Creative Realities, Inc. (“Creative Realities,” “CRI,” or the
“Company”) (NASDAQ: CREX, CREXW), a leading provider of digital
signage solutions, announced that cash contingent consideration
issuable in conjunction with its acquisition of Reflect Systems,
Inc. (“Reflect”) via merger in 2022 has been reduced by
approximately $1,900,000.
On February 17, 2022, the parties consummated a
merger in which CRI issued to Reflect stockholders as of the
effective time of the merger, among other consideration, 2,333,334
shares of common stock of the Company (the “Shares”).
The holders of Shares are entitled to receive,
for each Share, a contingent cash payment on February 17, 2025
(subject to a possible extension) equal to the amount by which the
average closing price of CRI common stock for the prior 15 trading
days as reported on the Nasdaq Capital Market is less than $6.40
per share, or if certain conditions were met on or before December
31, 2022, less than $7.20 per share. CRI has determined that such
conditions were not met on or before December 31, 2022.
Accordingly, the continent cash payment amount has been reduced
from $7.20 per Share to $6.40 per Share, a reduction of $0.80 per
Share, or approximately $1.9 million. This reduction will be
reflected in the Company’s annual consolidated financial statements
to be filed on CRI’s Annual Report on Form 10-K in March 2023.
The final calculation of the contingent cash
payments will not be finalized until February 17, 2025 (subject to
a possible extension), and the Company believes that the total
amount of such payments will be further reduced, and possibly
eliminated, as CRI’s share price increases as investors will
ultimately recognize and acknowledge the value creation taking
place as general economic conditions improve and CRI continues to
report impressive financial results. The Company has reported
record revenue for the first, second and third quarters of 2022 and
re-affirmed guidance for $43 million in revenue for FY2022, which
is a record full year revenue and represents a 40% organic growth
rate. The Company recently conveyed additional revenue guidance of
$54 million for FY2023, which would constitute 25% incremental
organic growth rate, nearly twice the industry average. Management
projects these increased levels of revenue will drive 2023 results
to record Adjusted EBITDA at an improved Adjusted EBITDA margin
percentage. A reconciliation of the Company’s historical GAAP-basis
net income/(loss) to Adjusted EBITDA is provided in our earnings
releases and SEC filings on Form 10-Q and Form 10-K, and will
continue to be provided for future periods in which Adjusted EBITDA
is reported.
About Creative Realities,
Inc.Creative Realities helps clients use the latest
omnichannel technologies to inspire better customer experiences.
CRI designs, develops and deploys consumer experiences for high-end
enterprise-level networks, and is actively providing recurring SaaS
and support services across diverse vertical markets, including but
not limited to automotive, advertising networks, apparel &
accessories, convenience stores, food service/QSR, gaming, theater,
and stadium venues. The company has operations across North America
with active installations in more than 10 countries.
Use of Non-GAAP Measures
Creative Realities, Inc. prepares its consolidated financial
statements in accordance with United States generally accepted
accounting principles (“GAAP”). In addition to disclosing financial
results prepared in accordance with GAAP, the Company discloses
information regarding “EBITDA” and “Adjusted EBITDA.” CRI defines
“EBITDA” as earnings before interest, income taxes, depreciation
and amortization of intangibles. CRI defines “Adjusted EBITDA” as
EBITDA excluding stock-based compensation, fair value adjustments
and both cash and non-cash non-recurring gains and charges. EBITDA
and Adjusted EBITDA are not measures of performance defined in
accordance with GAAP. However, EBITDA and Adjusted EBITDA are used
internally in planning and evaluating the Company’s operating
performance. Accordingly, management believes that disclosure of
these metrics offers investors, bankers and other stakeholders an
additional view of the Company’s operations that, when coupled with
the GAAP results, provides a more complete understanding of the
Company’s financial results.
EBITDA and Adjusted EBITDA should not be
considered as an alternative to net income/(loss) or to net cash
used in operating activities as measures of operating results or
liquidity. Our calculation of EBITDA and Adjusted EBITDA may not be
comparable to similarly titled measures used by other companies,
and the measures exclude financial information that some may
consider important in evaluating the Company’s performance. A
reconciliation of GAAP net income/(loss) to EBITDA and Adjusted
EBITDA is included in the accompanying financial schedules.
For further information, please refer to
Creative Realities, Inc.’s filings available online at www.sec.gov,
including its Annual Report on Form 10-K filed with the Securities
and Exchange Commission on March 22, 2022.
Cautionary Note on Forward-Looking
Statements This press release contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, Section 21E of the Securities Exchange Act of
1934, as amended, and the Private Securities Litigation Reform Act
of 1995, and includes, among other things, discussions of our
business strategies, product releases, future operations and
capital resources. Words such as “estimates,” “projected,”
“expects,” “anticipates,” “forecasts,” “plans,” “intends,”
“believes,” “seeks,” “may,” “will,” “should,” “future,” “propose”
and variations of these words or similar expressions (or the
negative versions of such words or expressions) are intended to
identify forward-looking statements. Forward-looking statements are
not guarantees of future performance, conditions or results. They
are based on the opinions, estimates and beliefs of management as
of the date such statements are made, and they are subject to known
and unknown risks, uncertainties, assumptions and other factors,
many of which are outside of our control, that may cause the actual
results, level of activity, performance or achievements to be
materially different from those expressed or implied by such
forward-looking statements. Some of these risks are discussed in
the “Risk Factors” section contained in Item 1A of our Annual
Report on Form 10-K for the year ended December 31, 2021 and the
Company’s subsequent filings with the U.S. Securities and Exchange
Commission. Important factors, among others, that may affect actual
results or outcomes include: our ability to effectively integrate
Reflect’s business operations, our strategy for customer retention,
growth, product development, market position, financial results and
reserves, our ability to execute on our business plan, our ability
to retain key personnel, potential litigation, supply chain
shortages, and general economic and market conditions impacting
demand for our products and services, including those as a result
of the COVID-19 pandemic. Readers should not place undue reliance
upon any forward-looking statements. We assume no obligation to
update or revise the forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.
Contacts
Media Inquiries
Christina Daviescdavies@ideagrove.com
Investor
Relations:ir@cri.comhttps://investors.cri.com/
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