Creatd, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Creatd, Inc. December 31, 2022 and 2021 Index to the Consolidated Financial Statements Contents Page(s) Report Of Independent Registered Public Accounting Firm (PCAOB Firm ID 0089 ) F-2 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-5 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2022 and 2021 F-6 Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2022 and 2021 F-7 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021 F-8 Notes to the Consolidated Financial Statements F-9 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Creatd, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Creatd, Inc. (the “Company”) as of December 31, 2022 and 2021, and the related statements of operations and comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company had a significant accumulated deficit, significant net loss and net cash used in operating activities that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F- 2 Goodwill and Finite-Lived Intangible Assets Impairment Evaluation As discussed in Note 2 to the financial statements, management conducts a goodwill impairment assessment on an annual basis and when events or changes in circumstances indicate that the carrying value of a reporting unit exceeds its fair value. The fair value of a reporting unit is determined through the use of the income approach using estimates of future cash flows attributable to the respective reporting units. As a result of the annual impairment assessment, the Company recognized approximately $1.4 million of goodwill impairment related to its reporting units. Additionally, as discussed in Note 2 to the financial statements, management evaluates the recoverability of acquired finite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from their use and eventual disposition. As a result of the intangible asset impairment assessment, the Company recognized approximately $1.9 million of impairment related to finite-lived intangible assets. We identified the impairment of Goodwill and finite-lived intangible assets as a critical audit matter because of significant judgments required by management to estimate the fair value, including forecasted cash flows, revenue growth rates and expectations for operating expenses. The Goodwill assessment also requires judgment related to the discount rate utilized and other significant valuation assumptions. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s cash flow estimates and the selection of cash flow multiples used in the income approach for valuing Goodwill. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the forecasts of management’s estimates of future cash flows, the selection of cash flow multiples for the Company’s reporting units, and the evaluation of the discount rate for Goodwill assessments included the following, among others: – We obtained an understanding of the controls over the assessment of Goodwill and intangible asset impairment, including those over qualitative assessments and the determination of fair value based on relevant cash flow forecasts. – Tested the mathematical accuracy of the calculations and evaluated significant assumptions and the underlying data used by the Company by performing procedures to test the projected revenues, projected direct costs, and projected operating expenses by comparing them with the historical forecasted results of the respective entities’ operations, evaluating the feasibility of generating revenues and cost-cutting strategies and assessing the impacts of internal and/or external economic factors. – We used experienced personnel to evaluate the expertise, valuation assumptions and methodologies utilized by valuation professionals with specialized skills and knowledge engaged by the Company, and critically evaluated management’s assumptions used in the valuations. Inventory As discussed in Note 2 to the financial statements, inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value and are periodically evaluated to identify obsolete or otherwise impaired products and are written off when management determines usage is not probable. The Company estimates the balance of excess and obsolete inventory by analyzing inventory by age using last used and original purchase date and existing sales pipeline for which the inventory could be used. We identified the audit of inventory as a critical audit matter for the following reasons based on different aspects of the audit of inventory. (a) Existence of inventory – we encountered difficulty in gaining timely access to observe physical inventory counts at multiple locations or confirm existence in other locations. Certain counts could only be done virtually. These factors required the need for inventory roll back procedures, which were also complicated. (b) Valuation of inventory – (1) The determination of the proper allocation of inventory value to unit costs was complex and the Company lacked formal controls over this area; (2) The determination of inventory obsolescence required significant assumptions about expiration and spoilage or breakage. F- 3 How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the testing the existence and valuation of inventory included the following, among others: – We obtained an understanding of the controls over inventory recognition, valuation and monitoring, including those related to allocation of unit costs, inventory obsolescence, and tracking of remote inventories. – Tested the mathematical accuracy of the calculations and evaluated significant assumptions and the underlying data used by the Company in allocating unit costs by performing procedures to test the underlying value of inventory components in relation to historical bill of materials and finished goods observed during inventory counts. We also evaluated this information by performing our own independent allocations of predicted unit costs and comparing to Company estimates. – We critically evaluated the assumptions and methodology employed by the Company in evaluating inventory obsolescence, including consideration of subsequent events, and assessing the reasonableness of estimates to historical data for spoilage or breakage. – During inventory observations, we required live counts, ensured that count procedures were prepared and properly followed, the counting team member was adequately familiar with the inventory items to be counted, count locations were properly identified and tracked accurately, and observed the contents of certain boxes and observed all sides of palleted items. – We tested the verifiability of inventory reports and tested detailed transactions for the inventory roll back procedures. /s/ Rosenberg Rich Baker Berman, P.A. We have served as the Company’s auditor since 2018. Somerset, New Jersey April 18, 2023 F- 4 Creatd, Inc. Consolidated Balance Sheets December 31, 2022 December 31, 2021 Assets Current Assets Cash $ 706,224 $ 3,794,734 Accounts receivable, net 239,423 337,440 Inventory 404,970 106,403 Prepaid expenses and other current assets 128,547 236,665 Total Current Assets 1,479,164 4,475,242 Property and equipment, net 212,545 102,939 Intangible assets 230,084 2,432,841 Goodwill 46,460 1,374,835 Deposits and other assets 797,231 718,951 Minority investment in businesses - 50,000 Operating lease right of use asset 2,054,265 18,451 Total Assets $ 4,819,749 $ 9,173,259 Liabilities and Stockholders’ Deficit Current Liabilities Accounts payable and accrued liabilities $ 7,565,720 $ 3,730,540 Convertible Notes, net of debt discount and issuance costs 5,369,599 159,193 Current portion of operating lease payable 326,908 18,451 Note payable, net of debt discount and issuance costs 1,645,680 1,278,672 Deferred revenue 299,409 234,159 Total Current Liabilities 15,207,316 5,421,015 Non-current Liabilities: Note payable 38,014 63,992 Operating lease payable 2,077,618 - Total Non-current Liabilities 2,115,632 63,992 Total Liabilities 17,322,948 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 450 and 500 shares issued and outstanding, respectively - - Common stock par value $ 0.001 : 100,000,000 shares authorized; 39,062,386 issued and 38,969,013 outstanding as of December 31, 2022 and 16,691,170 issued and 16,685,513 outstanding as of December 31, 2021 39,062 16,691 Additional paid in capital 134,570,600 111,563,618 Less: Treasury stock, 93,373 and 5,657 shares, respectively ( 78,456 ) ( 62,406 ) Accumulated deficit ( 146,142,373 ) ( 109,632,574 ) Accumulated other comprehensive income ( 140,183 ) ( 78,272 ) Total Creatd, Inc. Stockholders’ Equity ( 11,751,350 ) 1,807,057 Non-controlling interest in consolidated subsidiaries ( 751,849 ) 1,881,195 ( 12,503,199 ) 3,688,252 Total Liabilities and Stockholders’ Equity (Deficit) $ 4,819,749 $ 9,173,259 The accompanying notes are an integral part of these consolidated financial statements. F- 5 Creatd, Inc. Consolidated Statements of Comprehensive Loss For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 Net revenue $ 4,796,474 $ 4,299,717 Cost of revenue 6,109,206 5,300,037 Gross margin (loss) ( 1,312,732 ) ( 1,000,320 ) Operating expenses Compensation 4,678,390 5,812,057 Research and development 951,414 983,528 Marketing 4,700,171 9,626,982 Stock based compensation 4,183,844 9,661,168 Impairment of goodwill 1,433,815 1,035,795 Impairment of intangible assets 2,043,011 688,127 General and administrative 9,727,735 4,560,743 Total operating expenses 27,718,380 32,368,400 Loss from operations ( 29,031,112 ) ( 33,368,720 ) Other income (expenses) Other income 99 396,223 Interest expense ( 821,051 ) ( 372,106 ) Accretion of debt discount and issuance cost ( 4,668,039 ) ( 3,612,669 ) Derivative expense - ( 100,502 ) Change in derivative liability 3,729 ( 1,096,287 ) Impairment of investment ( 50,000 ) ( 589,461 ) Settlement of vendor liabilities ( 265,717 ) 59,692 Loss on marketable securities ( 11,742 ) - Gain (loss) on extinguishment of debt ( 832,482 ) 1,025,655 Gain on forgiveness of debt - 279,022 Other income (expenses), net ( 6,645,203 ) ( 4,010,433 ) Loss before income tax provision ( 35,676,315 ) ( 37,379,153 ) Income tax provision - - Net loss ( 35,676,315 ) ( 37,379,153 ) Non-controlling interest in net loss 3,383,044 86,251 Net Loss attributable to Creatd, Inc. ( 32,293,271 ) ( 37,292,902 ) Deemed dividend ( 4,216,528 ) ( 410,750 ) Net loss attributable to common shareholders $ ( 36,509,799 ) $ ( 37,703,652 ) Comprehensive loss Net loss ( 35,676,315 ) ( 37,379,153 ) Currency translation loss ( 61,911 ) ( 41,038 ) Comprehensive loss $ ( 35,738,226 ) $ ( 37,420,191 ) Per-share data Basic and diluted loss per share $ ( 1.66 ) $ ( 2.98 ) Weighted average number of common shares outstanding 22,035,260 12,652,470 The accompanying notes are an integral part of these consolidated financial statements. F- 6 Creatd, Inc. Consolidated Statement of Changes in Stockholders’ Equity (Deficit) For the Years Ended December 31, 2022 and 2021 Series E Preferred Stock Common Stock Treasury stock Additional Paid In Subscription Accumulated Non-Controlling Other Comprehensive Stockholders’ Equity Shares Amount Shares Amount Shares Amount Capital Receivable Deficit Interest Income (Deficit) Balance, January 1, 2021 7,738 $ 8 8,736,378 $ 8,737 ( 5,657 ) $ ( 62,406 ) $ 77,505,013 $ ( 40,000 ) $ ( 71,928,922 ) $ - $ ( 37,234 ) $ 5,445,196 Stock based compensation - - 388,411 388 - - 9,446,687 - - - - 9,447,075 Shares issued for prepaid services - - 50,000 50 - - 226,450 - - - - 226,500 Shares issued to settle vendor liabilities - - 294,895 295 - - 791,091 - - - - 791,386 Common stock issued upon conversion of notes payable - - 1,128,999 1,129 - - 5,155,865 - - - - 5,156,994 Exercise of warrants to stock - - 2,250,691 2,251 - - 9,484,972 - - - - 9,487,223 Cash received for common stock and warrants - - 1,687,500 1,687 - - 5,665,263 - - - - 5,666,950 Cash received for preferred series E and warrants 40 - - - - - ( 4,225 ) 40,000 - - - 35,775 Conversion of preferred series E to stock ( 7,278 ) ( 8 ) 1,766,449 1,766 - - ( 1,758 ) - - - - - Stock warrants issued with note payable - - - - - - 1,665,682 - - - - 1,665,682 Shares issued for acquisition - - 387,847 388 - - 1,217,828 - - 1,967,446 - 3,185,662 Foreign currency translation adjustments - - - - - - - - - - ( 41,038 ) ( 41,038 ) Dividends - - - - - - 410,750 - ( 410,750 ) - - - Net loss for the year months ended December 31, 2021 - - - - - - - - ( 37,292,902 ) ( 86,251 ) - ( 37,379,153 ) Balance, December 31, 2021 500 $ - 16,691,170 $ 16,691 ( 5,657 ) $ ( 62,406 ) $ 111,563,618 $ - $ ( 109,632,574 ) $ 1,881,195 $ ( 78,272 ) $ 3,688,252 Conversion of preferred series E to stock ( 50 ) 12,136 12 - - ( 12 ) - - - - - Stock based compensation - - 444,162 444 - - 4,086,960 - - - - 4,087,404 Shares issued to settle vendor liabilities - - 307,342 307 - - 410,192 - - - - 410,499 Shares issued for prepaid services - - 150,000 150 - - 141,000 - - - - 141,150 Shares issued for in process research and development - - 57,576 58 - - 40,937 - - - - 40,995 BCF issued with note payable - - - - - - 2,008,227 - - - - 2,008,227 Exercise of warrants to stock - - 9,172,772 9,173 - - 1,772,774 - - - - 1,781,947 Purchase of treasury stock - - - - ( 87,716 ) ( 16,050 ) - - - - - ( 16,050 ) Stock warrants issued with note payable - - - - - - 3,149,270 - - - - 3,149,270 Cash received for common stock and warrants, net of $ 190,000 of issuance costs - - 7,046,314 7,046 - - 5,715,254 - - - - 5,722,300 Stock issued with note payable - - 815,000 815 - - 409,130 - - - - 409,945 Common stock issued upon conversion of notes payable - - 4,365,914 4,366 - - 1,056,722 - - - - 1,061,088 Foreign currency translation adjustments - - - - - - - - - - ( 61,911 ) ( 61,911 ) Sale of non-controlling interest in OG Collection Inc. - - - - - - - - - 750,000 - 750,000 Deemed Dividends - - - - - - 4,216,528 - ( 4,216,528 ) - - - Net loss for the year ended December 31, 2022 - - - - - - - - ( 32,293,271 ) ( 3,383,044 ) - ( 35,676,315 ) Balance, December 31, 2022 450 $ - 39,062,386 $ 39,062 ( 93,373 ) $ ( 78,456 ) $ 134,570,600 $ - $ ( 146,142,373 ) $ ( 751,849 ) $ ( 140,183 ) $ ( 12,503,199 ) The accompanying notes are an integral part of these consolidated financial statements. F- 7 Creatd, Inc. Consolidated Statements of Cash Flows For the Year Ended For the Year Ended December 31, 2022 December 31, 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 35,676,315 ) $ ( 37,379,153 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 586,109 397,440 Impairment of investment 50,000 589,461 Impairment of intangible assets 1,433,815 1,038,905 Impairment of goodwill 2,043,011 688,127 impairment of ROU 101,623 - Accretion of debt discount and issuance cost 4,668,039 3,612,669 Share-based compensation 4,183,844 9,661,174 Shares issued for in process research and development 40,994 - Bad debt expense 398,130 110,805 (Gain) loss on extinguishment of debt 832,482 ( 1,304,677 ) Settlement of vendor liabilities 265,717 ( 59,692 ) Change in fair value of derivative liability ( 3,729 ) 1,096,287 Derivative Expense - 100,502 Loss on marketable securities 11,742 - Non cash lease expense 274,784 82,511 Reserve for obsolete inventory 399,058 - Equity interest granted for other income - ( 123,710 ) Equity in net loss from unconsolidated investment - 16,413 Changes in operating assets and liabilities: Prepaid expenses 86,155 ( 174,819 ) Inventory ( 479,356 ) ( 39,182 ) Accounts receivable ( 755,907 ) ( 80,407 ) Deposits and other assets ( 78,280 ) ( 527,115 ) Deferred revenue 65,250 144,851 Accounts payable and accrued expenses 4,773,551 1,714,902 Operating lease liability ( 26,146 ) ( 84,099 ) Net Cash Used In Operating Activities ( 16,805,429 ) ( 20,518,807 ) CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for property and equipment ( 212,249 ) ( 95,935 ) Cash paid for minority investment in business - ( 325,000 ) Cash paid for equity method investment - ( 510,000 ) Cash paid for investments in marketable securities ( 48,878 ) - Sale of marketable securities 37,135 - Cash received from the Sale of non-controlling interest in OG Collection Inc. 750,000 - Cash consideration for acquisition ( 31,679 ) ( 225,947 ) Purchases of digital assets ( 410,369 ) ( 11,241 ) Sale of digital assets 289,246 - Net Cash Provided By (Used In) Investing Activities 373,206 ( 1,168,123 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the exercise of warrant 1,781,947 9,487,223 Net proceeds from issuance of notes 2,219,219 747,937 Repayment of notes ( 2,830,382 ) ( 456,233 ) Proceeds from issuance of convertible note 8,391,905 3,610,491 Repayment of convertible notes ( 1,863,315 ) ( 941,880 ) Repayment of note payable - related party - ( 538,574 ) Proceeds from issuance of common stock and warrants 5,722,300 5,666,951 Cash received for preferred series E and warrants - 40,000 Purchase of treasury stock ( 16,050 ) - Net Cash Provided By Financing Activities 13,405,624 17,615,915 Effect of exchange rate changes on cash ( 61,911 ) ( 41,038 ) Net Change in Cash ( 3,088,510 ) ( 4,112,053 ) Cash - Beginning of period 3,794,734 7,906,787 Cash - End of period $ 706,224 $ 3,794,734 SUPPLEMENTARY CASH FLOW INFORMATION: Cash Paid During the Year for: Income taxes $ - $ - Interest $ 650,000 $ 60,073 SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Settlement of vendor liabilities $ - $ 168,667 Beneficial conversion feature on convertible notes $ 2,008,227 $ - Warrants issued with debt $ 3,149,270 $ 1,665,682 Shares issued with debt $ 409,945 $ - Issuance of common stock for prepaid services $ 141,150 $ 226,500 Recognition of Right-of-use asset and corresponding operating lease liability $ 2,412,221 $ - Deferred offering costs $ - $ 4,225 Common stock and warrants issued upon conversion of notes payable $ 1,061,088 $ 5,156,994 Shares issued for acquisition $ - $ 1,318,218 Reduction of ROU asset related to re-measurement of lease liability $ - $ 135,086 Repayment of promissory notes from Australian R&D credits $ - $ 146,630 The accompanying notes are an integral part of these consolidated financial statements. F- 8 Creatd, Inc. December 31, 2022 Notes to the Consolidated Financial Statements Note 1 – Organization and Operations Creatd, Inc., formerly Jerrick Media Holdings, Inc. (“we,” “us,” the “Company,” or “Creatd”), is a technology company focused on providing economic opportunities for creators, which it accomplishes through its four main business pillars: Creatd Labs, Creatd Partners, Creatd Ventures, and Creatd Studios. Creatd’s flagship product, Vocal, delivers a robust long-form, digital publishing platform organized into highly engaged niche-communities capable of hosting all forms of rich media content. Through Creatd’s proprietary algorithm dynamics, Vocal enhances the visibility of content and maximizes viewership, providing advertisers access to target markets that most closely match their interests. The Company was originally incorporated under the laws of the State of Nevada on December 30, 1999 under the name LILM, Inc. The Company changed its name on December 3, 2013 to Great Plains Holdings, Inc. as part of its plan to diversify its business. On February 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 of the 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’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”). In connection 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 liability company, and (ii) all of GTPH’s interest in Lil Marc, Inc., a Utah corporation, in exchange for the cancellation of 39,091 shares of 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. Upon closing of the Merger on February 5, 2016, the Company changed its business plan to that of Jerrick. Effective February 28, 2016, GTPH entered into an Agreement and Plan of Merger (the “Statutory Merger Agreement”) with Jerrick, pursuant to which GTPH became the parent company of Jerrick Ventures, LLC, a wholly-owned operating subsidiary of Jerrick (the “Statutory Merger”) and GTPH changed its name to Jerrick Media Holdings, Inc. to better reflect its new business strategy. 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 September 9, 2020, the Company filed a certificate of amendment with the Secretary of State of the State of Nevada to change our name to “Creatd, Inc.”, which became effective on September 10, 2020. On June 4, 2021, the Company acquired 89 % of the membership interests of Plant Camp, LLC, a Delaware limited liability company (“Plant Camp”), which the Company subsequently rebranded as Camp. Camp is a direct-to-consumer (DTC) food brand which creates healthy upgrades to classic comfort food favorites. The results of Plant Camp’s operations have been included since the date of acquisition in the Statements of Operations. On July 20, 2021, the Company acquired 44 % of the membership interests of WHE Agency, Inc. WHE Agency, Inc, is a talent management and public relations agency based in New York (“WHE”). WHE 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. F- 9 Between October 21, 2020, and August 16, 2021, the Company acquired 21 % of the membership interests of Dune, Inc. Dune, Inc. is a direct-to-consumer brand focused on promoting wellness through its range of health-oriented beverages. On October 3, 2021, the Company acquired an additional 29 % of the membership interests of Dune, Inc., bringing our total membership interests to 50 %. Dune, Inc., has been consolidated due to the Company’s ownership of 50 % voting control, and the results of operations have been included since the date of acquisition in the Statements of Operations. On March 7, 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 operations have been included since the date of acquisition in the Statement of Operations. On August 1, 2022, the Company acquired 51 % of the membership interests of Orbit Media LLC, a New York limited liability company. Orbit is a app-based stock trading platform designed to empower a new generation of investors. Orbit has been consolidated due to the Company’s ownership of 51 % voting control, and the results of operations have been included since the date of acquisition in the Statement of Operations. On September 13, 2022, the Company acquired 100 % of the membership interests of Brave Foods, LLC, a Maine limited liability company. Brave is a plant-based food company that provides convenient and healthy breakfast food products. Brave Foods, LLC has been consolidated due to the Company’s ownership of 100 % voting control, and the results of operations have been included since the date of acquisition in the Statement of Operations. On December 13, 2022, an investor entered into a Subscription Agreement whereby it purchased from OG Collection, Inc., a subsidiary of the Company (“OG”), 150,000 shares of common stock of OG for a purchase price of $ 750,000 , and, in connection therewith OG, the Company, and the Investor entered into a Shareholder Agreement. Note 2 – Significant Accounting Policies and Practices Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by the accounting principles generally accepted in the United States of America. Use of Estimates and Critical Accounting Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. The Company uses estimates in accounting for, among other items, revenue recognition, allowance for doubtful accounts, stock-based compensation, income tax provisions, excess and obsolete inventory reserve, and impairment of intellectual property. Actual results could differ from those estimates. F- 10 Principles of consolidation The Company consolidates all majority-owned subsidiaries, if any, in which the parent’s power to control exists. As of December 31, 2022, the Company’s consolidated subsidiaries and/or entities are as follows: Name of combined affiliate State or other jurisdiction of incorporation or organization Company Ownership Interest Jerrick Ventures LLC Delaware 100 % Abacus Tech Pty Ltd Australia 100 % Creatd Ventures LLC Delaware 100 % Dune Inc. Delaware 50 % OG Collection, Inc. Delaware 89 % Orbit Media LLC New York 51 % WHE Agency, Inc. Delaware 44 % As of December 31, 2022, Creatd Ventures, LLC (formerly Creatd Partners, LLC) is operating three DBAs for Brave Foods, Plant Camp, and Basis (formerly Denver Bodega, LLC). All other previously consolidated subsidiaries have been dissolved. All inter-company balances and transactions have been eliminated. The consolidated financial statements include Denver Bodega, LLC activity since March 7, 2022, Orbit Media LLC activity since August 1, 2022, and Brave Foods, LLC activity since September 13, 2022. Variable Interest Entities Management performs an ongoing assessment of its noncontrolling interests from investments in unrelated entities to determine if those entities are variable interest entities (VIEs), and if so, whether the Company is the primary beneficiary. If an entity in such a transaction, by design, meets the definition of a VIE and the Company determines that it, or a consolidated subsidiary is the primary beneficiary, the Company will include the VIE in its consolidated financial statements. If such an entity is deemed to not be consolidated, the Company records only its investment in equity securities as a marketable security or investment under the equity method, as applicable. Fair Value of Financial Instruments The fair value measurement disclosures are grouped into three levels based on valuation factors: ● Level 1 – quoted prices in active markets for identical investments ● Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs) ● Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments) The Company’s Level 1 assets/liabilities include cash, accounts receivable, marketable trading securities, accounts payable, marketable trading securities, prepaid and other current assets, line of credit and due to related parties. Management believes the estimated fair value of these accounts at December 31, 2022 approximate their carrying value as reflected in the balance sheets due to the short-term nature of these instruments or the use of market interest rates for debt instruments. The Company’s Level 2 assets/liabilities include certain of the Company’s notes payable. Their carrying value approximates their fair values based upon a comparison of the interest rate and terms of such debt given the level of risk to the rates and terms of similar debt currently available to the Company in the marketplace. The Company’s Level 3 assets/liabilities include goodwill, intangible assets, equity investments at cost, and derivative liabilities. Inputs to determine fair value are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities. F- 11 The following tables provide a summary of the relevant assets that are measured at fair value on a recurring basis: Fair Value Measurements as of December 31, 2021 Total Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Assets: Marketable securities - debt securities $ - $ - $ - $ - Total assets $ - $ - $ - $ - Liabilities: Derivative liabilities $ - $ - $ - $ - Total Liabilities - $ - $ - $ - Fair Value Measurements as of December 31, 2022 Total Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Assets: Marketable securities - equity securities $ - $ - $ - $ - Total assets $ - $ - $ - $ - Our marketable equity securities are publicly traded stocks measured at fair value using quoted prices for identical assets in active markets and classified as Level 1 within the fair value hierarchy. Marketable equity securities as of December 31, 2022 and 2021 are $ 0 . The change in net realized depreciation on equity trading securities that have been included in other expenses for the year ended December 31, 2022 and 2021 was $ 11,742 and $ 0 , respectively. The following table sets forth a summary of the changes in marketable securities - available-for-sale debt securities that are measured at fair value on a recurring basis: For the years ended December 31, 2022 and 2021 Total As of January 1, 2021 $ 62,733 Purchase of marketable securities - Interest due at maturity - Other than temporary impairment ( 62,733 ) Conversion of marketable securities - December 31, 2021 and 2022 $ - F- 12 The following are the changes in the derivative liabilities during the years ended December 31, 2022 and 2021. Years Ended December 31, 2022 and 2021 Level 1 Level 2 Level 3 Derivative liabilities as January 1, 2021 $ - $ - $ 42,231 Addition - - 417,24 Extinguishment - - ( 431,458 ) Conversion to Note payable - related party - - ( 1,124,301 ) Changes in fair value - - 1,096,287 Derivative liabilities as December 31, 2021 - - - Addition - - 100,532 Changes in fair value - - ( 3,729 ) Extinguishment - - ( 96,803 ) Derivative liabilities as December 31, 2022 $ - $ - $ - The following tables provide a summary of the relevant assets that are measured at fair value on a non-recurring basis: Fair Value Measurements as of December 31, 2021 Total Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Assets: Equity investments, at cost $ 50,000 $ - $ - $ 50,000 Intangible assets 2,432,841 - - 2,432,841 Goodwill 1,374,835 - - 1,374,835 Total assets $ 3,857,676 $ - $ - $ 3,857,676 Fair Value Measurements as of December 31, 2022 Total Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Assets: Equity investments, at cost $ - $ - $ - $ - Intangible assets 230,084 - - 230,084 Goodwill 46,460 - - 46,460 Total assets $ 276,544 $ - $ - $ 276,544 Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. At times, cash balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) or Financial Claims Scheme (“FCS”) insurable limits. The Company has never experienced any losses related to these balances. The uninsured cash balance as of December 31, 2022, was $ 308,474 . The Company does not believe it is exposed to significant credit risk on cash and cash equivalents. F- 13 Concentration of Credit Risk and Other Risks and Uncertainties The Company provides credit in the normal course of business. The Company maintains allowances for credit losses on factors surrounding the credit risk of specific customers, historical trends, and other information. The Company operates in Australia and holds total assets of $ 700,268 . It is reasonably possible that operations located outside an entity’s home country will be disrupted in the near term. Property and Equipment Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows: Estimated Useful Life (Years) Computer equipment and software 3 Furniture and fixtures 5 Leasehold Improvements 3 Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. Long-lived Assets Including Acquired Intangible Assets We evaluate the recoverability of property and equipment, acquired finite-lived intangible assets and, purchased infinite life digital assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from the use and eventual disposition. Digital assets accounted for as intangible assets are subject to impairment losses if the fair value of digital assets decreases other than temporarily below the carrying value. The fair value is measured using the quoted price of the crypto asset at the time its fair value is being measured. If such review indicates that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value. During the year ended December 31, 2022, the Company recorded an impairment charge of $ 2,043,111 for intangible assets. During the year ended December 31, 2021, the Company recorded an impairment charge of $ 688,127 for intangible assets. Acquired finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets. We routinely review the remaining estimated useful lives of property and equipment and finite-lived intangible assets. If we change the estimated useful life assumption for any asset, the remaining unamortized balance is amortized or depreciated over the revised estimated useful life. The remaining weighted average life of the intangible assets is 8 .06 years. Scheduled amortization over the next five years are as follows: Twelve months ending December 31, 2023 $ 32,097 2024 32,098 2025 28,863 2026 18,966 2027 18,964 Thereafter 76,313 Total 207,301 Intangible assets not subject to amortization 22,783 Total Intangible Assets $ 230,084 F- 14 Amortization expense was $ 483,484 and $ 348,186 for the year ended December 31, 2022 and 2021, respectively. Goodwill Goodwill is not amortized but is subject to periodic testing for impairment in accordance with ASC Topic 350 “Intangibles – Goodwill and Other – Testing Indefinite-Lived Intangible Assets for Impairment” (“ASC Topic 350”). The Company tests goodwill for impairment on an annual basis as of the last day of the Company’s fiscal December each year or more frequently if events occur or circumstances change indicating that the fair value of the goodwill may be below its carrying amount. The Company uses an income-based approach to determine the fair value of the reporting units. This approach uses a discounted cash flow methodology and the ability of our reporting units to generate cash flows as measures of fair value of our reporting units. During the year ended December 31, 2022 and 2021, the Company completed its annual impairment tests of goodwill. The Company performed the qualitative assessment as permitted by ASC 350-20 and determined for one of its reporting units that the fair value of that reporting unit was more likely than not greater than its carrying value, including Goodwill. However, based on this qualitative assessment, the Company determined that the carrying value of the Denver Bodega, Dune, Plant Camp and, WHE Agency reporting units was more likely than not greater than their carrying value, including Goodwill. Based on the completion of the annual impairment tests, the Company recorded an impairment charge of $ 1,433,815 and $ 1,035,795 for goodwill for the years ended December 31 2022 and 2021, respectively. The following table sets forth a summary of the changes in goodwill for the years ended December 31, 2021 and 2022. For the years ended December 31, 2021 and 2022 Total As of January 1, 2021 $ 1,035,795 Goodwill acquired in a business combination 1,374,835 Impairment of goodwill ( 1,035,795 ) As of December 31, 2021 1,374,835 Goodwill acquired in business combinations 105,440 Impairment of goodwill ( 1,433,815 ) As of December 31, 2022 46,460 Investments Marketable securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value, with unrealized gains and losses recognized in earnings. Debt securities not classified as held-to-maturity or as trading are classified as available-for-sale, and are carried at fair market value, with the unrealized gains and losses, net of tax, included in the determination of comprehensive income and reported in stockholders’ equity. The Company accounts for its investments in available-for-sale debt securities, in accordance with sub-topic 320-10 of the FASB ASC (“Sub-Topic 320-10”). Accrued interest on these securities is included in fair value and amortized cost. Pursuant to Paragraph 320-10-35, investments in debt securities that are classified as available for sale shall be measured subsequently at fair value in the statement of financial position. Unrealized holding gains and losses for available-for-sale securities (including those classified as current assets) shall be excluded from earnings and reported in other comprehensive income until realized. F- 15 The Company follows FASB ASC 320-10-35 to assess whether an investment in debt securities is impaired in each reporting period. An investment in debt securities is impaired if the fair value of the investment is less than its amortized cost. If the Company intends to sell the debt security (that is, it has decided to sell the security), an other-than-temporary impairment shall be considered to have occurred. If the Company more likely than not will be required to sell the security before recovery of its amortized cost basis or it otherwise does not expect to recover the entire amortized cost basis of the security, an other-than-temporary impairment shall be considered to have occurred. The Company considers the expected cash flows from the investment based on reasonable and supportable forecasts as well as several other factors to estimate whether a credit loss exists. If the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. The following table sets forth a summary of the changes in marketable securities - available-for-sale debt securities that are measured at fair value on a recurring basis: For the years ended December 31, 2022 and 2021 Total As of January 1, 2021 $ 62,733 Purchase of marketable securities - Interest due at maturity - Other than temporary impairment ( 62,733 ) Conversion of marketable securities - December 31, 2021 and 2022 $ - We invest in debt securities. Our investments in debt securities are subject to interest rate risk. To minimize the exposure due to an adverse shift in interest rates, we invest in securities with maturities of two years or less and maintain a weighted average maturity of one year or less. As of December 31, 2021, all of our investments had maturities between one and three years . The marketable debt security investments are evaluated for impairment if events or circumstances arise that indicate that the carrying amount of such assets may not be recoverable. During the years ended December 31, 2021, the Company recognized a $ 62,733 from the impairment of the debt security. The following table sets forth a summary of the changes in equity investments, at cost that are measured at fair value on a non-recurring basis: For the years ended December 31, 2021 and 2022 Total As of January 1, 2021 $ 217,096 Purchase of equity investments 150,000 Other than temporary impairment ( 102,096 ) Conversion to equity method investments ( 215,000 ) As of December 31, 2021 50,000 Purchase of equity investments - Other than temporary impairment ( 50,000 ) Conversion to equity method investments - As of December 31, 2022 $ - The Company has elected to measure its equity securities without a readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. An election to measure an equity security in accordance with this paragraph shall be made for each investment separately. F- 16 The Company performed a qualitative assessment considering impairment indicators to evaluate whether these investments were impaired. Impairment indicators that the Company considered included the following: a) a significant deterioration in the earnings performance, credit rating, asset quality or business prospects of the investee; b) a significant adverse change in the regulatory, economic or technology environment of the investee; c) a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates; d) a bona fide offer to purchase or an offer by the investee to sell the investment; e) factors that raise significant concerns about the investee’s ability to continue as a going concern. During the years ended December 31, 2022 and 2021 the Company recognized a $ 50,000 and $ 102,096 impairment of the equity security respectively. Equity Method Investments Investments in unconsolidated entities over which we have significant influence are accounted for under the equity method of accounting. Under the equity method of accounting, the Company does not consolidate the investment’s financial statements within its consolidated financial statements. Equity method investments are initially recorded at cost, then our proportional share of the underlying net income or loss is recorded as equity in net loss from equity method investments in our statement of operations, with a corresponding increase or decrease to the carrying value of the investment. Distributions received from the investee reduce our carrying value of the investment and are recorded in the consolidated statements of cash flows using the cumulative earnings approach. These investments are evaluated for impairment if events or circumstances arise that indicate that the carrying amount of such assets may not be recoverable. There were indicators of impairment related to our equity method investments for the year ended December 31, 2021. During the year ended December 31, 2022 and 2021, the Company recorded an impairment charge of $ 50,000 and $ 487,365 respectively for equity method investments. Commitments and Contingencies The Company follows subtopic 450-20 of the FASB ASC to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Foreign Currency Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at our Consolidated Balance Sheet dates. Results of operations and cash flows are translated using the average exchange rates throughout the periods. The effect of exchange rate fluctuations on the translation of assets and liabilities is included as a component of stockholders’ equity in accumulated other comprehensive income. Gains and losses from foreign currency transactions, which are included in operating expenses, have not been significant in any period presented. F- 17 Derivative Liability The Company evaluates its debt and equity issuances to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 815-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then the related fair value is reclassified to equity. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date. The Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. The Company utilizes a binomial option model for convertible notes that have an option to convert at a variable number of shares to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The inputs utilized in the application of the Binomial model included a stock price on valuation date, an expected term of each debenture remaining from the valuation date to maturity, an estimated volatility, and a risk-free rate. The Company records the change in the fair value of the derivative as other income or expense in the consolidated statements of operations. Shipping and Handling Costs The Company classifies freight billed to customers as sales revenue and the related freight costs as cost of revenue. Revenue Recognition Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We determine revenue recognition through the following steps: ● identification of the contract, or contracts, with a customer; ● identification of the performance obligations in the contract; ● determination of the transaction price. The transaction price for any given subscriber could decrease based on any payments made to that subscriber. A subscriber may be eligible for payment through one or more of the monetization features offered to Vocal creators, including earnings through reads (on a cost per mile basis) and cash prizes offered to Challenge winners; ● allocation of the transaction price to the performance obligations in the contract; and ● recognition of revenue when, or as, we satisfy a performance obligation. F- 18 Revenue disaggregated by revenue source for the year ended December 30, 2022 and 2021 consists of the following: Years Ended December 31, 2022 2021 Agency (Managed Services, Branded Content, & Talent Management Services) $ 1,914,647 $ 2,256,546 Platform (Creator Subscriptions) 1,417,094 1,926,135 Ecommerce 1,457,161 90,433 Affiliate Sales 7,572 26,453 Other Revenue - 150 $ 4,796,474 $ 4,299,717 The Company utilizes the output method to measures the results achieved and value transferred to a customer over time. Timing of revenue recognition for the three and years ended December 31, 2022 and 2021 consists of the following: Years Ended December 31, 2022 2021 Products and services transferred over time $ 3,331,741 $ 4,182,681 Products transferred at a point in time 1,464,733 117,036 $ 4,796,474 $ 4,299,717 Agency Revenue Managed Services The Company provides Studio/Agency Service offerings to business-to-business (B2B) and business-to-consumer (B2C) product and service brands which encompasses a full range of digital marketing and e-commerce solutions. The Company’s services include the setup and ongoing management of clients’ websites, Amazon and Shopify storefronts and listings, social media pages, search engine marketing, and other various tools and sales channels utilized by e-commerce sellers for sales and growth optimization. Contracts are broken into three categories: Partners, Monthly Services, and Projects. Contract amounts for Partner and Monthly Services clients range from approximately $ 500 -$ 7,500 per month while Project amounts vary depending on the scope of work. Partner and Monthly clients are billed monthly for the work completed within that month. Partner Clients may or may not have an additional billing component referred to as Sales Performance Fee, which is a fee based upon a previously agreed upon percentage point of the client’s total sales for the month. Some Partners may also have projects within their contracts that get billed and recognized as agreed upon project milestones are achieved. Revenue is recognized over time as service obligations and milestones in the contract are met. Branded Content Branded content represents the revenue recognized from the Company’s obligation to create and publish branded articles and/or branded challenges for clients on the Vocal platform and promote said stories, tracking engagement for the client. In the case of branded articles, the performance obligation is satisfied when the Company successfully publishes the articles on its platform and meets any required promotional milestones as per the contract. In the case of branded challenges, the performance obligation is satisfied when the Company successfully closes the challenge and winners have been announced. The Company utilizes the completed contract method when revenue is recognized over time as the services are performed and any required milestones are met. Certain contracts contain separate milestones whereas the Company separates its performance obligations and utilizes the stand-alone selling price method and residual method to determine the estimate of the allocation of the transaction price. F- 19 Below are the significant components of a typical agreement pertaining to branded content revenue: ● The Company collects fixed fees ranging from $ 10,000 to $ 110,000 , with branded challenges ranging from $ 10,000 to $ 25,000 and branded articles ranging from $ 2,500 to $ 10,000 per article. ● Branded articles are created and published, and challenges are completed, within three months of the signed agreement, or as previously negotiated with the client. ● Branded articles and challenges are promoted per the contract and engagement reports are provided to the client. ● Most contracts include provisions for clients to acquire content rights at the end of the campaign for a flat fee. Talent Management Services Talent Management represents the revenue recognized by WHE Agency, Inc. (“WHE”) from the Company’s obligation to manage and oversee influencer-led campaigns from the contract negotiation stage through content creation and publication. WHE acts in an agent capacity for influencers and collects a management fee of approximately 20 % of the value of an influencer’s contract with a brand. Revenue is recognized net of the 80 % of the contract that is collected by the influencer and is recognized when performance obligations of the contract are met. Performance obligations are complete when milestones and deliverables of contracts are delivered to the client. Below are the significant components of a typical agreement pertaining to talent management revenue: ● Total gross contracts range from $ 500 -$ 100,000 . ● The Company collects fixed fees in the amount of 20 to 25 % of the gross contract amount, ranging from $ 100 to $ 25,000 in net revenue per contract. ● The campaign is created and made live by the influencer within the timeframe specified in the contract. ● Campaigns are promoted per the contract and the customer is provided a link to the live deliverables on the influencer’s social media channels. ● Most billing for contracts occur 100 % at execution of the performance obligation. Net payment terms vary by client. Platform Revenue Creator Subscriptions Vocal+ is a premium subscription offering for Vocal creators. In addition to joining for free, Vocal creators now have the option to sign up for a Vocal+ membership for either $ 9.99 monthly or $ 99 annually, though these amounts are subject to promotional discounts and free trials. Vocal+ subscribers receive access to value-added features such as increased rate of cost per mille (thousand) (“CPM”) monetization, a decreased minimum withdrawal threshold, a discount on platform processing fees, member badges for their profiles, access to exclusive Vocal+ Challenges, and early access to new Vocal features. Subscription revenues stem from both monthly and annual subscriptions, the latter of which is amortized over a twelve-month period. Any customer payments received are recognized over the subscription period, with any payments received in advance being deferred until they are earned. The transaction price for any given subscriber could decrease based on any payments made to that subscriber. A subscriber may be eligible for payment through one or more of the monetization features offered to Vocal creators, including earnings through reads (on a cost per mille basis) and cash prizes offered to Challenge winners. Potential revenue offset is calculated by reviewing a subscriber’s earnings in conjunction with payments made by the subscriber on a monthly and/or annual basis. F- 20 Affiliate Sales Revenue Affiliate sales represents the commission the Company receives from views or sales of its multimedia assets. Affiliate revenue is earned on a “click through” basis, upon visitors viewing or purchasing the relevant video, book, or other media asset and completing a specific conversion. The revenue is recognized upon receipt as reliable estimates could not be made. E-Commerce Revenue The Company’s e-commerce businesses are housed under Creatd Ventures, and currently consists of four majority-owned e-commerce companies, Camp (previously Plant Camp), Dune Glow Remedy (“Dune”), Basis, and Brave. The Company generates revenue through the sale of Camp, Dune, Basis, and Brave’s consumer products through its e-commerce distribution channels. The Company satisfies its performance obligation upon shipment of product to its customers and recognizes shipping and handling costs as a fulfillment cost. Customers have 30 days from receipt of an item to return unopened, unused, or damaged items for a full refund for Camp, Dune, and Basis, and 7 days from receipt of purchase for Brave. All returns are processed within the relevant recording period and accounted for as a reduction in revenue. The Company runs discounts from time to time to promote sales, improve market penetration, and increase customer retention. Any discounts are run as coupon codes applied at the time of transaction and accounted for as a reduction in gross revenue. The Company assesses variable consideration using the most likely amount method. Deferred Revenue Deferred revenue consists of billings and payments from clients in advance of revenue recognition. The Company has two types of deferred revenue, subscription revenue whereas the revenue is recognized over the subscription period and contract liabilities where the performance obligation was not satisfied. The Company will recognize the deferred revenue within the next twelve months. As of December 31, 2022, and 2021, the Company had deferred revenue of $ 299,409 and $ 234,159 respectively. Accounts Receivable and Allowances Accounts receivable are recorded and carried when the Company has performed the work in accordance with managed services, project, partner, consulting and branded content agreements. For example, we bill a managed service client monthly when we have updated their Amazon store, modified SEO, or completed the other services listed in the agreement. For projects and branded content, we will bill the client and record the receivable once milestones are reached that are set in the agreement. We make estimates for the allowance for doubtful accounts and allowance for unbilled receivables based upon our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, and other factors that may affect our ability to collect from customers. During the years ended December 31, 2022 and 2021, the Company recorded $ 398,130 and $ 110,805 , respectively as a bad debt expense. As of December 31, 2022, the Company has an allowance for doubtful accounts of $ 585,077 . As of December 31, 2021, the Company has an allowance for doubtful accounts of $ 186,147 . F- 21 Inventory Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value. Inventories are periodically evaluated to identify obsolete or otherwise impaired products and are written off when management determines usage is not probable. The Company estimates the balance of excess and obsolete inventory by analyzing inventory by age using last used and original purchase date and existing sales pipeline for which the inventory could be used. As of December 31, 2022, and 2021, the Company had a valuation allowance of $ 399.058 and $ 0 respectively. During the years ended December 31, 2022 and 2021 the Company recorded $ 399,058 and $ 0 respectively for product obsolescence. Stock-Based Compensation The Company recognizes compensation expense for all equity–based payments granted in accordance with Accounting Standards Codification (“ASC”) 718 “Compensation – Stock Compensation”. Under fair value recognition provisions, the Company recognizes equity–based compensation over the requisite service period of the award. The company has a relatively low forfeiture rate of stock-based compensation and forfeitures are recognized as they occur. Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods. The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are inputs into the model. These assumptions are the value of the underlying share, the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and forfeitures are recognized as they occur. . Expected volatility is derived from the Company’s historical data over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common stock and does not intend to pay dividends on its Common stock in the foreseeable future. Forfeitures are recognized as they occur. Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, our equity–based compensation could be materially different in the future. The Company issues awards of equity instruments, such as stock options and restricted stock units, to employees and certain non-employee directors. Compensation expense related to these awards is based on the fair value of the underlying stock on the award date and is amortized over the service period, defined as the vesting period. The vesting period is generally one to three years . A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock units. Compensation expense is reduced for actual forfeitures as they occur. Loss Per Share Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. For the years ended December 31, 2022 and 2021, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. F- 22 The Company had the following common stock equivalents at December 31, 2022 and 2021: December 31, 2022 2021 Series E preferred 109,223 121,359 Options 3,061,767 2,902,619 Warrants 16,261,699 5,658,830 Convertible notes 27,823,250 - Totals 47,255,939 8,682,808 Reclassifications Certain prior year amounts in the consolidated financial statements and the notes thereto have been reclassified where necessary to conform to the current year’s presentation. These reclassifications did not affect the prior period’s total assets, total liabilities, stockholders’ deficit, net loss or net cash used in operating activities. During the year ended December 31, 2021, we adopted a change in presentation on our consolidated statements of operations and comprehensive loss in order to present a gross profit line, the presentation of which is consistent with our peers. Under the new presentation, we began allocating payroll and related expenses, professional services and creator payouts. Prior periods have been revised to reflect this change in presentation. Recently Adopted Accounting Guidance In May 2021, the FASB issued authoritative guidance intended to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. (ASU 2021-04), “Derivatives and Hedging Contracts in Entity’s Own Equity (Topic 815). This guidance’s amendments provide measurement, recognition, and disclosure guidance for an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The updated guidance, which became effective for fiscal years beginning after December 15, 2021, During the year ended December 31, 2022, the Company recognized a deemed dividend of $ 3,187,906 from the modification of warrants. Recent Accounting Guidance Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU-2016-13”). ASU 2016-13 affects loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. On October 16, 2019, FASB approved a final ASU delaying the effective date of ASU 2016-13 for small reporting companies to interim and annual periods beginning after December 15, 2022. The Company is currently evaluating the impact of these amendments to the Company’s financial position and results of operations and currently does not know or cannot reasonably quantify the impact of the adoption of the amendments as a result of the complexity and extensive changes from the amendments. The adoption of the guidance will affect disclosures and estimates around accounts receivable. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related EPS guidance for both Subtopics. ASU 2020-06 is effective for the fiscal year beginning after December 15, 2022, including interim periods within that fiscal year. Upon adoption, the Company would no longer recognize the intrinsic value of beneficial conversion features underlying convertible debt. During the year ended December 31, 2022, the company recognized approximately $ 2.0 million relating to a beneficial conversion feature. F- 23 In October 2021, the FASB issued ASU No. 2021-08, Business Combinations — Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805), Which aims to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in recognition and payment terms that effect subsequent revenue recognition. ASU 2021-08 is effective for the fiscal year beginning after December 15, 2022, including interim periods within that fiscal year. The Company expects that there would be no material impact on the Company’s consolidated financial statements upon the adoption of this ASU. Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial statements. Note 3 – Going Concern The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the consolidated financial statements, as of December 31, 2022, the Company had an accumulated deficit of $ 146.2 million, a net loss of $ 35.7 million and net cash used in operating activities of $ 16.7 million for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. The Company is attempting to further implement its business plan and generate sufficient revenues; however, its cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to further implement its business plan and generate sufficient revenues and in its ability to raise additional funds by way of a public or private offering of its debt or equity securities, there can be no assurance that it will be able to do so on reasonable terms, or at all. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenues and its ability to raise additional funds by way of a public or private offering. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Note 4 – Inventory Inventory was comprised of the following at December 31, 2022 and December 31, 2021: December 31, 2022 December 31, 2021 Raw Materials $ - $ - Packaging 34,632 2,907 Finished goods $ 370,335 103,496 $ 404,970 $ 106,403 F- 24 Note 5 – Property and Equipment Property and equipment stated at cost, less accumulated depreciation, consisted of the following: December 31, 2022 December 31, 2021 Computer Equipment $ 447,860 $ 353,880 Furniture and Fixtures 184,524 102,416 Leasehold Improvements 47,616 11,457 680,000 467,753 Less: Accumulated Depreciation ( 467,455 ) ( 364,814 ) $ 212,545 $ 102,939 Depreciation expense was $ 102,643 and $ 49,254 for the year ended December 31, 2022 and 2021, respectively. Note 6 – Notes Payable Notes payable as of December 31, 2022 and 2021 is as follows: Outstanding Principal as of December 31, 2022 December 31, 2021 Interest Rate Maturity Date Seller’s Choice Note $ - $ 660,000 30 % September 2020 The April 2020 PPP Loan Agreement 198,577 198,577 1 % May 2022 The First December 2021 Loan Agreement - 185,655 10 % June 2023 The Second December 2021 Loan Agreement - 313,979 14 % June 2022 First Denver Bodega LLC Loan 38,014 - 5 % March 2025 The Third May 2022 Loan Agreement 9,409 - - % November 2022 The Fourth May 2022 Loan Agreement 31,701 - - % November 2022 The Second June Loan agreement 39,500 - - % October 2022 The First August 2022 Loan Agreement 130,615 - 14 % November 2022 The Second August 2022 Loan Agreement 387,950 - - % January 2023 The First September 2022 Loan Agreement 73,236 - - % September 2023 The Second September 2022 Loan Agreement 763,625 - - % May 2023 The Third September 2022 Loan Agreement 256,964 - - % April 2023 The November 2022 Loan 68,211 - - % June 2023 1,683,694 1,358,211 Less: Debt Discount ( 314,108 ) ( 15,547 ) Less: Debt Issuance Costs - - 1,683,694 1,342,664 Less: Current Debt ( 1,645,680 ) ( 1,278,672 ) Total Long-Term Debt $ 38,014 $ 63,992 Seller’s Choice Note On September 11, 2019, the Company entered into Seller’s Choice Purchase Agreement with Home Revolution LLC. As a part of the consideration provided pursuant to the Seller’s Choice Acquisition, the Company issued the Seller’s Choice Note to the Seller in the principal amount of $ 660,000 . The Seller’s Choice Note bears interest at a rate of 9.5% per annum and is payable on March 11, 2020 (the “Seller’s Choice Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts become due. Upon maturity the Company utilized an automatic extension up to 6 months. This resulted in a 5% increase in the interest rate every month the Seller’s Choice Note is outstanding. As of December 31, 2021, the Company was in default on the Seller’s Choice note. F- 25 On March 3, 2022, after substantial motion practice, Creatd successfully settled the dispute with Home Revolution, LLC for a total of $ 799,000 , which includes $ 660,000 of note principal and $ 139,000 of accrued interest. The matter has been dismissed. As part of the settlement the Company recorded a Gain on extinguishment of debt of $ 147,256 . The April 2020 PPP Loan Agreement On April 30, 2020, the Company was granted a loan with a principal amount of $ 282,432 (the “Loan”), pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020. The Loan, which was in the form of a Note dated April 30, 2020, matures on April 30, 2022, and bears interest at a fixed rate of 1.00% per annum, payable monthly commencing on October 30, 2020. The Note may be prepaid by the Company at any time prior to maturity without payment of any premium. Funds from the Loan may only be used to retain workers and maintain payroll or make mortgage payments, lease payments and utility payments. During the year ended December 31, 2021, the Company accrued interest of $ 1,637 . During the year ended December 31, 2021, the Company repaid $ 83,855 in principal. During the year ended December 31, 2022, the Company accrued interest of $ 10,850 . As of December 31, 2022, the Loan is in default, and the lender may require immediate payment of all amounts owed under the Loan or file suit and obtain judgment. Subsequent to December 31, 2022, the Company made a repayment of $ 5,000 towards this note. The May 2020 PPP Loan Agreement On May 4, 2020, Jerrick Ventures, LLC (“Jerrick Ventures”), the Company’s wholly-owned subsidiary, was granted a loan from PNC Bank, N.A. with a principal amount of $ 412,500 , pursuant to the Paycheck Protection Program (the “PPP”). The Loan, which was in the form of a Note dated May 4, 2020, matures on May 4, 2022, and bears interest at a fixed rate of 1.00 % per annum, payable monthly commencing on November 4, 2020. The Note may be prepaid by Jerrick Ventures at any time prior to maturity without payment of any premium. Funds from the Loan may only be used to retain workers and maintain payroll or make mortgage payments, lease payments and utility payments. Jerrick Ventures intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. During the year ended December 31, 2021, the Company accrued interest of $ 396 . During the year ended December 31, 2021, the Company repaid $ 136,597 in principal and was forgiven $ 275,903 of principal and $ 3,119 of accrued interest. The October 2020 Loan Agreement On October 6, 2020, the Company entered into a secured loan agreement (the “October 2020 Loan Agreement”) with a lender (the “October 2020 Lender”), whereby the October 2020 Lender issued the Company a secured promissory note of $ 74,300 AUD or $ 54,412 United States Dollars (the “October 2020 Note”). Pursuant to the October 2020 Loan Agreement, the October 2020 Note has an effective interest rate of 14% . The maturity date of the October 2020 Note is September 30, 2021 (the “October 2020 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the October 2020 Loan Agreement are due. The loan is secured by the Australian research & development credit. During the year ended December 31, 2021, the Company accrued $ 4,850 AUD in interest. During the year ended December 31, 2021, the Company’s repaid $ 111,683 in principal and $ 6,408 in interest from our R&D tax credit receivable. F- 26 The November 2020 Loan Agreement On November 24, 2020, the Company entered into a loan agreement (the “November 2020 Loan Agreement”) with a lender (the “November 2020 Lender”) whereby the November 2020 Lender issued the Company a promissory note of $ 34,000 (the “November 2020 Note”). Pursuant to the November 2020 Loan Agreement, the November 2020 Note has an effective interest rate of 14% . The maturity date of the November 2020 Note is May 25, 2021 (the “November 2020 Maturity Date”), at which time all outstanding principal, accrued and unpaid interest and other amounts due under the November 2020 Note are due. During the year ended December 31, 2020, the Company repaid $ 10,284 in principal. During the year ended December 31, 2021, the Company repaid $ 23,716 in principal and $ 4,736 of accrued interest. The February 2021 Loan Agreement On February 24, 2021, the Company entered into a secured loan agreement (the “February 2021 Loan Agreement”) with a lender (the “February 2021 Lender”), whereby the February 2021 Lender issued the Company a secured promissory note of $ 111,683 AUD or $ 81,789 United States Dollars (the “February 2021 Note”). Pursuant to the February 2021 Loan Agreement, the February 2021 Note has an effective interest rate of 14% . The maturity date of the February 2021 Note is July 31, 2021 (the “February 2021 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the February 2021 Loan Agreement are due. The loan is secured by the Australian research & development credit. During the year ended December 31, 2021, the Company accrued $ 9,339 AUD in interest. The April 2021 Loan Agreement On April 9, 2021, the Company entered into a loan agreement (the “April 2021 Loan Agreement”) with a lender (the “April 2021 Lender”) whereby the April 2021 Lender issued the Company a promissory note of $ 128,110 (the “April 2021 Note”). Pursuant to the April 2021 Loan Agreement, the April 2021 Note has an effective interest rate of 11% . The maturity date of the April 2021 Note is October 8, 2022 (the “April 2021 Maturity Date”), at which time all outstanding principal, accrued and unpaid interest and other amounts due under the April 2021 Note are due. During the year ended December 31, 2021, the Company repaid $ 92,140 in principal and converted $ 35,970 into the July 2021 Loan Agreement. As part of the conversion the Company recorded $ 8,341 as extinguishment expense. The July 2021 Loan Agreement On July 2, 2021, the Company entered into a loan agreement (the “July 2021 Loan Agreement”) with a lender (the “July 2021 Lender”) whereby the July 2021 Lender issued the Company a promissory note of $ 137,625 (the “July 2021 Note”). Pursuant to the July 2021 Loan Agreement, the July 2021 Note has an effective interest rate of 10% . The maturity date of the July 2021 Note is December 31, 2022 (the “July 2021 Maturity Date”), at which time all outstanding principal, accrued and unpaid interest and other amounts due under the July 2021 Note are due. During the year ended December 31, 2021, the Company repaid $ 113,606 in principal and converted $ 24,019 into the Second December 2021 Loan. As part of the conversion the Company recorded $ 7,109 as extinguishment expense. F- 27 The First December 2021 Loan Agreement On December 3, 2021, the Company entered into a loan agreement (the “First December 2021 Loan Agreement”) with a lender (the “First December 2021 Lender”) whereby the First December 2021 Lender issued the Company a promissory note of $ 191,975 (the “First December 2021 Note”). Pursuant to the First December 2021 Loan Agreement, the First December 2021 Note has an effective interest rate of 9 %. The maturity date of the First December 2021 Note is June 3, 2023 (the “First December 2021 Maturity Date”), at which time all outstanding principal, accrued and unpaid interest and other amounts due under the First December 2021 Note are due. During the year ended December 31, 2021, the Company repaid $ 6,320 in principal. During the year ended December 31, 2022, the Company repaid $ 185,655 in principal. The Second December 2021 Loan Agreement On December 14, 2021, the Company entered into a secured loan agreement (the “Second December 2021 Loan Agreement”) with a lender (the “Second December 2021 Lender”), whereby the Second December 2021 Lender issued the Company a secured promissory note of $ 438,096 AUD or $ 329,127 United States Dollars (the “Second December 2021 Note”). Pursuant to the Second December 2021 Loan Agreement, the Second December 2021 Note has an effective interest rate of 14 %. The maturity date of the Second December 2021 Note is June 30, 2022 (the “Second December 2021 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the Second December 2021 Loan Agreement are due. The Company has the option to extend the Maturity date by 60 days. The loan is secured by the Australian research & development credit. During the year ended December 31, 2022, the Company repaid $ 293,499 of principal and $ 26,115 of interest. The First February 2022 Loan Agreement On February 22, 2022, the Company entered into a secured loan agreement (the “First February 2022 Loan Agreement”) with a lender (the “First February 2022 Lender”), whereby the First February 2022 Lender issued the Company a secured promissory note of $ 222,540 AUD or $ 159,223 United States Dollars (the “First February 2022 Note”). Pursuant to the First February 2022 Loan Agreement, the First February 2022 Note has an effective interest rate of 14% . The maturity date of the First February 2022 Note is June 30, 2022 (the “First February 2022 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the First February 2022 Loan Agreement are due. The Company has the option to extend the Maturity date by 60 days. The loan is secured by the Australian research & development credit. During the year ended December 31, 2022, the Company repaid $ 159,223 of principal and $ 8,120 of interest. F- 28 Denver Bodega LLC Notes Payable On March 7, 2022, The Company acquired five note payable agreements from the acquisition of Denver Bodega LLC. See note 12. The total liabilities of these notes amounted to $ 293,888 . During the year ended December 31, 2022, the Company repaid $ 255,874 . As of December 31, 2022, the Company has one note outstanding. This note has a principal balance of $ 38,014 , bears interest at 5 %, and requires 36 monthly payments of $ 1,496 . Subsequent to December 31, 2022, the Company made payments totaling $ 5,994 towards this note. The First May 2022 Loan Agreement On May 9, 2022, the Company entered into a loan agreement (the “First May 2022 Loan Agreement”) with a lender (the “First May 2022 Lender”), whereby the First May 2022 Lender issued the Company a promissory note of $ 693,500 (the “First May 2022 Note”). The Company received cash proceeds of $ 455,924 . Pursuant to the First May 2022 Loan Agreement, the First May 2022 Note has an effective interest rate of 143 %. The maturity date of the First May 2022 Note is December 18, 2022 (the “First May 2022 Maturity Date”). The Company is required to make weekly payment of $ 21,673 . The First May 2022 Note is secured by officers of the Company. The Company recorded a $ 237,576 debt discount relating to an original issue discount. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2022, the Company repaid $ 390,114 in principal. On September 22, 2022, the Company and the First May 2022 Lender entered into an exchange agreement whereas both parties agreed to roll the remaining $ 303,386 in the Second September 2022 Loan Agreement. Since the PV cashflows of the new and old debt were more than 10 % differences the company used extinguishment accounting. As part of the agreement the Company recognized $ 33,079 as loss on extinguishment of debt due to the remaining debt discount on the First May 2022 Loan Agreement. The Second May 2022 Loan Agreement On May 9, 2022, the Company entered into a loan agreement (the “Second May 2022 Loan Agreement”) with a lender (the “Second May 2022 Lender”), whereby the Second May 2022 Lender issued the Company a promissory note of $ 401,500 (the “Second May 2022 Note”). The Company received cash proceeds of $ 263,815 . Pursuant to the Second May 2022 Loan Agreement, the Second May 2022 Note has an effective interest rate of 162 %. The maturity date of the Second May 2022 Note is November 20, 2022 (the “Second May 2022 Maturity Date”). The Company is required to make weekly payment of $ 14,339 . The Second May 2022 Note is secured by officers of the Company. The Company recorded a $ 137,685 debt discount relating to an original issue discount. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2022, the Company repaid $ 272,447 in principal. On September 23, 2022, the Company and the Second May 2022 Lender entered into an exchange agreement whereas both parties agreed to roll the remaining $ 129,053 in the Third September 2022 Loan Agreement. Since the PV cashflows of the new and old debt were more than 10 % differences the company used extinguishment accounting. As part of the agreement the Company recognized $ 3,905 as loss on extinguishment of debt due to the remaining debt discount on the Second May 2022 Loan Agreement. F- 29 The Third May 2022 Loan Agreement On May 25, 2022, the Company entered into a loan agreement (the “Third May 2022 Loan Agreement”) with a lender (the “Third May 2022 Lender”), whereby the Third May 2022 Lender issued the Company a promissory note of $ 27,604 (the “Third May 2022 Note”). Pursuant to the Third May 2022 Loan Agreement, the Third May 2022 Note has an effective interest rate of 20 %. The maturity date of the Third May 2022 Note is November 23, 2022 (the “Third May 2022 Maturity Date”). The Company is required to make monthly payments of $ 3,067 . During the year ended December 31, 2022, the Company repaid $ 18,195 in principal. Subsequent to December 31, 2022, the Company made repayments of $ 4,432 towards this note. The Fourth May 2022 Loan Agreement On May 26, 2022, the Company entered into a loan agreement (the “Fourth May 2022 Loan Agreement”) with a lender (the “Fourth May 2022 Lender”), whereby the Fourth May 2022 Lender issued the Company a promissory note of $ 45,200 (the “Fourth May 2022 Note”). Pursuant to the Fourth May 2022 Loan Agreement, the Fourth May 2022 Note has an effective interest rate of 17 %. The maturity date of the Fourth May 2022 Note is November 23, 2022 (the “Fourth May 2022 Maturity Date”). During the year ended December 31, 2022, the Company repaid $ 13,499 in principal. Subsequent to December 31, 2022, the Company made repayments of $ 7,097 towards this note. The First June 2022 Loan Agreement On June 17, 2022, the Company entered into a loan agreement (the “First June 2022 Loan Agreement”) with a lender (the “First June 2022 Lender”), whereby the First June 2022 Lender issued the Company a promissory note of $ 568,000 (the “First June 2022 Note”). The Company received cash proceeds of $ 378,000 . Pursuant to the First June 2022 Loan Agreement, the First June 2022 Note has an effective interest rate of 217 %. The maturity date of the First June 2022 Note is November 4, 2022 (the “First June 2022 Maturity Date”). The Company is required to make weekly payment of $ 28,400 . The First June 2022 Note is secured by officers of the Company. The Company recorded a $ 190,000 debt discount relating to an original issue discount. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2022, the Company repaid $ 255,600 in principal. On August 19, 2022, the Company and the First June 2022 Lender entered into an exchange agreement whereas both parties agreed to roll the remaining $ 312,400 in the Third September 2022 Loan Agreement. Since the PV cashflows of the new and old debt were more than 10 % differences the company used extinguishment accounting. As part of the agreement the Company recognized $ 66,749 as loss on extinguishment of debt due to the remaining debt discount on the Second May 2022 Loan Agreement. The Second June 2022 Loan Agreement On June 17, 2022, the Company entered into a loan agreement (the “Second June 2022 Loan Agreement”) with a lender (the “Second June 2022 Lender”), whereby the Second June 2022 Lender issued the Company a promissory note of $ 104,500 (the “Second June 2022 Note”). The Note holder repaid a vendor liability of $ 104,500 . The maturity date of the Second June 2022 Note is October 15, 2022 (the “Second June 2022 Maturity Date”). The First August 2022 Loan Agreement On August 18, 2022, the Company entered into a secured loan agreement (the “First August 2022 Loan Agreement”) with a lender (the “First August 2022 Lender”), whereby the First August 2022 Lender issued the Company a secured promissory note of $ 193,500 AUD or $ 134,070 United States Dollars (the “First August 2022 Note”). Pursuant to the First August 2022 Loan Agreement, the First August 2022 Note has an effective interest rate of 14 %. The maturity date of the First August 2022 Note is June 30, 2023 (the “First August 2022 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the First August 2022 Loan Agreement are due. The Company has the option to extend the Maturity date by 60 days. The loan is secured by the Australian research & development credit. During the year ended December 31, 2022, the Company accrued $ 2,037 AUD in interest. F- 30 The Second August 2022 Loan Agreement On August 19, 2022, the Company entered into a loan agreement (the “Second August 2022 Loan Agreement”) with a lender (the “Second August 2022 Lender”), whereby the Second August 2022 Lender issued the Company a promissory note of $ 923,000 (the “Second August 2022 Note”). The Company received cash proceeds of $ 300,100 and rolled the remaining $ 312,400 of principal from the June 2022 Loan Agreement. Pursuant to the Second August 2022 Loan Agreement, the Second August 2022 Note has an effective interest rate of 167 %. The maturity date of the Second August 2022 Note is January 9, 2022 (the “Second August 2022 Maturity Date”). The Company is required to make weekly payment of $ 46,150 . The Second August 2022 Note is secured by officers of the Company. The Company recorded a $ 310,500 debt discount relating to an original issue discount. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2022, the Company repaid $ 535,050 in principal. Subsequent to December 31, 2022, the Company made repayments of $ 312,000 towards this note. The First September 2022 Loan Agreement On September 1, 2022, the Company entered into a loan agreement (the “First September 2022 Loan Agreement”) with a lender (the “First September 2022 Lender”), whereby the First September 2022 Lender issued the Company a promissory note of $ 87,884 (the “First September 2022 Note”). Pursuant to the First September 2022 Loan Agreement, the First September 2022 Note has an effective interest rate of 13 %. The maturity date of the First September 2022 Note is September 1, 2023 (the “First September 2022 Maturity Date”). During the year ended December 31, 2022, the Company repaid $ 14,647 in principal. Subsequent to December 31, 2022, the Company made payments totaling $ 21,971 towards this note. The Second September 2022 Loan Agreement On September 22, 2022, the Company entered into a loan agreement (the “Second September 2022 Loan Agreement”) with a lender (the “Second September 2022 Lender”), whereby the Second September 2022 Lender issued the Company a promissory note of $ 876,000 (the “Second September 2022 Note”). The Company received cash proceeds of $ 272,614 and rolled the remaining $ 303,386 of principal from the First May 2022 Loan Agreement. Pursuant to the Second September 2022 Loan Agreement, the Second September 2022 Note has an effective interest rate of 100 %. The maturity date of the Second September 2022 Note is May 5, 2023 (the “Second September 2022 Maturity Date”). The Company is required to make weekly payment of $ 27,375 . The Second September 2022 Note is secured by officers of the Company. The Company recorded a $ 300,000 debt discount relating to an original issue discount. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2022, the Company repaid $ 112,375 in principal. Subsequent to December 31, 2022, the Company made repayments of $ 117,000 towards these notes. The Third September 2022 Loan Agreement On September 22, 2022, the Company entered into a loan agreement (the “Third September 2022 Loan Agreement”) with a lender (the “Third September 2022 Lender”), whereby the Third September 2022 Lender issued the Company a promissory note of $ 365,000 (the “Third September 2022 Note”). The Company received cash proceeds of $ 110,762 and rolled the remaining $ 129,053 of principal from the Second May 2022 Loan Agreement. Pursuant to the Third September 2022 Loan Agreement, the Third September 2022 Note has an effective interest rate of 143 %. The maturity date of the Third September 2022 Note is May 5, 2023 (the “Second September 2022 Maturity Date”). The Company is required to make weekly payment of $ 13,036 . The Third September 2022 Note is secured by officers of the Company. F- 31 The Company recorded a $ 300,000 debt discount relating to an original issue discount. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2022, the Company repaid $ 108,036 in principal. Subsequent to December 31, 2022, the Company made repayments of $ 140,000 towards this note. The November 2022 Loan Agreement On November 15, 2022, the Company entered into a loan agreement (the “November 2022 Loan Agreement”) with a lender (the “November 2022 Lender”) whereby the November 2022 Lender issued the Company a promissory note of $ 80,325 (the “November 2022 Note”). Pursuant to the November 2022 Loan Agreement, the November 2022 Note has an effective interest rate of 21% . The maturity date of the November 2022 Note is June 3, 2023 (the “November 2022 Maturity Date”), at which time all outstanding principal, accrued and unpaid interest and other amounts due under the November 2022 Note are due. During the year ended December 31, 2022, the Company repaid $ 12,114 in principal. Subsequent to December 31, 2022, the Company made repayments of $ 36,468 towards this note. Note 7 – Convertible Notes Payable Convertible notes payable as of December 31, 2022, is as follows: Outstanding Principal as of December 31, Outstanding Principal as of December 31, Interest Conversion Maturity Warrants granted 2022 2021 Rate Price Date Quantity Exercise Price The July 2021 Convertible Loan Agreement - 168,850 6.0 % - (*) July -22 - - The May 2022 Convertible Loan Agreement 50,092 - 11 % - (*) May-23 - - The May 2022 Convertible Note Offering 990,000 - 18 % 2.00 (*) November-22 4,000,000 $ 3.00 – $ 6.00 The July 2022 Convertible Note Offering 3,750,000 - 18 % 0.20 (*) March-23 2,150,000 $ 3.00 – $ 6.00 The First October 2022 Convertible Loan Agreement 104,250 - 10 % - (*) September-23 The Second October 2022 Convertible Loan Agreement 300,000 - 10 % - (*) October-23 The Third October 2022 Convertible Loan Agreement 866,650 - 10 % 0.20 (*) April-23 The December 2022 Convertible Loan Agreement 750,000 - - % 0.20 (*) April-23 562,500.00 $ 0.20 6,810,992 168,850 Less: Debt Discount ( 1,426,728 ) ( 8,120 ) Less: Debt Issuance Costs ( 14,665 ) ( 1,537 ) 5,369,599 159,193 (*) As subject to adjustment as further outlined in the notes The First July 2020 Convertible Loan Agreement On July 1, 2020, the Company entered into a loan agreement (the “First July 2020 Loan Agreement”) with an individual (the “First July 2020 Lender”), whereby the First July 2020 Lender issued the Company a promissory note of $ 68,000 (the “First July 2020 Note”). Pursuant to the First July 2020 Loan Agreement, the First July 2020 Note has interest of ten percent ( 10 %). The First July 2020 Note matures on June 29, 2021. F- 32 Upon default or 180 days after issuance the First July 2020 Note 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) consecutive trading day period immediately preceding the date of the respective conversion. During the year ended December 31, 2021, the First July 2020 Note became convertible. Due to the fact that these convertible notes have an option to convert at a variable amount, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. The conversion feature has been measured at fair value using a Binomial model at the conversion date and the period end. The conversion feature of First July 2020 Note gave rise to a derivative liability of $ 112,743 . The Company recorded $ 68,000 as a debt discount and $ 44,743 was recorded to derivative expense. The debt discount is charged to accretion of debt discount over the remaining term of the convertible note. During the year ended December 31, 2021, the Company converted $ 68,000 in principal and $ 3,400 in interest into 35,469 shares of the Company’s common stock. The September 2020 Convertible Loan Agreement On September 23, 2020, the Company entered into a loan agreement (the “September 2020 Loan Agreement”) with an individual (the “September 2020 Lender”), whereby the September 2020 Lender issued the Company a promissory note of $ 385,000 (the “September 2020 Note”). Pursuant to the September 2020 Loan Agreement, the September 2020 Note has interest of twelve percent ( 12 %). The September 2020 Note matures on September 23, 2021. Upon default or 180 days after issuance the Second July 2020 Note is convertible into shares of the Company’s common stock, par value $ .001 per share equal to the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the respective conversion. The Company recorded a $ 68,255 debt discount relating to original issue discount associated with this note. The Company recorded a $ 146,393 debt discount relating to 85,555 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2021, the Company repaid $ 341,880 in principal and $ 46,200 in interest. The October 2020 Convertible Loan Agreement On October 2, 2020, the Company entered into a loan agreement (the “October 2020 Loan Agreement”) with an individual (the “October 2020 Lender”), whereby the October 2020 Lender issued the Company a promissory note of $ 169,400 (the “October 2020 Note”). Pursuant to the October 2020 Loan Agreement, the October 2020 Note has interest of six percent ( 6 %). The October 2020 Note matures on the first (12th) month anniversary of its issuance date. Upon default or 180 days after issuance the October 2020 Note is convertible into shares of the Company’s common stock, par value $ 0.001 per share (“Conversion Shares”) equal to 75 % of average the lowest three trading prices of the Company’s common stock on the fifteen-trading day immediately preceding the date of the respective conversion. The Company recorded a $ 19,400 debt discount relating to original issue discount associated with this note. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2021, the Second July 2020 Note became convertible. Due to the fact that these convertible notes have an option to convert at a variable amount, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. The conversion feature has been measured at fair value using a Binomial model at the conversion date and the period end. The conversion feature of Second July 2020 Note gave rise to a derivative liability of $ 74,860 . The Company recorded this as a debt discount. The debt discount is charged to accretion of debt discount over the remaining term of the convertible note. During the year ended December 31, 2021, the Company converted $ 169,400 in principal and $ 4,620 in interest into 55,631 shares of the Company’s common stock. F- 33 The First December 2020 convertible Loan Agreement On December 9, 2020, the Company entered into a loan agreement (the “First December 2020 Loan Agreement”) with an individual (the “First December 2020 Lender”), whereby the First December 2020 Lender issued the Company a promissory note of $ 600,000 (the “First December 2020 Note”). Pursuant to the First December 2020 Loan Agreement, the First December 2020 Note has interest of twelve percent ( 12 %). As additional consideration for entering in the First December 2020 convertible Loan Agreement, the Company issued 45,000 shares of the Company’s common stock. The First December 2020 Note matures on the first (12th) month anniversary of its issuance date. Upon default the First December 2020 Note is convertible into shares of the Company’s common stock, par value $ .001 per share (“Conversion Shares”) equal to the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the respective conversion. The Company recorded a $ 110,300 debt discount relating to original issue discount associated with this note. The Company recorded a $ 113,481 debt discount relating to 45,000 shares issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2021, the Company repaid $ 600,000 in principal and $ 4,340 in interest. F- 34 The May 2021 Convertible Note Offering On May 14, 2021, the Company conducted multiple closings of a private placement offering to accredited investors (the “May 2021 Convertible Note Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors” (the “May 2021 Investors”) for aggregate gross proceeds of $ 3,690,491 . The May 2021 convertible notes are convertible into shares of the Company’s common stock, par value $ .001 per share at a conversion price of $ 5.00 per share. As additional consideration for entering in the May 2021 Convertible Note Offering, the Company issued 1,090,908 warrants of the Company’s common stock. The May 2021 Convertible Note matures on November 14, 2022. The Company recorded a $ 1,601,452 debt discount relating to 1,090,908 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of these notes to accretion of debt discount and issuance cost. The Company recorded a $ 666,669 debt discount relating to an original issue discount and $ 539,509 of debt issuance costs related to fees paid to vendors relating to the offering. The debt discount and debt issuance costs are being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2021, the Company converted $ 4,666,669 in principal into 933,334 shares of the Company’s common stock. The July 2021 Convertible Loan Agreement On July 6, 2021, the Company entered into a loan agreement (the “July 2021 Loan Agreement”) with an individual (the “July 2021 Lender”), whereby the July 2021 Lender issued the Company a promissory note of $ 168,850 (the “July 2021 Note”). Pursuant to the July 2021 Loan Agreement, the July 2021 Note has interest of six percent ( 6 %). The July 2021 Note matures on the first (12 th ) month anniversary of its issuance date. Upon default or 180 days after issuance the July 2021 Note is convertible into shares of the Company’s common stock, par value $ 0.001 per share (“Conversion Shares”) equal to 75 % of average the lowest three trading prices of the Company’s common stock on the fifteen-trading day immediately preceding the date of the respective conversion. The Company recorded a $15,850 debt discount relating to an original issue discount and $ 3,000 of debt issuance costs related to fees paid to vendors relating to the offering. The debt discount and debt issuance costs are being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2022, the July 2021 Note became convertible. Due to the fact that these convertible notes have an option to convert at a variable amount, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. The conversion feature has been measured at fair value using a Binomial model at the conversion date. The conversion feature of July 2021 Note gave rise to a derivative liability of $ 100,532 . The Company recorded this as a debt discount. The debt discount is charged to accretion of debt discount over the remaining term of the convertible note. F- 35 During the year ended December 31, 2022, the note holder converted $ 168,850 of principal and $ 4,605 of interest into 109,435 shares of the Company’s common stock. The unamortized debt discount of $ 96,803 was recorded to extinguishment of debt due to conversion. The Second February 2022 Loan Agreement On February 22, 2022, the Company entered into a loan agreement (the “Second February 2022 Loan Agreement”) with a lender (the “Second February 2022 Lender”), whereby the Second February 2022 Lender issued the Company a promissory note of $ 337,163 (the “Second February 2022 Note”). Pursuant to the Second February 2022 Loan Agreement, the Second February 2022 Note has an interest rate of 11 %. The maturity date of the Second February 2022 Note is February 22, 2023 (the “Second February 2022 Maturity Date”). The Company is required to make 10 monthly payments of $ 37,425 . Upon default the Second February 2022 Note is convertible into shares of the Company’s common stock, par value $ 0.001 per share (“Conversion Shares”) equal to 75 % of average the lowest three trading prices of the Company’s common stock on the ten-trading day immediately preceding the date of the respective conversion. The Company recorded a $ 37,163 debt discount relating to an original issue discount. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2022, the Company repaid $ 299,400 in principal and converted $ 74,850 in principal into 216,842 shares of the Company’s common stock. The May 2022 Convertible Loan Agreement On May 20, 2022, the Company entered into a loan agreement (the “May 2022 Loan Agreement”) with an individual (the “May 2022 Lender”), whereby the May 2022 Lender issued the Company a promissory note of $ 115,163 (the “May 2022 Note”). Pursuant to the May 2022 Loan Agreement, the May 2022 Note has an interest rate of 11 %. The May 2022 Note matures on the first (12 th ) month anniversary of its issuance date. Upon default the May 2022 Note is convertible into shares of the Company’s common stock, par value $ 0.001 per share (“Conversion Shares”) equal to 75 % of average the lowest three trading prices of the Company’s common stock on the ten-trading day immediately preceding the date of the respective conversion. The Company recorded a $ 15,163 debt discount relating to an original issue discount The debt discount and debt issuance costs are being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2022, the Company repaid $ 63,915 in principal and converted $ 12,783 in principal into 39,637 shares of the Company’s common stock. Subsequent to December 31, 2022, the May 2022 Lender converted $ 51,132 in principal into shares of the Company’s common stock and repaid the remaining note balance. The May 2022 Convertible Note Offering During May of 2022, the Company conducted multiple closings of a private placement offering to accredited investors (the “May 2022 Convertible Note Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors” (the “May 2022 Investors”) for aggregate gross proceeds of $ 4,000,000 . The May 2022 convertible notes are convertible into shares of the Company’s common stock, par value $ .001 per share at a conversion price of $ 2.00 per share. As additional consideration for entering in the May 2022 Convertible Note Offering, the Company issued 4,000,000 warrants of the Company’s common stock. The May 2022 Convertible Note matures on November 30, 2022. F- 36 The Company recorded a $ 1,895,391 debt discount relating to 4,000,000 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of these notes to accretion of debt discount and issuance cost. The Company recorded a $ 399,964 debt discount relating to an original issue discount and $ 125,300 of debt issuance costs related to fees paid to vendors relating to the offering. The debt discount and debt issuance costs are being accreted over the life of the note to accretion of debt discount and issuance cost. On September 2, 2022, the Company went into default on these notes. As part of the default terms the Company owes 110 % of the principal outstanding and the notes accrue interest at a rate of 18 %. On September 15, 2022, the Company and six out of eight lenders May 2022 Investors agreed to forgive default interest and extend the maturity date to March 31, 2023, for a reduced conversion price of $ 0.20 for the convertible notes and warrants. Since the PV cashflows of the new and old debt were more than 10 % differences the company used extinguishment accounting. As part of the agreement the Company recognized $ 1,083,684 as loss on extinguishment of debt due to the remaining debt discount and recognized $ 331,861 as a gain on extinguishment of debt due to the forgiveness of interest. The company also recognized an additional $ 75,610 of debt discount from the change in relative fair value on the warrants. During the year ended December 31, 2022 the Company repaid $ 1,314,286 in principal. During the year ended December 31, 2022, the Company accrued $ 75,674 in interest that was not forgiven. As of December 31, 2022, the Company is in default on $ 900,000 of principal and $ 75,674 of interest. Subsequent to December 31, 2022, the Company made repayments totaling $ 785,714 towards these notes. The July 2022 Convertible Note Offering During July of 2022, the Company conducted multiple closings of a private placement offering to accredited investors (the “July 2022 Convertible Note Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors” (the “July 2022 Investors”) for aggregate gross proceeds of $ 2,150,000 . The July 2022 convertible notes are convertible into shares of the Company’s common stock, par value $ .001 per share at a conversion price of $ 2.00 per share. As additional consideration for entering in the July 2022 Convertible Note Offering, the Company issued 2,150,000 warrants of the Company’s common stock. The July 2022 Convertible Note matures on November 30, 2022. The Company recorded a $ 863,792 debt discount relating to 2,150,000 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of these notes to accretion of debt discount and issuance cost. The Company recorded a $ 214,981 debt discount relating to an original issue discount. The debt discount are being accreted over the life of the note to accretion of debt discount and issuance cost. On September 2, 2022, the Company went into default on these notes. As part of the default terms the Company owes 110 % of the principal outstanding and the notes accrue interest at a rate of 18 %. On September 15, 2022, the Company and the July Investors agreed to forgive default interest and extend the maturity date to March 31, 2023, for a reduced conversion price of $ 0.20 for the convertible notes and warrants. Since the present value of the cash flows of the new and old debt were more than 10 % different, the company used extinguishment accounting. As part of the agreement the Company recognized $ 339,594 as loss on extinguishment of debt due to the remaining debt discount and recognized $ 230,162 as a gain on extinguishment of debt due to the forgiveness of interest. During the year ended December 31, 2022, the Company repaid $ 185,714 in principal. Subsequent to December 31, 2022, the Company made repayments totaling $ 714,286 towards these notes. F- 37 The First October 2022 Loan Agreement On October 3, 2022, the Company entered into a loan agreement (the “First October 2022 Loan Agreement”) with a lender (the “First October 2022 Lender”), whereby the First October 2022 Lender issued the Company a promissory note of $ 104,250 (the “First October 2022 Note”). Pursuant to the First October 2022 Loan Agreement, the First October 2022 Note has an interest rate of 10 %. The maturity date of the First October 2022 Note is September 29, 2023 (the “First October 2022 Maturity Date”). On April 1, 2023, the First October 2022 Note is convertible into shares of the Company’s common stock, par value $ 0.001 per share (“Conversion Shares”) equal to 75 % of average the lowest three trading prices of the Company’s common stock on the ten-trading day immediately preceding the date of the respective conversion. The Company recorded a $ 4,250 debt discount relating to an original issue discount. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost. The Second October 2022 Loan Agreement On October 20, 2022, the Company entered into a loan agreement (the “Second October 2022 Loan Agreement”) with a lender (the “Second October 2022 Lender”), whereby the Second October 2022 Lender issued the Company a promissory note of $ 300,000 (the “Second October 2022 Note”). Pursuant to the Second October 2022 Loan Agreement, the Second October 2022 Note has an interest rate of 10 %. The maturity date of the Second October 2022 Note is October 20, 2023 (the “Second October 2022 Maturity Date”). Upon default, the Second October 2022 Note is convertible into shares of the Company’s common stock, par value $ 0.001 per share (“Conversion Shares”) equal to the lowest VWAP of the Company’s common stock on the twenty-trading day immediately preceding the date of the respective conversion. The Company recorded a $ 45,000 debt discount relating to an original issue discount, $ 409,945 relating to the fair value of 815,000 shares of common stock issue to the lender, and $ 17,850 of debt issuance costs related to fees paid to vendors relating to the debt agreement. The debt discount and debt issuance cost are being accreted over the life of the note to accretion of debt discount and issuance cost. Subsequent to December 31, 2022, the Company made a repayment of $ 47,143 towards the balance of the Second October 2022 Note. The Third October 2022 Loan Agreement On October 24, 2022, the Company entered into a loan agreement (the “Third October 2022 Loan Agreement”) with a lender (the “Third October 2022 Lender”), whereby the Third October 2022 Lender issued the Company a promissory note of $ 1,666,650 (the “Third October 2022 Note”). Pursuant to the Third October 2022 Loan Agreement. The maturity date of the Third October 2022 Note is April 24, 2023 (the “Third October 2022 Maturity Date”). The Third October 2022 Note is convertible into shares of the Company’s common stock, par value $ 0.001 per share (“Conversion Shares”) equal to $ 0.20 . The Company recorded a $ 1,833,300 debt discount relating to a $ 166,650 original issue discount and $ 1,666,650 from a beneficial conversion feature. The debt discount and debt issuance cost are being accreted over the life of the note to accretion of debt discount and issuance cost. During the year ended December 31, 2022, the lender converted $ 800,000 into 4,000,000 shares of the Company’s common stock. Subsequent to December 31, 2022, the Third October 2022 Lender converted the remaining balance of $ 866,650 into 4,333,250 shares of the Company’s common stock. F- 38 The December 2022 Loan Agreement On December 12, 2022, the Company entered into a loan agreement (the “December 2022 Loan Agreement”) with a lender (the “December 2022 Lender”), whereby the December 2022 Lender issued the Company a promissory note of $ 750,000 (the “December 2022 Note”). Pursuant to the December 2022 Loan Agreement. The maturity date of the Third October 2022 Note is April 24, 2023 (the “Third October 2022 Maturity Date”). The Second October 2022 Note is convertible into shares of the Company’s common stock, par value $ 0.001 per share (“Conversion Shares”) equal to $ 0.20 . The Company recorded a $ 241,773 debt discount relating to 562,500 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance and $ 508,227 relating to the beneficial conversion feature. The debt discount is being accreted over the life of these notes to accretion of debt discount and issuance cost. Subsequent to December 31, 2022, the December 2022 Lender converted $ 500,000 into 2,500,000 shares of the Company’s common stock. Note 8 – Related Party Notes payable The September 2020 Goldberg Loan Agreement On September 15, 2020, the Company entered into a loan agreement (the “September 2020 Goldberg Loan Agreement”) with Goldberg whereby the Company issued a promissory note of $ 16,705 (the “September 2020 Goldberg Note”). Pursuant to the September 2020 Goldberg Loan Agreement, the September 2020 Goldberg Note has an interest rate of 7 %. The maturity date of the September 2020 Goldberg Note is September 15, 2022 (the “September 2020 Goldberg Maturity Date”), at which time all outstanding principal, accrued and unpaid interest and other amounts due under note are due. The September 2020 Goldberg Loan is secured by the tangible and intangible property of the Company. Since the September 2020 Goldberg Note has a make-whole provision if the shares of the Company’s common stock issued to the lender in accordance with the Lender’s Exchange Agreement (see note 10) have a value equal to or less than $ 6,463,363 determined by using the lowest VWAP of the last 30 days prior to September 14, 2021. The principal amount of the September 2020 Goldberg Note shall increase by 200 % of the difference between the initial consideration and the September 14, 2021, value. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. The make-whole feature gave rise to a derivative liability that has been marked to market during the year ended December 31, 2021, and the change in derivative liability is recorded on Consolidated Statements of Comprehensive Loss. On September 15, 2021, the make-whole provision was triggered, causing an increase in principal of the September 2020 Goldberg Note by $ 939,022 . During the year ended December 31, 2021, the Company accrued interest of $ 3,576 . During the year ended December 31, 2021, the Company entered into a settlement agreement whereas the Company agreed to pay $ 200,000 in cash and $ 150,000 in shares of Common Stock. The September 2020 Rosen Loan Agreement On September 15, 2020, the Company entered into a loan agreement (the “September 2020 Rosen Loan Agreement”) with Rosen whereby the Company issued a promissory note of $ 3,295 (the “September 2020 Rosen Note”). Pursuant to the September 2020 Rosen Loan Agreement, the September 2020 Rosen Note has an interest rate of 7 %. The maturity date of the September 2020 Rosen Note is September 15, 2022 (the “September 2020 Rosen Maturity Date”), at which time all outstanding principal, accrued and unpaid interest and other amounts due under the note are due. The September 2020 Rosen Loan is secured by the tangible and intangible property of the Company. F- 39 Since the September 2020 Rosen Note has a make-whole provision if the shares of the Company’s common stock issued to the lender in accordance with the Lender’s Exchange Agreement (see note 10) have a value equal to or less than $ 1,274,553 determined by using the lowest VWAP of the last 30 days prior to September 14, 2021. The principal amount of the September 2020 Rosen Note shall increase by 200 % of the difference the initial consideration and the September 14, 2021 value. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. The make-whole feature of gave rise to a derivative that has been marked to market during the year ended December 31, 2021, and the change in derivative liability is recorded on Consolidated Statements of Comprehensive Loss. On September 15, 2021 the make-whole provision was triggered, causing an increase in principal of the September 2020 Rosen Note by $ 185,279 . During the year ended December 31, 2021, the Company accrued interest of $ 1,610 . During the year ended December 31, 2021, the Company repaid $ 188,574 in principal and $ 1,677 in interest. Revenue During the year ended December 31, 2021 the Company received revenue of $ 80,000 from Dune for branded content services prior to consolidation but after recognition as an equity method investee. Equity raises During the year ended December 31, 2022, the Company conducted two equity raises in which officers, directors, employees, and an affiliate of an officer cumulatively invested $ 484,753 for 277,000 shares of common stock and 272,000 warrants to purchase common stock. Officer compensation During the year ended December 31, 2022 and 2021, the Company paid $ 172,091 and $ 138,713 , respectively for living expenses for officers of the Company. Note 9 – Derivative Liabilities The Company has identified derivative instruments arising from convertible notes that have an option to convert at a variable number of shares in the Company’s convertible notes payable during the year ended December 31, 2022 and 2021. For the terms of the conversion features see Note 7. The Company had no derivative assets measured at fair value on a recurring basis as of December 31, 2022 or 2021. The Company utilizes either a Monte Carlo simulation model or a binomial option model for convertible notes that have an option to convert at a variable number of shares to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The inputs utilized in the application of the Binomial model included a stock price on valuation date, an expected term of each debenture remaining from the valuation date to maturity, an estimated volatility, and a risk-free rate. The Company records the change in the fair value of the derivative as other income or expense in the consolidated statements of operations. Risk-free interest rate: The Company uses the risk-free interest rate of a U.S. Treasury Note adjusted to be on a continuous return basis to align with the Monte Carlo simulation model and binomial model. Dividend yield: The Company uses a 0 % expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring dividends in the near future. Volatility: The Company calculates the expected volatility based on the company’s historical stock prices with a look back period commensurate with the period to maturity. F- 40 Expected term: The Company’s remaining term is based on the remaining contractual maturity of the convertible notes. The following are the changes in the derivative liabilities during the years ended December 31, 2022 and 2021. Years Ended December 31, 2022 and 2021 Level 1 Level 2 Level 3 Derivative liabilities as January 1, 2021 $ - $ - $ 42,231 Addition - - 417,24 Extinguishment - - ( 431,458 ) Conversion to Note payable - related party - - ( 1,124,301 ) Changes in fair value - - 1,096,287 Derivative liabilities as December 31, 2021 - - - Addition - - 100,532 Changes in fair value - - ( 3,729 ) Extinguishment - - ( 96,803 ) Derivative liabilities as December 31, 2022 $ - $ - $ - Note 10 – Stockholders’ Equity Shares Authorized The Company is authorized to issue up to one billion, five hundred and twenty million ( 1,520,000,000 ) shares of capital stock, of which one billion five hundred million ( 1,500,000,000 ) shares are designated as common stock, par value $ 0.001 per share, and twenty million ( 20,000,000 ) are designated as preferred stock, par value $ 0.001 per share. Preferred Stock Series E Convertible Preferred Stock The Company has designated 8,000 shares of Series E Convertible Preferred stock and has 450 shares issued and outstanding as of December 31, 2022. The shares of Series E Preferred Stock have a stated value of $ 1,000 per share and are convertible into Common Stock at the election of the holder of the Series E Preferred Stock, at any time following the Original Issue Date at a price of $ 4.12 per share, subject to adjustment. Each holder of Series E Preferred Stock shall be entitled to receive, with respect to each share of Series E Preferred Stock then outstanding and held by such holder, dividends on an as-converted basis in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. The holders of Series E Preferred Stock shall be paid pari passu with the holders of Common Stock with respect to payment of dividends and rights upon liquidation and shall have no voting rights. In addition, as further described in the Series E Designation, as long as any of the shares of Series E Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of Series E Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series E Preferred Stock or alter or amend this Series E Designation, (b) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Series E Preferred Stock, (c) increase the number of authorized shares of Series E Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing. Each share of Series E Preferred Stock shall be convertible, at any time and from time to time at the option of the holder of such shares, into that number of shares of Common Stock determined by dividing the Series E Stated Value by the Conversion Price, subject to certain beneficial ownership limitations. F- 41 During the year ended December 31, 2021, the Company received the $ 40,000 of the subscription receivable for the Series E Convertible Preferred Stock. The Company has recorded $ 4,225 to stock issuance costs, which are part of Additional Paid-in Capital. During the year ended December 31, 2021, investors converted 7,278 shares of the Company’s Series E Convertible Preferred Stock into 1,766,449 shares of the Company’s common stock. During the year ended December 31, 2022, investors converted 50 shares of the Company’s Series E Convertible Preferred Stock into 12,136 shares of the Company’s common stock. Common Stock On January 14, 2021, the Company issued 30,000 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 133,200 . On January 20, 2021, the Company issued 40,000 shares of its restricted common stock to consultants in exchange for a year of services at a fair value of $ 192,000 . On May 24, 2021, the Company amended the contract and issued and additional 10,000 shares of its restricted common stock. these shares had a fair value of $ 34,500 . The shares issued to the consultant were recorded as common stock issued for prepaid services and will be expensed over the life of the consulting contract to share based payments. During the year ended December 31, 2021, the Company recorded $ 99,908 to stock-based compensation expense related to these shares. On February 1, 2021, the Company issued 50,000 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 196,000 . On February 3, 2021, the Company issued 1,929 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 8,198 . On February 8, 2021, the Company entered into a consulting agreement whereas the Company issued a total of 2,092 shares of common stock in exchange for services at a fair value of $ 7,502 . On February 18, 2021, the Company issued 10,000 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 48,000 . On February 18, 2021, the Company issued 10,417 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 50,002 . On February 26, 2021, the Company issued 291 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 1,499 . On March 17, 2021, the Company issued 9,624 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 49,371 . On March 28, 2021, the Company issued 31,782 shares of its restricted common stock to settle outstanding vendor liabilities of $ 125,000 . On March 31, 2021, the Company issued 13,113 shares of its restricted common stock to settle outstanding vendor liabilities of $ 43,667 . In connection with this transaction the Company also recorded a loss on settlement of vendor liabilities of $ 12,719 . On April 10, 2021, the Company issued 16,275 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 69,332 . On April 21, 2021, the Company entered into a consulting agreement whereas the Company issued a total of 1,048 shares of common stock in exchange for services at a fair value of $ 3,587 . F- 42 On June 17, 2021, the Company entered into an underwriting agreement with The Benchmark Company LLC, pursuant to which we agreed to sell to the Underwriter in a firm commitment underwritten public offering an aggregate of 750,000 shares of the Company’s common stock, at a public offering price of $3.40 per share. The Company also granted the Underwriter a 30-day option to purchase up to an additional 112,500 shares of Common Stock to cover over-allotments, if any. The Offering closed on June 21, 2021. The net proceeds to the Company from the equity raise was $2,213,500. As part of the underwriting agreement the Company issued 46,667 warrants of the Company’s common stock to Benchmark. The warrants have an exercise price $5.40 and a term of five years. On July 9, 2021, the Representative exercised the over-allotment option to purchase an additional 954,568 shares of Common Stock. On July 20, 2021, the Company issued 2,154 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 8,570 . On July 15, 2021, the Company issued 715 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 2,500 . On August 15, 2021, the Company issued 820 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 2,500 . On August 26, 2021, the Company issued 348 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 999 . On September 15, 2021, the Company issued 793 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 2,500 . On October 25, 2021, the Company entered into a securities purchase agreement with institutional investors resulting in the raise of $3,407,250 in gross proceeds to the Company. Pursuant to the terms of the purchase agreement, the Company agreed to sell, in a registered direct offering, an aggregate of 850,000 shares of the Company’s common stock, par value $0.001 per share, at a purchase price of $4.50 per Share. On November 5, 2021, the Company issued 25,000 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 85,750 . On November 15, 2021, the Company issued 13,392 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 41,917 . On November 29, 2021, the Company issued 250,000 shares of its restricted common stock to settle outstanding vendor liabilities of $ 576,783 . In connection with this transaction the Company also recorded a loss on settlement of vendor liabilities of $ 33,217 . On November 29, 2021, the Company issued 101,097 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 246,676 . On December 3, 2021, the Company issued 194 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 429 . On December 14, 2021, the Company issued 211 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 452 . During the year ended December 31, 2022, the Company issued 307,342 shares of its restricted common stock to settle outstanding vendor liabilities of $ 138,125 . In connection with this transaction the Company also recorded a loss on settlement of vendor liabilities of $ 265,717 . F- 43 On January 6, 2022, the Company issued 8,850 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 19,736 . On February 24, 2022, the Company issued 50,000 shares of its restricted common stock to consultants in exchange for four months of services at a fair value of $ 69,000 . These shares were recorded as common stock issued for prepaid services and will be expensed over the life of the consulting contract to share based payments. During the nine months ended September 30, 2022 the Company recorded $ 69,000 to share based payments. On March 1, 2022, the Company entered into securities purchase agreements with twenty-eight accredited investors whereby, at the closing, such investors purchased from the Company an aggregate of 1,401,457 shares of the Company’s common stock and (ii) 1,401,457 warrants to purchase shares of common stock, for an aggregate purchase price of $2,452,550. Such warrants are exercisable for a term of five-years from the date of issuance, at an exercise price of $1.75 per share. The Company has recorded $40,000 to stock issuance costs, which are part of Additional Paid-in Capital. On March 7, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with thirteen accredited investors resulting in the raise of $ 2,659,750 in gross proceeds to the Company. Pursuant to the terms of the Purchase Agreement, the Company agreed to sell in a registered direct offering an aggregate of 1,519,857 shares of the Company’s common stock together with warrants to purchase an aggregate of 1,519,857 shares of Common Stock at an exercise price of $ 1.75 per share. The warrants are immediately exercisable and will expire on March 9, 2027. The Company has recorded $ 75,000 to stock issuance costs, which are part of Additional Paid-in Capital. During the three months ended March 31, 2022, the Company issued 7,488 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 8,364 . On April 5, 2022 the Company issued 185,000 shares of its restricted common stock to officers of the company in exchange for services at a fair value of $ 192,400 . On June 24, 2022, the Company issued 50,000 shares of its restricted common stock to consultants in exchange for four months of services at a fair value of $ 37,200 . These shares were recorded as common stock issued for prepaid services and will be expensed over the life of the consulting contract to share based payments. During the nine months ended September 30, 2022 the Company recorded $ 2,405 to share based payments. During the three months ended June 30, 2022, the Company issued 29,387 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 24,001 . On September 15, 2022, the Company entered into a securities purchase agreement with five accredited investors resulting in the raise of $ 796,000 in gross proceeds to the Company. Pursuant to the terms of the Purchase Agreement, the Company agreed to sell in a registered direct offering an aggregate of 4,000,000 shares of the Company’s common stock together with warrants to purchase an aggregate of 4,000,000 shares of Common Stock at an exercise price of $ 0.20 per share. The warrants are immediately exercisable and will expire on September 15, 2027. The Company has recorded $ 75,000 to stock issuance costs, which are part of Additional Paid-in Capital. During the three months ended September 30, 2022, the Company issued 50,000 shares of its restricted common stock to consultants in exchange for prepaid services at a fair value of $ 34,900 . During the three months ended September 30, 2022, the Company issued 107,206 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 22,892 . F- 44 During the three months ended December 31, 2022, the Company issued 111,324 shares of its restricted common stock to consultants in exchange for services at a fair value of $ 44,894 . During the year ended December 31, 2022, the company repurchased 87,716 shares of common stock for $ 16,050 . Stock Options The assumptions used for options granted during the twelve months ended December 31, 2022 and 2021, are as follows: December 31, 2022 Exercise price $ 1.10 – 1.90 Expected dividends 0 % Expected volatility 165.38 % – 166.48 % Risk free interest rate 2.69 % – 2.95 % Expected life of option 5 years December 31, 2021 Exercise price $ 2.09 - 4.89 Expected dividends 0 % Expected volatility 169.78 – 242.98 % Risk free interest rate 0.46 – 1.26 % Expected life of option 5 - 7 years The following is a summary of the Company’s stock option activity: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Balance – January 1, 2021 – outstanding 541,021 12.75 3.27 Granted 2,425,762 5.97 5.91 Exercised - - - Forfeited/Cancelled ( 64,164 ) 13.06 - Balance – December 31, 2021 – outstanding 2,902,619 7.07 4.71 Granted 1,940,000 1.38 5.00 Exercised - - - Forfeited/Cancelled ( 434,352 ) 13.56 - Balance – December 31, 2022 – outstanding 4,408,267 4.05 4.29 Balance – December 31, 2022 – exercisable 3,061,767 4.19 4.07 F- 45 Option Outstanding Option Exercisable Exercise price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Remaining Contractual Life (in years) $ 4.05 4,408,267 4.29 4.19 3,061,767 4.07 Stock-based compensation for stock options has been recorded in the consolidated statements of operations and totaled $ 7,616,195 , for the year ended December 31, 2021. Stock-based compensation for stock options has been recorded in the consolidated statements of operations and totaled $ 3,757,514 , for the year ended December 31, 2022. As of December 31, 2022, there was $237,522 of total unrecognized compensation expense related to unvested employee options granted under the Company’s share-based compensation plans that is expected to be recognized over a weighted average period of approximately 0.14 years. Warrants The Company applied fair value accounting for all share-based payments awards. The fair value of each warrant granted is estimated on the date of grant using the Black-Scholes option-pricing model. The assumptions used for warrants granted during the year ended December 31, 2022 and 2021 are as follows: December 31, 2022 Exercise price $ 0.20 – 6.00 Expected dividends 0 % Expected volatility 164.34 % - 175.30 % Risk free interest rate 2.81 % - 3.75 % Expected life of warrant 5 - 5.5 years December 31, 2021 Exercise price $ 4.50 – 5.40 Expected dividends 0 % Expected volatility 232.10 % - 237.14 % Risk free interest rate 0.82 % - 0.89 % Expected life of warrant 5 – 5.5 years F- 46 Warrant Activities The following is a summary of the Company’s warrant activity: Warrant Weighted Average Exercise Price Balance – January 1, 2022 – outstanding 6,130,948 4.96 Granted 1,961,267 5.60 Exercised ( 2,414,218 ) 4.55 Forfeited/Cancelled ( 19,167 ) 24.00 Balance – December 31, 2021 – outstanding 5,658,830 4.98 Granted 22,460,182 2.07 Exercised ( 9,624,067 ) 5.18 Forfeited/Cancelled ( 2,233,246 ) 4.73 Balance – December 31, 2022 – outstanding 16,261,699 2.18 Balance – December 31, 2022 – exercisable 16,261,699 $ 2.79 Warrants Outstanding Warrants Exercisable Exercise price Number Outstanding Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $ 2.18 16,261,699 4.20 2.79 16,261,699 4.20 During the Year ended December 31, 2021, the Company issued 2,250,691 shares of common stock to a certain warrant holder upon the exercise of 2,414,218 warrants. The Company received $ 9,487,223 in connection with the exercise of the warrant. During the year ended December 31, 2021, a total of 486,516 warrants were issued in connection with the Series E Convertible Preferred Stock raise. During the year ended December 31, 2021, a total of 1,137,575 warrants were issued with convertible notes. The warrants have a grant date fair value of $ 3,258,955 using a Black-Scholes option-pricing model and the above assumptions. During the year ended December 31, 2021, some of the Company’s warrants had a down-round provision triggered that also resulted in an additional 127,801 warrants to be issued. A deemed dividend of $ 410,750 was recorded to the Statements of Comprehensive Loss. During the year ended December 31, 2021, the Company issued 80,000 warrants in connection with the underwriting agreement. Stock-based compensation for stock warrants of 129,375 has been recorded in the Consolidated Statements of Comprehensive Loss and totaled $ 480,863 , for the year ended December 31, 2021. F- 47 During the year ended December 31, 2022, the company granted warrant holders 5,246,953 warrants to exercise existing warrants. A deemed dividend of $ 4,216,528 was recorded to the Statements of Operations and Comprehensive Loss. During the year ended December 31, 2022, a total of 6,712,500 warrants were issued with convertible notes (See Note 7 above). The warrants have a grant date fair value of $ 6,172,614 using a Black-Scholes option-pricing model and the above assumptions and a relative fair value of $ 3,171,076 . Note 11 – Commitments and Contingencies Litigation Skube v. WHE Agency Inc., et al A complaint against WHE, Creatd and Jeremy Frommer filed December 22, 2022, was filed in the Supreme Court of the State of New York, New York County, by Jessica Skube, making certain claims alleging conversion, trespass to chattel, unjust enrichment, breach of contract, fraud in the inducement, seeking damages of $ 161,000 and punitive damages of $ 500,000 . Skube filed an Order to Show Cause, which the Company opposed, which is currently pending. The contingency is probable that a material loss of $ 161,000 has been incurred and is accrued in the Company’s consolidated financial statements. Lind Global v. Creatd, Inc. A complaint against Creatd 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 LP and Lind Global Fund II LP, making certain claims alleging breach of contract related to two Securities Purchase Agreements executed on May 31, 2022, seeking damages in excess of $ 920,000 . The Company filed a Motion to Dismiss, which is currently pending. Given the premature nature of this case, it is still too early for the Company to make an assessment as to liability. Inflation Reduction Act of 2022 On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA includes a 15 % Corporate Alternative Minimum Tax (“Corporate AMT”) for tax years beginning after December 31, 2022. We do not expect the Corporate AMT to have a material impact on our consolidated financial statements. Additionally, the IRA imposes a 1 % excise tax on net repurchases of stock by certain publicly traded corporations. The excise tax is imposed on the value of the net stock repurchased or treated as repurchased. The new law will apply to stock repurchases occurring after December 31, 2022. F- 48 Lease Agreements The Company currently does not own any properties. Our corporate headquarters consists of a total of 8,000 square feet and is located at 419 Lafayette Street, 6th Floor, New York, NY, 10003. The current lease term is 7 years commencing May 1, 2022. The total amount due under this lease is $ 3,502,033 . On April 19, 2022, the Company signed a 2-year lease for approximately 2,252 square feet of office space at 1 Westmount Square, Westmount, Qc H3Z2P9 . Commencement date of the lease is July 1, 2022. The total amount due under this lease is $ 72,064 . During the year ended December 31, 2022, it was decided the company would not be using the office space and recorded an impairment of $ 63,472 on the right-of-use asset. As of December 31, 2022, the company was in breach of this lease agreement and subsequently reached a settlement agreement to terminate the lease. On July 28, 2022, the Company signed a 3-year lease for approximately 1,364 square feet of office space at 1674 Meridian Ave. , Miami Beach, FL, 33131. Commencement date of the lease is July 28, 2022. The total amount due under this lease is $ 181,299 . During the year ended December 31, 2022, it was decided the company would not be using the office space and recorded an impairment of $ 101,623 on the right-of-use asset. As of December 31, 2022, the company is in breach of this lease agreement. On September 9, 2021, the Company signed a 1-year lease for approximately 3,200 square feet at 648 Broadway, Suite 200, New York, NY 10012. Monthly rent under the lease was $12,955 for the leasing period. As of December 31, 2022, the company is in breach of this lease agreement. The components of lease expense were as follows: Year Ended December 31, 2022 Operating lease cost $ 398,498 Short term lease cost 139,136 Total net lease cost $ 537,634 Supplemental cash flow and other information related to leases was as follows: Year Ended December 31, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating lease payments 206,944 Weighted average remaining lease term (in years): 6.02 Weighted average discount rate: 12.50 % Total future minimum payments required under the lease as of December 31, are as follows: For the Twelve Months Ended December 31, Operating Leases 2023 $ 583,728 2024 550,705 2025 517,231 2026 532,424 2027 548,073 Thereafter 754,064 Total lease payments 3,486,225 Less: Amounts representing interest ( 1,081,698 ) Total lease obligations 2,404,526 Less: Current ( 326,908 ) $ 2,077,618 Rent expense for the year ended December 31, 2022 and 2021 was $ 590,100 and $ 216,845 , respectively. F- 49 Market price risk of crypto (“digital”) assets The Company holds crypto and digital assets in third-party wallets. Crypto asset price risk could adversely affect its operating results and will depend upon the market price of Bitcoin, ETH, as well as other crypto assets. Crypto asset prices have fluctuated significantly from quarter to quarter. There is no assurance that crypto asset prices will reflect historical trends. A decline in the market price of Bitcoin, ETH, and Other crypto assets could have an adverse effect on our earnings, the carrying value of the crypto assets, and future cash flows. This may also affect the liquidity and the ability to meet our ongoing obligations. Appointment of New Directors On February 17, 2022, the Board of Directors (the “Board”) of the Company appointed Joanna Bloor, Brad Justus, and Lorraine Hendrickson to serve as members of the Board. Ms. Bloor has been nominated to, and will serve as, chair of the Compensation Committee, and to be a member of the Audit Committee and Nominating & Corporate Governance Committee. Mr. Justus has been nominated, and will serve as, chair of the Nominating & Corporate Governance Committee, and to be a member of the Compensation Committee and Audit Committee. Ms. Hendrickson has been nominated to, and will serve as, chair of the Audit Committee and to be a member of the Compensation and Nominating & Corporate Governance Committee. Management Restructuring On February 17, 2022, the Board of the Company approved the restructuring of the Company’s senior management team to eliminate the Co-Chief Executive Officer role, appointing Jeremy Frommer as Executive Chairman and Founder, and appointing Laurie Weisberg as Chief Executive Officer (the “Second Restructuring”). Prior to the Second Restructuring, Mr. Frommer and Ms. Weisberg served as the Company’s co-Chief Executive Officers and Ms. Weisberg served as the Company’s Chief Operating Officer. The Second Restructuring does not impact the role or functions of the Company’s Chief Financial Officer, Chelsea Pullano, or the role or functions of the Company’s President and Chief Operating Officer, Justin Maury. Departure of Directors On February 17, 2022, the Board received notice that effective immediately, Mark Standish resigned as Chair of the Board, Chair of the Audit Committee and as a member of the Compensation Committee and Nominating & Corporate Governance Committee; Leonard Schiller resigned as member of the Board, Chair of the Compensation Committee and as a member of the Audit Committee and Nominating & Corporate Governance Committee; and LaBrena Martin resigned as a member of the Board, Chair of the Nominating & Corporate Governance Committee and as a member of the Audit Committee and Compensation Committee. Such resignations are not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. On September 2, 2022, the Company entered into an Executive Separation Agreement with Laurie Weisberg the Company’s Chief Executive Officer and member of the Board of Directors setting forth the terms and conditions related to the Executive’s resignation for good reason as Chief Executive Officer, Director and any other positions held with the Company or any subsidiary. On September 21, 2022, the Board received notice from Brad Justus of his resignation as a member of the Board, and from all committees of the Board on which he served, with such resignation to become effective on September 30, 2022. Such resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. On November 1, 2022, the Board received notice from Lorraine Hendrickson of her resignation as a Director and from all committees of the Board on which she served, effective as of such date. Ms. Hendrickson’s resignation as a member of the Board was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. On November 17, 2022, the Board received notice from Joanna Bloor of her resignation as a Director and from all committees of the Board on which she served, effective as of such date. Ms. Bloor’s resignation as a member of the Board was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. F- 50 Appointment of New Directors On September 2, 2022, the Board appointed Justin Maury, President and Chief Operating Officer, as Director to the Board On November 2, 2022, the Board appointed Peter Majar as Director to the Board. Mr. Majar has been nominated to, and will serve as, chair of the Audit Committee and the Compensation Committee and to be a member of the Nominating & Corporate Governance Committee. On November 16, 2022, the Board appointed Erica Wagner as Director to the Board. Ms. Wagner has been nominated, and will serve as, chair of the Nominating & Corporate Governance Committee, and to be a member of the Compensation Committee. Nasdaq Notice of Delisting On September 2, 2022, the Company received a letter from the staff of The Nasdaq Capital Market notifying the Company that the Nasdaq Hearings Panel has determined to delist the Company’s common stock from the Exchange, based on the Company’s failure to comply with the listing requirements of Nasdaq Rule 5550(b)(1) as a result of the Company’s shareholder equity deficit for the period ended June 30, 2022, as demonstrated in Company’s Quarterly Report on Form 10-Q filed on August 15, 2022, following the Company having not complied with the market value of listed securities requirement in Nasdaq Rule 5550(b)(2) on March 1, 2022, while the Company was under a Panel Monitor, as had been previously disclosed. Suspension of trading in the Company’s shares on the Exchange became effective 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 Group Inc. Following passage of the proscribed 15-day time period for appeal as stated in the Letter, on October 26, 2022, Nasdaq completed the delisting by filing a Form 25 Notification of Delisting with the Securities and Exchange Commission. The Company’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. Effective April 4, 2023, our symbol changed to “VOCL.” The Company’s publicly-traded warrants, under the symbol “CRTDW,” are quoted on the OTCPink marketplace operated by OTC Markets Group Inc. Employment Agreements On April 5, 2022, upon the recommendation of the Compensation Committee of the Board, the Board approved employment agreements with, and equity issuances for, (i) Jeremy Frommer, Executive Chairman, who will receive (a) an signing award of $ 80,000 , (b) an annual salary of $ 420,000 ; (c) 121,000 options, to vest immediately with a strike price of $ 1.75 , and (d) 50,000 shares of the Company’s restricted common stock; (ii) Laurie Weisberg, Chief Executive Officer, who will receive (a) an annual salary of $ 475,000 ; (b) 121,000 options, to vest immediately with a strike price of $ 1.75 , and (c) 50,000 shares of the Company’s restricted common stock; (iii) Justin Maury, Chief Operating Officer & President, who will receive (a) an annual salary of $ 475,000 (b) 81,000 options, to vest immediately with a strike price of $ 1.75 , and (c) 50,000 shares of the Company’s restricted common stock; and (iv) Chelsea Pullano, Chief Financial Officer, who will receive (a) an annual salary of $ 250,000 ; (b) 37,000 options, to vest immediately with a strike price of $ 1.75 , and (c) 35,000 shares of the Company’s restricted common stock (collectively, the “Executive Employment Arrangements”). Pursuant to the Executive Employment Arrangements, the Company entered into executive employment agreements with each of the respective executives as of April 5, 2022 (the “Executive Employment Agreements”). The Executive Employment Agreements contain customary terms, conditions and rights. F- 51 Executive Separation Agreement On September 2, 2022, the Company entered into an Executive Separation Agreement with Laurie Weisberg the Company’s Chief Executive Officer and member of the Board of Directors setting forth the terms and conditions related to the Executive’s resignation for good reason as Chief Executive Officer, Director and any other positions held with the Company or any subsidiary. The Company will pay severance in the aggregate amount of $ 475,000 , payable as follows: (i) 1/24 will be paid on each of September 15, 2022, October 1, 2022 and November 1, 2022, respectively; (ii) 1/8 will be paid on each of December 1, 2022, January 1, 2023 and February 1, 2023, respectively; (iii) 1/4 will be paid on April 1, 2023; and (iv) the balance will be paid on May 1, 2023. The Company has executed and delivered a Confession of Judgment concerning the severance amount, which is being held in escrow pending satisfaction of payment. Additionally, all unvested and/or outstanding stock options held by Ms. Weisberg as of the date of the separation agreement that are not subject to metric based vesting shall automatically and fully vest. All unvested and/or outstanding stock options held by Ms. Weisberg as of the date of the separation agreement that are subject to metric based vesting shall vest in accordance with their respective original terms. Note 12 – Acquisitions Plant Camp LLC On June 1, 2021, the Company, entered into a Membership Interest Purchase Agreement (the “MIPA”) with Angela Hein (“Hein”) and Heidi Brown (“Brown”, and together with Hein, the “ Sellers ”), pursuant to which the Purchaser acquired 490,863 common units (the “Membership Interests”) of Plant Camp LLC, a Delaware limited liability company (“Plant Camp”) from the Sellers, resulting in the Purchaser owning 33 % of the issued and outstanding equity of Plant Camp. The Membership Interests were purchased for $ 175,000 . On June 4, 2021, the Company, entered into a MIPA with Sellers, pursuant to which the Purchaser acquired 841,005 common units of Plant Camp from the Sellers, resulting in the Purchaser owning a total of 89 % of the issued and outstanding equity of Plant Camp. The additional Membership Interests were purchased for $ 300,000 . The acquisition was accounted for as a step acquisition however there was no change in value of the Company’s existing equity interest. The Company utilized the fair value of the consideration to determine the fair value of the existing equity interest based on the total merger consideration offered. The following sets forth the components of the purchase price: Purchase price: Cash paid to seller $ 300,000 Fair value of equity investment purchased on June 1, 2021 175,000 Total purchase price 475,000 Assets acquired: Cash 5,232 Accounts Receivable 7,645 Inventory 19,970 Total assets acquired 32,847 Liabilities assumed: Accounts payable and accrued expenses 5,309 Deferred Revenue 671 Total liabilities assumed 5,980 Net assets acquired 26,867 Non-controlling interest in consolidated subsidiary 56,865 Excess purchase price $ 504,998 F- 52 The following table provides a summary of the final allocation of the excess purchase price. Goodwill $ 7,198 Trade Names & Trademarks 100,000 Know-How and Intellectual Property 316,500 Website 51,300 Customer Relationships 30,000 Excess purchase price $ 504,998 The goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. WHE Agency, Inc. On July 20, 2021, the Company entered into a Stock Purchase Agreement to purchase 44 % ownership and 55 % of voting power of the issued and outstanding shares of WHE Agency, Inc., (“WHE”). The aggregate closing consideration was $ 1,038,271 , which consists of a combination of $144,750 in cash and $ 893,521 in the form of 224,503 shares of the Company’s restricted common stock at a price of $ 3.98 per share. Based on the purchase price of $ 1,038,271 for 44 % ownership, the fair value of the non-controlling interest was estimated to be $ 1,190,000 based on the consideration from the Company. WHE is a talent management and public relations agency dedicated to the representation and management of family- and lifestyle-focused influencers and digital creators. The following sets forth the components of the purchase price: Purchase price: Cash paid to seller $ 144,750 Shares granted to seller 893,521 Total purchase price 1,038,271 Assets acquired: Cash 26,575 Accounts Receivable 446,272 Total assets acquired 472,847 Liabilities assumed: Accounts payable and accrued expenses 353,017 Total liabilities assumed 353,017 Net assets acquired 119,830 Non-controlling interest in consolidated subsidiary 1,190,000 Excess purchase price $ 2,108,442 The following table provides a summary of the final allocation of the excess purchase price. Goodwill $ 1,349,697 Trade Names & Trademarks 85,945 Non-Compete Agreements 45,190 Influencers / Customers 627,610 Excess purchase price $ 2,108,442 F- 53 The goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. Dune Inc. Prior to October 3, 2021, the Company invested $ 732,297 into Dune See note 6 & 7. Using step acquisition accounting, the Company decreased the value of its existing equity interest to its fair value based on its purchase price on October 3, 2021, resulting in the recognition of an impairment in investment of $ 424,632 , which was included in within our consolidated statements of operations. The Company utilized the fair value of the consideration to determine the fair value of the existing equity interest based on the total merger consideration offered and the Company’s stock price at acquisition. On October 3, 2021, we, through Creatd Partners, LLC (“Buyer”), entered into a Stock Purchase Agreement (the “Dune Agreement”) with Standard Holdings, Inc. (“SHI”) and Mark De Luca (“De Luca”) (SHI and De Luca, collectively the “Dune Sellers”), and Stephanie Roy Dufault, whereby Buyer purchased a majority stake in Dune, Inc., a Delaware corporation (“Dune”). Pursuant to the Dune Agreement, which closed on October 4, 2021, Buyer acquired a total of 3,905,634 shares of the common stock of Dune (the “Purchased Shares”). The Company issued 163,344 restricted shares of the Company’s common stock to the Dune Sellers. In addition, pursuant to the Dune Agreement, $ 50,000 worth of the Company’s common stock issuable to the Dune Sellers on a pro rata basis, priced in accordance with the terms and conditions set forth in the Dune Agreement (the “Indemnification Escrow Amount”), shall be held in escrow and reserved in each Dune Seller’s name by the Company’s transfer agent until such time as release is authorized under the Agreement. The following sets forth the components of the purchase price: Purchase price: Shares granted to seller $ 424,698 Fair value of equity investment purchased before October 4, 2021 307,665 Total purchase price 732,363 Assets acquired: Cash 186,995 Inventory 47,250 Total assets acquired 234,246 Liabilities assumed: Accounts payable 40,000 Total liabilities assumed 40,000 Net assets acquired 194,246 Non-controlling interest in consolidated subsidiary 720,581 Excess purchase price $ 1,258,698 Due to the limited amount of time since the acquisition date, the assets and liabilities of Dune Inc. were recorded based primarily on their acquisition date carrying values. Management believes the estimated fair value of these accounts on the acquisition date approximates their carrying value as reflected in the table above due to the short-term nature of these instruments. The remaining assets and liabilities primarily consisted of goodwill, customer relationships, know how, and tradenames. We will adjust the remaining assets and liabilities to fair value as valuations are completed and we obtain information necessary to complete the analyses, but no later than one year from the acquisition data. F- 54 The following table provides a summary of the final allocation of the excess purchase price. Goodwill $ 64,230 Trade Names & Trademarks 208,304 Know-How and Intellectual Property 858,300 Website 127,864 Excess purchase price $ 1,258,698 The goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. Denver Bodega, LLC d/b/a Basis On March 7, 2022, the Company entered into a Membership Interest Purchase (the “Agreement”) with Henry Springer and Kyle Nowak (collectively the “Sellers”), whereby the Company purchased a majority stake in Denver Bodega, LLC, a Colorado limited liability company whose product is Basis, a direct-to-consumer functional beverage brand that makes high-electrolyte mixes meant to aid hydration. Pursuant to the Agreement, Creatd acquired all of the issued and outstanding membership interests of Denver Bodega, LLC for consideration of one dollar ($ 1.00 ), as well as the Company’s payoff, assumption, or satisfaction of certain debts and liabilities. The following sets forth the components of the purchase price: Purchase price: Cash paid to seller $ 1 Total purchase price 1 Assets acquired: Cash 44,977 Accounts Receivable 2,676 Inventory 194,365 Total assets acquired 242,018 Liabilities assumed: Accounts payable and accrued expenses 127,116 Notes payable 293,888 Total liabilities assumed 421,004 Net liabilities acquired ( 178,986 ) Excess purchase price $ 178,987 The following table provides a summary of the preliminary allocation of the excess purchase price. Goodwill $ 12,691 Trade Names & Trademarks 19,970 Know-How and Intellectual Property 107,633 Customer Relationships 38,693 Excess purchase price $ 178,987 F- 55 The goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. Orbit Media, LLC On August 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 purchased a majority stake in Orbit Media LLC, a New York limited liability company whose product is an app-based stock trading platform designed to empower a new generation of investors, providing users with a like-minded community as well as access to tools, content, and other resources to learn, train, and excel in the financial markets. Pursuant to the Agreement, Creatd acquired fifty one percent ( 51 %) of the issued and outstanding membership interests of Orbit Media LLC for consideration of forty-four thousand dollars ($ 44,000 ) in cash and 57,576 shares of the Company’s Common Stock. This transaction was considered to be an acquisition of in-process research and development with no alternative future use. Orbit Media, LLC is part of the Company’s consolidated subsidiaries as of December 31, 2022. Brave Foods, LLC On September 13, 2022, the Company acquired 100 % of the membership interests of Brave Foods, LLC, a Maine limited liability company for $ 150,000 . Brave is a plant-based food company that provides convenient and healthy breakfast food products. The following sets forth the components of the purchase price: Purchase price: Cash paid to seller $ 150,000 Total purchase price 150,000 Assets acquired: Cash 73,344 Inventory 46,375 Total assets acquired 119,719 Liabilities assumed: Accounts payable and accrued expenses 1,316 Notes payable 75,000 Total liabilities assumed 76,316 Net assets acquired 43,403 Excess purchase price $ 106,596 The excess purchase price amounts are provisional and may be adjusted during the one-year measurement period as required by U.S. GAAP. It is likely that all intangible assets will be reallocated during the measurement period. The following table provides a summary of the allocation of the excess purchase price. Goodwill $ 46,460 Trade Names & Trademarks 16,705 Know-How and Intellectual Property 16,704 Website 16,704 Customer Relationships 10,023 Excess purchase price $ 106,596 The goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition. F- 56 The following presents the unaudited pro-forma combined results of operations of the Company with Plant Camp, WHE, Dune, Denver Bodega, and Brave as if the entities were combined on January 1, 2021. Year Ended 2021 Revenues $ 6,492,696 Net loss attributable to common shareholders $ ( 44,422,150 ) Net loss per share $ ( 3.43 ) Weighted average number of shares outstanding 12,934,549 Year Ended 2022 Revenues $ 5,482,827 Net loss attributable to common shareholders $ ( 36,638,249 ) Net loss per share $ ( 1.66 ) Weighted average number of shares outstanding 22,092,836 Note 13 – Segment Information We operate in three reportable segments: Creatd Labs, Creatd Ventures, and Creatd Partners. Our segments were determined based on the economic characteristics of our products and services, our internal organizational structure, the manner in which our operations are managed and the criteria used by our Chief Operating Decision Maker (CODM) to evaluate performance, which is generally the segment’s operating losses. Operations of: Products and services provided: Creatd Labs Creatd Labs is the segment focused on development initiatives. Creatd Labs houses the Company’s proprietary technology, including its flagship platform, Vocal, as well as oversees the Company’s content creation framework, and management of its digital communities. Creatd Labs derives revenues from Vocal creator subscriptions, platform processing fees and technology licensing fees. Creatd Ventures Creatd Ventures builds, develops, and scales e-commerce brands. This segment generates revenues through product sales of its two majority-owned direct-to-consumer brands, Camp and Dune Glow Remedy. Creatd Partners Creatd Partners fosters relationships between brands and creators through its suite of agency services, including content marketing (Vocal for Brands), performance marketing (Seller’s Choice), and influencer marketing (WHE Agency). Creatd Partners derives revenues in the form of brand fees and talent management commissions. The following tables present certain financial information related to our reportable segments and Corporate: As of December 31, 2022 Creatd Labs Creatd Ventures Creatd Partners Corporate Total Accounts receivable, net $ - $ 11,217 $ 228,206 $ - $ 239,423 Prepaid expenses and other current assets 23,712 40,681 - 64,154 128,547 Deposits and other assets 629,955 2,600 - 164,676 797,231 Intangible assets - 207,301 - 22,783 230,084 Goodwill - 46,460 - - 46,460 Inventory 30,125 374,845 - - 404,970 All other assets - - - 2,973,034 2,973,034 Total Assets $ 683,792 $ 683,104 $ 228,206 $ 3,224,647 $ 4,819,749 Accounts payable and accrued liabilities $ 8,495 $ 1,635,298 $ 509,931 $ 5,411,996 $ 7,565,720 Note payable, net of debt discount and issuance costs 130,615 184,160 - 1,368,919 1,683,694 Deferred revenue 275,017 - 24,392 - 299,409 All other Liabilities - - - 7,774,125 7,774,125 Total Liabilities $ 414,217 $ 1,819,458 $ 534,323 $ 14,555,040 $ 17,322,948 F- 57 As of December 31, 2021 Creatd Labs Creatd Ventures Creatd Partners Corporate Total Accounts receivable, net $ - $ 2,884 $ 334,556 $ - $ 337,440 Prepaid expenses and other current assets 48,495 - - 188,170 236,665 Deposits and other assets 626,529 - - 92,422 718,951 Intangible assets - 1,637,924 783,676 11,241 2,432,841 Goodwill - 25,139 1,349,696 - 1,374,835 Inventory - 106,403 - - 106,403 All other assets - - - 3,966,124 3,966,124 Total Assets $ 675,024 $ 1,772,350 $ 2,467,928 $ 4,257,957 $ 9,173,259 Accounts payable and accrued liabilities $ 9,693 $ 766,253 $ 6,232 $ 2,948,362 $ 3,730,540 Note payable, net of debt discount and issuance costs 313,979 - - 1,028,685 1,342,664 Deferred revenue 161,112 13,477 59,570 - 234,159 All other Liabilities - - - 177,644 177,644 Total Liabilities $ 484,784 $ 779,730 $ 65,802 $ 4,154,691 $ 5,485,007 For the year December 30, 2022 Creatd Labs Creatd Ventures Creatd Partners Corporate Total Net revenue $ 1,616,278 $ 1,456,593 $ 1,723,603 $ - $ 4,796,474 Cost of revenue 2,000,970 2,807,285 1,300,951 - 6,109,206 Gross margin (loss) ( 384,692 ) ( 1,350,692 ) 422,652 - ( 1,312,732 ) Compensation 1,794,003 826,185 931,158 1,127,044 4,678,390 Research and development 606,211 - 345,203 - 951,414 Marketing 2,722,579 1,675,083 302,509 - 4,700,171 Stock based compensation 864,507 781,928 887,627 1,649,782 4,183,844 General and administrative not including depreciation, amortization, or Impairment 246,540 592,210 509,757 7,675,921 9,024,428 Depreciation and amortization - 143,360 132,683 316,096 592,139 Impairment of intangibles 213,141 365,732 - 3,009,121 3,587,994 Total operating expenses $ 4,439,837 $ 3,558,313 $ 2,177,779 $ 12,650,920 $ 27,718,380 Interest expense ( 33,938 ) 298 - ( 787,411 ) ( 821,051 ) All other expenses - - - ( 5,824,152 ) ( 5,824,152 ) Other expenses, net ( 33,938 ) 298 - ( 6,611,563 ) ( 6,645,203 ) Loss before income tax provision $ ( 4,858,467 ) $ ( 4,908,707 ) $ ( 1,755,127 ) $ ( 19,262,483 ) $ ( 35,676,315 ) F- 58 For the year ended December 31, 2021 Creatd Labs Creatd Ventures Creatd Partners Corporate Total Net revenue $ 1,926,374 $ 90,194 $ 2,283,149 $ - $ 4,299,717 Cost of revenue 3,186,240 148,989 1,964,808 - 5,300,037 Gross margin ( 1,259,866 ) ( 58,940 ) 318,341 - ( 1,000,320 ) Research and development 758,293 131 225,104 - 983,528 Marketing 8,182,935 - 962,698 481,349 9,626,982 Stock based compensation 1,727,021 1,560,546 1,884,986 4,488,615 9,661,168 Impairment of goodwill - - 1,035,795 - 1,035,795 General and administrative not including depreciation, amortization, or Impairment 3,918,130 1,665,783 1,600,212 2,791,236 9,975,360 Depreciation and amortization - 100,633 252,730 44,076 397,440 Impairment of intangibles - - 688,127 - 688,127 Total operating expenses $ 14,586,379 $ 3,327,093 $ 6,649,652 $ 11,803,003 $ 32,368,400 Interest expense ( 12,706 ) - - ( 359,400 ) ( 372,106 ) All other expenses - - - ( 3,638,327 ) ( 3,638,327 ) Other expenses, net ( 12,706 ) ( 3,997,727 ) ( 4,010,433 ) Loss before income tax provision and equity in net loss from unconsolidated investments $ ( 15,858,951 ) $ ( 3,385,888 ) $ ( 6,331,311 ) $ ( 11,803,003 ) $ ( 37,379,153 ) Note 14 –Income Taxes Components of deferred tax assets are as follows: December 31, 2022 December 31, 2021 Net deferred tax assets – Non-current: Depreciation $ ( 24,850 ) $ (70,194 ) Amortization ( 876,459 ) 95,115 Stock based compensation 5,545,450 4,369,372 Expected income tax benefit from NOL carry-forwards 20,744,537 15,073,606 Less valuation allowance ( 25,388,679 ) (19,467,900 ) Deferred tax assets, net of valuation allowance $ - $ - Income Tax Provision in the Consolidated Statements of Operations A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows: For the Year Ended December 31, 2021 For the Year Ended December 31, 2021 Federal statutory income tax rate 21.0 % 21.0 % State tax rate, net of federal benefit 7.1 % 7.1 % Change in valuation allowance on net operating loss carry-forwards ( 28.1 )% ( 28.1 )% Effective income tax rate 0.0 % 0.0 % F- 59 Based on the available objective evidence, management believes it is more likely than not that the net deferred tax assets of the Company will not be fully realizable for the years ended December 31, 2022 and 2021. Accordingly, management had applied a full valuation allowance against net deferred tax assets as of December 31, 2022 and 2021. As of December 31, 2022, the Company had approximately $ 74 million of federal net operating loss carryforwards available to reduce future taxable income which will begin to expire in 2035 for both federal and state purposes. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code of 1986, as amended (the “Code”). The Act reduces the federal corporate income tax rate from 35 % to 21 % effective for tax years beginning after December 31, 2017. ASC 470 requires the Company to remeasure the existing net deferred tax asset in the period of enactment. The Act also provides for immediate expensing of 100 % or the costs of qualified property that is incurred and placed in service during the period from September 27, 2017, to December 31, 2022. Beginning January 1, 2023, the immediate expensing provision is phased down by 20% per year until it is completely phased out as of January 1, 2027. Additionally, effective January 1, 2018, the Act imposes possible limitations on the deductibility of interest expense. As a result of the provisions of the Act, the Company’s deduction for interest expense could be limited in future years. The effects of other provisions of the Act are not expected to have a material impact on the Company’s financial statements. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to provide guidance on accounting for the tax effects of the Act. SAB 118 provides a measurement period that begins in the reporting period that includes the Act’s enactment date and ends when an entity has obtained, prepared and analyzed the information that was needed in order to complete the accounting requirements under ASC 720. However, in no circumstance should the measurement period extend beyond one year from the enactment date. In accordance with SAB 118, a company must reflect in its financial statements the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. SAB 118 provides that to the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete, but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. The Company does not reflect a deferred tax asset in its financial statements but includes that calculation and valuation in its footnotes. We are still analyzing the impact of certain provisions of the Act and refining our calculations. The Company will disclose any change in the estimates as it refines the accounting for the impact of the Act. Federal and state tax laws impose limitations on the utilization of net operating losses and credit carryforwards in the event of an ownership change for tax purposes, as defined in Section 382 of the Internal Revenue Code. Accordingly, the Company’s ability to utilize these carryforwards may be limited as a result of an ownership change which may have already happened or may happen in the future. Such an ownership change could result in a limitation in the use of the net operating losses in future years and possibly a reduction of the net operating losses available. F- 60 Note 15 – Subsequent Events Increase in Authorized Shares On January 18, 2023, upon approval from our board of directors and stockholders, we filed Second Amended and Restated Articles of Incorporation with the Secretary of State of the State of Nevada for the purpose of increasing our authorized shares of Common Stock to 1,500,000,000 . Note Conversions Subsequent to December 31, 2022, $ 1,417,782 in principal of three convertible notes converted into 6,946,851 shares of common stock. Note Repayments and Warrant Cancellations Subsequent to December 31, 2022, the Company repaid $ 1,500,000 in convertible notes, resulting in the cancellation of 1,216,008 warrants, per the Restructuring Agreements entered into on September 15, 2022. Securities Purchase Agreements Subsequent to December 31, 2022, the Company entered into a Securities Purchase Agreement with an investor to purchase 1,562,500 shares of common stock for gross proceeds of $ 750,000 . Convertible Notes Subsequent to December 31, 2022, the Company entered into 3 convertible promissory notes with 3 investors for proceeds of $ 2,364,250 . Minority Investment in OG Collection, Inc. Subsequent to December 31, 2022, an investor entered into a Subscription Agreement whereby it purchased from OG Collection, Inc., a subsidiary of the Company (“OG”), 50,000 shares of common stock of OG for a purchase price of $ 250,000 , and, in connection therewith OG, the Company and the Investor entered into a Shareholder Agreement. Additional Purchase of Orbit Media, LLC Subsequent to December 31, 2022, the Company acquired an additional 5 % of the membership interests of Orbit Media, LLC., bringing our total membership interests to 56 %. Orbit Media LLC., has been consolidated due to the Company’s ownership of 85 % voting control, and the results of operations have been included since the date of acquisition in the Statements of Operations. February 2023 Warrant Exchange On February 10, 2023 the Company entered into a letter agreement (the “Letter Agreement”), between Creatd and the respective holders of an aggregate of 2,161,415 warrants (the “Warrants”) to issue to the holders, for each Warrant held by such Selling Stockholder, one new warrant to purchase one share of the Company’s common stock in exchange for the immediate exercise of the Warrants. The new warrants are exercisable immediately, for a term of 60 months, at a price of $ 0.77 , subject to customary adjustment provisions. March 2023 Warrant Exchange On March 6, 2023 the Company entered a letter agreement (the “Letter Agreement”), between Creatd, Inc. and the respective holders of an aggregate of 1,607,050 warrants (the “Warrants”) to issue to the holders, for each Warrant held by such Selling Stockholder, one new warrant to purchase one share of the Company’s common stock in exchange for the immediate exercise of the Warrants. The new warrants are exercisable immediately, for a term of 60 months, at a price of $ 0.77 , subject to customary adjustment provisions. Additional Purchase of Dune, Inc. Subsequent to December 31, 2022, the Company acquired an additional 23 % equity interest in Dune, Inc. bringing our total ownership to 85 % . Dune, Inc., has been consolidated due to the Company’s ownership of over 50 % voting control, and the results of operations have been included since the date of acquisition in the Statements of Operations. F- 61 Additional Purchase of WHE Agency, Inc. Subsequent to December 31, 2022, the Company acquired an additional 51 % of the equity interest in WHE Agency, Inc. bringing our total ownership to 95 %. WHE Agency, Inc., has been consolidated due to the Company’s ownership of over 50 % voting control, and the results of operations have been included since the date of acquisition in the Statements of Operations. Consultant Shares Subsequent to December 31, 2022, the Company issued 3,142,780 shares of Common Stock to consultants. Employee & Officer Equity Awards Subsequent to December 31, 2022, in recognition of certain employees having accepted reduced salaries beginning August 22, 2023, the Company issued equity awards totaling 7,512,918 shares to non-officer employees and 18,250,319 to officers of the Company. The fair value of these issuances is $ 16,134,193 and the Company will be paying approximately $ 3,477,062 in payroll taxes on behalf of employees receiving these awards. Equity Line of Credit Subsequent to December 31, 2022, the Company drew down from its outstanding Equity Line of Credit for total proceeds of $ 300,000 . F- 62 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.