Creatd Answers: Fourteen Questions from Our Shareholders

We recently received a thoughtful email from an investor posing fourteen detailed questions about Creatd, our balance sheet, our transactions, and our path forward. We felt these questions were substantive and broadly relevant enough that they deserved a public response rather than a private one. Accordingly, we wanted to address them openly and share our answers with our entire investor community below. This response comes ahead of the investor call we are holding on July 7 at 4:15 p.m., where we will discuss these topics in greater detail. Register for the call here.

Questions 1–3: The Flyte Transaction, Cash Received, Liquidity Bridge, and the Path to Monetizing VTAK Assets

Can you walk shareholders through the Flyte transaction in plain terms: how much cash has Creatd actually received to date, how much remains receivable, what are the payment terms on the promissory note, and what conditions or restrictions apply to the VTAK preferred stock? Given the transaction was described as a major balance-sheet event, but quarter-end cash was approximately $250,000, can you provide a bridge showing where the cash proceeds went and what liquidity the company has today? And for the VTAK-related preferred stock and note receivables now on the balance sheet, what is the realistic timeline for converting those into cash, and what risks, collectability, valuation, sale restrictions, should shareholders understand?

Answer:

On March 9, 2026, Creatd closed the sale of its remaining 80% stake in Fly Flyte, Inc. to Catheter Precision, Inc. (VTAK), for total consideration of approximately $11.6 million, roughly $5.8 million in cash and roughly $5.8 million in VTAK Convertible Preferred Stock.

Where things stand today: As of quarter-end on March 31, 2026, actual cash and cash equivalents totaled approximately $250,000, with approximately $981,000 of cash generated from investing activities during the quarter overall. The remaining consideration sits on the balance sheet as receivables, a note receivable for approximately $5.8 million expected before year end (valued at approximately $4.8 million on the balance sheet due to debt discount in accordance with GAAP) and a preferred stock receivable of $5.8 million (valued at approximately $5.6 million on the balance sheet due to valuation discount in accordance with GAAP), together, with cash and liabilities taken on, contributed to total assets of approximately $11.6 million. Creatd retains a strategic advisory relationship with VTAK, which is a significant client of ours.

We provided the preferred stock terms, a full sources-and-uses reconciliation, and a monetization timeline with associated risk factors in the Q1 Quarterly Report and on page F-45 in our most recently filed S-1, so shareholders can see exactly how the announced $11.6 million transaction value translates into cash in hand, near-term liquidity, and realistic future recovery.

Question 4: Stock-Based Compensation and Executive Options

Q1 included approximately $11.3 million of stock-based compensation expense. How much of that amount was specifically tied to the CEO's warrants, preferred stock, or related conversion transactions, and how much was tied to employees, consultants, directors, or other parties?

Answer:

For the three months ended March 31, 2026, Creatd recognized $11,307,992 of stock-based compensation expense. It's important for shareholders to understand what this figure represents, because it is easily misread. The $11.3 million is an accounting expense recognized by the Company under required accounting rules, it is not representative of compensation delivered to any officer, and it in no way represents cash or realizable intrinsic value that any executive received.

This entire amount relates to stock option grants, to officers, directors, employees, and consultants, issued under the Company's shareholder-approved Equity Incentive Plan, at an exercise price equal to fair market value on the grant date (at-the-money).

At-the-money options carry zero intrinsic value at the moment they're granted: a recipient realizes a gain only if the stock price rises above the exercise price after the grant date and the recipient then chooses to successfully exercise, and receives nothing if it doesn't. Unlike shares, these options cannot simply be taken and sold into the market for cash.

Under U.S. GAAP (ASC 718), companies are required to recognize an expense equal to the modeled fair value of those options at grant, typically calculated using an option-pricing formula such as Black-Scholes. That model relies on inputs like historical volatility and time to expiration, and for a thinly-traded, high-volatility stock, it can produce a fair-value estimate well above the option's realistic economic value to the recipient. This is not a discretionary accounting choice by management, it is a mandatory, PCAOB-enforced requirement applied uniformly across all public companies' audited financials, regardless of whether any cash or tangible value actually changed hands.

To be direct: no cash was paid out, no cash was received by any option holder, no options were exercised or sold into the market, and the $11.3 million did not reduce the Company's cash position or affect enterprise value. Because every one of these options is at-the-money, its present value to any executive is effectively zero, value would materialize only if the stock price climbs above the strike price and an executive then successfully exercises. The figure reflects a required accounting estimate under a formula, not compensation actually delivered, and read at face value, the $11.3 million can even be misleading as a measure of what any executive actually received, which is nothing. The specific grant-level assumptions, volatility, term, and risk-free rate, that were used to calculate this figure were disclosed in our most recently quarterly filing, so shareholders can evaluate the modeling inputs directly. The number of options issued to executives and employees can be found in the options footnote.

Question 5: Reason for Converting CEO Warrants and Preferred Stock into Common Stock

You've said the conversion of certain warrants and preferred stock into common stock simplifies the capital structure and supports a future uplisting. Can you explain why this conversion was necessary now, what valuation or conversion terms were used, whether the board or an independent committee reviewed it, and whether any of those shares are currently registered or eligible for sale?

Answer:

Our goal is to convert all outstanding warrant and preferred stock holders into common shareholders. A capital structure built on common stock alone is simpler, cleaner, and far stronger than one layered with multiple preferred series and warrants. The fewer convertible, variable, or derivative securities we carry, preferred stock and warrants chief among them, the higher our likelihood of being approved for a national exchange. That is the reason we are encouraging these conversions. A national exchange will not approve an uplisting application with our current structure. If Creatd is going to grow and move off the OTCQB, these conversions has to happen.

Mr. Frommer's conversion was the first step in that direction, and it was approved by unanimous vote of the Company's independent directors.

Question 6: Potential Dilution from S-1 and Conversions

For retail shareholders trying to understand dilution, can you provide a fully diluted share count today, including common stock, preferred conversions, warrants, convertible debt, registration statement shares, and any securities issued or issuable to management?

Answer:

As of today, Creatd has 1,370,000 shares of common stock outstanding. On a fully diluted basis, including preferred conversions, warrants, options, and convertible notes, that number could grow to near 6 million shares, representing roughly 4 to 4.5 times the current outstanding count.

Question 7: Repeated Shareholder-Meeting Delays

The annual shareholder meeting date and record date have been revised multiple times. What specific issues caused the repeated delays, and should shareholders view the delays as administrative, audit-related, SEC-registration-related, governance-related, or tied to pending transactions?

Answer:

The revisions were tied to re-establishing our SEC reporting status. The record date and meeting were reset to follow completion of our Q1 2026 audited filing and S-1, so shareholders vote with current financials in hand. The record date is now June 26, 2026, with the meeting on August 3, 2026, and no further delays are currently anticipated.

Question 8: Vocal, OG Collection, PCG, and Portfolio Structure

Over the last two quarters, Creatd has discussed Flyte, Vocal, OG Collection, PCG Advisory, VTAK, and possible AI-related acquisitions. Can you give shareholders a simple current ownership chart, including percentage ownership, consolidation status, revenue contribution, cash needs, and strategic purpose for each major asset?

Answer:

Here is our current portfolio structure:

• Vocal, Inc., Majority-owned (51%) and consolidated. Our core creator, media, technology, and brand-services platform.

• OG Collection, Inc., Majority-owned (51%) and consolidated.

• Flyte / VTAK, Following the March 2026 sale of Flyte, Creatd holds an estimated 20–25% future ownership position in VTAK on a fully diluted basis. This is a minority position and is not consolidated.

• PCG Advisory, PRISM Media Holdings, PRISM MediaWire, and AIRHub, Minority equity stakes, not consolidated.

• Numerous other minority positions in private and public companies, building and holding minority stakes across a range of companies is a core part of our business model, not incidental to it. Reference Marketable Securities and Minority Holdings footnotes in our Q1 quarterly filing.

The larger story of these holdings is heading in the following direction: we currently service the marketing and data needs of multiple consumer product goods companies, several of which are in various stages of transactional discussion with Creatd.

Further, it is our intention to grow the PCG investment and merge certain other minority interests into PCG at the parent level, with eventual consolidation targeted for early 2027.

Separately, we are actively engaged in discussions regarding a minority investment in the broker-dealer space, structured as a general partnership managing a micro-cap-strategically-oriented hedge fund.

The strategic thread across all of this: Creatd is positioning itself to create and structure transactions that address the capital and liquidity challenges facing the broader microcap and small-cap space, not just to hold a collection of unrelated minority stakes.

For revenue breakdown, reference Note 12 – Segment Reporting in the Q1 Quarterly Filing.

Question 9: Path to Uplisting and SEC Reporting

What are the exact remaining steps to regain full SEC reporting status and pursue a national-exchange uplisting, and what are the biggest gating items: share price, shareholder equity, audit completion, governance, minimum bid requirements, financing, or SEC review?

Answer:

We are targeting NYSE American, whose current listing standards require: a minimum share price generally in the $3–$4 range, stockholders' equity of at least $4–5 million, U.S. GAAP financials audited by a PCAOB-registered firm, a majority-independent board with independent audit and compensation committees, formal clawback and cybersecurity-oversight policies, and at least $15 million of public float made up exclusively of unrestricted, freely tradable shares.

We are diligently working to satisfy each of these requirements and will keep shareholders updated on our progress toward uplisting.

Question 10: Operating Business Versus Investment Portfolio

Looking ahead, how should shareholders evaluate Creatd: as an operating company with recurring revenue, as a holding company with strategic investments, or as a turnaround vehicle preparing assets for monetization? What are the key metrics you want investors to track over the next two quarters?

Answer:

Creatd is best understood as a hybrid: an operating company built around consolidated, majority-owned businesses, Vocal and OG Collection, combined with a portfolio of minority strategic investments, including PCG Advisory and related affiliates, our remaining VTAK position, and other private and public company stakes. Creating and structuring transactions across that portfolio, not just holding it passively, is core to our model.

Over the next two quarters, we'd encourage shareholders to track:

• Consolidated revenue and margin contribution from Vocal and OG Collection

• Progress on the PCG consolidation and any related transactional announcements

• Cash position and liquidity, independent of non-cash accounting items

• Concrete milestones toward NYSE American uplisting requirements

• Fully diluted share count, as conversions and any new issuances occur

We will report against these metrics consistently so shareholders can track progress quarter over quarter.

Question 11: The "Build, Enhance, Monetize, Retain as Customer" Model

You've described the Flyte transaction as an example of Creatd's future business model. Can you explain that model in concrete terms? Is the strategy to acquire or partner with companies, use Creatd's infrastructure to improve them, then monetize or sell while retaining an ongoing customer relationship? Can you quantify what that ongoing relationship with Flyte looks like today?

Answer:

To answer your question, yes, the strategy is to acquire or partner with companies, use Creatd's infrastructure to improve them, then monetize or sell while retaining an ongoing customer relationship.

Flyte is the best example of that. Put simply, we acquired our 80% interest in Flyte for approximately $11.4 million of Creatd stock, stock that, at the time, traded on the OTC Pink Sheets and was not liquid. A little over a year later, we sold that interest for roughly $5.8 million in cash and roughly $5.8 million of price-protected VTAK stock.

Under PCAOB accounting standards, that transaction is recorded a certain way on our books. But in practical terms, this was the equivalent of converting an illiquid equity investment into real, near-term value, while retaining a 20%+ ongoing interest in a company we believe has meaningful upside from here, potentially worth anywhere from $25 million to $100 million if execution is successful, though there is no assurance that outcome is achieved. We view the transaction as powerful and transformative, and we think the numbers speak for themselves.

This is the model: take positions where Creatd's infrastructure can build real value, then monetize that value while retaining upside exposure to the business going forward. We expect to repeat it.

Question 12: One-Time Sale or Repeatable Model?

Put differently, should shareholders view Flyte as a one-time asset sale, or as proof of a repeatable 'build, enhance, monetize, and retain as a customer' model? And what measurable KPIs will you report so investors can judge whether that model is working?

Answer:

Flyte should be viewed as proof of a repeatable model, not a one-time event, and we have a concrete next example already in motion.

We are currently evaluating spinning out both Vocal and OG Collection into standalone entities with clean, pristine balance sheets. Vocal in particular has the benefit of audited financials, since it has been properly consolidated on Creatd's audited books.

On the high end of our theoretical planning, we would look to achieve a standalone valuation for Vocal in the range of approximately $35 million to $50 million, with a potential raise in the range of $10 million to $15 million and a sale of a greater-than-51% controlling stake to a new controlling company or investor group. That group would be one theoretically capable of growing Vocal further, potentially toward multiples of that valuation over time, in a manner similar to comparable companies in the creator-and-media space. This is an early-stage, theoretical framework only, and there is no assurance any transaction is completed on these or any other terms, or at all.

To let shareholders judge whether this model is working over time, we intend to report:

• Realized proceeds (cash and securities) from any monetization event, measured against original investment

• Ongoing revenue or advisory relationships retained post-transaction, and their contract status

• Retained equity value in monetized businesses, marked against independent valuations where available

• Consolidated revenue growth from majority-owned operating businesses ahead of any spin-out

• Portfolio-level cash conversion, how much of reported "value creation" actually converts to cash versus remaining as receivables or illiquid securities

Questions 13–14: Convertible Notes and a Candid Uplisting Risk Assessment

If Creatd does not complete the uplist before the November 9, 2026 maturity date of the related convertible notes, can you explain the company's cash obligation to those investors? Specifically, which tranches have actually funded, what is the outstanding principal amount today after the 20% OID, how much would be payable at maturity if the notes are not converted, and what would the cash redemption amount be if failure to repay or failure to satisfy the transaction documents created an Event of Default? Separately, given the challenges of uplisting from OTC Pink Sheets to a National Exchange are daunting and even more so in a short timeframe, can you provide shareholders a candid risk matrix, base case, delayed case, and failed-uplist case, covering the impact on cash, debt maturity, investor rights, dilution, and operating runway in each?

Answer:

In connection with the Flyte transaction, we cut off further funding under the November 2025 tranche-based facility, the investors were released from funding the unfunded tranches, and we have taken on no additional financing under this facility since. We have also obtained waivers from the noteholders addressing the maturity timeline.

The remaining outstanding balance under this facility is approximately $3 million. Those notes mature in January 2027.

Our plan is to convert that remaining balance into common stock, consistent with our broader goal of carrying a fully cleaned-up balance sheet, common stock only, with no outstanding preferred stock, warrants, or convertible notes, by the time we complete a national exchange uplisting. We are encouraged by the reception we've received so far from the remaining debt holders on this conversion plan.

On the broader risk picture, we want to be candid rather than only present the optimistic case:

Base case, uplist completed on target timeline: Cash impact is manageable, as remaining notes convert to common stock either voluntarily or via the mandatory uplist-triggered conversion terms, avoiding any cash redemption. Dilution is bounded by the fully diluted share count discussed above (near 6 million shares), and operating runway benefits from improved access to capital markets and institutional investment once listed.

Delayed case, uplist takes longer than currently planned: We have already obtained waivers from remaining noteholders addressing timing, so a delay does not automatically trigger a cash maturity event. A longer timeline means continued operation under OTCQB constraints, limited liquidity and continued reliance on non-cash equity compensation rather than cash-funded growth. Noteholders retain their contractual conversion rights throughout any delay.

Failed-uplist case: While this is a possibility we take seriously, we are at such an early stage of the uplisting process that attempting to project specific cash, dilution, or runway impacts under a failure scenario would be premature and not particularly meaningful to shareholders. That said, we expect to have significantly more clarity within the next 120 days, and we will provide a more detailed risk assessment for this scenario at that time.