Creative Realities, Inc. (“Creative Realities,” “CRI,” or the
“Company”) (NASDAQ: CREX, CREXW), a leading provider of digital
engagement solutions, announced the amendment of its agreements
related to its previous acquisition of Reflect Systems, Inc.
(“Reflect”) via merger on February 17, 2022 (the “Merger”), which,
in part, extended the maturity date of the $2.5 million Secured
Promissory Note by one year, from February 17, 2023 to February 17,
2024.
Extension of Secured Promissory NoteOn February
11, 2023, Creative Realities and RSI Exit Corporation (the
“Stockholders’ Representative”) executed an amendment to the $2.5
million Secured Promissory Note (the “Note Amendment”). The
original terms of the note required the Company to pay to the
Stockholders’ Representative a balloon payment of $1.25 million,
plus all accrued and unpaid interest, on its stated maturity date,
February 17, 2023. The Note Amendment eliminated the balloon
payment, extending the maturity date for a one-year period, to
February 17, 2024. During the extended period, the Company will
continue to make monthly principal payments of $104,166.67, and the
annual interest rate on the outstanding principal increased from
0.59% to 4.60%, which will accrue and is payable in full on the new
maturity date.
Second Amendment to Merger AgreementOn February
11, 2023, Creative Realities and Stockholders’ Representative
executed a Second Amendment to the Merger Agreement, which provided
that, among other things, the cash merger consideration payable in
the Merger should be reduced by $0.2 million, or the “Claim
Amount,” subject to a reduction in the Claim Amount to the extent
that Reflect or Creative Realities receives payments of certain
accounts receivable of Reflect. An employer retention credit of
$0.2 million (the “ERC”) based on the operations of Reflect
pre-Merger remains outstanding and will be paid to the
Stockholders’ Representative for the benefit of former Reflect
stockholders upon receipt, subject to the offset rights of Creative
Realities described below.
Offset Rights; Payment of Claim AmountIn light
of the possible collection of the ERC and the Note Amendment, the
parties agreed that the Claim Amount would be reduced by the amount
of any ERC received by Creative Realities or Reflect prior to the
maturity date of the Secured Promissory Note. If the Claim Amount
exceeds the remaining amounts payable under the Secured Promissory
Note on any payment date, Creative Realities may reduce the amount
of the Secured Promissory Note, and the Claim Amount will be
reduced on a dollar-for-dollar basis.
Escrow AgreementIn light of the resolution of
the Claim Amount, the parties agreed to release $250,000 of
escrowed funds, plus interest, to the Stockholders’ Representative,
which was placed in escrow at the closing of the Merger. The
parties also amended an escrow agreement to extend the period for
which the escrow agent would accept monthly payments of the Secured
Promissory Note until the extended maturity date, February 17,
2024.
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.
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 InquiriesChristina
Daviescdavies@ideagrove.com
Investor
Relations:ir@cri.comhttps://investors.cri.com/
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