CREATD(US:CRTD)2023-05-18 17:35Revenue Generation - Creatd, Inc. has over 1.5 million registered creators on its Vocal platform, which has become a key revenue source through creator subscriptions and microtransactions [253]. - The Vocal+ subscription service is priced at approximately $10 per month, providing a scalable source of monthly recurring gross revenue for the company [274]. - The company's Consumer Products Group has grown significantly, contributing to revenue through brands like Camp, Dune, Basis, and Brave, with a focus on direct-to-consumer strategies [260]. - Vocal takes platform processing fees ranging from approximately 3% to 7% on transactions, enabling audience engagement and creator support [274]. - Creatd's revenue model includes e-commerce sales from its owned brands and revitalizing legacy media content, further diversifying its income sources [275]. - Digital subscription revenue decreased by 41%, while direct-to-consumer brand revenue increased by 61% [328]. - Total revenue for Q1 2023 was $986,145, a decrease of 27% from $1,348,738 in Q1 2022 [328]. Strategic Acquisitions - The company has a strategic acquisition strategy, enhancing its revenue streams and operational efficiencies through complementary business acquisitions [273]. - On February 5, 2016, the company completed a merger with Jerrick Ventures, Inc., acquiring all outstanding capital stock in exchange for 475,000 shares of common stock and assuming 33,415 shares of Series A Convertible Preferred Stock and 8,064 shares of Series B Convertible Preferred Stock [278][279]. - The company acquired 100% of Seller's Choice, LLC on September 11, 2019, and settled the Seller's Choice Note for $799,000 on March 3, 2022 [283]. - The company acquired 89% of Plant Camp, LLC on June 4, 2021, which has been included in the Statements of Operations since the acquisition date [287]. - As of January 25, 2023, the company acquired an additional 23% equity interest in Dune, Inc., bringing total ownership to 85% [291]. Financial Performance - Operating expenses for Q1 2023 were $13,685,073, up from $6,785,852 in Q1 2022, primarily due to stock-based compensation [332]. - Net loss for Q1 2023 was $15,955,525, compared to a net loss of $6,881,048 in Q1 2022 [335]. - Loss per share for Q1 2023 was $0.35, slightly improved from $0.36 in Q1 2022 [335]. - Cost of revenue decreased by 35% to $1,012,687 in Q1 2023 from $1,572,170 in Q1 2022 [331]. - The company reported current assets of $946,743, a decrease of $532,421 from $1,479,164 on December 31, 2022 [336]. - Current liabilities increased to $17,776,824, up by $2,569,508 from $15,207,316 at the end of 2022 [336]. - The working capital deficit widened to $16,830,081, an increase of $3,101,929 compared to a deficit of $13,728,152 at December 31, 2022 [336]. - Net cash used in operating activities for Q1 2023 was $2,858,058, a decrease of $2,184,071 from the same period in 2022 [337]. - Net cash provided by financing activities decreased to $2,073,886 in Q1 2023 from $4,527,972 in Q1 2022 [339]. Operational Strategies - The company is committed to leveraging first-party data to create personalized user experiences, which can lead to higher retention rates and improved user satisfaction [268]. - Creatd's Vocal for Brands unit specializes in creating organic marketing campaigns, leveraging first-party data to optimize audience targeting and increase brand visibility [257][259]. - The company continues to invest in research and development to enhance the Vocal platform, ensuring scalability and sustainability without incurring high operational costs [255]. - The company plans to continue reducing expenses and improving operational efficiency while focusing on organic revenue growth throughout 2023 [337]. - A managed pause in influencer marketing led to a 57% decrease in revenues from that segment [328]. - The company reduced marketing spend by almost 75% during the quarter [328]. - The company expects to achieve cash flow break-even within a year due to reduced operating expenses and a recapitalization plan [328]. - The company anticipates significant revenue growth following the implementation of its Q2 recapitalization plan [328]. Corporate Governance - The company changed its name to Jerrick Media Holdings, Inc. on February 28, 2016, to better reflect its new business strategy following the merger [281]. - On July 25, 2019, the company executed a one-for-twenty reverse stock split, reducing the number of authorized common stock shares proportionately [282]. - On January 18, 2023, the company entered into securities purchase agreements with Dorado Goose LLC, raising $1,500,000 through an unsecured debenture and common stock [296]. - The company has an investment agreement allowing the purchase of up to $15,000,000 of common stock over 36 months, with the purchase price set at 82% of the lowest volume weighted average price during the last ten trading days prior to a drawdown notice [305]. - The company issued a promissory note for $300,000 to an investor, with a purchase price of $255,000, to be used for general working capital purposes [306]. - The company approved the Creatd, Inc. 2022 Omnibus Securities and Incentive Plan, allowing for the issuance of up to 30,000,000 common shares plus annual increases through 2031 [297]. Market Risk - As of March 31, 2023, there were no off-balance sheet arrangements reported by the company [340]. - There have been no material changes in the company's exposures to market risk since December 31, 2022 [342].