Creatd, Inc. Eliminates $4.5 Million of Convertible Debt and Reduces Outstanding Warrants by 90%

February 28, 2024

Creatd, Inc. ($CRTD), a pioneering digital media and technology company, today announced that it has successfully eliminated $4.5 million in convertible debt. This strategic move, along with the reduction of 90% of its outstanding warrants, marks a pivotal moment in the Company's ongoing efforts to enhance shareholder value and solidify its financial foundation.

Key Highlights of the Transaction:

Avoidance of Dilution: Through this strategic exchange of convertible debt and warrants, Creatd has successfully avoided dilution to its common stock, ensuring the protection of shareholder value. Management expects to exchange shares of its common stock into the Preferred class in the coming weeks.
Insider Participation: The remaining outstanding warrants are held by insiders and management, indicating strong internal confidence in the Company's future and alignment with shareholder interests.
OG Collection, Inc. Audit Completion: The Company expects to finally complete the 2022 OG Collection, Inc. audit. It has been an unexpectedly bureaucratic process to complete, but it is in the final stages of having audited GAAP-compliant financials.
Strategic Move Towards National Exchange Uplist: The Company expects to file an uplist application to a national exchange in the short term.

In a statement from Jeremy Frommer, the Company’s CEO, expressed optimism about Creatd's future:

"This exchange represents a tipping point moment for the Company given that it creates no dilution to the common stock. Once we have completed final dialogues on the relatively small remaining balance of debt and payables, we will immediately file to uplist to a national exchange. I want to thank all those individuals who helped us through our turnaround strategy and create this incredible opportunity to generate shareholder value."

This financial restructuring is part of Creatd's broader strategy to streamline its operations, enhance its balance sheet, and position the Company for sustainable growth. By reducing its debt and minimizing the potential for dilution, Creatd is well-positioned to capitalize on future opportunities and deliver on its promise of creating long-term shareholder value.

The Company is actively engaged in constructive dialogues with strategic partners, investors, and operational teams to optimize the value of each asset within the holding company. Creatd believes that, in the current market, the value of its individual components surpasses their collective worth, indicating that the Company is presently undervalued.

Additional balance sheet highlights include:

On January 29, 2024, Creatd, Inc. announced that it has filed for the Employee Retention Credit (ERC) for $1,284,966, and is now carrying that balance as a receivable. The ERC is a refundable tax credit under the U.S. government’s response to the economic impact of the pandemic, aimed at encouraging businesses to retain employees during these challenging times. Once approved, the ERC is expected to provide financial relief to Creatd, Inc., enabling continued investment in its innovative initiatives from Reg CFs and accretive acquisitions to strengthen the balance sheet with potential stock buybacks and special dividends.
On October 26, 2023, Creatd, Inc. announced its negotiation of a settlement with former key executives, which reduced severance liabilities by about $400K and reflected their support for the Company's turnaround efforts. This settlement, part of a broader strategy that reduced total liabilities by over $3 million.
On October 17, 2023, Created, Inc. announced a significant reduction in its tax liability. By rescinding the original share grants intended for Executive Officers and Board Members—a class of recipients that had never cleared or deposited any shares—the Company has markedly improved its financial health. This decision resulted in a $1.8 million decrease in tax obligation liability on the balance sheet, marking a crucial step in Creatd's ongoing financial restructuring efforts.
On October 10, 2023, Creatd, Inc. announced it streamlined its operations through Creatd Ventures LLC by finalizing an Assignment and Assumption agreement with a private investor group for the assets and liabilities of its Brave and Basis brands, eliminating nearly $300,000 in liabilities and approximately $500,000 in future operating expenses from its balance sheet. Additionally, Creatd will benefit from a 7.5% royalty on the sale of the acquired inventory and receive 7.5% equity in the acquiring entity, enhancing its financial flexibility and stakeholder value.

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About Creatd, Inc.

Creatd, Inc. is a publicly traded digital holding company renowned for its commitment to innovation, transparency, and growth. Central to its operations is the flagship platform, Vocal—a pioneering social media and publishing platform designed to amplify user engagement and monetization.

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