85 to the Investor.

 

On October 20, 2022,in connection with the entry by the Company and the Investor into the economic agreements, (i.e., the Investment Agreement, thePurchase Agreement, and the Note and the funding thereof), the Company issued 800,000 shares of its common stock to the Investor.

 

Securities Purchase Agreement

 

On September 15, 2022,Creatd, Inc., entered into a securities purchase agreement (the “Purchase Agreement”) with five accredited investors resultingin the raise of $800,000 in gross proceeds to the Company. Pursuant to the terms of the Purchase Agreement, the Company agreed to sellin a registered direct offering (the “Offering”) an aggregate of 4,000,000 shares of the Company’s common stock, parvalue $0.001 per share (the “Common Stock”). In a concurrent private placement, the Company issued to such investors warrantsto purchase up to 4,000,000 shares of Common Stock, representing 100% of the shares of common stock purchased in the Offering (the “Warrants”).The Warrants and the shares of common stock issuable upon the exercise of the Warrants (the “Warrant Shares”) are not beingregistered under the Securities Act of 1933, as amended.

 

The Offering is expectedto close on or about September 19, 2022, subject to the satisfaction of customary closing conditions as set forth in the Purchase Agreement.The Company expects the gross proceeds from the Offering to be $800,000, before deducting Offering expenses, which will be used for generalcorporate purposes, including working capital.

 

The shares of CommonStock were offered and sold by the Company pursuant to a prospectus supplement, which will be filed with the Securities and Exchange Commissionin connection with a takedown from the Company’s effective shelf registration statement on Form S-3, which was filed with the Commissionon November 25, 2020 and subsequently declared effective on April 23, 2021 (File No. 333-250982) (the “Shelf Registration Statement”).

 

The Warrants are immediately exercisable for aterm of five years until September 15, 2027. The Warrants are exercisable at an exercise price of $0.20, subject to adjustment upon certainevents. The Warrants provide for cashless exercise to the extent that there is no registration statement available for the underlyingshares of Common Stock. The shares underlying the Warrants are to be registered within 10 trading days of the date of the Purchase Agreement.

 

The representations and warranties contained inthe Purchase Agreement were made by the parties to, and solely for the benefit of, the other in the context of all of the terms and conditionsof the Purchase Agreement and in the context of the specific relationship between the parties. The provisions of the Purchase Agreement,including the representations and warranties contained therein, are not for the benefit of any party other than the parties to the PurchaseAgreement. The Purchase Agreement is not intended for investors and the public to obtain factual information about the current state ofaffairs of the parties.

 

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Restructuring Agreement

 

On September 15, 2022, in connection with theOffering, the Company entered into an agreement with the holders of certain of the Company’s previously issued securities (the “RestructuringAgreement”).

 

The Restructuring Agreement, among other things,modified certain provisions of the following securities of the Company:

 

(i)Original Issue Discount Senior Convertible Debentures issued on May 31, 2022 (the “May 2022 Debentures”);

 

(ii)Original Issue Discount Senior Convertible Debentures issued on July 25, 2022 (the “July 2022 Debentures”and, together with the May 2022 Debentures, the “Debentures”);

 

(iii)Common Stock Purchase Warrants issued on February 28, 2022 (the “February 2022 Warrants”);

 

(iv)Common Stock Purchase Warrants issued on March 9, 2022 (the “March 2022 Warrants”);

 

(v)Series C Common Stock Purchase Warrants issued on May 31, 2022 (the “Series C Warrants”);

 

(vi)Series D Common Stock Purchase Warrants issued on May 31, 2022 (the “Series D Warrants”);

 

(vii)Series E Common Stock Purchase Warrants issued on July 25, 2022 (the “Series E Warrants”);

 

(viii)Series F Common Stock Purchase Warrants issued on July 25, 2022 (the “Series F Warrants” and,together with the February 2022 Warrants, the March 2022 Warrants, Series C Warrants, Series D Warrants and Series E Warrants, the “RestructuredWarrants”);

 

Pursuant to the Restructuring Agreement, the Companyand the Holders agreed to, among other things, to (i) reduce the conversion price of the Debentures down to $0.20, subject to adjustmentfor reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock; (ii) reducethe exercise price of the Restructured Warrants down to $0.20, subject to adjustment for subject to adjustment for reverse and forwardstock splits, stock dividends, stock combinations and other similar transactions of the Common Stock; (iii) extend the maturity datesfor the Debentures to March 31, 2023; (iv) permit the Company’s contemplated rights offering to proceed, provided that the per shareoffering price in the rights offering is not less than $0.20; and (v) require that the Company’s cash burn rate not exceed $600,000per month; provided, however, that with the prior written consent of a majority in interest of the Holders, such permitted monthly burnrate can be increased by $150,000, provided such additional amount is used for marketing purposes.

 

Additionally, in connection with the RestructuringAgreement, (i) the Company entered into a Registration Rights Agreement (“Registration Rights Agreement”), providing for thefiling of a registration statement covering the Restructured Warrants and shares underlying the Warrants by not later than 10 tradingdays after the date of the Registration Rights Agreement or the earliest practical date on which the Company is permitted by Commissionguidance to file such registration statement; (ii) the Company and its subsidiaries entered into a Security Agreement (the “SecurityAgreement”), whereby the Company granted a first priority security interest in all of their respective assets to the Holders and(iii) the subsidiaries of the Company delivered a guarantee (the “Guarantee”) in favor of the Holders whereby each such subsidiaryguaranteed the full payment and performance of all obligations of the Company pursuant to the Debentures.

 

Each of our directors and officers have entered into lock-up agreements(the “Lock-up Agreements”) in favor of the Holders, whereby they have agreed not to offer, sell, agree to sell, directly orindirectly, or otherwise dispose of any shares of Common Stock or any securities convertible into or exchangeable for shares of CommonStock without the prior written consent of the Holders for a period of 180 days after the date of the Restructuring Agreement. The Lock-upAgreements provide limited exceptions and their restrictions may be waived at any time by the Holders.

 

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Resignation of Brad Justus

 

On September 21, 2022, the Board of Directorsof Creatd, Inc. received notice from Brad Justus of his resignation as a member of the Board, chair of the Nominating & CorporateGovernance Committee, a member of the Audit Committee and a member of the Compensation Committee, with such resignation to become effectiveon September 30, 2022. Such resignation is not the result of any disagreement with the Company on any matter relating to the Company’soperations, policies or practices.

 

Resignation of Chief Executive Officer andDirector

 

On August 9, 2022, Laurie Weisberg, the Company’sChief Executive Officer and a member of the Board, notified the Company of her intention to resign from the positions of Chief ExecutiveOfficer, director, and any other positions held with the Company or any of its subsidiaries, regardless of whether Ms. Weisberg had beenappointed. Such resignations are to become effective on a date to be determined following further discussion with the Board, but in noevent later than August 31, 2022. On September 2, 2022, the Company entered into an Executive SeparationAgreement with Laurie Weisberg the Company’s Chief Executive Officer and member of the Board of Directors setting forth the termsand conditions related to the Executive’s resignation for good reason as Chief Executive Officer, Director and any other positionsheld with the Company or any subsidiary.

 

Appointment of Chief Executive Officer

 

Effective upon Ms. Weisberg’s resignationas Chief Executive Officer, Jeremy Frommer, currently the Company’s Executive Chairman, will be appointed as Chief Executive Officer,pursuant to the Board’s approval.

 

Jeremy Frommer

 

Mr. Frommer was appointed Executive Chairman inFebruary 2022 and has been a member of our board of directors since February 2016. Previously, he served as our Chief Executive Officerfrom February 2016 to August 2021, and Co-Chief Executive Officer from August 2021 to February 2022. Mr. Frommer has over 20 years ofexperience in the financial technology industry. Previously, Mr. Frommer held key leadership roles in the investment banking and tradingdivisions of large financial institutions. From 2009 to 2012, Mr. Frommer was briefly retired until beginning concept formation for JerrickVentures which he officially founded in 2013. From 2007 to 2009, Mr. Frommer was Managing Director of Global Prime Services at RBC CapitalMarkets, the investment banking arm of the Royal Bank of Canada, the largest financial institution in Canada, after the sale of CarlinFinancial Group, a professional trading firm. From 2004 to 2007, Mr. Frommer was the Chief Executive Officer of Carlin Financial Groupafter the sale of NextGen Trading, a software development company focused on building equity trading platforms. From 2002 to 2004, Mr.Frommer was Founder and Chief Executive Officer of NextGen Trading. From 2000 to 2002, he was Managing Director of Merger Arbitrage Tradingat Bank of America, a financial services firm. Mr. Frommer was also a director of LionEye Capital, a hedge fund from June 2012 to June2014. He holds a B.A. from the University of Albany. We believe Mr. Frommer is qualified to serve on our board of directors due to hisfinancial and leadership experience.

 

Appointment of Director

 

Effective upon Ms. Weisberg’s resignationas a director, Justin Maury, currently the Company’s President and Chief Operating Officer, will be appointed to the Board, pursuantto the Board’s approval.

 

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Justin Maury

 

Mr. Maury has served as our President since January2019 and was appointed Chief Operating Officer in August 2021. A full-stack designer and product developer by training, Mr. Maury partneredwith Jeremy Frommer and founded the Company in 2013, having brought with him 10 years of experience in the creative industry. Since joiningCreatd in 2013, Mr. Maury has been an instrumental force in the Company’s business and revenue expansion, and has overseen the Company’sproduct development since inception, including overseeing the design, development, launch, and ongoing growth of the Company’s flagshipproduct, Vocal, the innovative creator that, under Mr. Maury’s leadership, has grown to a community of over 1.5 million users witha total audience reach of over 175 million.

 

As a director, we believe Mr. Maury will add considerablevalue, including through by providing a unique perspective into Creatd’s product performance and evolution and by providing invaluabledirect input to help guide the Company’s ongoing refinement of its technology roadmap and maturation of its business model.

 

Trigger of Price Reset

 

On July 29, 2022, theCompany announced that it was not moving forward with its previously announced Rights Offering. In doing so, it triggered a price resetin the July 2022 Financing and the May 2022 Securities Purchase Agreement. As a result of this price reset, the May 2022 Securities PurchaseAgreement debentures now have a conversion price of $1.00, and both the Series C and Series D warrants have exercise prices of $0.96.As a result of the price reset, the July 2022 Financing debentures now have a conversion price of $1.25, and both the Series E and SeriesF warrants have exercise prices of $1.01.

 

July 2022 Financing

 

On July 25, 2022 (the“Effective Date”), the Company entered into and closed securities purchase agreements (each, a “Purchase Agreement”)with five accredited investors (the “Investors”), whereby the Investors purchased from the Company for an aggregate of $1,935,019in subscription amount (i) debentures in the principal amount of $2,150,000 (the “Debentures”); (ii) 1,075,000 Series E CommonStock Purchase Warrants to purchase shares of the Common Stock (the “Series E Warrants”); and (iii) 1,075,000 Series F CommonStock Purchase Warrants to purchase shares of Common Stock (the “Series F Warrants”, and collectively with the Series E Warrants,the “Warrants”). The Company and the Investors also entered into registration rights agreements (each, a “RegistrationRights Agreement”) pursuant to the Purchase Agreement.

 

The Debentures have anoriginal issue discount of 10%, have a maturity date of November 30, 2022, may be extended by six months at the Company’s optionsubject to certain conditions, and are convertible into shares of Common Stock at a conversion price of $2.00 per share, subject to adjustmentupon certain events including a one-time adjustment to the price of the Common Stock offered in the Rights Offering (as defined therein),with such adjusted conversion price not to be lower than $1.25.

 

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The Warrants are immediatelyexercisable for a term of five years until July 25, 2027. The Series E Warrants are exercisable at an exercise price of $3.00, subjectto adjustment upon certain events including a one-time adjustment to the price of the Common Stock offered in the Rights Offering, withsuch adjusted exercise price not to be lower than $1.01. The Series F Warrants are exercisable at an exercise price of $6.00 subject toadjustment upon certain events including a one-time adjustment to the price of the Common Stock offered in the Rights Offering, with suchadjusted exercise price not to be lower than $1.01. The Warrants provide for cashless exercise to the extent that there is no registrationstatement available for the underlying shares of Common Stock. The shares underlying the Debentures, the Series E Warrants and the SeriesF Warrants are to be registered within 90 days of the Effective Date.

 

The representations andwarranties contained in the Purchase Agreement were made by the parties to, and solely for the benefit of, the other in the context ofall of the terms and conditions of the Purchase Agreement and in the context of the specific relationship between the parties. The provisionsof the Purchase Agreement, including the representations and warranties contained therein, are not for the benefit of any party otherthan the parties to the Purchase Agreement. The Purchase Agreement is not intended for investors and the public to obtain factual informationabout the current state of affairs of the parties.

 

Additionally, in connectionwith the Purchase Agreements, the subsidiaries of the Company delivered a guarantee (the “Guarantee”) in favor of the Investorswhereby each such subsidiary guaranteed the full payment and performance of all obligations of the Company pursuant to the Purchase Agreement.

 

Securities PurchaseAgreement

 

On May 31, 2022, theCompany entered into and closed securities purchase agreements (each, a “Purchase Agreement”) with eight accredited investors(the “Investors”), whereby the Investors purchased from the Company for an aggregate of $3,600,036 in subscription amount(i) debentures in the principal amount of $4,000,000 (the “Debentures”); (ii) 2,000,000 Series C Common Stock Purchase Warrantsto purchase shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) (the “SeriesC Warrants”); and (iii) 2,000,000 Series D Common Stock Purchase Warrants to purchase shares of Common Stock (the “SeriesD Warrants”, and collectively with the Series C Warrants, the “Warrants”). The Company and the Investors also enteredinto registration rights agreements (each, a “Registration Rights Agreement”) pursuant to the Purchase Agreement.

 

The Debentures have anoriginal issue discount of 10%, have a term of six months with a maturity date of November 30, 2022, may be extended by six months atthe Company’s option subject to certain conditions, and are convertible into shares of Common Stock at a conversion price of $2.00per share, subject to adjustment upon certain events including a one-time adjustment to the price of the Common Stock offered in the RightsOffering (as defined therein), with such adjusted conversion price not to be lower than $1.00.

 

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The Warrants are exercisablefor a term of five years from the initial exercise date of November 30, 2022, until November 30, 2027. The Series C Warrants are exercisableat an exercise price of $3.00, subject to adjustment upon certain events including a one-time adjustment to the price of the Common Stockoffered in the Rights Offering, with such adjusted exercise price not to be lower than $0.96. The Series D Warrants are exercisable atan exercise price of $6.00 subject to adjustment upon certain events including a one-time adjustment to the price of the Common Stockoffered in the Rights Offering, with such adjusted exercise price not to be lower than $0.96. The Warrants provide for cashless exerciseto the extent that there is no registration statement available for the underlying shares of Common Stock. The shares underlying the Debentures,the Series C Warrants and the Series D Warrants are to be registered within 90 days of the Effective Date.

 

Additionally, in connectionwith the Purchase Agreements, the subsidiaries of the Company delivered a guarantee (the “Guarantee”) in favor of the Investorswhereby each such subsidiary guaranteed the full payment and performance of all obligations of the Company pursuant to the PurchaseAgreement.

 

The Debentures, Warrants,Common Stock underlying the Debentures and the Common Stock underlying the Warrants were not registered under the Securities Act, butqualified for exemption under Section 4(a)(2) and Rule 506 promulgated thereunder. The Company is relying on this exemption from registrationfor private placements based in part on the representations made by Investors, including representations with respect to each Investor’sstatus as an accredited investor, as such term is defined in Rule 501(a) of the Securities Act, and each Investor’s investment intent.

 

Results of Operations

 

Liquidity and CapitalResources

 

The following table summarizestotal current assets, liabilities and working capital at September 30, 2022 compared to December 31, 2021:

 

   September 30,
2022
   December 31,
2021
   Increase / (Decrease) 
Current Assets  $1,680,594   $4,475,242   $(2,794,648)
Current Liabilities  $15,172,939   $5,421,015   $9,751,924 
Working Capital (Deficit)  $(13,492,345)  $(945,773)  $(12,546,572)

 

At September 30, 2022,the Company had a working capital deficit of $13,492,345 as compared to a working capital deficit of $945,773 at December 31, 2021, anincrease in working capital deficit of $12,546,572. The increase is primarily attributable to the decrease in cash, accounts receivable,and prepaids and other current assets, as well as an increase in accounts payable, notes payable and deferred revenue.

 

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Net Cash

 

Net cash used in operatingactivities for the nine months ended September 30, 2022, and 2021, was $13,857,189 and $15,617,065, respectively. The net loss for thenine months ended September 30, 2022, and 2021 was $25,112,331 and $24,942,247, respectively. The decrease in net cash used in operatingactivities reflects the decrease in net cash used in operating activities reflects a decrease in cash paid for marketing expenditures,research and development, legal fees, and accounting & audit fees. This was offset by an increase in rent and lease expenses and payrollexpense. 

 

Net cash used in investingactivities for the nine months ended September 30, 2022, and 2021, was $494,192 and $1,325,155, respectively. This is primarily attributableto cash paid for property and equipment along with the cash paid for minority and majority investment in business.

 

Net cash provided byfinancing activities for the nine months ended September 30, 2022, and 2021 was $11,061,905 and $10,560,265, respectively. During thenine months ended September 30, 2022, the Company’s operations were predominantly financed by net proceeds from the issuance ofcommon stock with warrants and from the issuance of notes. Similarly, the Company’s financing activity for the nine months endedSeptember 30, 2021, generated $5,472,068 from the exercise of warrants, the proceeds from loans and notes of $3,931,720, and proceedsfrom the issuance of stock and warrants, which were partially offset by the repayment of notes and loans of $1,345,723.

 

Summary of Statementsof Operations for the Three Months Ended September 30, 2022, and 2021:

 

   Three Months Ended
September 30,
 
   2022   2021 
Revenue  $1,022,851   $1,179,620 
Cost of revenue  $1,404,562   $1,418,213 
Operating expenses  $(5,595,108)  $(6,672,381)
Loss from operations  $(5,976,819)  $(6,910,974)
Other expenses  $(3,549,526)  $(2,809,147)
Net loss  $(9,526,345)  $(9,736,534)
Loss per common share - basic and diluted  $(0.45)  $(0.71)

 

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Revenue

 

Revenue totaled $1,022,851for the three months ended September 30, 2022, a decrease of $156,769 as compared to $1,179,620 for the comparable three months endedSeptember 30, 2021. Management attributes this decrease to the significant headwinds that have interrupted year-over-year growth due tosupply-line disruptions and an overall decline in consumer spending.   

 

Cost of Revenue

 

Cost of revenue for thethree months ended September 30, 2022, were $1,404,562, relatively flat as compared to $1,418,213 for the three months ended September30, 2021. Going forward, the Company expects the gross margin to continue to improve over time as it continues to consolidate operationsacross its portfolio of e-commerce brands.  

 

Operating Expenses

 

Operating expenses forthe three months ended September 30, 2022, were $5,595,108 as compared to $6,672,381 for the three months ended September 30, 2021. The16% decrease of $1,077,273 in operating expenses is primarily attributable to a cost cutting program implemented by the Company to dramaticallyreduce expenses, including significant decreases to marketing and research and development expenditures. This program began in Septemberof 2022, and its primary impact will be recognized in Q4 of 2022, including the impact of a significant reduction in headcount. Additionally,the company’s non-cash charges totaled $626,568, a $1,135,880 decrease from third quarter 2021. This decrease primarily representsstock-based compensation to employees and consultants during the quarter.

 

These decreases wereoffset by an increase in general and administrative expenses, as well as approximately $257,117 in one-time non-cash expenses relatedto the impairment of intangible assets and goodwill, as well as a one-time cash expense of $475,000 expense related to a member of management’sseverance package.

 

Loss from Operations

 

Loss from operationsfor the three months ended September 30, 2022, was $5,976,819 as compared to $6,910,974 for the three months ended September 30, 2021.The $934,155 decrease in the loss from operations this quarter primarily reflects the Company’s decreased operating expenses, offsetby the decrease in revenues.

 

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Other Expenses

 

Other expenses for thethree months ended September 30, 2022, were $3,549,526 as compared to $2,809,147 for the three months ended September 30, 2021. The decreasein third quarter 2022 other income was predominantly due to the increase from loss on extinguishment of debt and interest expense. Thiswas offset by a decrease in change in derivative liability and accretion of debt discount and issuance cost.

 

Net Loss

 

Net loss for the threemonths ended September 30, 2022, was $9,526,345, as compared to a net loss of $9,797,011 for the three months ended September 30, 2021.

 

Net loss attributableto common shareholders for the three months ended September 30, 2022, was $9,448,271, or loss per share of $0.45, as compared to a netloss attributable to common shareholders of $9,797,011, or loss per share of $0.71, for the three months ended September 30, 2021.

 

Summary of Statementsof Operations for the Nine Months Ended September 30, 2022, and 2021:

 

   Nine Months Ended
September 30,
 
   2022   2021 
Revenue  $3,997,490   $2,894,390 
Cost of revenue  $4,771,151   $4,160,743 
Operating expenses  $(20,205,866)  $(19,971,413)
Loss from operations  $(20,979,527)  $(21,237,766)
Other expenses  $(4,132,804)  $(3,688,068)
Net loss  $(25,112,331)  $(24,942,247)
Loss per common share - basic and diluted  $(1.23)  $(2.20)

 

Revenue

 

Revenue totaled $3,997,490for the nine months ended September 30, 2022, as compared to $2,894,390 for the comparable nine months ended September 30, 2021, an increaseof $1,103,100. The 38% year-over-year increase in revenue is primarily attributable to growth within the Company’s consumer productportfolio.

 

Cost of Revenue

 

Cost of revenue for thenine months ended September 30, 2022, were $4,771,151 as compared to $4,160,743 for the nine months ended September 30, 2021. The increaseof $610,408 in cost of revenue is primarily related to an increase in product-related cost of goods sold as the consumer products groupexpanded its operations. The Company expects the gross margin to continue to improve over time as it continues to grow a self-sustaining,organically driven revenue model across its business segments.

 

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Operating Expenses

 

Operating expenses forthe nine months ended September 30, 2022, were $20,205,866 as compared to $19,971,413 for the nine months ended September 30, 2021. Thedecrease of $234,453 in operating expenses is mainly related to a 50% decrease in marketing spend and a 32% decrease in stock-based compensation.This increase was partially offset by an increase in general and administrative expenses. The Company expects expenditures to decreasefurther due to the austerity measures put into place in late Q3 2022.

 

Loss from Operations

 

Loss from operationsfor the nine months ended September 30, 2022, was $20,979,527 as compared to $21,237,766 for the nine months ended September 30, 2021.The $ 258,239 increase in the loss from operations primarily reflects the Company’s increased revenues within its consumer productsgroup coupled with lowered operating expenses.

 

Other Expenses

 

Other expenses for thenine months ended September 30, 2022, were $4,132,804 as compared to $3,688,068 for the nine months ended September 30, 2021. The increasein other income was predominantly due to the increase from loss on extinguishment of debt and interest expense. This was offset by a decreasein change in derivative liability and accretion of debt discount and issuance cost.

 

Net Loss

 

Net loss for the ninemonths ended September 30, 2022, was $25,112,331, as compared to a net loss of $24,942,247 for the nine months ended September 30, 2021.

 

Net loss attributableto common shareholders for the nine months ended September 30, 2022, was $24,130,227, or loss per share of $1.23, as compared to a netloss attributable to common shareholders of $25,413,042, or loss per share of $2.20, for the nine months ended September 30, 2021.

 

Off-Balance SheetArrangements

 

As of September 30, 2022,we had no off-balance sheet arrangements.

 

Significant AccountingPolicies

 

Our significant accountingpolicies are described in Note 2 of the Financial Statements. If we complete an acquisition, we will be required to make estimates andassumptions typical of other companies. For example, we will be required to make critical accounting estimates related to valuation andaccounting for business combinations. The estimates will require us to rely upon assumptions that were highly uncertain at the time theaccounting estimates are made, and changes in them are reasonably likely to occur from period to period. Changes in estimates used inthese and other items could have a material impact on our financial statements in the future. Our estimates will be based on our experienceand our interpretation of economic, political, regulatory, and other factors that affect our business prospects. Actual results may differsignificantly from our estimates. For detailed information regarding our critical accounting policies and estimates, see our financialstatements and notes thereto included in this Report and in our Annual Report on Form 10-K for the year ended December 31, 2021. Therehave been no material changes to our critical accounting policies and estimates from those disclosed in our most recent Annual Reporton Form 10-K.

 

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BUSINESS

 

Overview

 

Creatd, Inc. provideseconomic opportunities to creators and brands by multiplying the impact of platforms, technology, and people.

 

The Company has fourmain revenue lines, all directly related to its flagship technology platform, Vocal. The business lines complement one another, creatinga flywheel effect. Working together, they provide shared data and resources to holistically leverage and organically grow the Company.Revenues are generated from creator subscriptions, consumer product sales, branded content, and IP development. 

 

Creator-Centric Strategy

 

Creatd’s northstar metric is to empower creators by providing best-in-class tools, supportive communities, and opportunities for monetization and audienceexpansion. This creator-first approach is the foundation of our culture and mission. 

 

Creator Subscriptions

 

Creatd’s most scalablestream of revenues are derived from its flagship technology platform, Vocal. 

 

Vocal was built to serveas a home base for creators. This robust, proprietary technology platform provides digital tools and resources, safe and curated communities,and monetization opportunities that enable creators to find a receptive audience and be rewarded for their content. Creators of all typescall Vocal their home, from bloggers to social media influencers, to podcasters, founders, musicians, photographers, and more.

 

Since its initial launchin 2016, Vocal has grown to over 1.5 million registered creators and is one of the premier technology platforms for content creators ofall shapes and sizes. Creators can opt to use Vocal for free, or upgrade to the premium membership tier, Vocal+. Upon joining Vocal, eitheras a freemium or premium member, creators can immediately begin to utilize Vocal’s storytelling tools to create and publish theirstories, as well as benefit from Vocal’s monetization features. Creatd facilitates creators’ monetization on Vocal in manyways, including i) rewarding creators for each ‘read’ their story receives; ii) via Vocal Challenges, or writing conteststhrough which creators can win cash and other rewards; iii) by awarding Bonuses; iv) by connecting creators with brands for opportunitiesto collaborate on Vocal for Brands branded content campaigns; v) through ’Subscribe,’ which enables creators to receive paymentdirectly from their audience via monthly subscriptions and one-off microtransactions; vi) via Vocal’s Ambassador Program, whichenables creators to receive additional rewards whenever they refer a new Vocal+ member. The Vocal app is available for both iOS and Androidon the Apple App store and the Google Play store.

 

Vocal’s proprietarytechnology is built on Keystone, the same underlying open-source framework used by industry leaders in the software as a service (SaaS)space. Some of the differentiating elements of Vocal’s technology are speed, sustainability, and scalability. The Company continuesto invest heavily in research and development to continuously improve and innovate its platform, with the goal of optimizing the userexperience for creators, brands and their audiences. Additionally, the Vocal platform and its underlying technology maintain an advantageouscapital-light infrastructure. By using cloud service providers and data segment specialists, we are able to focus on building the platform,community, and revenue rather than building and maintaining the costly internal infrastructures that have materially affected so manylegacy media platforms.

 

Vocal’s technologyhas been specifically designed to significantly scale without a material corresponding increase in operational costs. While our userscan embed rich media, such as video, audio, and product links, into their Vocal stories, the rich media content is hosted elsewhere (suchas YouTube, Instagram, Vimeo, Shopify, and Spotify). The Vocal platform can accommodate content of all kinds without bearing the financialor operational costs associated with hosting the media itself. Creatd maintains a number of partnerships and initiatives with the primarycontent distribution and hosting platforms. In addition to the benefits this framework affords to the Company, it provides the additionalbenefit to our content creators, in that a creator can increase their monetization; for example, a creator can embed their YouTube videointo a Vocal story and thus derive earnings from both platforms when their video is viewed.

 

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Consumer ProductsGroup

 

Creatd’s portfolioof internally owned and operated e-commerce businesses and associated technology and infrastructure make up the majority of the company’ssecond most scalable revenue line. The Company supports founders by providing a host of services including design and development, marketingand distribution, and go-to-market strategies. The Company expects to broaden its portfolio through the acquisition of up and coming brandsthat are aligned and easily consolidated into its shared supply chain, resources, and infrastructure. 

 

This portfolio includes:

 

  Camp, a direct-to-consumer (DTC) food brand which creates healthy upgrades to classic comfort food favorites. Each of Camp’s products are created with servings of vegetables and contain Vitamins A, C, D, E, B1 + B6. Since its launch in 2020, Camp continues to add new products to its line of healthy, veggie-based, family-friendly foods, with flavors including Classic Cheddar Mac ‘N’ Cheese, White Cheddar Mac ‘N’ Cheese, Vegan Cheezy Mac, and Twist Veggie Pasta.

 

  Dune Glow Remedy (“Dune”), which the Company purchased and brought to market in 2021, is a beverage brand focused on promoting wellness and beauty from within. Each beverage in Dune’s product line is meticulously crafted with functional ingredients that nourish skin from the inside out and enhance one’s natural glow. During 2022, Dune has continued to advance its retail and wholesale distribution strategy, securing numerous partnerships including with lifestyle retailer Urban Outfitters, Equinox, and the Los Angeles-based Erewhon Market.

 

  Basis, a hydrating electrolyte drink mix formulated using rehydration therapies developed by the World Health Organization. Acquired by the Company in first quarter 2022, Basis has a history of strong sales volume both on the brand’s website as well as through third-party distribution channels such as Amazon.

 

  Brave, a plant-based food company that provides convenient and healthy breakfast food products. On September 13, 2022, the Company acquired 100% of the membership interests of Brave Foods, LLC, a Maine limited liability company (“Brave”). What started as a search for a better morning routine evolved into a business serving thousands of go-getters of every type.

 

Branded Content

 

The branded content revenueline is driven primarily by its Vocal for Brands offering, the Company’s internal content studio. The business line works with premierbrands developing best-in-class organic marketing campaigns. In addition to content creation, the Company generates revenues from itsinfluencer and performance marketing agency opportunities.

  

Brands have a story totell. They leverage Vocal’s creator communities to help them tell it. Vocal for Brands’ content marketing studio specializesin pairing leading brands with Vocal creators, as well as discovering new talent and introducing them to the Vocal platform. The brandedcontent business produces marketing campaigns on the platform that are non-interruptive, engaging, and direct-response driven. Additionally,brands can opt to collaborate with Vocal on sponsored Challenges, prompting the creation of thousands of high-quality stories that arecentered around the brand’s mission and further disseminated through creators’ respective social channels and promotionaloutlets. Vocal for Brands campaigns leverage Vocal’s first-party audience insights, which enables the creation of highly targeted,segmented audiences and optimized campaign results.

 

IP Development andProduction

 

Creatd’s fourthrevenue stream is driven by partnering with its top creators to produce stories for TV, film, podcasts, and print. The Vocal platformis perpetually generating intellectual property sourced and curated by a combination of human let moderation and machine learning models.With millions of compelling stories in its midst, Creatd’s Vocal technology surfaces the best candidates for transmedia adaptations,through a deep analysis of community, creator, and audience insights.  

 

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In 2022, Creatd announceda series of newly released and upcoming production projects, including:

 

  “Write Here, Write Now,” the Company’s first-ever podcast showcasing select Vocal creators and stories; a partnership with UK-based publisher, Unbound, for the publication of books featuring stories sourced from Vocal; the formation of a new graphic novel development arm which in Fall 2022 will release its first title, Steam Wars, created by artist and independent filmmaker Larry Blamire.

 

  OG Gallery: The OG Collection is an extensive library of original artwork and imagery from the archives of some of the most iconic magazines of the 20th century. OG Gallery is an exploratory initiative aimed at identifying opportunities to propel the OG Collection into a new technological sphere: the NFT marketplace.

 

Application of First-PartyData

 

Creatd’s sharedbusiness intelligence and marketing teams identify and target individual creators, communities, and brands, utilizing empirical data harnessedfrom the Vocal technology platform. The team’s ability to apply its proprietary first-party data works to reduce acquisition costsfor new creators and to help provide brands with conversions and an ideal targeted audience. In this way, our ability to apply first-partydata is one of the value-drivers for the Company across its four business pillars. The internal teams work across the Company’sportfolio of technology product and service revenue lines.

 

Creatd uses its firstparty data to improve the Vocal platform. Specifically, data helps understand the behaviors and attributes that are common among the creators,brands, and audiences within the platform’s ecosystem. Pairing first-party Vocal data with third-party data from distribution platformssuch as Instagram, Tiktok, Twitter, and Snapchat provide a more granular profile of creators, brands, and audiences. It is through generatingthis valuable first-party data that the Company can continually enrich and refine its targeting capabilities for branded content marketingand creator acquisition, and specifically, to reduce creator acquisition costs (CAC) and subscriber acquisition costs (SAC).

 

Competitive Advantage

 

The idea for Vocal cameas a response to what Creatd’s founders recognized as systemic flaws inherent to the digital media industry and its operationalinfrastructures. The depreciating value of digital media business models built on legacy technology platforms that did not efficientlyaccess and apply data, created a unique opportunity for the development of a new type of creator-centric platform. Key to building a platformthat could appeal to a global community was utilizing that data to create a win-win proposition for all constituents including creators,audiences and the brands that want to access them. The proprietary nature of Creatd’s technology and its process give the companya competitive advantage in acquiring undervalued technology assets that can be rapidly assimilated into the greater collective, thus exponentiallydriving future EBITDA.

 

Creatd’s foundersbuilt the Vocal platform upon the general thesis that a closed and safe ecosystem utilizing first-party data to increase efficienciescould create a sustainable and defensible business model. Vocal was strategically developed to provide value for content creators, readers,and brands, and to serve as a home for the ever-increasing amount of digital content being produced and the libraries of digital assetslying dormant.

 

Acquisition Strategy

 

Creatd’s hybridfinance and design culture is key to its acquisition strategy. Acquisition targets are companies that meet a set of opportunistic or financialstandards or that are part of specific digital environments. Transactions are mainly accretive and targets can seamlessly integrate intoCreatd’s existing revenue lines. Creatd will continue to make strategic acquisitions when presented with opportunities that arein the interest of long term shareholder value.

 

Corporate History and Information

 

We were originally incorporated under the lawsof the State of Nevada on December 30, 1999 under the name LILM, Inc. The Company changed its name on December 3, 2013 to Great PlainsHoldings, Inc.

 

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On February 5, 2016 (the “Merger ClosingDate”), we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with GPH Merger Sub, Inc., a Nevadacorporation and our wholly-owned subsidiary (“Merger Sub”), and Jerrick Ventures, Inc., a privately-held Nevada corporationheadquartered in New Jersey (“Jerrick”), pursuant to which the Merger Sub was merged with and into Jerrick, with Jerrick survivingas our wholly-owned subsidiary (the “Merger”). Pursuant to the terms of the Merger Agreement, we acquired, through a reversetriangular merger, all of the outstanding capital stock of Jerrick in exchange for issuing Jerrick’s shareholders (the “JerrickShareholders”), pro-rata, a total of 475,000 shares of our common stock, par value $0.001 per share (“Common Stock”).Additionally, we assumed 33,415 shares of Jerrick’s Series A Convertible Preferred Stock (the “Jerrick Series A Preferred”)and 8,064 shares of Series B Convertible Preferred Stock (the “Jerrick Series B Preferred”).

 

Upon closing of the Merger on February 5, 2016,the Company changed its business plan to our current plan.

 

In connection with the Merger, on the Merger ClosingDate, we entered into a Spin-Off Agreement with Kent Campbell (the “Spin-Off Agreement”), pursuant to which Mr. Campbell purchased(i) all of our interest in Ashland Holdings, LLC, a Florida limited liability company, and (ii) all of our interest in Lil Marc, Inc.,a Utah corporation, in exchange for the cancellation of 13,030 shares of our common stock held by Mr. Campbell. In addition, Mr. Campbellassumed all of our debts, obligations and liabilities, including any existing prior to the Merger, pursuant to the terms and conditionsof the Spin-Off Agreement.

 

Effective February 28, 2016, we entered into anAgreement and Plan of Merger (the “Statutory Merger Agreement”), pursuant to which we became the parent company of JerrickVentures, LLC, our wholly-owned operating subsidiary (the “Statutory Merger”).

 

On February 28, 2016, we changed our name to JerrickMedia Holdings, Inc. to better reflect our new business strategy.

 

On July 25, 2019, we filed a certificate of amendmentto our articles of incorporation, as amended (the “Amendment”), with the Secretary of State of the State of Nevada to effectuatea one-for-twenty (1:20) reverse stock split (the “Reverse Stock Split”) of our common stock without any change to its parvalue. The Amendment became effective on July 30, 2019. The number of shares of authorized common stock was proportionately reduced asa result of the Reverse Stock Split. The number of shares of authorized preferred stock was not affected by the Reverse Stock Split. Nofractional shares were issued in connection with the Reverse Stock Split as all fractional shares were “rounded up” to thenext whole share.

 

All share and per share amounts for the commonstock indicated in this prospectus have been retroactively restated to give effect to the Reverse Stock Split.

  

On September 11, 2019, the Company acquired 100%of the membership interests of Seller’s Choice, LLC, a New Jersey limited liability company (“Seller’s Choice”),a digital e-commerce agency.

 

On July 13, 2020, upon approval from our boardof directors and stockholders, we filed Second Amended and Restated Articles of Incorporation with the Secretary of State of the Stateof Nevada for the purpose of increasing our authorized shares of Common Stock to 100,000,000.

 

On August 13, 2020, we filed a certificate ofamendment to our second amended and restated articles of incorporation (the “Amendment”), with the Secretary of State of theState of Nevada to effectuate a one-for-three (1:3) reverse stock split (the “August 2020 Reverse Stock Split”) of our commonstock without any change to its par value. The Amendment became effective on August 17, 2020. No fractional shares were issued in connectionwith the August 2020 Reverse Stock Split as all fractional shares were rounded down to the next whole share. All share and per share amountsof our common stock listed in this prospectus have been adjusted to give effect to the August 2020 Reverse Stock Split.

 

On September 9, 2020, the Company filed a certificateof amendment with the Secretary of State of the State of Nevada to change our name to “Creatd, Inc.”, which became effectiveon September 10, 2020.

 

On June4, 2021, the Company acquired 89% of the membership interests of Plant Camp, LLC, a Delaware limited liability company (“PlantCamp”), which the Company subsequently rebranded as Camp. Camp is a direct-to-consumer (DTC) food brand which creates healthy upgradesto classic comfort food favorites. The results of Plant Camp’s operations have been included since the date of acquisition in theStatements of Operations.

 

On July20, 2021, the Company acquired 44% of the membership interests of WHE Agency, Inc. WHE Agency, Inc, is a talent management and publicrelations agency based in New York (“WHE”). WHE has been consolidated due to the Company’s ownership of 55% votingcontrol, and the results of operations have been included since the date of acquisition in the Statements of Operations.

 

BetweenOctober 21, 2020, and August 16, 2021, the Company acquired 21% of the membership interests of Dune, Inc. Dune, Inc. is a direct-to-consumerbrand focused on promoting wellness through its range of health-oriented beverages.

 

On October3, 2021, the Company acquired an additional 29% of the membership interests of Dune, Inc., bringing our total membership intereststo 50%. Dune, Inc., has been consolidated due to the Company’s ownership of 50% voting control, and the results of operationshave been included since the date of acquisition in the Statements of Operations. 

 

On March7, 2022, the Company acquired 100% of the membership interests of Denver Bodega, LLC, d/b/a Basis, a Colorado limited liability company(“Basis”). Basis is a direct-to-consumer functional beverage brand that makes high-electrolyte mixes meant to aid hydration.Denver Bodega, LLC has been consolidated due to the Company’s ownership of 100% voting control, and the results of operationshave been included since the date of acquisition in the Statement of Operations.

 

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On August1, 2022, the Company acquired 51% of the membership interests of Orbit Media LLC, a New York limited liability company. Orbit isa app-based stock trading platform designed to empower a new generation of investors. Orbit has been consolidated due to the Company’sownership of 51% voting control, and the results of operations have been included since the date of acquisition in the Statementof Operations.

 

On September13, 2022, the Company acquired 100% of the membership interests of Brave Foods, LLC, a Maine limited liability company. Braveis a plant-based food company that provides convenient and healthy breakfast food products. Brave Foods, LLC has been consolidateddue to the Company’s ownership of 100% voting control, and the results of operations have been included since the date of acquisitionin the Statement of Operations.

 

Recent Developments

 

December 2022 SecuritiesPurchase Agreement

 

On December 12, 2022,the Company entered into and closed a securities purchase agreement (the “Purchase Agreement”) with one accredited investor(the “Investor”), whereby the Investor purchased from the Company for an aggregate of $750,000 in subscription amount, anunsecured debenture in the principal amount of $750,000 (the “Debenture”). The Company and the Investor also entered intoa registration rights agreement pursuant to the Purchase Agreement.

 

The Debenture has a termof six months with a maturity date of June 12, 2023, which may be extended by six months at the Company’s option subject to certainconditions and monthly redemption options at the election of the holder and are convertible into shares of Common Stock at a conversionprice of $0.20 per share, subject to adjustment upon certain events.

 

November 2022 WarrantAmendment and Issuance

 

On November 18, 2022, the Company entered intothat certain letter agreement dated November 18, 2022 (the “Letter Agreement”) with the respective holders of an aggregateof 471,953 warrants issued as placement agent fees in connection with the Company’s entry into securities purchase agreements with33 accredited investors, whereby, at the closing, the Investors agreed to purchase from the Company an aggregate of (i) 7,778 shares ofthe Company’s Series E Convertible Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”); and(ii) 2,831,721 warrants to purchase shares of the Company’s common stock, pursuant to which the exercise price of such warrantswas amended and such warrants were immediately exercised. Additionally, pursuant to the Letter Agreement, the Company issued to such warrantholders 471,953 new warrants, exercisable immediately, for a term of 60 months, at a price of $0.77 per share, subject to customary adjustmentprovisions. As a result of the triggering of such adjustment provisions, the number of warrants increased to 1,817,019 and the exerciseprice decreased to $0.20.

 

Appointment of Erica Wagner to Board; Resignationof Joanna Bloor

 

On November 16, 2022, Erica Wagner was appointedto the Company’s Board of Directors. Ms. Wagner, age 55, joins the Board with over 25 years of experience as a journalist, broadcaster,editor and author. From 2016 through 2021, Ms. Wagner was a Lecturer, and later Senior Lecturer, at Goldsmith’s College, Universityof London, where she taught creative writing. Ms. Wagner was previously Lead Editorial Innovator for Creatd, Inc., has previously andcurrently held roles as a freelance editor, journalist, and contributing writer for numerous outlets both in the U.K. and the U.S., including TheNew StatesmanHarper’s Bazaar, the Economist, the Observer, the New York Times.Ms. Wagner is also a freelance literary and creative consultant for Chanel, as well as the host of their branded podcast. She has twicebeen a judge of the Booker Prize and has been judge and Chair of the Goldsmiths Prize. In 2015, Ms. Wagner was awarded an Honorary PhDby the University of East Anglia, and currently Goldsmith’s College Distinguished Writers’ Centre Fellow. She has an undergraduatedegree from University of Cambridge, a Master’s degree from University of East Anglia, and an Honorary PhD from the University ofEast Anglia. As a member of Creatd’s board of directors, Ms. Wagner will add significant expertise with respect to informing theCompany’s literary and creative direction, having worked closely with news organizations, commercial companies and publishers, toadvise their creative direction and its application towards commercial success.

 

On November17, 2022, the Board received notice from Joanna Bloor of her resignation as a director and from all committees of the Board on which sheserved, effective as of such date. Such resignation is not the result of any disagreement with the Company on any matter relating to theCompany’s operations, policies or practices.

 

Appointment of Peter Majar to the Board;Resignation of Lorraine Hendrickson

 

On November 2, 2022, the Board appointed PeterMajar to the Board. Mr. Majar, age 55, Founder and Managing Member of Majar Advisors, combines over 25 years of experience in investmentbanking, financial services and technology, and management consulting, having held numerous senior management and executive positionsincluding Chief Financial Officer, Head of Financial Technology, Head of Strategy, as well as several Managing Director positions. From2015 to 2017, Mr. Majar served as Managing Director in Investment Banking and co-Head of Diversified Financial Services at Piper Jaffray& Co. (now Piper Sandler Companies). From 2017 to 2018, Mr. Majar provided management consulting services through his self-establishedfirm, Majar Advisors LLC, which remains in operation through the present. From 2018 to 2021, Mr. Majar served as Managing Director, Headof Financial Technology at New York-based investment banking and financial advisory firm, TAP Advisors, LLC. Between 2021 and 2022, Mr.Majar served as Chief Financial Officer at information technology company Hoyos Integrity Corp., having previously served as a longtimeadvisor to the firm. Mr. Majar holds an undergraduate degree from University of Washington and an MBA from Columbia University. As a boarddirector, Mr. Majar will add considerable value, including through his comprehensive and diverse investment management experience, deepknowledge of financial technology services and transactions, and broad experience with corporate development, strategy consulting, andexecutive leadership.

 

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On November 1, 2022, the Board received noticefrom Lorraine Hendrickson of her resignation as a director and from all committees of the Board on which she served, effective as of suchdate. Ms. Hendrickson’s resignation as a member of the Board is not the result of any disagreement with the Company on any matterrelating to the Company’s operations, policies or practices.

 

NasdaqDelisting 

 

On September2, 2022, the Company received a letter from the staff of The Nasdaq Capital Market notifying the Company that the Nasdaq Hearings Panelhas determined to delist the Company’s common stock from the Exchange, based on the Company’s failure to complywith the listing requirements of Nasdaq Rule 5550(b)(1) as a result of the Company’s shareholder equity deficit for the period endedJune 30, 2022, as demonstrated in Company’s Quarterly Report on Form 10-Q filed on August 15, 2022, following the Company havingnot complied with the market value of listed securities requirement in Nasdaq Rule 5550(b)(2) on March 1, 2022, while the Company wasunder a Panel Monitor, as had been previously disclosed. Suspension of trading in the Company’s shares on the Exchange becameeffective at the opening of business on September 7, 2022, at which time the Company’s common stock, under the symbol “CRTD,”and publicly-traded warrants, under the symbol “CRTDW,” was quoted on the OTCPink marketplace operated by OTC Markets GroupInc.  

 

Followingpassage of the proscribed 15-day time period for appeal as stated in the Letter, on October 26, 2022, Nasdaq completed the delisting byfiling a Form 25 Notification of Delisting with the Securities and Exchange Commission.

 

The Company’scommon stock, under the symbol “CRTD,” is quoted on the OTCQB marketplace operated by OTC Markets Group Inc. effective asof September 26, 2022. The Company’s publicly-traded warrants, under the symbol “CRTDW,” are quoted on the OTCPink marketplaceoperated by OTC Markets Group Inc.

 

Securities PurchaseAgreement; Side Letter

 

On October 24, 2022, the Company entered into and closed a securitiespurchase agreement (the “Purchase Agreement”) with one accredited investor (the “Investor”), whereby the Investorpurchased from the Company for an aggregate of $1,500,000 in subscription amount, an unsecured debenture in the principal amount of $1,666,650(the “Debenture”). The Company and the Investor also entered into a registration rights agreement (each, a “RegistrationRights Agreement”) pursuant to the Purchase Agreement.

 

The Debenture has anoriginal issue discount of 10%, has a term of six months with a maturity date of April 24, 2023, may be extended by six months at theCompany’s option subject to certain conditions, and are convertible into shares of Common Stock at a conversion price of $0.20 pershare, subject to adjustment upon certain events.

 

In connection with itsentry into the Purchase Agreement and issuance of the Debenture, the Company also entered into a side letter agreement (the “LetterAgreement”) with the holders of debentures of the Company, the Series C Warrants and Series D Warrants issued as of May 31, 2022(the “May Investors”) and the holders of debentures of the Company, the Series E Warrants and Series F Warrants issued asof July 25, 2022 (the “July Investors”). Pursuant to the Letter Agreement each of the May Investors and the July Investorshave entered into a lock-up agreement whereby they may not sell any such debentures, warrants, the shares into which such debentures maybe converted, or certain shares underlying such warrants until the date that is 30 days after the date on which the registration statementregistering for resale the shares of the Company’s common stock underlying the Debenture is declared effective by the Securitiesand Exchange Commission. Additionally, the Letter Agreement, provides that the May Investors and July Investors have agreed to a furtherlock up of such shares for a further 30 days upon the receipt of a certain amount of the proceeds from future potential issuances of debentures,common stock or similar securities by the Company. Further additionally, pursuant to the Letter Agreement, the May Investors and the JulyInvestors have agreed to exchange and return for cancellation the Series C Warrants, Series D Warrants, Series E Warrants and Series FWarrants, receiving replacement warrants from the Company (the “Replacement Warrants”), in consideration for (i) the Company’spayment of $750,000 of the proceeds from the sale of the Debenture to the May Investors and July Investors on a pro rata basis and (ii)the Company’s agreement to pay, on a pro rata basis to the May Investors and July Investors, the greater of (x) $750,000 and (y)50% of the gross proceeds raised in a subsequent financing. The Replacement Warrants reflect a reduction in the number of Series C andSeries D Warrants from 1,550,000 in each class to 1,536,607 in each class and a reduction in the number of Series E and Series F Warrantsfrom 1,075,000 in each class to 807,143 in each class, and the initial exercise date for the Replacement Warrants are unchanged from thedate as set forth in the respective exchanged Series C, Series D, Series E or Series F Warrant.

 

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Common Stock PurchaseAgreement, Securities Purchase Agreement and Promissory Note

 

On October 20, 2022,the Company entered into a Common Stock Purchase Agreement (the “Investment Agreement”) with an otherwise unaffiliated thirdparty (the “Investor”). Pursuant to the terms of the Investment Agreement, for a period of thirty-six (36) months commencingon the trading day immediately following date of effectiveness of the Registration Statement (as defined below), the Investor purchaseup to $15,000,000 of the Company’s common stock, par value $0.001 per share (the “Shares”), pursuant to Drawdown Notices(as defined below), covering the Registrable Securities (as defined below). The purchase price of the Shares under the Investment Agreementis equal to 82% of the lowest volume weighted average price (VWAP) during the last ten trading days after the Company delivers to theInvestor a Put notice (a “Drawdown Notice”) in writing requiring Investor to purchase shares of the Company, subject to theterms of the Investment Agreement.

 

On October 20, 2022,the Company also entered into a Securities Purchase Agreement (the “Purchase Agreement”) with the Investor, pursuant to whichthe Company issued to the Investor on that date a Promissory Note (the “Note”) in the principal amount of $300,000 in exchangefor a purchase price of $255,000, which the Investor funded on October 20,2022.  The proceeds of the Note will be used by the Companyfor general working capital purposes.  

 

The Note bears interestat the rate of 10% per annum.  Starting on the fifth month anniversary of the funding of the Note, and for the next six months thereafter,the Company will make seven equal monthly payments of $47,142.85 to the Investor.

 

On October 20, 2022,in connection with the entry by the Company and the Investor into the economic agreements, (i.e., the Investment Agreement, thePurchase Agreement, and the Note and the funding thereof), the Company issued 800,000 shares of its common stock to the Investor.

 

Securities Purchase Agreement

 

On September 15, 2022, Creatd, Inc., entered into a securities purchaseagreement (the “Purchase Agreement”) with five accredited investors resulting in the raise of $800,000 in gross proceeds tothe Company. Pursuant to the terms of the Purchase Agreement, the Company agreed to sell in a registered direct offering (the “Offering”)an aggregate of 4,000,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”). Ina concurrent private placement, the Company issued to such investors warrants to purchase up to 4,000,000 shares of Common Stock, representing100% of the shares of common stock purchased in the Offering (the “Warrants”). The Warrants and the shares of common stockissuable upon the exercise of the Warrants (the “Warrant Shares”) are not being registered under the Securities Act of 1933,as amended.

 

The Offering is expectedto close on or about September 19, 2022, subject to the satisfaction of customary closing conditions as set forth in the Purchase Agreement.The Company expects the gross proceeds from the Offering to be $800,000, before deducting Offering expenses, which will be used for generalcorporate purposes, including working capital.

 

The shares of CommonStock were offered and sold by the Company pursuant to a prospectus supplement, which will be filed with the Securities and Exchange Commissionin connection with a takedown from the Company’s effective shelf registration statement on Form S-3, which was filed with the Commissionon November 25, 2020 and subsequently declared effective on April 23, 2021 (File No. 333-250982) (the “Shelf Registration Statement”).

 

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The Warrants are immediately exercisable for aterm of five years until September 15, 2027. The Warrants are exercisable at an exercise price of $0.20, subject to adjustment upon certainevents. The Warrants provide for cashless exercise to the extent that there is no registration statement available for the underlyingshares of Common Stock. The shares underlying the Warrants are to be registered within 10 trading days of the date of the Purchase Agreement.

 

The representations and warranties contained inthe Purchase Agreement were made by the parties to, and solely for the benefit of, the other in the context of all of the terms and conditionsof the Purchase Agreement and in the context of the specific relationship between the parties. The provisions of the Purchase Agreement,including the representations and warranties contained therein, are not for the benefit of any party other than the parties to the PurchaseAgreement. The Purchase Agreement is not intended for investors and the public to obtain factual information about the current state ofaffairs of the parties.

 

Restructuring Agreement

 

On September 15, 2022, in connection with theOffering, the Company entered into an agreement with the holders of certain of the Company’s previously issued securities (the “RestructuringAgreement”).

 

The Restructuring Agreement, among other things,modified certain provisions of the following securities of the Company:

 

(i)Original Issue Discount Senior Convertible Debentures issued on May 31, 2022 (the “May 2022 Debentures”);
   
(ii)Original Issue Discount Senior Convertible Debentures issued on July 25, 2022 (the “July 2022 Debentures”and, together with the May 2022 Debentures, the “Debentures”);
   
(iii)Common Stock Purchase Warrants issued on February 28, 2022 (the “February 2022 Warrants”);
   
(iv)Common Stock Purchase Warrants issued on March 9, 2022 (the “March 2022 Warrants”);
   
(v)Series C Common Stock Purchase Warrants issued on May 31, 2022 (the “Series C Warrants”);
   
(vi)Series D Common Stock Purchase Warrants issued on May 31, 2022 (the “Series D Warrants”);
   
(vii)Series E Common Stock Purchase Warrants issued on July 25, 2022 (the “Series E Warrants”);
   
(viii)Series F Common Stock Purchase Warrants issued on July 25, 2022 (the “Series F Warrants” and,together with the February 2022 Warrants, the March 2022 Warrants, Series C Warrants, Series D Warrants and Series E Warrants, the “RestructuredWarrants”);

 

Pursuant to the Restructuring Agreement, the Companyand the Holders agreed to, among other things, to (i) reduce the conversion price of the Debentures down to $0.20, subject to adjustmentfor reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock; (ii) reducethe exercise price of the Restructured Warrants down to $0.20, subject to adjustment for subject to adjustment for reverse and forwardstock splits, stock dividends, stock combinations and other similar transactions of the Common Stock; (iii) extend the maturity datesfor the Debentures to March 31, 2023; (iv) permit the Company’s contemplated rights offering to proceed, provided that the per shareoffering price in the rights offering is not less than $0.20; and (v) require that the Company’s cash burn rate not exceed $600,000per month; provided, however, that with the prior written consent of a majority in interest of the Holders, such permitted monthly burnrate can be increased by $150,000, provided such additional amount is used for marketing purposes.

 

Additionally, in connection with the RestructuringAgreement, (i) the Company entered into a Registration Rights Agreement (“Registration Rights Agreement”), providing for thefiling of a registration statement covering the Restructured Warrants and shares underlying the Warrants by not later than 10 tradingdays after the date of the Registration Rights Agreement or the earliest practical date on which the Company is permitted by Commissionguidance to file such registration statement; (ii) the Company and its subsidiaries entered into a Security Agreement (the “SecurityAgreement”), whereby the Company granted a first priority security interest in all of their respective assets to the Holders and(iii) the subsidiaries of the Company delivered a guarantee (the “Guarantee”) in favor of the Holders whereby each such subsidiaryguaranteed the full payment and performance of all obligations of the Company pursuant to the Debentures.

 

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Each of our directors and officers have entered into lock-up agreements(the “Lock-up Agreements”) in favor of the Holders, whereby they have agreed not to offer, sell, agree to sell, directly orindirectly, or otherwise dispose of any shares of Common Stock or any securities convertible into or exchangeable for shares of CommonStock without the prior written consent of the Holders for a period of 180 days after the date of the Restructuring Agreement. The Lock-upAgreements provide limited exceptions and their restrictions may be waived at any time by the Holders.

 

Resignation of Brad Justus

 

On September 21, 2022, the Board of Directorsof Creatd, Inc. received notice from Brad Justus of his resignation as a member of the Board, chair of the Nominating & CorporateGovernance Committee, a member of the Audit Committee and a member of the Compensation Committee, with such resignation to become effectiveon September 30, 2022. Such resignation is not the result of any disagreement with the Company on any matter relating to the Company’soperations, policies or practices.

 

Resignation of Chief Executive Officer andDirector

 

On August 9, 2022, Laurie Weisberg, the Company’sChief Executive Officer and a member of the Board, notified the Company of her intention to resign from the positions of Chief ExecutiveOfficer, director, and any other positions held with the Company or any of its subsidiaries, regardless of whether Ms. Weisberg had beenappointed. Such resignations are to become effective on a date to be determined following further discussion with the Board, but in noevent later than August 31, 2022. On September 2, 2022, the Company entered into an Executive SeparationAgreement with Laurie Weisberg the Company’s Chief Executive Officer and member of the Board of Directors setting forth the termsand conditions related to the Executive’s resignation for good reason as Chief Executive Officer, Director and any other positionsheld with the Company or any subsidiary. 

 

Appointment of Chief Executive Officer

 

Effective upon Ms. Weisberg’s resignationas Chief Executive Officer, Jeremy Frommer, currently the Company’s Executive Chairman, will be appointed as Chief Executive Officer,pursuant to the Board’s approval.

 

Jeremy Frommer

 

Mr. Frommer was appointed Executive Chairman inFebruary 2022 and has been a member of our board of directors since February 2016. Previously, he served as our Chief Executive Officerfrom February 2016 to August 2021, and Co-Chief Executive Officer from August 2021 to February 2022. Mr. Frommer has over 20 years ofexperience in the financial technology industry. Previously, Mr. Frommer held key leadership roles in the investment banking and tradingdivisions of large financial institutions. From 2009 to 2012, Mr. Frommer was briefly retired until beginning concept formation for JerrickVentures which he officially founded in 2013. From 2007 to 2009, Mr. Frommer was Managing Director of Global Prime Services at RBC CapitalMarkets, the investment banking arm of the Royal Bank of Canada, the largest financial institution in Canada, after the sale of CarlinFinancial Group, a professional trading firm. From 2004 to 2007, Mr. Frommer was the Chief Executive Officer of Carlin Financial Groupafter the sale of NextGen Trading, a software development company focused on building equity trading platforms. From 2002 to 2004, Mr.Frommer was Founder and Chief Executive Officer of NextGen Trading. From 2000 to 2002, he was Managing Director of Merger Arbitrage Tradingat Bank of America, a financial services firm. Mr. Frommer was also a director of LionEye Capital, a hedge fund from June 2012 to June2014. He holds a B.A. from the University of Albany. We believe Mr. Frommer is qualified to serve on our board of directors due to hisfinancial and leadership experience.

 

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Appointment of Director

 

Effective upon Ms. Weisberg’s resignationas a director, Justin Maury, currently the Company’s President and Chief Operating Officer, will be appointed to the Board, pursuantto the Board’s approval.

 

Justin Maury

 

Mr. Maury has served as our President since January2019 and was appointed Chief Operating Officer in August 2021. A full-stack designer and product developer by training, Mr. Maury partneredwith Jeremy Frommer and founded the Company in 2013, having brought with him 10 years of experience in the creative industry. Since joiningCreatd in 2013, Mr. Maury has been an instrumental force in the Company’s business and revenue expansion, and has overseen the Company’sproduct development since inception, including overseeing the design, development, launch, and ongoing growth of the Company’s flagshipproduct, Vocal, the innovative creator that, under Mr. Maury’s leadership, has grown to a community of over 1.5 million users witha total audience reach of over 175 million.

 

As a director, we believe Mr. Maury will add considerablevalue, including through by providing a unique perspective into Creatd’s product performance and evolution and by providing invaluabledirect input to help guide the Company’s ongoing refinement of its technology roadmap and maturation of its business model.

 

Trigger of Price Reset

 

On July 29, 2022, theCompany announced that it was not moving forward with its previously announced Rights Offering. In doing so, it triggered a price resetin the July 2022 Financing and the May 2022 Securities Purchase Agreement. As a result of this price reset, the May 2022 Securities PurchaseAgreement debentures now have a conversion price of $1.00, and both the Series C and Series D warrants have exercise prices of $0.96.As a result of the price reset, the July 2022 Financing debentures now have a conversion price of $1.25, and both the Series E and SeriesF warrants have exercise prices of $1.01.

 

July 2022 Financing

 

On July 25, 2022 (the“Effective Date”), the Company entered into and closed securities purchase agreements (each, a “Purchase Agreement”)with five accredited investors (the “Investors”), whereby the Investors purchased from the Company for an aggregate of $1,935,019in subscription amount (i) debentures in the principal amount of $2,150,000 (the “Debentures”); (ii) 1,075,000 Series E CommonStock Purchase Warrants to purchase shares of the Common Stock (the “Series E Warrants”); and (iii) 1,075,000 Series F CommonStock Purchase Warrants to purchase shares of Common Stock (the “Series F Warrants”, and collectively with the Series E Warrants,the “Warrants”). The Company and the Investors also entered into registration rights agreements (each, a “RegistrationRights Agreement”) pursuant to the Purchase Agreement.

 

The Debentures have anoriginal issue discount of 10%, have a maturity date of November 30, 2022, may be extended by six months at the Company’s optionsubject to certain conditions, and are convertible into shares of Common Stock at a conversion price of $2.00 per share, subject to adjustmentupon certain events including a one-time adjustment to the price of the Common Stock offered in the Rights Offering (as defined therein),with such adjusted conversion price not to be lower than $1.25.

 

The Warrants are immediatelyexercisable for a term of five years until July 25, 2027. The Series E Warrants are exercisable at an exercise price of $3.00, subjectto adjustment upon certain events including a one-time adjustment to the price of the Common Stock offered in the Rights Offering, withsuch adjusted exercise price not to be lower than $1.01. The Series F Warrants are exercisable at an exercise price of $6.00 subject toadjustment upon certain events including a one-time adjustment to the price of the Common Stock offered in the Rights Offering, with suchadjusted exercise price not to be lower than $1.01. The Warrants provide for cashless exercise to the extent that there is no registrationstatement available for the underlying shares of Common Stock. The shares underlying the Debentures, the Series E Warrants and the SeriesF Warrants are to be registered within 90 days of the Effective Date.

 

The representations andwarranties contained in the Purchase Agreement were made by the parties to, and solely for the benefit of, the other in the context ofall of the terms and conditions of the Purchase Agreement and in the context of the specific relationship between the parties. The provisionsof the Purchase Agreement, including the representations and warranties contained therein, are not for the benefit of any party otherthan the parties to the Purchase Agreement. The Purchase Agreement is not intended for investors and the public to obtain factual informationabout the current state of affairs of the parties.

 

Additionally, in connectionwith the Purchase Agreements, the subsidiaries of the Company delivered a guarantee (the “Guarantee”) in favor of the Investorswhereby each such subsidiary guaranteed the full payment and performance of all obligations of the Company pursuant to the Purchase Agreement.

 

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SecuritiesPurchase Agreement

 

On May 31, 2022, theCompany entered into and closed securities purchase agreements (each, a “Purchase Agreement”) with eight accredited investors(the “Investors”), whereby the Investors purchased from the Company for an aggregate of $3,600,036 in subscription amount(i) debentures in the principal amount of $4,000,000 (the “Debentures”); (ii) 2,000,000 Series C Common Stock Purchase Warrantsto purchase shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) (the “SeriesC Warrants”); and (iii) 2,000,000 Series D Common Stock Purchase Warrants to purchase shares of Common Stock (the “SeriesD Warrants”, and collectively with the Series C Warrants, the “Warrants”). The Company and the Investors also enteredinto registration rights agreements (each, a “Registration Rights Agreement”) pursuant to the Purchase Agreement.

 

The Debentures have anoriginal issue discount of 10%, have a term of six months with a maturity date of November 30, 2022, may be extended by six months atthe Company’s option subject to certain conditions, and are convertible into shares of Common Stock at a conversion price of $2.00per share, subject to adjustment upon certain events including a one-time adjustment to the price of the Common Stock offered in the RightsOffering (as defined therein), with such adjusted conversion price not to be lower than $1.00.

 

The Warrants are exercisablefor a term of five years from the initial exercise date of November 30, 2022, until November 30, 2027. The Series C Warrants are exercisableat an exercise price of $3.00, subject to adjustment upon certain events including a one-time adjustment to the price of the Common Stockoffered in the Rights Offering, with such adjusted exercise price not to be lower than $0.96. The Series D Warrants are exercisable atan exercise price of $6.00 subject to adjustment upon certain events including a one-time adjustment to the price of the Common Stockoffered in the Rights Offering, with such adjusted exercise price not to be lower than $0.96. The Warrants provide for cashless exerciseto the extent that there is no registration statement available for the underlying shares of Common Stock. The shares underlying the Debentures,the Series C Warrants and the Series D Warrants are to be registered within 90 days of the Effective Date.

 

Additionally, in connectionwith the Purchase Agreements, the subsidiaries of the Company delivered a guarantee (the “Guarantee”) in favor of the Investorswhereby each such subsidiary guaranteed the full payment and performance of all obligations of the Company pursuant to the PurchaseAgreement.

 

The Debentures, Warrants,Common Stock underlying the Debentures and the Common Stock underlying the Warrants were not registered under the Securities Act, butqualified for exemption under Section 4(a)(2) and Rule 506 promulgated thereunder. The Company is relying on this exemption from registrationfor private placements based in part on the representations made by Investors, including representations with respect to each Investor’sstatus as an accredited investor, as such term is defined in Rule 501(a) of the Securities Act, and each Investor’s investment intent.

 

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Employees

 

As of September 30, 2022, we had 24 full-timeemployees and 12 part-time employees. None of our employees are subject to a collective bargaining agreement, and we believe our relationshipwith our employees to be good.

 

We believe that our future success will dependin part on our continued ability to attract, hire and retain qualified personnel. Our human capital resources objectives include identifying,recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants. The principal purposesof our equity and cash incentive plans are to attract, retain and reward personnel through the granting of stock-based and cash-basedcompensation awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform tothe best of their abilities and achieve our objectives.

 

Facilities

 

Our corporate headquarters consists of a totalof approximately 8,000 square feet and is located at 419 Lafayette Street, 6th Floor, New York, NY 10003. The current leaseterm is effective May 1, 2022 through April 30, 2029, with monthly rent of $39,000 for the first year of the leasing period, and an increasein rent of 3% for every year thereafter. Previously in 2022, the Company also had additional office space located at 648 Broadway, Suite200, New York, NY 10012. The lease term was effective September 9, 2021 through September 9, 2022, with monthly rent of $12,955 for theleasing period. During 2021, the Company also had additional office space located at 2050 Center Ave, Suite 640 and Suite 660, Fort Lee,NJ 07024. The lease term was effective June 5, 2018 through July 5, 2023, with monthly rent of $7,693 for the first year and increasesat a rate of 3% for each subsequent year thereafter. Subsequent to December 31, 2021, the Company reached an agreement with the landlordat the New Jersey location to terminate the lease effective February 28, 2022.

 

Legal Proceedings

 

From time to time, we may become involved in variouslawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and anadverse result in these or other matters may arise from time to time that may harm our business. Except as set forth below, we are currentlynot aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business,financial condition or operating results.

  

On or aboutAugust 30, 2021, Robert W. Monster and Anonymize, Inc. (“Monster”) filed a lawsuit in the United States District Court forthe Western District of Washington at Seattle, Robert W. Monster, et al. v. Creatd, Inc., et al. (Western District of Washington at Seattle2:21-CV-1177). The Complaint alleges, among other things, that action for Declaratory Judgment under 28 U.S.C. § 2201 that Monster’sregistration and use of the internet domain name VOCL.COM (the “Domain Name”) does not violate Creatd’s rightsunder the Anticybersquatting Consumer Protection Act (“ACPA”), 15 U.S.C. § 1125(d), or otherwise under the Lanham Act,15 U.S.C. § 1051 et seq. Creatd claims trademark rights and certain other rights with respect to the term and the domain name VOCL.COM.Monster seeks a determination by the Court that Monster’s registration and/or use of VOCL.COM is not, and has not beenin violation of the ACPA, and that Plaintiffs’ use of VOCL.COM constitutes neither a violation of the ACPA nor trademarkinfringement or dilution under the Lanham Act. Creatd believes the lawsuit lacks merit and will vigorously challenge the action. At thistime, we are unable to estimate potential damage exposure, if any, related to the litigation.

 

A complaint against the Company,dated September 21, 2022, has been filed in the Supreme Court of the State of New York, New York County, by Lind Global Macro Fund LPand Lind Global Fund II LP, making certain claims alleging breach of contract related to two Securities Purchase Agreements executed onMay 31, 2022, seeking damages in excess of $920,000. On November 18, 2022, Creatd filed a motion to dismiss the Complaint in its entirety.No response to the motion to dismiss has been filed to date. Given the premature nature of this case, it is still too early for theCompany to make an assessment as to liability.

 

Corporate Information

 

The Company’s address is 419 Lafayette Street,6th Floor, New York, NY 10003. The Company’s telephone number is (201) 258-3770. Our website is https://creatd.com. Theinformation on, or that can be accessed through, this website is not part of this prospectus, and you should not rely on any such informationin making the decision whether to purchase the securities.

 

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MANAGEMENT

 

The following table and biographical summariesset forth information, including principal occupation and business experience, about our directors and executive officers as of the dateof this prospectus:

 

Name  Age   Positions
Jeremy Frommer   53   Chief Executive Officer, Executive Chairman of the Board of Directors
Peter Majar   58   Director
Erica Wagner   55   Director
Justin Maury   33   Chief Operating Officer, President and Director
Chelsea Pullano   31   Chief Financial Officer

 

Jeremy Frommer – ExecutiveChairman and Co-Founder

 

Mr. Frommer was appointed Executive Chairman inFebruary 2022 and has been a member of our board of directors since February 2016. Previously, he served as our Chief Executive Officerfrom February 2016 to August 2021, and Co-Chief Executive Officer from August 2021 to February 2022. Mr. Frommer has over 20 years ofexperience in the financial technology industry. Previously, Mr. Frommer held key leadership roles in the investment banking and tradingdivisions of large financial institutions. From 2009 to 2012, Mr. Frommer was briefly retired until beginning concept formation for JerrickVentures which he officially founded in 2013. From 2007 to 2009, Mr. Frommer was Managing Director of Global Prime Services at RBC CapitalMarkets, the investment banking arm of the Royal Bank of Canada, the largest financial institution in Canada, after the sale of CarlinFinancial Group, a professional trading firm. From 2004 to 2007, Mr. Frommer was the Chief Executive Officer of Carlin Financial Groupafter the sale of NextGen Trading, a software development company focused on building equity trading platforms. From 2002 to 2004, Mr.Frommer was Founder and Chief Executive Officer of NextGen Trading. From 2000 to 2002, he was Managing Director of Merger Arbitrage Tradingat Bank of America, a financial services firm. Mr. Frommer was also a director of LionEye Capital, a hedge fund from June 2012 to June2014. He holds a B.A. from the University of Albany. We believe Mr. Frommer is qualified to serve on our board of directors due to hisfinancial and leadership experience.

 

Peter Majar– Director

 

Mr. Majar joined the Board in November 2022.Mr. Majar, Founder and Managing Member of Majar Advisors, previously held numerous senior management and executive positions includingChief Financial Officer, Head of Financial Technology, Head of Strategy, as well as several Managing Director positions. From 2015 to2017, Mr. Majar served as Managing Director in Investment Banking and co-Head of Diversified Financial Services at Piper Jaffray &Co. (now Piper Sandler Companies). From 2017 to 2018, Mr. Majar provided management consulting services through his self-established firm,Majar Advisors LLC, which remains in operation through the present. From 2018 to 2021, Mr. Majar served as Managing Director, Head ofFinancial Technology at New York-based investment banking and financial advisory firm, TAP Advisors, LLC. Between 2021 and 2022, Mr. Majarserved as Chief Financial Officer at information technology company Hoyos Integrity Corp., having previously served as a longtime advisorto the firm. Mr. Majar holds an undergraduate degree from University of Washington and an MBA from Columbia University. As a board director,Mr. Majar will add considerable value, including through his comprehensive and diverse investment management experience, deep knowledgeof financial technology services and transactions, and broad experience with corporate development, strategy consulting, and executiveleadership.

 

Erica Wagner – Director

 

Ms. Wagner joined the Board in November 2022.From 2016 through 2021, Ms. Wagner was a Lecturer, and later Senior Lecturer, at Goldsmith’s College, University of London, whereshe taught creative writing. Ms. Wagner was previously Lead Editorial Innovator for Creatd, Inc., has previously and currently held rolesas a freelance editor, journalist, and contributing writer for numerous outlets both in the U.K. and the U.S., including The NewStatesmanHarper’s Bazaar, the Economist, the Observer, the New York Times.Ms. Wagner is also a freelance literary and creative consultant for Chanel, as well as the host of their branded podcast. She has twicebeen a judge of the Booker Prize and has been judge and Chair of the Goldsmiths Prize. In 2015, Ms. Wagner was awarded an Honorary PhDby the University of East Anglia, and currently Goldsmith’s College Distinguished Writers’ Centre Fellow. She has an undergraduatedegree from University of Cambridge, a Master’s degree from University of East Anglia, and an Honorary PhD from the University ofEast Anglia. As a member of Creatd’s board of directors, Ms. Wagner will add significant expertise with respect to informing theCompany’s literary and creative direction, having worked closely with news organizations, commercial companies and publishers, toadvise their creative direction and its application towards commercial success.

 

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Justin Maury – Chief OperatingOfficer, Co-Founder and Director

 

Mr. Maury has served as our President since January2019, and was appointed Chief Operating Officer in August 2021. He is a full stack design director with an expertise in product development.With over ten years of design and product management experience in the creative industry, Mr. Maury’s passion for the creative artsand technology ultimately resulted in the vision for Vocal. Since joining Creatd in 2013, Maury has overseen the development and launchof the company’s flagship product, Vocal, an innovative platform that provides storytelling tools and engaged communities for creatorsand brands to get discovered while funding their creativity. Under Maury’s supervision, Vocal has achieved growth to over 380,000creators across 34 genre-specific communities in its first two years since launch.

 

Chelsea Pullano – Chief FinancialOfficer

 

Ms. Pullano has been our Chief Financial Officersince June 2020. She has a long history of leadership at Creatd, serving as a member of the Company’s Management Committee for fouryears. Prior to her current role, Ms. Pullano was an integral member of our finance department since 2017, most recently serving as ourHead of Corporate Finance, a role in which she coordinated our periodic reports under the Exchange Act and other financial matters. Priorto joining the Finance Department, Ms. Pullano was a member of our operations team from 2015 to 2017. She holds a B.A. from the StateUniversity of New York College at Geneseo.

 

Director Terms; Qualifications

 

Members of our board of directors serve untilthe next annual meeting of stockholders, or until their successors have been duly elected.

 

When considering whether directors and nomineeshave the experience, qualifications, attributes and skills to enable the board of directors to satisfy its oversight responsibilitieseffectively in light of the Company’s business and structure, the board of directors focuses primarily on the industry and transactionalexperience, and other background, in addition to any unique skills or attributes associated with a director. 

 

Director or Officer Involvement in CertainLegal Proceedings

 

There are no material proceedings to which anydirector or officer, or any associate of any such director or officer, is a party that is adverse to our Company or any of our subsidiariesor has a material interest adverse to our Company or any of our subsidiaries. No director or executive officer has been a director orexecutive officer of any business which has filed a bankruptcy petition or had a bankruptcy petition filed against it during the pastten years. No director or executive officer has been convicted of a criminal offense or is the subject of a pending criminal proceedingduring the past ten years. No director or executive officer has been the subject of any order, judgment or decree of any court permanentlyor temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activitiesduring the past ten years. No director or officer has been found by a court to have violated a federal or state securities or commoditieslaw during the past ten years.

 

Directors and Officers Liability Insurance

 

The Company has directors’ and officers’liability insurance insuring its directors and officers against liability for acts or omissions in their capacities as directors or officers,subject to certain exclusions. Such insurance also insures the Company against losses, which it may incur in indemnifying its officersand directors. In addition, officers and directors also have indemnification rights under applicable laws, and the Company’s SecondAmended and Restated Articles of Incorporation and Amended and Restated Bylaws.

 

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DirectorIndependence

 

Thelisting rules of The Nasdaq Stock Market LLC (“Nasdaq”) require that independent directors must comprise a majority of alisted company’s board of directors. In addition, the rules of Nasdaq require that, subject to specified exceptions, each memberof a listed company’s audit, compensation, and nominating and governance committees be independent. Audit committee members mustalso satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. Under the rules of Nasdaq, a director will onlyqualify as an “independent director” if, in the opinion of that company’s board of directors, that person does nothave a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

 

Ourboard of directors has undertaken a review of the independence of our directors and considered whether any director has a material relationshipwith it that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Basedupon information requested from and provided by each director concerning his background, employment and affiliations, including familyrelationships, the board of directors has determined that Peter Majar is “independent” as that term is defined under theapplicable rules and regulations of the SEC and the listing standards of Nasdaq. In making these determinations, our board of directorsconsidered the current and prior relationships that each non-employee director has with the Company and all other facts andcircumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of the Company’scapital stock by each non-employee director, and any transactions involving them described in the section captioned “—Certainrelationships and related transactions and director independence.”

 

BoardCommittees

 

TheCompany’s Board has established three standing committees: Audit, Compensation, and Nominating and Corporate Governance. Each ofthe committees operates pursuant to its charter. The committee charters will be reviewed annually by the Nominating and Corporate GovernanceCommittee. If appropriate, and in consultation with the chairs of the other committees, the Nominating and Corporate Governance Committeemay propose revisions to the charters. The responsibilities of each committee are described in more detail below.

 

Nasdaqpermits a phase-in period of up to one year for an issuer registering securities in an initial public offering to meet the Audit Committee,Compensation Committee and Nominating and Corporate Governance Committee independence requirements. Under the initial public offeringphase-in period, only one member of each committee is required to satisfy the heightened independence requirements at the time our registrationstatement becomes effective, a majority of the members of each committee must satisfy the heightened independence requirements within90 days following the effectiveness of our registration statement, and all members of each committee must satisfy the heightened independencerequirements within one year from the effectiveness of our registration statement.

 

AuditCommittee

 

TheAudit Committee, among other things, will be responsible for:

 

Appointing;approving the compensation of; overseeing the work of; and assessing the independence, qualifications, and performance of the independentauditor;

 

Reviewingthe internal audit function, including its independence, plans, and budget;

 

Approving,in advance, audit and any permissible non-audit services performed by our independent auditor;

 

Reviewingour internal controls with the independent auditor, the internal auditor, and management;

 

Reviewingthe adequacy of our accounting and financial controls as reported by the independent auditor, the internal auditor, and management;

 

Overseeingour financial compliance system; and

 

Overseeingour major risk exposures regarding the Company’s accounting and financial reporting policies, the activities of our internal auditfunction, and information technology.

  

Theboard of directors has affirmatively determined that each member of the Audit Committee meets the additional independence criteria applicableto audit committee members under SEC rules and Nasdaq listing rules. The board of directors has adopted a written charter setting forththe authority and responsibilities of the Audit Committee. The Board has affirmatively determined that each member of the Audit Committeeis financially literate, and that Mr. Majar meets the qualifications of an Audit Committee financial expert.

 

TheAudit Committee consists of Mr. Majar, Chair.

 

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CompensationCommittee

 

TheCompensation Committee will be responsible for:

 

Reviewingand making recommendations to the Board with respect to the compensation of our officers and directors, including the CEO;

 

Overseeingand administering the Company’s executive compensation plans, including equity-based awards;

 

Negotiatingand overseeing employment agreements with officers and directors; and

 

Overseeinghow the Company’s compensation policies and practices may affect the Company’s risk management practices and/or risk-takingincentives.

 

Theboard of directors has adopted a written charter setting forth the authority and responsibilities of the Compensation Committee.

 

TheCompensation Committee consists of Mr. Majar, who serves as chair, and Ms. Wagner. The board of directors has affirmatively determinedthat each member of the Compensation Committee meets the independence criteria applicable to compensation committee members under SECrules and Nasdaq listing rules. The Company believes that the composition of the Compensation Committee meets the requirements for independenceunder, and the functioning of such Compensation Committee will comply with, any applicable requirements of the rules and regulationsof Nasdaq listing rules and the SEC. 

 

Nominatingand Corporate Governance Committee

 

TheNominating and Corporate Governance Committee, among other things, is responsible for:

 

  Reviewing and assessing the development of the executive officers and considering and making recommendations to the Board regarding promotion and succession issues;
     
  Evaluating and reporting to the Board on the performance and effectiveness of the directors, committees and the Board as a whole;
     
  Working with the Board to determine the appropriate and desirable mix of characteristics, skills, expertise and experience, including diversity considerations, for the full Board and each committee;
     
  Annually presenting to the Board a list of individuals recommended to be nominated for election to the Board;
     
  Reviewing, evaluating, and recommending changes to the Company’s Corporate Governance Principles and Committee Charters;
     
  Recommending to the Board individuals to be elected to fill vacancies and newly created directorships;
     
  Overseeing the Company’s compliance program, including the Code of Conduct; and
     
  Overseeing and evaluating how the Company’s corporate governance and legal and regulatory compliance policies and practices, including leadership, structure, and succession planning, may affect the Company’s major risk exposures.

 

Theboard of directors has adopted a written charter setting forth the authority and responsibilities of the Corporate Governance/NominatingCommittee.

 

TheNominating and Corporate Governance Committee consists of Ms. Wagner, who serves as chair, and Mr. Majar. The Company’s board ofdirectors has determined that each member of the Nominating and Corporate Governance Committee is independent within the meaning of theindependent director guidelines of Nasdaq listing rules.

 

61

 

 

CompensationCommittee Interlocks and Insider Participation

 

Noneof the Company’s executive officers serves, or in the past has served, as a member of the board of directors or compensation committee,or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of theCompany’s board of directors or its compensation committee. None of the members of the Company’s compensation committee is,or has ever been, an officer or employee of the company.

 

Codeof Business Conduct and Ethics

 

TheCompany’s Board of Directors has adopted a code of business conduct and ethics applicable to its employees, directors and officers,in accordance with applicable U.S. federal securities laws and the corporate governance rules of Nasdaq. The code of business conductand ethics will be publicly available on the Company’s website. Any substantive amendments or waivers of the code of business conductand ethics or code of ethics for senior financial officers may be made only by the Company’s board of directors and will be promptlydisclosed as required by applicable U.S. federal securities laws and the corporate governance rules of Nasdaq.

 

CorporateGovernance Guidelines

 

TheCompany’s board of directors has adopted corporate governance guidelines in accordance with the corporate governance rules of Nasdaq. 

 

DelinquentSection 16(A) Reports

 

Section16(a) of the Exchange Act requires the Company’s officers and directors, and persons who beneficially own more than 10% of a registeredclass of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC and are required tofurnish copies to the Company. Based solely on the review of the Changes of Beneficial Ownership disclosures on Forms 3, 4 and 5 filedwith the Securities and Exchange Commission, the following persons filed the following number of transactions on Section 16 beneficialownership disclosure filings late for transactions:

 

  Mr. Mark Standish filed one Form 4 late with respect to one transaction;

 

  Mr. Arthur Rosen filed one Form 5 for late filings with respect to five transactions; and

 

  Mr. Eric Ellis Goldberg filed one Form 4 for late filings with respect to two transactions, and one Form 3 late with respect to two transactions.

 

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EXECUTIVECOMPENSATION

 

Thefollowing information is related to the compensation paid, distributed or accrued by us for the years ended December 31, 2021 and December31, 2020 for our Chief Executive Officer (principal executive officer) serving during the year ended December 31, 2021 and the threeother executive officers serving at December 31, 2021 whose total compensation exceeded $100,000 (the “Named Executive Officers”).

 

Name and Principal Position  Year   Salary
($)
   Bonus
($)
   Stock
Awards
($)
   Option
Awards
($)
   Non-Equity
Incentive Plan
Compensation
($)
   Nonqualified
Deferred
Compensation
Earnings 
($)
   All Other
Compensation
($)
   Total
($)
 
Laurie Weisberg   2021   $313,750   $25,000   $20,226   $763,894          -          -   $24,925(1)  $1,147,795 
Chief Executive Officer   2020   $60,577   $-    -    -    -    -   $7,875(2)  $68,452 
                                              
Justin Maury   2021   $306,923   $5,000    -   $1,479,328    -    -   $7,919(3)  $1,799,170 
President & Chief Operating Officer   2020   $147,009    -   $412,204(9)  $713,563    -    -   $7,920(4)  $1,280,696 
                                              
Chelsea Pullano   2021   $207,616   $-    -   $610,052    -    -   $7,632(5)  $825,300 
Chief Financial Officer   2020   $123,500    -   $38,050(10)  $522,121    -    -   $1,908(6)  $685,579 
                                              
Jeremy Frommer   2021   $665,433   $200,000    -   $1,709,628    -    -   $98,237(7)  $2,673,298 
Executive Chairman   2020   $234,231   $182,000   $469,255(11)  $931,339    -    -   $86,686(8)  $1,903,511 

 

(1) The $24,925 includes payment to Ms. Weisberg for health insurance.

 

(2) The $7,875 includes payment to Ms. Weisberg for health insurance.
   
(3) The $7,919 includes payment to Mr. Maury for health insurance.
   
(4) The $7,920 includes payment to Mr. Maury for health insurance.
   
(5) The $7,632 includes payment to Ms. Pullano for health insurance.
   
(6) The $1,908 includes payment to Ms. Pullano for health insurance.
   
(7) The $98,237 includes payment to Mr. Frommer for living expenses, health insurance and a vehicle allowance.
   
(8) The $86,686 includes payment to Mr. Frommer for living expenses, health insurance and a vehicle allowance.
   
(9) On May 13, 2020, the Company exchanged 167,955 stock options for 251,933 shares of Common Stock. $403,604 is attributable to this exchange. $8,660 of this amount is attributable to the issuance of shares in lieu of wages.
   
(10) On May 13, 2020, the Company exchanged 14,205 stock options for 21,308 shares of Common Stock.
   
(11) On May 13, 2020, the Company exchanged 200,000 stock options for 300,000 shares of Common Stock. $456,134 is attributable to this exchange. $12,121 of this amount is attributable to the issuance of shares in lieu of wages.

 

EmploymentAgreements

 

Asof December 31, 2021, the Company had not entered into any employment agreements, but has entered into such agreements with its ChiefExecutive Officer, Executive Chairman, President& Chief Operating Officer, and Chief Financial Officer subsequent to December 31,2021.

 

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2020Equity Incentive Plan 

 

Our2020 Equity Incentive Plan (the “2020 Plan”) provides for the issuance of incentive stock options, non-statutory stockoptions, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), and other stock-based awardsand there are 2,500,000 shares originally reserved under the 2020 Plan.  

 

Nofurther awards may be issued under the Jerrick Ventures 2015 Incentive and Award Plan (the “2015 Plan”), but all awards underthe 2015 Plan that are outstanding as of the Effective Date will continue to be governed by the terms, conditions and procedures setforth in the 2015 Plan and any applicable award agreement.

  

OutstandingEquity Awards at Fiscal Year-End 2021

 

AtDecember 31, 2021, we had outstanding equity awards as follows:  

  

Name  Number of
Securities
Underlying
Unexercised
Options
Exercisable
   Number of
Securities
Underlying
Unexercised
Options
Unexercisable
   Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
   Weighted Average
Exercise Price
   Expiration
Date
  Number of
Shares
or Units
of Stock
That
Have
Not
 Vested
   Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
   Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
   Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
 
Jeremy Frommer (1)     210,188    400,000         -   $5.94   February 19,
2028 (5)
       -   $    -        -        - 
Laurie Weisberg (2)   137,667    87,083    -   $7.13   February 19,
2028 (6)
   -   $-    -    - 
JustinMaury (3)   149,333    374,000    -   $5.93   February 19,
2028 (7)
   -   $-    -    - 
Chelsea Pullano (4)     87,000    150,000    -   $4.37   February 19,
2028 (8)
   -   $-    -    - 

 

(1) Effective February 5, 2016, to August 13, 2021, Jeremy Frommer was appointed as our Chief Executive Officer. Starting August 13, 2021, Jeremy Frommer was appointed Co-Chief Executive Officer with Laurie Weisberg.
   
(2) Effective September 28, 2020, to August 13, 2021, Laurie Weisberg was appointed as our Chief Operating Officer. Starting August 13, 2021, Laurie Weisberg Co-Chief Executive Officer with Jeremy Frommer.

 

(3) Effective January 31, 2019, to August 13, 2021, Justin Maury was appointed as our President. Starting August 13, 2021, Justin Maury was appointed Chief Operating Officer in addition to President.
   
(4) Effective June 29, 2020, Chelsea Pullano was appointed Chief Financial Officer.
   
(5) 121,000 options expire on October 28, 2026, 200,000 options expire on February 19, 2027, 200,000 options expire on February 19, 2028.
   
(6) 53,750 options expire on February 4, 2026, 121,000 options expire on October 28, 2026, 25,000 options expire on February 19, 2027, 25,000 options expire on February 19, 2028.
   
(7) 81,000 options expire on October 28, 2026, 187,000 options expire on February 19, 2027, 187,000 options expire on February 19, 2028.
   
(8) 37,000 options expire on October 28, 2026, 75,000 options expire on February 19, 2027, 75,000 options expire on February 19, 2028.

 

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DirectorCompensation 

 

Thefollowing table presents the total compensation for each person who served as a non-employee member of our board of directors and receivedcompensation for such service during the fiscal year ended December 31, 2021. Other than as set forth in the table and described morefully below, we did not pay any compensation, make any equity awards or non-equity awards to, or pay any other compensation to any ofthe non-employee members of our board of directors in 2021.

 

Director  Option
Awards (1) 
   Fees
Earned or
Paid in Cash
   Total 
Mark Standish  (4)  $340,414   $    -   $340,414 
Mark Patterson (2)  $131,845   $-   $131,845 
Leonard Schiller (4)  $171,453   $-   $171,453 
LaBrena Martin (4)  $169,078   $-   $169,078 
Laurie Weisberg (3)  $763,894   $-   $763,894 

 

(1) Amounts shown in this column do not reflect dollar amounts actually received by our non-employee directors. Instead, these amounts represent the aggregate grant date fair value of stock option awards determined in accordance with FASB ASC Topic 718.
   
(2) Mark Patterson resigned from the board of directors effective July 31, 2021.
   
(3) Laurie Weisberg was appointed the Company’s Chief Operating Officer on September 28, 2020.
   
(4) Mark Standish, Leonard Schiller, and LaBrena Martin resigned from the board of directors subsequent to December 31, 2021.

  

65

 

 

CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS

 

Thefollowing includes a summary of transactions during our fiscal years ended December 31, 2021 and December 31, 2020 to which we havebeen a party, including transactions in which the amount involved in the transaction exceeds the lesser of  $120,000 or 1% ofthe average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors, executiveofficers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any ofthe foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination,change in control and other arrangements, which are described elsewhere in this Annual Report. We are not otherwise a party to a currentrelated party transaction, and no transaction is currently proposed, in which the amount of the transaction exceeds the lesser of $120,000or 1% of the average of our total assets at year-end for the last two completed fiscal years and in which a related person had orwill have a direct or indirect material interest.

 

Revenue

 

Duringthe year ended December 31, 2021 the Company received revenue of $80,000 from Dune for branded content services prior to consolidationbut after recognition as an equity method investee.

 

TheJuly 2020 Convertible Note Offering

 

FromJuly 2020 to September 2020, the Company conducted multiple closings of a private placement offering to accredited investors (the “July2020 Convertible Note Offering”) of units of the Company’s securities by entering into subscription agreements with “accreditedinvestors” (the “July 2020 Investors”) for aggregate gross proceeds of $50,000. The July 2020 Convertible Note Offeringaccrues interest at a rate of twelve percent per annum (12%). The July 2020 Convertible Note Offering mature on the six (6th)month anniversary of their issuance dates.

 

TheJuly 2020 Note Offering is convertible into shares of the Company’s common stock, par value $.001 per share (“ConversionShares”) at the lesser of (i) a fixed conversion price equal to $12.75 per share after the maturity date or (ii) any private placementofferings or one or more registered public offerings by the Company under the Securities Act in connection with its listing onto a nationalsecurities exchange (a “Qualified Offering”).

 

Upondefault the July 2020 Convertible Note Offering is convertible into shares of the Company’s common stock, par value $.001 per share(“Conversion Shares”) equal to 61% multiplied by the lowest trade of the common stock during the twenty (15) consecutivetrading day period immediately preceding the date of the respective conversion.

 

Theconversion feature of the July 2020 Convertible Note Offering provides for an effective conversion price that is below market value onthe date of issuance. Such feature is normally characterized as a beneficial conversion feature. When the Company records a BCF the relativefair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The Company recordeda BCF and related debt discount of $9,812, the discount is being accreted over the life of the Debenture to accretion of debt discountand issuance cost.

 

TheCompany recorded a $21,577 debt discount relating to 3,922 July 2020 Convertible Note Offering issued to investors based on the relativefair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of these notes to accretionof debt discount and issuance cost.

 

Duringthe year ended December 31, 2020, the Company converted $50,000 of principal and $630 of unpaid interest into the September 2020 EquityRaise.

 

TheJanuary 2020 Rosen Loan Agreement

 

OnJanuary 14, 2020, the Company entered into a loan agreement (the “January 2020 Rosen Loan Agreement”), whereby the Companyissued a promissory note in the principal amount of $150,000 (the “January 2020 Rosen Note”). Pursuant to the January 2020Rosen Loan Agreement, the January 2020 Rosen Note accrues interest at a fixed amount of $2,500 for the duration of the note.

  

Duringthe year ended December 31, 2020 the Company repaid $150,000 in principal and $15,273 in interest.

 

TheFebruary Banner 2020 Loan Agreement

 

OnFebruary 15, 2020, the Company entered into a loan agreement (the “February 2020 Banner Loan Agreement”), whereby the Companyissued a promissory note in the principal amount of $9,900 (the “February 2020 Note”) for expenses paid on behalf of theCompany by an employee. Pursuant to the February 2020 Loan Agreement, the February 2020 Note bears interest at a rate of $495. As additionalconsideration for entering in the February 2020 Loan Agreement, the Company issued a five-year warrant to purchase 49 shares of the Company’scommon stock at a purchase price of $18.00 per share.

 

Duringthe year ended December 31, 2020 the Company repaid $9,900 in principal and $495 in interest.

 

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TheFebruary 2020 Frommer Loan Agreement

 

OnFebruary 18, 2020, the Company entered into a loan agreement (the “February 2020 Frommer Loan Agreement”) with Jeremy Frommer,an officer of the Company, whereby the Company issued Frommer a promissory note in the principal amount of $2,989 (the “February2020 Frommer Note”). As additional consideration for entering in the June 2018 Frommer Note Loan Agreement, the Company issuedFrommer a five-year warrant to purchase 15 shares of the Company’s common stock at a purchase price of $18.00 per share. Pursuantto the February 2020 Frommer Loan Agreement, the note is payable on the maturity date of February 28, 2020 (the “February 2020Frommer Maturity Date”).

 

Duringthe year ended December 31, 2020 the Company repaid $2,989 in principal and $160 in interest.

 

TheSeptember 2020 Goldberg Loan Agreement

 

OnSeptember 15, 2020, the Company entered into a loan agreement (the “September 2020 Goldberg Loan Agreement”) with Goldbergwhereby the Company issued a promissory note of $16,705 (the “September 2020 Goldberg Note”). Pursuant to the September 2020Goldberg Loan Agreement, the September 2020 Goldberg Note has an interest rate of 7%. The maturity date of the September 2020 GoldbergNote is September 15, 2022 (the “September 2020 Goldberg Maturity Date”), at which time all outstanding principal, accruedand unpaid interest and other amounts due under note are due. The September 2020 Goldberg Loan is secured by the tangible and intangibleproperty of the Company.

 

Sincethe September 2020 Goldberg Note has a make-whole provision if the share price of the Company’s common stock is below 2.92 on September14, 2020, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement ina variable quantity of shares. The make-whole feature of gave rise to a derivative liability of $2,557,275 which was recorded as a losson extinguishment of debt.

 

Duringthe year ended December 31, 2020 the Company accrued interest of $347.

 

TheSeptember 2020 Rosen Loan Agreement

 

OnSeptember 15, 2020, the Company entered into a loan agreement (the “September 2020 Rosen Loan Agreement”) with Rosen wherebythe Company issued a promissory note of $3,295 (the “September 2020 Rosen Note”). Pursuant to the September 2020 Rosen LoanAgreement, the September 2020 Rosen Note has an interest rate of 7%. The maturity date of the September 2020 Rosen Note is September15, 2022 (the “September 2020 Rosen Maturity Date”), at which time all outstanding principal, accrued and unpaid interestand other amounts due under the note are due. The September 2020 Rosen Loan is secured by the tangible and intangible property of theCompany.

 

Sincethe September 2020 Rosen Note has a make-whole provision if the share price of the Company’s common stock is below 2.92 on September14, 2020, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement ina variable quantity of shares. The make-whole feature of gave rise to a derivative liability of $504,413 which was recorded as a losson extinguishment of debt.

 

Duringthe year ended December 31, 2020 the Company accrued interest of $67.

 

67

 

 

PRINCIPALSTOCKHOLDERS

 

The following table sets forth certain information,as of January 5, 2023, with respect to the beneficial ownership of the outstanding common stock by (i) any holder of more than five(5%) percent; (ii) each of the Company’s executive officers and directors; and (iii) the Company’s directors andexecutive officers as a group. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment powerover the shares beneficially owned. Except as otherwise indicated, each of the stockholders listed below has sole voting and investmentpower over the shares beneficially owned. The address for each person is 419 Lafayette Street, 6th Floor, New York,NY 10003.

 

   Shares Beneficially Owned(1)   Percentage Ownership 
Executive Officers and Directors        
Jeremy Frommer   2,037,001(2)   5.05%
Justin Maury   1,160,536(3)   2.90%
Chelsea Pullano   420,818(4)   1.07%
Erica Wagner   32,767(5)   *%
Peter Majar       0%
All current directors and officers as a group   3,651,122    9.10%

 

 

*lessthan one percent

 

(1)Thesecurities “beneficially owned” by a person are determined in accordance with the definition of “beneficial ownership”set forth in the regulations of the SEC and accordingly, may include securities owned by or for, among others, the spouse, children orcertain other relatives of such person, as well as other securities over which the person has or shares voting or investment power orsecurities which the person has the right to acquire within 60 days.

 

(2)Includes721,462 shares of common stock, 1,121,188 shares of common stock underlying stock options, and 194,351 shares of common stock underlyingwarrants.

 

(3)Includes159,060 shares of common stock, 994,333 shares of common stock underlying stock options, and 7,143 shares of common stock underlyingwarrants.

 

(4)Includes44,818 shares of common stock, 374,000 shares of common stock underlying stock options and 2,000 shares of common stock underlying warrants.

 

(5)Includes 7,053 shares of common stock, 20,000 shares of common stockunderlying stock options and 5,714 shares of common stock underlying warrants.

 

SecuritiesAuthorized for Issuance Under Equity Compensation Plans 

 

Asof December 31, 2021, we had awards outstanding under our 2020 Equity Incentive Plan:

  

   Number of
securities
to be
issued upon
exercise of
outstanding
options and
warrants
   Weighted-
average
exercise
price of
outstanding
options,
warrants and
rights
   Number of
securities
remaining
available for
future
issuance
under
equity
compensation
plans
(excluding
securities
reflected
in
column (a)
 
Plan Category  (a)   (b)   (c) 
Equity compensation plans approved by security holders   2,950,402(1)  $7.07    351,515 
Equity compensation plans not approved by stockholders   N/A    N/A    N/A 
Total   2,950,402   $7.07    351,515 

 

(1) During the year ended December 31, 2021, we had awards outstanding under the 2020 Plan. As of the end of fiscal year 2021, we had 3,039,308 shares of our common stock issuable upon the exercise of outstanding options granted pursuant to the 2020 Plan. The securities available under the Plan for issuance and issuable pursuant to exercises of outstanding options may be adjusted in the event of a change in outstanding stock by reason of stock dividend, stock splits, reverse stock splits, etc. Pursuant to the terms of the 2020 Plan we can grant stock options, restricted stock unit awards, and other awards at levels determined appropriate by our Board and/or compensation committee. The 2020 Plan also allows us to utilize a broad array of equity incentives and performance cash incentives in order to secure and retain the services of our employees,

 

68

 

 

SELLINGSTOCKHOLDERS FOR WHOSE ACCOUNTS WE ARE REGISTERING SHARES

 

The shares of our Common Stock being offered bythe Selling Stockholders are issuable upon conversion of the July Debentures, exercise of the Series E Warrants, exercise of the SeriesF warrants, exercise of the November Warrants, conversion of the October Debenture, and conversion of the December Debenture. For additionalinformation regarding the issuance of such debentures and warrants see above descriptions of the July Purchase Agreement, the SeptemberPurchase Agreement, the October Debenture, the November Warrants, and the December Debenture. We are registering the shares of our CommonStock in order to permit the Selling Stockholders to offer the shares for resale from time to time. Except as otherwise described in thefootnotes to the table below and for the ownership of the registered shares issued pursuant to the July Purchase Agreement, the SeptemberPurchase Agreement and/or the October Purchase Agreement, neither the Selling Stockholders nor any of the persons that control them hashad any material relationships with us or our affiliates within the past three (3) years.

 

Thetable below lists the Selling Stockholders and other information regarding the beneficial ownership (as determined under Section 13(d)of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (and the rules and regulations thereunder) of theshares of our Common Stock by each of the Selling Stockholders.

 

Thesecond column lists the number of shares of our Common Stock beneficially owned by each Selling Stockholder before this Offering (includingshares which the Selling Stockholder has the right to acquire within 60 days, including upon conversion of any convertible securities)

 

Thethird column lists the shares of our Common Stock being offered by this prospectus by each Selling Stockholder.

 

Thefourth and fifth columns list the number of shares of Common Stock beneficially owned by each Selling Stockholder and their percentageownership after the Offering (including shares which the Selling Stockholder has the right to acquire within 60 days, including uponconversion of any convertible securities), assuming the sale of all of the shares offered by each Selling Stockholder pursuant to thisprospectus.

 

Under the terms of the July Debenture, the NovemberWarrants, the October Debenture, and the December Debenture a Selling Stockholder may not convert any such securities to the extent suchconversion or exercise would cause such Selling Stockholder, together with any other person with which the Selling Stockholder is consideredto be part of a group under Section 13 of the Exchange Act or with which the Selling Stockholder otherwise files reports under Section13 and/or 16 of the Exchange Act, to beneficially own a number of shares of Common Stock which exceeds 4.99% or 9.99%, as applicable,of the Equity Interests of a class that is registered under the Exchange Act that is outstanding at such time.

 

69

 

 

The amounts and information set forth below are based upon informationprovided to us by the Selling Stockholders as of January 10, 2023, except as otherwise noted below. The Selling Stockholders may sellall or some of the shares of Common Stock it is offering, and may sell, unless indicated otherwise in the footnotes below, shares of ourcommon stock otherwise than pursuant to this prospectus. The tables below assume the Selling Stockholders sell all of the shares offeredby them in offerings pursuant to this prospectus, and do not acquire any additional shares. We are unable to determine the exact numberof shares that will actually be sold or when or if these sales will occur.

 

Selling Stockholder  Number of Shares Owned Before Offering (1)   Shares Offered Hereby   Number of Shares Owned After Offering   Percentage of Shares Beneficially Owned After Offering (1) 
Anson Investment Master Fund LP (2)   1,207,297    779,982    1,207,297    2.41%
Anson East Master Fund (3)   301,825    194,995    301,825    0.60%
L1 Capital Global Opportunities Master Fund (4)   0    21,428    0    0.00%
Joseph Reda (5)   1,272,768    1,675,601    1,272,768    2.54%
Gregory Castaldo (6)   575,000    194,995    575,000    1.15%
Andrew Arno (7)   300,000    617,366    300,000    0.60%
Dorado Goose, LLC (8)   0    6,833,250    0    0.00%
Jonathan Schechter (9)   170,000    462,000    170,000    0.34%
Daniel Ripp (10)   0    192,604    0    0.00%
Linda MacKay (11)   13,000    84,415    13,000    0.03%

 

(1) Percentages are calculated based on an aggregate of 39,024,070 sharesof Common Stock outstanding as of January 10, 2023. As applicable, such percentages have been further adjusted to account for outstandingconvertible securities of such Selling Stockholder.
   
(2) Represents 371,428 shares of issuable upon the exercise of warrantsand 408,554 shares issuable upon the conversion of convertible notes. Anson Advisors Inc. and Anson Funds Management LP, the Co-InvestmentAdvisers of Anson Investments Master Fund LP (“AIMF”) hold voting and dispositive power over the Common Shares held by Anson.Bruce Winson is the managing member of Anson 4 Management GP LLC, which is the general partner of Anson Funds Management LP. Moez Kassamand Amin Nathoo are directors of Anson Advisors Inc. Mr. Winson, Mr. Kassam and Mr. Nathoo each disclaim beneficial ownership of theseCommon Shares except to the extent of their pecuniary interest therein. The principal business address of Anson is Walkers Corporate Limited,Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands.
   
(3) Represents 92,858 shares issuable upon the exercise of warrants and 102,137 shares issuable upon the conversion of convertible notes. Anson Advisors Inc. and Anson Funds Management LP, the Co-Investment Advisers of Anson Investments Master Fund LP (“AIMF”) hold voting and dispositive power over the Common Shares held by Anson. Bruce Winson is the managing member of Anson 4 Management GP LLC, which is the general partner of Anson Funds Management LP. Moez Kassam and Amin Nathoo are directors of Anson Advisors Inc. Mr. Winson, Mr. Kassam and Mr. Nathoo each disclaim beneficial ownership of these Common Shares except to the extent of their pecuniary interest therein. The principal business address of Anson is Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands.
   
(4) Represents 21,428 shares issuable upon the exercise of warrants. David Feldman is a director of L1 Capital Global Opportunities Master Fund and may be deemed to having voting and investment power over the securities listed in the table above. Such Selling Stockholder’s address is 161A Shedden Road, 1 Artillery Court, PO Box 10085, Grand Cayman KY1-1001, Cayman Islands.
   
(5) Represents 1,152,142 shares issuable upon the exercise of warrants and 523,459 shares issuable upon the conversion of convertible notes.
   
(6) Represents 92,858 shares issuable upon the exercise of warrants and 102,137 shares issuable upon the conversion of convertible notes.
   
(7) Represents 425,858 shares issuable upon the exercise of warrants and 191,508 shares issuable upon the conversion of convertible notes.
   
(8) Represents 6,833,250 shares issuable upon the conversion of convertible notes. Tommy Wang is a director of Dorado Goose, LLC and may be deemed to having voting and investment power over the securities listed in the table above. Such Selling Stockholder’s address is 170 Dorado Bch E, Dorado, Puerto Rico 00646.
   
(9) Represents 462,000 shares issuable upon the exercise of warrants.
   
(10) Represents 192,604 shares issuable upon the exercise of warrants.
   
(11) Represents 84,415 shares issuable upon the exercise of warrants.

 

70

 

 

DESCRIPTIONOF SECURITIES

 

Thefollowing description of the Company’s capital stock and provisions of its Second Amended and Restated Articles of Incorporationand Amended and Restated Bylaws are summaries and are qualified by reference to the Company’s Second Amended and Restated Articlesof Incorporation and Amended and Restated Bylaws.

 

Descriptionof Stock

 

The Company is authorized to issue 120,000,000 shares of capital stock,par value $0.001 per share, of which 100,000,000 are shares of common stock and 20,000,000 are shares of “blank check” preferredstock. As of January 5, 2023, there were shares of common stock issued and outstanding. There were 450 shares of Preferred Series E Stockissued or outstanding as of January 10, 2023.

 

OnAugust 13, 2020, we filed a certificate of amendment to our Second Amended and Restated Articles of Incorporation (the “Amendment”),with the Secretary of State of the State of Nevada to effectuate a one-for-three (1:3) reverse stock split (the “August 2020 ReverseStock Split”) of our common stock without any change to its par value. The Amendment became effective on August 17, 2020. No fractionalshares were issued in connection with the August 2020 Reverse Stock Split as all fractional shares were rounded down to the next wholeshare.

 

Theholders of the Common Stock are entitled to one vote per share. In addition, the holders of the Company’s common stock will beentitled to receive dividends ratably, if any, declared by the Company’s board of directors out of legally available funds; however,the current policy of the board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolutionor winding-up, the holders of the Company’s common stock are entitled to share ratably in all assets that are legally availablefor distribution. The holders of the Company’s common stock have no preemptive, subscription, redemption or conversion rights.The rights, preferences and privileges of holders of the Company’s common stock are subject to, and may be adversely affected by,the rights of the holders of any series of preferred stock, which may be designated solely by action of the board of directors and issuedin the future.

 

TheCommon Stock is quoted on the OTCQB under the trading symbol “CRTD.”

 

TheCompany’s transfer agent is Pacific Stock Transfer.

 

ApplicableAnti-Takeover Law

 

Setforth below is a summary of provisions in our Articles of Incorporation and the Bylaws that could have the effect of delaying or preventinga change in control of the Company. The following description is only a summary and it is qualified by refence our Articles of Incorporation,Bylaws and relevant provisions of the Nevada Revised Statutes.

 

NoCumulative Voting

 

OurArticles of Incorporation and the Bylaws do not provide holders of our common stock cumulative voting rights in the election of directors.The absence of cumulative voting could have the effect of preventing stockholders holding a minority of our shares of common stock fromobtaining representation on our board of directors. The absence of cumulative voting might also, under certain circumstances, rendermore difficult or discourage a merger, tender offer or proxy contest favored by a majority of our stockholders, the assumption of controlby a holder of a large block of our stock or the removal of incumbent management.

 

71

 

 

PLANOF DISTRIBUTION

 

EachSelling Stockholder and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of theirsecurities covered hereby on any stock exchange, market or trading facility on which the securities are traded or in private transactions.These sales may be at fixed or negotiated prices. The Company will not receive any of the proceeds from the sale by the Selling Stockholders.A Selling Stockholders may use any one or more of the following methods when selling securities:

 

ordinarybrokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

blocktrades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block asprincipal to facilitate the transaction;

 

purchasesby a broker-dealer as principal and resale by the broker-dealer for its account;

 

anexchange distribution in accordance with the rules of the applicable exchange;

 

privatelynegotiated transactions;

 

settlementof short sales;

 

intransactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulatedprice per security;

 

throughthe writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

acombination of any such methods of sale; or

 

anyother method permitted pursuant to applicable law.

 

TheSelling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act, if available,rather than under this prospectus.

 

Broker-dealersengaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissionsor discounts from the Selling Shareholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not inexcess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup ormarkdown in compliance with FINRA IM-2440.

 

Inconnection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealersor other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions theyassume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loanor pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into optionor other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require thedelivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealeror other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

TheSelling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters”within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealersor agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discountsunder the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding,directly or indirectly, with any person to distribute the securities.

 

TheCompany is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Companyhas agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities underthe Securities Act.

 

72

 

 

Weagreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be freely resold by the SellingStockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirementfor the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule ofsimilar effect, or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or anyother rule of similar effect, under circumstances in which any legend borne by such securities relating to restrictions on transferabilitythereof, under the Securities Act or otherwise, is removed. The resale securities will be sold only through registered or licensed brokersor dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby maynot be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualificationrequirement is available and is complied with.

  

 

Underapplicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneouslyengage in market making activities with respect to the securities for the applicable restricted period, as defined in Regulation M, priorto the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the ExchangeAct and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the securitiesby the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and haveinformed them of the need to deliver a copy of this prospectus to each purchaser of the securities at or prior to the time of the sale(including by compliance with Rule 172 under the Securities Act).

 

LEGALMATTERS

 

Thevalidity of the securities offered hereby will be passed upon for us by Lucosky Brookman LLP.

 

EXPERTS

 

Thefinancial statements as of the fiscal year ended December 31, 2021 and 2020 have been audited by Rosenberg Rich Baker Berman, P.A., anindependent registered public accounting firm, as stated in their reports. Such financial statements have been so included in relianceupon the reports of such firm given upon their authority as experts in accounting and auditing.

 

WHEREYOU CAN FIND ADDITIONAL INFORMATION

 

AvailableInformation

 

Wefile reports, proxy statements and other information with the SEC. Information filed with the SEC by us can be inspected and copied atthe Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of this informationby mail from the Public Reference Room of the SEC at prescribed rates. Further information on the operation of the SEC’s PublicReference Room in Washington, D.C. can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site that containsreports, proxy and information statements and other information about issuers, such as us, who file electronically with the SEC. Theaddress of that website is http://www.sec.gov.

 

Ourwebsite address is https://creatd.com. The information on our website, however, is not, and should not be deemed to be, a partof this prospectus.

 

Thisprospectus and any prospectus supplement are part of a registration statement that we filed with the SEC and do not contain all of theinformation in the registration statement. The full registration statement may be obtained from the SEC or us, as provided below. Formsof the documents establishing the terms of the offered securities are or may be filed as exhibits to the registration statement. Statementsin this prospectus or any prospectus supplement about these documents are summaries and each statement is qualified in all respects byreference to the document to which it refers. You should refer to the actual documents for a more complete description of the relevantmatters. You may inspect a copy of the registration statement at the SEC’s Public Reference Room in Washington, D.C. or throughthe SEC’s website, as provided above.

 

73

 

  

  

PART I - FINANCIAL INFORMATION

 

Creatd, Inc.

September 30, 2022

Index to the CondensedConsolidated Financial Statements 

 

Contents   Page(s)
Condensed Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021   F-2
     
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)   F-3
     
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)   F-4
     
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)   F-8
     
Notes to the Condensed Consolidated Financial Statements (unaudited)   F-9

 

F-1

 

 

Creatd, Inc.

Condensed Consolidated Balance Sheets

 

   September 30,
2022
   December 31,
2021
 
   (Unaudited)     
Assets        
         
Current Assets        
Cash  $439,539   $3,794,734 
Accounts receivable, net   222,183    337,440 
Inventory   879,050    106,403 
Marketable securities   96    - 
Prepaid expenses and other current assets   139,726    236,665 
Total Current Assets   1,680,594    4,475,242 
           
Property and equipment, net   248,963    102,939 
Intangible assets   2,536,599    2,432,841 
Goodwill   1,365,328    1,374,835 
Deposits and other assets   769,136    718,951 
Minority investment in businesses   -    50,000 
Operating lease right of use asset   2,123,171    18,451 
           
Total Assets  $8,723,791   $9,173,259 
           
Liabilities and Stockholders’ Deficit          
           
Current Liabilities          
Accounts payable and accrued liabilities  $6,714,606   $3,730,540 
Share liability   52,080    - 
Convertible Notes, net of debt discount and issuance costs   6,062,926    159,193 
Current portion of operating lease payable   279,593    18,451 
Note payable, net of debt discount and issuance costs   1,758,179    1,278,672 
Deferred revenue   305,555    234,159 
           
Total Current Liabilities   15,172,939    5,421,015 
           
Non-current Liabilities:          
Note payable   28,920    63,992 
Operating lease payable   2,135,393    
-
 
           
Total Non-current Liabilities   2,164,313    63,992 
           
Total Liabilities   17,337,252    5,485,007 
Commitments and contingencies   
 
    
 
 
Stockholders’ Equity (Deficit)          
Preferred stock, $0.001 par value, 20,000,000 shares authorized   
 
    
 
 
Series E Preferred stock, $0.001 par value, 8,000 shares authorized 500 and 500 shares issued and outstanding, respectively   
-
    
-
 
Common stock par value $0.001: 100,000,000 shares authorized; 24,469,675 issued and 24,380,218 outstanding as of September 30, 2022 and 16,691,170 Outstanding 16,685,513 outstanding as of December 31, 2021   24,470    16,691 
Additional paid in capital   124,667,772    111,563,618 
Less: Treasury stock at cost, 89,457 and 5,657 shares, respectively   (76,106)   (62,406)
Accumulated deficit   (133,762,800)   (109,632,574)
Accumulated other comprehensive income   (143,991)   (78,272)
Total Creatd, Inc. Stockholders’ Equity   (9,290,655)   1,807,057 
Non-controlling interest in consolidated subsidiaries   677,194    1,881,195 
    (8,613,461)   3,688,252 
           
Total Liabilities and Stockholders’ Equity (Deficit)  $8,723,791   $9,173,259 

 

The accompanying notes are an integral partof these condensed consolidated financial statements.

 

F-2

 

 

Creatd, Inc.

Condensed Consolidated Statementsof Operations and Comprehensive Loss

(Unaudited)

 

   For the Three
Months Ended
   For the Three
Months Ended
   For the Nine
Months Ended
   For the Nine
Months Ended
 
   September 30,
2022
   September 30,
2021
   September 30,
2022
   September 30,
2021
 
                 
Net revenue  $1,022,851   $1,179,620   $3,997,490   $2,894,390 
                     
Cost of revenue   1,404,562    1,418,213    4,771,151    4,160,743 
                     
Gross margin (loss)   (381,711)   (238,593)   (773,661)   (1,266,353)
                     
Operating expenses                    
Research and development   234,965    322,946    686,131    708,396 
Marketing   646,520    1,812,400    4,016,051    8,049,579 
Stock based compensation   626,568    2,151,900    3,848,578    5,662,389 
Impairment of intangible assets   249,586    -    257,117    93,791 
General and administrative   3,837,469    2,385,135    11,397,989    5,457,258 
                     
Total operating expenses   5,595,108    6,672,381    20,205,866    19,971,413 
                     
Loss from operations   (5,976,819)   (6,910,974)   (20,979,527)   (21,237,766)
                     
Other income (expenses)                    
Other income   -    123,710    99    123,710 
Interest expense   (673,694)   (59,859)   (707,950)   (319,290)
Accretion of debt discount and issuance cost   (1,884,679)   (2,176,651)   (2,531,687)   (3,028,015)
Derivative expense   -    -    -    (100,502)
Change in derivative liability   -    (833,456)   3,729    (1,096,287)
Impairment of investment   -    -    (50,000)   (62,733)
Settlement of vendor liabilities   -    -    (2,867)   92,909 
Loss on marketable securities   (11,415)   -    (11,646)   - 
Gain (loss) on extinguishment of debt   (979,738)   137,109    (832,482)   423,118 
Gain on forgiveness of debt   -    -    -    279,022 
                     
Other expenses, net   (3,549,526)   (2,809,147)   (4,132,804)   (3,688,068)
                     
Loss before income tax provision   (9,526,345)   (9,720,121)   (25,112,331)   (24,925,834)
                     
Equity in net loss from equity method investment   -    (16,413)   -    (16,413)
Income tax provision   
-
    
-
    
-
    
-
 
Net loss   (9,526,345)   (9,736,534)   (25,112,331)   (24,942,247)
                     
Non-controlling interest in net loss   299,903    (60,477)   1,285,661    (60,045)
                     
Net Loss attributable to Creatd, Inc.   (9,226,442)   (9,797,011)   (23,826,670)   (25,002,292)
                     
Deemed dividend   (221,829)   -    (303,557)   (410,750)
                     
Net loss attributable to common shareholders  $(9,448,271)  $(9,797,011)  $(24,130,227)  $(25,413,042)
Comprehensive loss                    
Net loss   (9,526,345)   (9,736,534)   (25,112,331)   (24,942,247)
                     
Currency translation gain (loss)   (36,110)   (8,436)   (65,719)   (16,299)
                     
Comprehensive loss  $(9,562,455)  $(9,744,970)  $(25,178,050)  $(24,958,546)
Per-share data                    
Basic and diluted loss per share
  $(0.45)  $(0.71)  $(1.23)  $(2.20)
Weighted average number of common shares outstanding
   21,030,188    13,710,111    19,669,411    11,563,150 

 

The accompanying notes are an integral partof these condensed consolidated financial statements.

 

F-3

 

 

Creatd, Inc.

Condensed ConsolidatedStatement of Changes in Stockholders’ Equity (Deficit)

For the Three MonthsEnded September 30, 2022

(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, July 1, 2022   500   $-    20,254,839   $20,255    (5,657)  $(62,406)  $122,068,892   $(124,314,529)  $895,437   $(107,881)  $(1,500,232)
                                                        
Stock based compensation   -    -    107,260    107    -    -    568,107    -    -    -    568,214 
                                                        
Shares issued for prepaid services   -    -    50,000    50    -    -    34,900    -    -    -    34,950 
                                                        
Shares issued for acquisition   -    -    57,576    58    -    -    40,937    -    81,660    -    122,655 
                                                        
Purchase of treasury stock   -    -    -    -    (83,800)   (13,700)   -    -    -    -    (13,700)
                                                        
Cash received for common stock and warrants, net of $75,000 of issuance costs   -    -    4,000,000    4,000    -    -    721,000    -    -    -    725,000 
                                                        
Stock warrants issued with note payable   -    -    -    -    -    -    1,012,107    -    -    -    1,012,107