Creative Realities, Inc. (“Creative Realities,” “CRI,” or the
“Company”) (NASDAQ: CREX, CREXW), a leading provider of digital
signage and media solutions, announced its financial results for
the fourth quarter and fiscal year ended December 31, 2022.
Rick Mills, Chief Executive Officer, commented
“I am pleased to report that the Company generated record fourth
quarter revenue of $10.5 million in 2022, a $5.1 million, or 94%,
improvement over the same period in 2021. That brought the
Company’s full year revenue to $43.3 million, representing a $12.7
million, or 41%, annual increase over the pro forma combination of
Creative Realities and Reflect Systems, indicative of both organic
and strategic growth through the merger of the companies. The
Company’s run-rate on annual recurring revenue is also at a record
level of $14.8 million, well exceeding the $12.0 million run-rate
for the combined companies at the end of 2021 and the $14.5 million
run-rate reported as of the third quarter of this year. For fiscal
year 2022, revenue totaled a record $43.4 million, exceeding the
guidance that management previously provided. This is a $24.9
million (135%) increase over fiscal year 2021. Adjusted EBITDA for
2022 totaled $3.8 million, a record full-year number that also
exceeded guidance provided by management and represented a 215%
improvement over the same period in 2021. The Fiscal Year 2022
Adjusted EBITDA margin percentage of 8.8% is also a record for the
Company.
“We believe these results evidence the strength
of the platform created by the combination of Creative Realities
and Reflect Systems and demonstrate the Company’s considerable
potential to drive value for our shareholders. Our current client
base continues to expand, and the pipeline for potential new logos
and new clients has never been more robust,” stated Rick Mills, CEO
of Creative Realties. Mr. Mills continued, “In addition to
announcing record financial results for 2022, we have a number of
important announcements and updates to report, including several
new significant client acquisitions and client expansions, the
cumulative impact of which is transformational for the Company.
These will be discussed in detail on our scheduled call to discuss
earnings results on March 30, 2022.”
The Company is updating its 2023 full-year
revenue guidance from $54 million to an expected $60 million at a
projected Adjusted EBITDA margin percentage of 15% and an annual
recurring revenue of $17 million, each on an annualized exit
run-rate basis. The Company believes its current revenue backlog
from existing customer opportunities is up to $110 million, which
the Company anticipates it will realize over the next two to three
calendar years. “Given significant new client acquisition and
expanded existing client relationships, we believe we have a truly
extraordinary value creation story in the making,” stated Mr.
Mills. “Accordingly, we are committed to communicating the
financial underpinnings for our revenue and profit guidance.
Important new measures that we are communicating
to investors is our backlog revenue and backlog conversion to
subscription services (SaaS). Backlog is primarily related to
network deployments and project work but seeds ARR. They complement
each other in this regard to support the revenue generation
projections of the Company. Our backlog calculation is comprised of
the full rollout of projects that are anticipated by our current
customers under contract, and includes all revenues to be received
by the Company by deploying all of our products and services
necessary to service such projects, and includes projected revenues
that are not currently subject to binding purchase orders or firm
commitments.
In addition to announcements of material new
client engagements and existing client engagement expansion, we
will discuss the recent rejection of a go-private proposal by
Pegasus Capital Advisors, the reverse stock split effected on March
27, 2023 and other noteworthy events on the scheduled earnings
call.
2022 Financial Overview
Key Highlights:
- Revenue growth of $24.9 million, or
135%, or $12.7 million and 41% as compared to the pro forma
combined results of CRI and Reflect in the prior year.
- Expansion of endpoints deployed
utilizing our content management platforms, increasing our exit
run-rate in ARR to $14.8 million
- Net income of $1.9 million as
compared to net income of $0.2 million in 2021
- Adjusted EBITDA of $3.9 million as
compared to an Adjusted EBITDA of $1.2 million in 2021
Revenue, gross profit, and gross margin:
- Sales were $43.3 million for the
year ended December 31, 2022, an increase of $24.9 million , or
135%, as compared to the same period in 2021. The increase on a pro
forma consolidated basis was $12.7 million, or 41%
organically.
- Hardware revenues were $19.5
million for the year ended December 31, 2022, an increase of $10.0
million, or 105.2% as compared to the same period in 2021, driven
by large scale LED deployments during the year by multiple
customers, the launch of the Company’s digital drive-thru product,
and the acquisition of Reflect Systems, Inc. in February 2022.
Gross margin on hardware revenue was 16.5% during 2021 as compared
to 26.8% during 2021, with approximately 5% of the reduction driven
by the non-cash write-off of unsold Safe Space Solutions inventory
as the Company has exited the temperature scanning technology
market.
- Services and other revenues were
$23.5 million in 2022, an increase of $14.5 million, or 162%, as
compared to the same period in 2021. Managed services revenue,
which includes both SaaS and help desk technical subscription
services were $14.3 million for the year ended December 31, 2022 as
compared to $5.6 million for the year ended December 31, 2021,
which represents a year-over-year growth rate of 156% in our higher
margin, typically subscription-based, managed service revenue.
- Gross profit was $17.7 million for
the year ended December 31, 2022, an increase of $9.4 million, or
112.3%, compared to the same period in 2021. Consolidated gross
margin decreased to 40.9% for the year ended December 31, 2022 from
45.3% in the prior year, driven primarily by the non-cash write-off
of unsold Safe Space Solutions inventory, without which the
consolidated gross margin for 2022 would have been 43.2%.
Operating expenses:
- For the year ended December 31,
2022 as compared to the same period in the prior year:
- Sales and marketing expenses
generally include the salaries, taxes, and benefits of our sales
and marketing personnel, as well as trade show activities, travel,
and other related sales and marketing costs. Sales and marketing
expenses increased by $2.5 million, or 217%, for the year ended
December 31, 2022 as compared to the same period in 2021
driven primarily by (i) the inclusion in the prior year of a
benefit of $0.2 million related Employee Retention Credits (“ERC”)
related to the retention and payment of salaries to sales personnel
throughout 2020 and 2021, (ii) the acquisition of Reflect Systems,
Inc. (“Reflect”) via merger (the “Merger”) on February 17, 2022,
and (iii) the Company’s enhanced investments into sales and
marketing activities post-COVID-19 pandemic. Immediately following
the Merger, the Company integrated the sales and marketing
functions of the Company and Reflect and did not disaggregate
expenses between the two legacy companies. Following the Merger and
through integration activities, the Company adopted certain tools,
technology, and processes – particularly with respect to lead
generation and brand marketing – that the Company believes were
undercapitalized historically by the Company. Additionally, the
Company engaged an investor relations firm and has increased
investor relations activities, including conferences and
presentations. As a result, we expected the sales and marketing
expenses of the Company for the year ended December 31, 2022 to
adequately reflect the pace for spend in these areas in future
reporting periods.
- Research and development
expenses generally include personnel and development tools costs
associated with the continued development of the Company’s content
management systems and other related application development.
Research and development expenses increased by $0.7 million, or
127%, for the year ended December 31, 2022 as compared to the same
period in 2021, driven primarily by (i) the inclusion in the
prior year of a benefit of $0.2 million related ERC, and (ii) the
acquisition of Reflect via the Merger on February 17, 2022. Through
the Merger, we acquired a fully staffed, experienced software
development team and elected to keep that team in-tact,
particularly given employment market conditions with respect to
talented software engineers. We have integrated the pre-existing
CRI development team with the acquired team and have experienced
enhanced speed to market on new feature and functionality
development activities from increasing this resource pool. We
expect this elevated level of expense during the year ended
December 31, 2022 to continue into the future as we develop our
current and future product set.
- General and administrative expenses
increased $4.6 million , or 62%, driven primarily by (i) the
inclusion in the prior year of a benefit of $694 related to ERC,
(ii) a prior period cash recovery of $0.6 million related to a
customer bankruptcy for which the Company previously recorded a
reserve, and (iii) increased headcount and operations as a
result of the acquisition of Reflect on February 17, 2022. While
the Company anticipates carrying higher general and administrative
expenses moving forward as a result of the acquisition and
subsequent expansion in organic revenues, the Company continues to
execute integration activities (including but not limited to
consolidation of CMS tools, cloud hosting environments, IT tools,
and rightsizing leases for office space) that we expect will be
realized by the end of 2022 and into 2023.
Operating loss, net loss, and EBITDA:
- Operating loss was $2.4 million for
the year ended December 31, 2022 as compared to an operating loss
of $2.5 million during the same period in 2021. The operating loss
in each period included $0.5 million in costs associated with
pursuit of acquisition activities, including the Reflect Merger.
The operating loss, via general & administrative expenses, in
the current year included $1.7 million in non-cash employee
share-based compensation expense.
- Net income was $1.9 million for the
year ended December 31, 2022 as compared to net income of $0.2
million for the same period in 2021.
- Adjusted EBITDA was $3.8 million in
2022 as compared to Adjusted EBITDA of $1.2 million in 2021. See
the appendix for a description of these non-GAAP financial measures
and reconciliation to our net income.
Subsequent events:
- Secured Promisor
Note: On February 11, 2023, the Company executed an
amendment to the Secured Promissory Note which eliminated the
balloon payment of $1.25 million due in February 2023, extending
the maturity date for a one-year period, to February 17, 2024.
During the extended period, Creative Realities will continue to
make monthly principal payments of $0.1 million, 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.
- Reverse Stock
Split: Effective March 27, 2023, the Company effectuated a
one-for-three stock split of the shares of the Company's common
stock, par value $0.01 per share. The Company now has approximately
7.7 million shares outstanding.
Conference Call DetailsThe
Company will host a conference call to review the results of the
Company’s fourth quarter and year ended 2022, and provide
additional commentary about the Company’s recent performance and
the Reflect merger, on March 30, 2023 at 9:00 am Eastern Time.
Prior to the call, participants should register at
http://bit.ly/CRIearnings2022Q4. Once registered, participants can
use the dial-in information provided in the registration email to
listen to the Company’s prepared remarks and participate in the
live question and answer session. An archived edition of the
conference call will also be posted on our website at www.cri.com
later that same day and will remain available to interested parties
via the same link for one year.
About Creative Realities,
Inc.Creative Realities helps clients use place-based
digital media to achieve business objectives such as increased
revenue, enhanced customer experiences, and improved productivity.
The Company designs, develops and deploys digital signage
experiences for enterprise-level networks, and is actively
providing recurring SaaS and support services across diverse
vertical markets, including but not limited to retail, automotive,
digital-out-of-home (DOOH) advertising networks, convenience
stores, foodservice/QSR, gaming, theater, and stadium venues.
With its recent acquisition of Reflect Systems,
Inc., a leading provider of digital signage software platforms, the
Company is poised to extend its product and service offering and
accelerate growth in SaaS revenue. While Reflect provided a broad
range of digital signage solutions, Reflect’s flagship products are
the market-leading ReflectView digital signage platform and Reflect
AdLogic ad management platform. ReflectView is the industry’s most
comprehensive, scalable, enterprise-grade digital signage platform,
powering enterprise customer networks. Meanwhile, Reflect AdLogic
has become the benchmark for digital signage powered ad networks,
delivering nearly 50 million ads daily. The acquisition of Reflect
also brought to the Company a media sales division with the
expertise and relationships to help any digital signage venue owner
develop and execute a monetization plan for their network.
The combined company has operations across North
America with active installations in more than 10 countries.
Use of Non-GAAP
MeasuresCreative 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, our ability to remain listed on the Nasdaq
Capital Market, our ability to realize the revenues included in our
future guidance and backlog reports, 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.
Contact
Christina Daviescdavies@ideagrove.com
Investor
Relations:ir@cri.comhttps://investors.cri.com/
|
|
|
|
|
|
|
CREATIVE REALITIES, INC. |
CONSOLIDATED BALANCE SHEETS |
(in thousands, except per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,633 |
|
|
$ |
2,883 |
|
Accounts receivable, net of allowance for doubtful accounts of $984
and $620, respectively |
|
|
8,263 |
|
|
|
3,006 |
|
Unbilled receivables |
|
|
- |
|
|
|
369 |
|
Inventories, net |
|
|
2,267 |
|
|
|
1,880 |
|
Prepaids and other current assets |
|
|
1,819 |
|
|
|
1,634 |
|
Total current assets |
|
|
13,982 |
|
|
|
9,772 |
|
Property and equipment, net |
|
|
201 |
|
|
|
75 |
|
Operating lease right-of-use assets |
|
|
1,584 |
|
|
|
654 |
|
Intangibles, net |
|
|
23,752 |
|
|
|
4,850 |
|
Goodwill |
|
|
26,453 |
|
|
|
7,525 |
|
Other assets |
|
|
43 |
|
|
|
5 |
|
TOTAL ASSETS |
|
$ |
66,015 |
|
|
$ |
22,881 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,757 |
|
|
$ |
2,517 |
|
Accrued expenses |
|
|
3,828 |
|
|
|
2,110 |
|
Deferred revenues |
|
|
1,223 |
|
|
|
426 |
|
Customer deposits |
|
|
2,478 |
|
|
|
1,525 |
|
Current maturities of operating leases |
|
|
711 |
|
|
|
281 |
|
Short-term portion of Secured Promissory Note |
|
|
1,248 |
|
|
|
- |
|
Short-term portion of related party Consolidation Term Loan, net of
$745 and $0 discount, respectively |
|
|
1,251 |
|
|
|
- |
|
Short-term related party Term Loan (2022) |
|
|
2,000 |
|
|
|
- |
|
Total current liabilities |
|
|
16,496 |
|
|
|
6,859 |
|
Long-term Secured Promissory Note |
|
|
208 |
|
|
|
- |
|
Long-term related party Acquisition Term Loan, net of $1,484 and $0
discount, respectively |
|
|
8,516 |
|
|
|
- |
|
Long-term related party Consolidation Term Loan, net of $840 and $0
discount, respectively |
|
|
4,349 |
|
|
|
- |
|
Long-term related party loans payable, net of $0 and $143 discount,
respectively |
|
|
- |
|
|
|
4,624 |
|
Long-term related party convertible loans payable, at fair
value |
|
|
- |
|
|
|
2,251 |
|
Long-term obligations under operating leases |
|
|
873 |
|
|
|
373 |
|
Contingent acquisition consideration, at fair value |
|
|
9,789 |
|
|
|
- |
|
Other liabilities |
|
|
205 |
|
|
|
45 |
|
TOTAL LIABILITIES |
|
|
40,436 |
|
|
|
14,152 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Common stock, $0.01 par value, 66,666 shares authorized; 7,266 and
4,003 shares issued and outstanding, respectively |
|
|
218 |
|
|
|
120 |
|
Additional paid-in capital |
|
|
75,770 |
|
|
|
60,863 |
|
Accumulated deficit |
|
|
(50,409 |
) |
|
|
(52,254 |
) |
Total shareholders’
equity |
|
|
25,579 |
|
|
|
8,729 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
66,015 |
|
|
$ |
22,881 |
|
|
|
|
|
CREATIVE REALITIES, INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(in thousands, except per share amounts) |
(unaudited) |
|
|
|
|
|
|
For the Years Ended |
|
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
Sales |
|
|
|
|
|
|
|
|
Hardware |
|
$ |
19,895 |
|
|
$ |
9,450 |
|
Services and other |
|
|
23,455 |
|
|
|
8,987 |
|
Total sales |
|
|
43,350 |
|
|
|
18,437 |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
|
|
Hardware |
|
|
16,613 |
|
|
|
6,914 |
|
Services and other |
|
|
8,998 |
|
|
|
3,166 |
|
Total cost of sales |
|
|
25,611 |
|
|
|
10,080 |
|
Gross profit |
|
|
17,739 |
|
|
|
8,357 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
3,651 |
|
|
|
1,153 |
|
Research and development |
|
|
1,251 |
|
|
|
550 |
|
General and administrative |
|
|
11,892 |
|
|
|
7,321 |
|
Depreciation and amortization |
|
|
2,833 |
|
|
|
1,364 |
|
Deal and transaction costs |
|
|
592 |
|
|
|
518 |
|
Total operating expenses |
|
|
20,219 |
|
|
|
10,906 |
|
Operating loss |
|
|
(2,480 |
) |
|
|
(2,549 |
) |
|
|
|
|
|
|
|
|
|
Other income/(expenses): |
|
|
|
|
|
|
|
|
Interest expense, including amortization of debt discount |
|
|
(2,743 |
) |
|
|
(805 |
) |
Change in fair value of warrant liability |
|
|
7,902 |
|
|
|
- |
|
Change in fair value of equity guarantee |
|
|
1,074 |
|
|
|
- |
|
Gain on settlement of obligations |
|
|
(237 |
) |
|
|
3,449 |
|
Gain on fair value of debt |
|
|
- |
|
|
|
166 |
|
Loss on debt waiver consent |
|
|
(1,212 |
) |
|
|
- |
|
Loss on warrant amendment |
|
|
(345 |
) |
|
|
- |
|
Other income/(expense), net |
|
|
(4 |
) |
|
|
(7 |
) |
Total other income/(expense) |
|
|
4,435 |
|
|
|
2,803 |
|
Net income before income
taxes |
|
|
1,955 |
|
|
|
254 |
|
Income tax expense |
|
|
(79 |
) |
|
|
(22 |
) |
Net income |
|
$ |
1,876 |
|
|
$ |
232 |
|
Net income per common share - basic |
|
$ |
0.28 |
|
|
$ |
0.06 |
|
Net income per common share - diluted |
|
$ |
0.28 |
|
|
$ |
0.06 |
|
Weighted average shares
outstanding - basic |
|
|
6,664 |
|
|
|
3,920 |
|
Weighted average shares
outstanding - diluted |
|
|
6,664 |
|
|
|
3,920 |
|
|
|
|
|
CREATIVE REALITIES, INC. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(in thousands, except share per share
amounts) |
(unaudited) |
|
|
|
|
|
|
For the Years Ended |
|
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
Operating Activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,876 |
|
|
$ |
232 |
|
Adjustments to reconcile net
income to be used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
2,833 |
|
|
|
1,364 |
|
Amortization of debt
discount |
|
|
1,268 |
|
|
|
159 |
|
Stock-based compensation |
|
|
2,116 |
|
|
|
2,023 |
|
Change in excess/obsolete
inventory reserve |
|
|
1,275 |
|
|
|
409 |
|
Change in allowance for
doubtful accounts |
|
|
398 |
|
|
|
10 |
|
Employee retention and other
government credits |
|
|
- |
|
|
|
(785 |
) |
Increase in notes due to
in-kind interest |
|
|
- |
|
|
|
467 |
|
Non-cash receivables from
in-process projects |
|
|
- |
|
|
|
(369 |
) |
Non-cash application of
customer deposits to completed projects |
|
|
- |
|
|
|
(506 |
) |
Gain on forgiveness of
Paycheck Protection Program |
|
|
- |
|
|
|
(1,552 |
) |
Gain on settlement of Seller
Note |
|
|
- |
|
|
|
(1,538 |
) |
Loss/(Gain) on settlement of
obligations |
|
|
237 |
|
|
|
(359 |
) |
Changes in fair value of
Convertible Loan |
|
|
- |
|
|
|
(166 |
) |
Loss on debt waiver
consent |
|
|
1,212 |
|
|
|
- |
|
Loss on warrant amendment |
|
|
345 |
|
|
|
- |
|
Gain on change in fair value
of contingent consideration |
|
|
(1,074 |
) |
|
|
- |
|
Gain on change in fair value
of warrants |
|
|
(7,902 |
) |
|
|
- |
|
Changes to operating assets
and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable and unbilled receivables |
|
|
(3,927 |
) |
|
|
(673 |
) |
Inventories |
|
|
(1,472 |
) |
|
|
62 |
|
Prepaid expenses and other current assets |
|
|
480 |
|
|
|
(342 |
) |
Accounts payable and other current payables |
|
|
914 |
|
|
|
869 |
|
Deferred revenue |
|
|
(462 |
) |
|
|
(338 |
) |
Accrued expenses, net |
|
|
1,112 |
|
|
|
206 |
|
Customer deposits |
|
|
110 |
|
|
|
1,261 |
|
Other |
|
|
(47 |
) |
|
|
37 |
|
Net cash provided by / (used
in) operating activities |
|
|
(708 |
) |
|
|
471 |
|
Investing
activities |
|
|
|
|
|
|
|
|
Acquisition of business, net
of cash acquired |
|
|
(17,186 |
) |
|
|
- |
|
Purchases of property and
equipment |
|
|
(149 |
) |
|
|
(19 |
) |
Capitalization of internal and
external labor for software development |
|
|
(4,140 |
) |
|
|
(1,140 |
) |
Net cash used in investing
activities |
|
|
(21,475 |
) |
|
|
(1,159 |
) |
Financing
activities |
|
|
|
|
|
|
|
|
Principal payments on finance
leases |
|
|
- |
|
|
|
(4 |
) |
Proceeds from sale of common
stock in PIPE, net of offering expenses |
|
|
1,814 |
|
|
|
- |
|
Proceeds from sale &
exercise of pre-funded warrants in PIPE, net of offering
expenses |
|
|
8,295 |
|
|
|
- |
|
Proceeds from Acquisition Term
Loan, net of offering expenses |
|
|
9,868 |
|
|
|
- |
|
Proceeds from Term Loan
(2022) |
|
|
2,000 |
|
|
|
- |
|
Repayment of seller note |
|
|
(1,044 |
) |
|
|
(100 |
) |
Proceeds from common stock
issuance, net of issuance costs |
|
|
- |
|
|
|
1,849 |
|
Net cash provided by financing
activities |
|
|
20,933 |
|
|
|
1,745 |
|
Decrease in Cash and
Cash Equivalents |
|
|
(1,250 |
) |
|
|
1,057 |
|
Cash and Cash
Equivalents, beginning of year |
|
|
2,883 |
|
|
|
1,826 |
|
Cash and Cash
Equivalents, end of year |
|
$ |
1,633 |
|
|
$ |
2,883 |
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP NET LOSS TO
ADJUSTED EBITDA (in thousands,
unaudited)
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 non-GAAP
financial measures and should not be considered as a substitute for
net income (loss), operating income (loss) or any other performance
measure derived in accordance with United States generally accepted
accounting principles (“GAAP”) or as an alternative to net cash
provided by operating activities as a measure of CRI’s
profitability or liquidity. CRI’s management believes EBITDA and
Adjusted EBITDA are useful financial metrics because they allow
external users of CRI’s financial statements, such as industry
analysts, investors, lenders and rating agencies, to more
effectively evaluate CRI’s operating performance, compare the
results of its operations from period to period and against CRI’s
peers without regard to CRI’s financing methods, hedging positions
or capital structure and because it highlights trends in CRI’s
business that may not otherwise be apparent when relying solely on
GAAP measures. CRI also presents EBITDA and Adjusted EBITDA because
it believes EBITDA and Adjusted EBITDA are important supplemental
measures of its performance that are frequently used by others in
evaluating companies in its industry. Because EBITDA and Adjusted
EBITDA exclude some, but not all, items that affect net income
(loss) and may vary among companies, the EBITDA and Adjusted EBITDA
CRI presents may not be comparable to similarly titled measures of
other companies.
The following table presents a reconciliation of
EBITDA and Adjusted EBITDA from net loss, CRI’s most directly
comparable financial measure calculated and presented in accordance
with GAAP.
|
|
|
|
|
|
Quarters Ended |
|
|
|
Year Ended |
|
|
December31, |
|
|
September30, |
|
|
June 30, |
|
|
March 31, |
|
Quarters ended |
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
GAAP net income (loss) |
|
$ |
1,876 |
|
|
$ |
(1,334 |
) |
|
$ |
(554 |
) |
|
$ |
1,262 |
|
|
$ |
2,502 |
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt discount |
|
|
1,268 |
|
|
|
364 |
|
|
|
363 |
|
|
|
360 |
|
|
|
181 |
|
Other interest, net |
|
|
1,475 |
|
|
|
423 |
|
|
|
394 |
|
|
|
390 |
|
|
|
268 |
|
Depreciation/amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
2,702 |
|
|
|
743 |
|
|
|
848 |
|
|
|
431 |
|
|
|
680 |
|
Amortization of employee share-based awards |
|
|
1,689 |
|
|
|
448 |
|
|
|
456 |
|
|
|
316 |
|
|
|
469 |
|
Depreciation of property and equipment |
|
|
131 |
|
|
|
30 |
|
|
|
37 |
|
|
|
37 |
|
|
|
27 |
|
Income tax expense/(benefit) |
|
|
79 |
|
|
|
33 |
|
|
|
(10 |
) |
|
|
53 |
|
|
|
3 |
|
EBITDA |
|
$ |
9,220 |
|
|
$ |
707 |
|
|
$ |
1,534 |
|
|
$ |
2,849 |
|
|
$ |
4,130 |
|
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on fair value of warrant liability |
|
|
(7,902 |
) |
|
|
- |
|
|
|
- |
|
|
|
(2,433 |
) |
|
|
(5,469 |
) |
(Gain)/loss on settlement of obligations |
|
|
237 |
|
|
|
- |
|
|
|
(37 |
) |
|
|
(21 |
) |
|
|
295 |
|
Loss on debt waiver
consent |
|
|
1,212 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,212 |
|
Loss on warrant amendment |
|
|
345 |
|
|
|
- |
|
|
|
- |
|
|
|
345 |
|
|
|
- |
|
(Gain)/loss on fair value of equity guarantee |
|
|
(1,074 |
) |
|
|
(705 |
) |
|
|
(442 |
) |
|
|
73 |
|
|
|
- |
|
Disposal of Safe Space
Solutions inventory |
|
|
909 |
|
|
|
909 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Deal and transaction costs |
|
|
592 |
|
|
|
54 |
|
|
|
110 |
|
|
|
37 |
|
|
|
391 |
|
Other income |
|
|
4 |
|
|
|
7 |
|
|
|
2 |
|
|
|
1 |
|
|
|
(6 |
) |
Stock-based compensation – Director grants |
|
|
302 |
|
|
|
56 |
|
|
|
82 |
|
|
|
82 |
|
|
|
82 |
|
Adjusted EBITDA |
|
$ |
3,845 |
|
|
$ |
1,028 |
|
|
$ |
1,249 |
|
|
$ |
933 |
|
|
$ |
635 |
|
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