FORT LEE, N.J., May 17, 2021 /PRNewswire/ -- Creatd, Inc.
(Nasdaq CM: CRTD) ("Creatd" or the "Company"), today reported
financial results for its first quarter ended March 31, 2021.
Commenting on the Company's first quarter results, Creatd's
founder and CEO Jeremy Frommer
stated, "Creatd established a solid business foundation in 2020,
fortifying operations, systems, financials, human resources, and
overall infrastructure, effectively eliminating any impediment to
future rapid growth and revenue expansion, and entered 2021 focused
on delivering growth in both our platform and agency businesses. We
are highly motivated to continue to exceed the guidance we set for
2021 which we have shown to deliver during this first quarter."
"In the first quarter of 2021, our agency business increased 73%
year-over-year, generating $428,000
in revenue. We have developed a true powerhouse in the form of our
Vocal Challenges, which validate our company's unique brand
awareness capabilities and enhance the value provided to our agency
clients, while also providing exciting new reward opportunities
through cash prizes for our creator communities. The success we
witnessed with our first Moleskine-branded Challenge, launched
in January, and the subsequent engagement shortly thereafter, has
led to a number of new arrangements with other iconic brands such
as Fiskars."
"Since the launch of Vocal+ in early 2020, net quarterly
revenues from creator subscriptions have increased nearly tenfold
from $36,000 in first quarter 2020 to
$307,000 in first quarter 2021. In
fact, earlier today we announced that Vocal+ hit a new record
milestone, surpassing 25,000 subscribers, and are on track to reach
our stated goal of 100,000 paid Vocal+ subscribers by year-end
2021. As we continue to enhance our platform with additional tools
and communities, as well as increase the number of challenges and
other monetization opportunities for creators, we see a
continuation of excitement and expansion from our flourishing
creator population."
"Given the performance we have experienced over the last 45
days, coupled with the close of our recent financing, we are
comfortable giving guidance of between $1
million and $1.2 million in
net revenues in second quarter 2021, and between $5 and $7 million
for full year 2021."
First Quarter 2021 Financial Highlights
- Net revenue: Net revenue for first quarter 2021
increased 154% to $744,000, as
compared to the $293,000 in net
revenues for first quarter 2020, and exceeded Company guidance of
$660,000. The year-over-year increase
in quarterly revenues is fully attributed to the steady growth of
Vocal+ paid subscribers as well as growth in the Company's agency
businesses, which accounted for approximately 58% of net revenues
during the quarter. Agency revenues consist of revenues from Vocal
for Brands, which has experienced an acceleration in revenues into
the second quarter as a result of securing of new clients as well
as contract renewal for existing clients, and Seller's Choice, or
Managed Services, which is benefiting from an increase in monthly
service fees and performance marketing revenues. First quarter
gross revenues were $756,000, before
adjustments due to reward payments made to Vocal+ subscribers,
which includes money earned through 'reads' on subscribers' stories
and Challenge rewards; gross revenues were in line with the
Company's guidance range of $725,000
to $770,000.
- Operating Expenses: Operating expenses totaled
$6.7 million compared to the prior
year first quarter operating expenses of $2.1 million. The year-over-year increase was due
to the following:
-
- a $993,000 increase in personnel
compensation as a result of an increase in headcount, including the
addition of corporate officer positions, as well as new hires to
support the Company's growing agency businesses, business
intelligence, and financial and accounting departments. Currently,
Creatd's headcount totals approximately 40;
- a $1.6 million increase in
marketing expenditures, which will be actively managed to achieve
optimum return on investment, with an eye toward continually
lowering subscriber acquisition costs;
- a $1.5 million in non-cash
charges, including stock-based compensation to employees and
consultants, and incentive-based options issued to employees;
- approximately $400,000 in
professional services predominantly related to a financing close
and S-3; and
- general ongoing operating expenses, including an increase in
research and development of $193,000.
The Company's average monthly cash
burn during first quarter 2021 was approximately $1.8 million, an increase of approximately
$1.3 million over the prior year's
average monthly cash burn. The increase is primarily due to the
addition of personnel, which is expected to hold steady at this
level for the foreseeable future, prepayment of R&D
expenditures, full year prepayment of approximately 10% of the
Company's outsourced service fees, higher than usual expenses for
professional services due to financings, and a substantial increase
attributed to the Company's first significant marketing campaign,
an effort which is expected to be repeated throughout 2021 given
its success.
Mr. Frommer commented, "First quarter 2021 we choreographed an
important transition for the Company without compromising our
revenue expectations. We are near complete in establishing our
permanent internal infrastructure while still carrying duplicate
outsourced consulting support. As we phase out duplicate functions,
which total approximately $100,000 -
200,000 in additional expenditure monthly, and our costs are
reduced to a baseline level, we anticipate our efficiencies
will increase and our revenues will be positively impacted. In
fact, were it not for the necessity of redundancy and non-recurring
cost of financings, the first quarter monthly cash burn would have
been approximately $1.4 million. With
the momentum we are witnessing, and assuming no changes in this
baseline monthly cash burn, we believe we may exit 2021 having
achieved cashflow breakeven."
- Comprehensive Loss: Comprehensive loss for first quarter
2021 totaled $(6.6) million, or
$(0.68) per basic and diluted share,
which included several, non-cash charges, including employee bonus
options issuances for 2020 performance and stock payment to
consultants for past services, as well as an extraordinary increase
in legal, accounting, and consulting fees related to a financing
close, valuation assessments, and remaining debt conversions at the
beginning of the quarter. Net of these charges, the first quarter
comprehensive loss would have been approximately $(4.6) million, or $(0.42) per basic and diluted share. This
compares to a comprehensive loss of $(3.0)
million or $(0.96) per basic
and diluted share for first quarter 2020.
- Total Assets: During first quarter, total assets
decreased by approximately $4.3
million to $6.4 million, as
cash was used to repay approximately $1.2
million in remaining aged payables and debt, $400,000 in professional services related to
financings, a $1.6 million increase
in marketing spend and an increase in personnel resulting in
$993,000 of additional compensation
and related expenses.
- Total Liabilities: Creatd reduced its total liabilities
by $868,000 to $4.5 million during the quarter. The Company's
remaining debt consists of $240,000
in convertible notes, of which $164,000 was repaid subsequent to March 31, 2021, and $1.5
million in notes payable of which $675,000 is a Government Payroll Protection
Program ("PPP") loan that carries 1% annual interest (for which a
request for loan forgiveness has been submitted) and $660,000 related to the acquisition of Seller's
Choice, a liability that Creatd is litigating. The Company's
accounts payable was reduced $790,000
to $1.8 million following the
satisfaction of all aged payables and a portion of current
payables.
- Capitalization: As of March 31,
2021, Creatd had 10.9 million shares of common stock
outstanding, an increase of approximately 2.2 million shares from
2020 year-end predominantly due to the conversion of Series E
Preferred stock into 1.62 million common shares and the exercise of
333,000 warrants, which generated approximately $1.3 million in additional capital to the
Company. The remaining increase in outstanding common stock is
attributed to stock-based compensation of approximately 152,000
shares for professional services and 60,000 shares allocated to the
Company's Board of Directors' Compensation plan retroactive to its
reconstitution in mid-2020. The Company's fully diluted shares
increased by 2.8 million during the first quarter, predominantly
due to the granting of 1.8 million options from the Company's 2020
Equity Incentive Plan, 350,000 options issued to the Company's
Board of Directors' Compensation plan, and 470,000 warrants issued
to bankers related to the Series E private placement. Creatd's
fully diluted shares total 19.9 million, of which warrants account
for approximately 6.2 million shares with an average strike price
of $5.20. Currently, the Company's
shares held by Creatd management, Board of Directors and employees
represents over 15% of the fully diluted shares.
First Quarter 2021 Operational Highlights
- Series E Financing: Creatd announced the closing of its
$7.8 million Series E Preferred Stock
and accompanying warrants on January 4,
2021. Currently 86% of Series E preferred has converted into
common shares with remaining preferred shares totaling 1,088 or
264,078 equivalent common shares.
- S-3 Effectiveness: The Securities and Exchange
Commission declared effective the Company's Registration Statement
on Form S-3, for a total of $50
million in aggregate over time.
- Private Placement: Subsequent to quarter-end, on
May 14, 2021, Creatd closed on a
private placement of $4.7 million in
principal value of convertible notes with an original issuance
discount with three institutional investors, two of whom invested
in the prior Series E preferred. The notes are convertible into
shares of Creatd's common stock at $5.00 per share and come with, in aggregate,
1,090,908 warrants, exercisable at $4.50 per share. Created intends to use the gross
proceeds of $4 million for general
corporate purposes including an increase in its marketing and
development spend.
- Vocal+ Creator Subscriptions: In the first quarter 2021,
subscribers to Creatd's premium subscription program, Vocal+,
nearly doubled to over 20,000, as compared to 10,500 subscribers at
year-end 2020. Subsequent to the first quarter, the Company
announced that Vocal+ reached a new record high, surpassing 25,000
subscribers, and confirmed its expectations to hit its goal of
100,000 paid subscribers by year-end 2021.
- Vocal Freemium: Vocal's freemium creator count grew
approximately 10% during the first quarter, totaling over 900,000
creators compared to 810,000 creators by year-end 2020. Currently,
the Company reports a total of 967,000 freemium Vocal creators, and
expects to break one million freemium creators by the end of second
quarter 2021; the expanding pool of freemium creators on Vocal has
a catalyzing effect on Vocal+ adoption, working to accelerate the
rate of conversion to a premium subscription.
- Vocal Challenges: At its one-year mark, Vocal initiated
a Challenge in partnership with Moleskine featuring a $20,000 grand prize, its largest to date,
followed by subsequent Challenge collaborations with notable and
emerging brands including Decider.com, part of the New York Post
Digital Network, owned by News Corp (Nasdaq: NWS, NWSA; ASX: NWS,
NWSLV,) and DTC wine subscription company, Bright Cellars;
importantly, in May 2021, the Company
signed its second branded collaboration with Moleskine and
materially increased the prize pool. In addition, in mid-May,
Creatd launched its first in a series of planned collaborations
between Vocal and Fiskars, owned by Fiskars Group (HEL: FSKRS), a
multi-billion-dollar lifestyle brand headquartered in Finland. Year-to-date, Vocal has launched a
total of 36 Challenges, which represents greater than half of the
total number of Challenges launched during the full year of 2020
(59). Notable guest judges for Challenges have included
Daniela Ricardi, CEO of Moleskine,
Shelley Zalis, founder and CEO of
The Female Quotient, and Miranda
York, editor and founder of 'At the Table' magazine and
author of 'The Food Almanac.' Vocal's Challenges feature remains
one of the core drivers for year-over-year growth for both the
subscription and agency-based businesses, working to both further
enhance the value proposition for a creator to upgrade to a premium
subscription, while at the same time providing brands with an even
deeper way to engage with Vocal's creator and audience base.
- Community Launches: Vocal resumed its launch of
additional communities with the release of "FYI" and "Confessions,"
Vocal's 35th and 36th niche community sites.
Subsequent to the end of the first quarter, Vocal launched its
37thcommunity, "Earth." The Company expects to continue
to launch new communities on Vocal to accommodate the diversified
interests and needs of its expanding creator community.
- New Vocal Monetization Feature: In February 2021, Creatd announced the release of
Creator Bonuses as an additional means of monetization for
creators: currently, Creators can earn money: (i) every time their
story is read, (ii) by competing in Challenges, (iii) by receiving
'tips' from audiences, (iv) receiving 'bonuses' from Vocal
curators, (v) by collaborating on branded content campaigns through
the Company's Vocal for Brands agency.
- Second Creatd Partner, Untamed Photographer: At year-end
2020, Creatd introduced a new business segment focused on corporate
venture opportunities, Creatd Partners, which entered into its
first agreement with direct-to-consumer food brand Plant Camp. In
April 2021, Creatd announced its
second Creatd Partner investment, Untamed Photographer, an online
marketplace platform for wildlife photography. In conjunction with
the Untamed Photographer launch, the Company additionally announced
plans to tokenize the Untamed Photographer library, allowing its
photographers and the causes they support to further monetize their
unique photographs within the emerging NFT market.
- OG Gallery: Subsequent to first quarter, Creatd
announced an update on its plans to launch the "OG Gallery," a new
NFT art gallery focused on the tokenization, marketing and sale of
digital collectibles originating from the OG collection, a library
of over 100,000 original photographs, digital artwork, imagery,
original documents, illustrations, and collectables by the
legendary Bob Guccione, former CEO
of General Media and owner of publications including Penthouse,
Viva, OMNI and Longevity. Previously, the Company has successfully
leveraged this collection for numerous transmedia opportunities
including: the documentary film Filthy Gorgeous: The Bob Guccione
Story, directed by renowned documentary filmmaker Barry Avrich, which premiered at the
Toronto International Film
Festival in 2013; the book No One's Pet, written by notable film
critic Glenn Kenny in 2016; and the
award-winning 2015 film Till Human Voices Wake Us, directed by
celebrity photographer Indrani and starring Lindsay Lohan.
- Insider Buying: Creatd's executive management team and
Board of Directors continue to purchase shares of the Company's
common stock in the open market, year-to-date collectively
purchasing approximately $62,124
(14,220 shares) at an average purchase price of $4.37. Since inception, Company insiders have
purchased Creatd common shares either through the open market or by
participation in private placements that have subsequently
converted into common shares collectively totaling 480,000 common
shares and 255,000 warrants.
- Vocal Product Enhancements: Creatd released significant
design and functionality enhancements to Vocal, primarily aimed
toward enhancing user Engagement and supporting significant growth
of Vocal's premium subscription. Updates included:
-
- a full platform front-end redesign, featuring a more refined
navigation experience for Vocal audiences aimed toward increasing
creator discoverability and enriching user experience delivered
ahead of schedule;
- the addition of community-specific metrics, highlighting the
health, safety, and user volume of both the creators and
communities throughout the platform;
- a new Challenge user interface;
- front-end framework enhancements;
- back-end framework and platform infrastructure
enhancements;
- integration and implementation of recurring revenue growth
platform to reduce churn and optimize pricing;
- fundamental accessibility improvements to comply with Web
Content Accessibility Guidelines WCAG 2.0 standards;
- enhanced payment experience by enabling creators to receive
Creator Bonuses and Challenge rewards directly to their Vocal
Wallet; and
- The addition of a "Sign in with Apple" option to further
streamline user experience.
About Creatd
About Creatd Creatd, Inc. (Nasdaq CM:
CRTD) is a creator-first technology company and the parent company
of the Vocal platform. Our mission is to empower creators,
entrepreneurs, and brands through technology and partnership. We
accomplish this through Creatd's three main business pillars: Vocal
Ventures, Creatd Partners, and Recreatd. For news and updates,
subscribe to Creatd's newsletter:
https://creatd.com/newsletter
Investor Relations Contact: ir@creatd.com
Forward-Looking Statements
Any statements that are not
historical facts and that express, or involve discussions as to,
expectations, beliefs, plans, objectives, assumptions or future
events or performance (often, but not always, indicated through the
use of words or phrases such as "will likely result," "are expected
to," "will continue," "is anticipated," "estimated," "intends,"
"plans," "believes" and "projects") may be forward-looking and may
involve estimates and uncertainties which could cause actual
results to differ materially from those expressed in the
forward-looking statements. We caution that the factors described
herein could cause actual results to differ materially from those
expressed in any forward-looking statements we make and that
investors should not place undue reliance on any such
forward-looking statements. Further, any forward-looking statement
speaks only as of the date on which such statement is made, and we
undertake no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of anticipated or
unanticipated events or circumstances. New factors emerge from time
to time, and it is not possible for us to predict all of such
factors. Further, we cannot assess the impact of each such factor
on our results of operations or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
This press release is qualified in its entirety by the cautionary
statements and risk factor disclosure contained in our Securities
and Exchange Commission filings.
Creatd,
Inc.
|
Condensed
Consolidated Balance Sheet
|
(Unaudited)
|
|
|
March 31,
2021
|
|
December 31,
2020
|
Assets
|
(Unaudited)
|
|
|
Current
Assets
|
|
|
|
Cash
|
$
2,802,772
|
|
$
7,906,782
|
Account receivable,
net
|
151,729
|
|
90,355
|
Prepaid expenses and
other current assets
|
566,727
|
|
23,856
|
Total Current
Assets
|
3,521,228
|
|
8,020,993
|
|
|
|
|
Property and
equipment, net
|
58,849
|
|
56,258
|
Intangible
assets
|
929,459
|
|
960,611
|
Goodwill
|
1,035,795
|
|
1,035,795
|
Deposits and other
assets
|
291,836
|
|
191,836
|
Marketable
securities
|
62,733
|
|
62,733
|
Minority
investment in business
|
317,096
|
|
217,096
|
Operating lease
right of use asset
|
219,449
|
|
239,158
|
Total
Assets
|
$
6,436,445
|
|
$
10,784,480
|
|
|
|
|
Liabilities and
Stockholders' Equity (Deficit)
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
1,849,136
|
|
$
2,638,688
|
Derivative
liabilities
|
344,404
|
|
42,231
|
Share
liability
|
187,500
|
|
-
|
Convertible Notes, net
of debt discount and issuance costs
|
239,544
|
|
897,516
|
Current portion of
operating lease payable
|
87,912
|
|
79,816
|
Notes payable – related
party, net of debt discount
|
5,397
|
|
-
|
Notes payable, net of
debt discount and issuance costs
|
1,423,995
|
|
1,221,539
|
Deferred
revenue
|
148,760
|
|
88,637
|
Total Current
Liabilities
|
4,286,648
|
|
4,968,427
|
|
|
|
|
Non-current
Liabilities:
|
|
|
|
Note payable
|
54,298
|
|
213,037
|
Operating lease
payable
|
130,303
|
|
157,820
|
|
|
|
|
Total Non-current
Liabilities
|
184,601
|
|
370,857
|
Total
Liabilities
|
4,471,249
|
|
5,339,284
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Stockholders'
Equity (Deficit)
|
|
|
|
Series E Preferred
stock, $0.001 par value: 20,000,000 shares
authorized
|
1
|
|
8
|
1,088 and 7,738
shares issued and outstanding, respectively
|
|
|
|
Common stock, $0.001:
100,000,000 authorized shares 10,925,026 issued and 10,915,676 outstanding as of
March 31, 2021 and
|
|
|
|
8,736,378 issued and
8,727,028 outstanding at December 31, 2020
|
10,925
|
|
8,737
|
Additional paid-in
capital
|
80,633,380
|
|
77,505,013
|
Subscription
receivable
|
-
|
|
(40,000)
|
Accumulated
deficit
|
(78,572,159)
|
|
(71,928,922)
|
Accumulated other
comprehensive income
|
(44,545)
|
|
(37,234)
|
Less: Treasury stock,
5,657 and 5,657 shares, respectively
|
(62,406)
|
|
(62,406)
|
Total
Stockholders' Equity (Deficit)
|
1,965,196
|
|
5,445,196
|
Total Liabilities
and Stockholders' Equity (Deficit)
|
$
6,426,445
|
|
$
10,784,480
|
Creatd,
Inc.
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
|
|
Three Months
ended March
31,
|
|
2021
|
|
2020
|
|
|
|
|
Net
revenue
|
$
743,913
|
|
$
293,142
|
Gross
margin
|
743,913
|
|
293,142
|
|
|
|
|
Operating
expenses
|
|
|
|
Research
and development
|
328,852
|
|
135,570
|
General
and administrative
|
6,361,058
|
|
1,983,521
|
Total
operating expenses
|
6,689,910
|
|
2,119,091
|
|
|
|
|
Loss
from operations
|
(5,945,997)
|
|
(1,825,949)
|
|
|
|
|
Other income
(expenses)
|
|
|
|
Other
income
|
-
|
|
63,556
|
Interest
expense
|
(198,671)
|
|
(375,530)
|
Accretion of debt discount and issuance cost
|
(497,165)
|
|
(186,947)
|
Derivative expense
|
(100,502)
|
|
-
|
Change
in fair value of derivative liability
|
(197,389)
|
|
-
|
Settlement of vendor liabilities
|
92,909
|
|
(126,087)
|
Gain
(loss) on extinguishment of debt
|
203,578
|
|
(535,040)
|
Other
income (expenses), net
|
(697,240)
|
|
(1,160,048)
|
|
|
|
|
Loss before income
tax provision
|
(6,643,237)
|
|
(2,985,997)
|
|
|
|
|
Income tax
provision
|
-
|
|
-
|
|
|
|
|
Net
loss
|
$
(6,643,237)
|
|
$(2,985,997)
|
Deemed
dividend
|
-
|
|
-
|
Net loss attributable
to common shareholders
|
(6,643,237)
|
|
(2,985,997)
|
|
|
|
|
Other
comprehensive income
|
|
|
|
Currency translation gain (loss)
|
(7,311)
|
|
(9,239)
|
|
|
|
|
Comprehensive
loss
|
(6,650,548)
|
|
(2,995,236)
|
|
|
|
|
Per-share
data
|
|
|
|
Basic and diluted loss per share
|
$
(0.68)
|
|
$
(0.96)
|
Weighted average number of common shares outstanding
|
9,836,443
|
|
3,101,387
|
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SOURCE Creatd, Inc.