Creatd Inc's (NASDAQ: CRTD) board approved a rights offering of up to $40 million for 20 million shares at $2 per unit. The offer price implies a premium of 147.5% to Creatd's May 25 closing price of $0.808.
What Happened? Creatd looks to distribute two subscription rights for each share which holders may acquire via conversion or exercise of preferred stock, warrants, or options. Each unit will consist of one share, one redeemable 5-year warrant exercisable for $3 per share, and one redeemable 5-year warrant exercisable for $6 per share.
The offering could increase by an additional $180 million subject to the exercise of the warrants.
Why Does It Matter? Creatd looks to utilize the offering proceeds for its expansion plan. Creatd Chair acknowledged the offering as its most significant offering since September 2020 uplisting.
If fully subscribed, the offering could yield between a 10x – 20x increase in revenues over the next 12 to 18 months.
Creatd Chair disclosed a tight float compared to microcap stocks like Remark Holdings, Inc (NASDAQ: MARK) and Genius Brands International, Inc (NASDAQ: GNUS), which trade at sub $1.00 with over $100 million and $250 million in outstanding shares.
Creatd grew revenues from zero to $4.3 million for FY21 and looked to reach between $7 million - $10 million for FY22, pre-expansion plan initiation.
Creatd maintained flat operating expenses, except for one-time charges and a decrease in its core platform, Vocal's, marketing spend over the past three quarters.
Additionally, Vocal's network grew to over 1.4 million creators and an audience reach exceeding 75 million.
Creatd eliminated nearly all outstanding debt from its balance sheet, unlike small-cap companies like BuzzFeed, Inc (NASDAQ: BZFD), Esports Entertainment Group Inc (NASDAQ: GMBL), and Ipsidy Inc (NASDAQ: AUID) struggling with debt.
Creatd Chair expressed that it was finally in a position to compete head-to-head with the multi-billion-dollar-valued platforms in its space, at a fraction of its internal headcount and with far lower development costs.
He acknowledged witnessing the shift of value away from legacy social media companies, like Snap Inc (NYSE: SNAP), Facebook rebranded Meta Platforms Inc (NASDAQ: FB), and Twitter Inc (NYSE: TWTR), toward subscription-based business models.
Creatd's founders built the non-ad dependent Vocal platform by employing an AI-assisted and human-led moderation system to cultivate a safe and secure platform for its creators and brands.
Creatd Chair encouraged everyone to go through the Growth and Capital Expansion Plan and Rights Offering deck.
Creatd will be hosting an investor day presentation in the middle of June.
Price Action: CRTD shares traded higher by 2.62% at $0.83 on the last check Thursday.
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