Creatd ($CRTD) January 2023 Shareholder Meeting featuring Chairman & CEO Jeremy Frommer
Video & transcript from Creatd ($CRTD) January 2023 Shareholder Meeting.
Good afternoon everyone. Thank you all for joining today's shareholder meeting from September to December, 2022. In less than a four month period, we eliminated a significant portion of our operating expenses, reduced debt and raised capital. We are stronger today than we were on September 2nd when I was notified that created would be delisted from the Nasdaq.
My attorney's words hurt like a pain that you don't want to get up from, but then you visualize all the carnage that comes along with you giving up. You dig so deep you didn't know that you had that depth. You bury any emotional obstacles and zero in on one singular idea survival. You cauterize the wound and move on as fast as you can.
There are too many people depending on you, investors, employees, vendors, clients, friends and family. In today's market environment, a CEO has no choice but to fight on a battlefront that was never intended to be their field of glory. The vast majority of CEOs in publicly traded companies are literally at war with the very same people they need to work with, and they are not armed with the right tools to win. This race against time to reach profitability has become a noose around the neck of entrepreneurs who in the last decade attempted to access the public markets to build a company.
Look at the charts. They speak for their sell for themselves. Data doesn't lie. The public markets, particularly the OTC and small cap Nasdaq, and the over 20,000 stocks that trade there were established to facilitate the American entrepreneurial dream. But that is not what it is morphed into today. A CEO of a publicly traded.
Requires an amazing team to run the day-to-day operations so that they can actually fight market headwinds and investigate technicals of the day-to-day movements of their stock. And while there are opportunities in this process to uncover nefarious enemies, it turns out the true problem is far more systemic.
Up until a decade ago, this systemic risk remained largely at the fringe, and I would even venture to assume that the larger institutions were aware of the problems, but lacked also the tools to combat them. In an age of technology, when demand began overwhelming supply, the machines that provide liquidity to the capital markets did not adapt to the monumental increase in demand for small cap and microcap stocks.
Without adjustment to the fundamental mechanism that fills electronic orders. In the 21st century, the machines were driven to create a supply to balance demand without recognition. From a risk perspective, it posed the following threat. Generally speaking, when stocks with micro to small market caps experience an increase in demand from retail investors.
It has the effect of abnormally expanding the shareholder base far above its authorized shares. A company can literally wind up with short positions in their underlying stock that far exceed the availability of the float. All of this is possible because the market making book and stock loan desks are just one of many businesses that answer up to institutional central books.
Think of the central book as the reconciliation point of all outstanding positions from all business divisions and portfolios associated with or in the institution. The central book includes things such as equity positions from convertible bond desks, retail desks, proprietary merger arbitrage books, let alone index arbitrage.
It includes any portfolio it is responsible for, and there are many. The central book reports net positions to regulators and SROs, a self-regulated organization. If the central book reports to regulators that it believes it can obtain a bonafide borrower on its short positions, then the regulators or SROs can and often do take the institution at its word.
Bear in mind how the ultimate report goes up to the regulator. It is a macro report, meaning the regulator sees billions and billions of shares summarize such that they understand as a broad nature where the institution is on a net basis and from a risk per. Meaning they see how many shares are short in totality, and does the institution believe it has a bonafide borrow for what it states that totality is.
It would require many people investigating on a much deeper level should they want to verify the full truth of that macro statement. And even then, this investigation is often only a sampling of transacations. This sampling authenticates the belief that the institution has a bonafide borrow. There are occasions that require the regulators to dig deeper and go through every individual position, but that is very rare.
At the root of all of this is a lack of transparency and a reliance on legacy platforms that actually no longer guarantee the safety of the retail investor. It took nearly a decade to see an increase in demand that has now led to short conditions in the markets that could potentially have a contagion effect that ultimately finds its way into the mid-cap and large cap space.
This would create the need for a reassessment of valuations within the stock market as a whole. Given what has been the creation of a synthetic depression of valuations. This synthetic depression should not have occurred under normal market trading circumstances. Algorithms should not have continued to fill retail orders irrespective of locates.
The regulators who for the most part do want fair and equitable market conditions are not unilaterally equipped to solve such a complex. To fix the problem would require an enormously expensive technology overhaul across the system, which could have a dramatic impact on liquidity in the market and create a systemic short squeeze that could damage the integrity of the financial institutions.
Diminish the wealth of the hedge fund elites and actually benefit the everyday retail investor.
Took us as a company the last six months to simply gain our footing and for me to find my voice. It does no good for me to review the machinations of arbitrary numbers, like $1 or net equity of 4 million, or other regulatory rules around shelves and baby shelves, et cetera, et cetera.
That feel like moving goalposts to all executives and leadership teams. The system is set up to disadvantage companies looking for financing by giving lenders the roadmap for the destruction of shareholder value. Algorithms do not care what a company does. They do not care how many employees you have.
Algorithms were built for one purpose to make money for financial institutions by figuring out how to approach trading on a purely statistical basis. And exploit an arbitrage. As such, shorts driven by algorithms, let alone nefarious players behind them, do not benefit the market as the idea of shorting was originally intended to do.
In fact, it has demonstrably shown that it has the opposite effect. Simply put, algorithms are taught to smell blood in the water. How is that good for any market? I heard rumors of systemic risks to the market years ago, but I did not believe it until I experienced it firsthand. To be clear, the risks posed to the market are akin to the opposite of a flash crash.
They could inflict damage on institutions that are short biased, that seem too big to. The financial sector is at a turning point, and so is our company Creatd. To that end, I want to reassure all of you that we will continue to work tirelessly to ensure that our stock is fairly traded. This battle is fought on multiple fronts, including the media, the political landscape, and within the regulatory environment.
We are a technology company. One that has a tremendous understanding of the power of data, and more importantly, how to apply it to achieve maximum gain. We will use our data, we will use our strength to identify and reach those who have the ability to to affect real change. Our team is determined to complete the spinoff of its subsidiary, media asset OG Collection, Inc. to created shareholders in Q1 2023. Personally, I am excited to see created list on an alternative blockchain exchange as early as January. We are continuing dialogue with GTII, Global Technologies Industry Group, as well as other interested parties. While we have created a lean operating machine, we have miles to go before we sleep and many battles to win along the way.
The next year of Creatd will be one of continued reduction in operational expenses and the stabilization of revenues, while we continue to face down whatever headwinds come our way. Finally, the next year of Creatd will be defined by uplisting our company to a national. And generating long-term value for our shareholders.
I would like to thank you all for listening today and look forward to taking your questions on Twitter and through other social media channels.
There are no comments for this story
Be the first to respond and start the conversation.