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Item 1. Business

2022-03-22 compared with 2021-03-10 · 298 added, 273 removed, 16 unchanged (97% of the section changed)

(All currency is rounded to the nearest

thousand, except share and per share amounts.)

ITEM 1 BUSINESS

currency is rounded to the nearest thousand, except share and per share amounts.)

Creative Realities, Inc.

is a Minnesota

corporation that provides innovative digital marketing technology solutions to a broad range of companies, individual brands, enterprises,

and organizations throughout the United States and in certain international markets.

We have expertise in a broad range of existing

and emerging digital marketing technologies across approximately 15 vertical markets, as well as the related media management and

distribution software platforms and networks, device and content management, product management, customized software service layers,

systems, experiences, workflows, and integrated solutions.

Our technology and solutions include:

digital merchandising systems

and omni-channel customer engagement systems;

content creation, production and scheduling programs and systems;

a comprehensive

series of recurring maintenance, support, and field service offerings;

interactive digital shopping assistants, advisors and kiosks;

and, other interactive marketing technologies such as mobile, social media, point-of-sale transactions, beaconing and web-based

media that enable our customers to transform how they engage with consumers.

Our main operations are conducted directly

through Creative Realities, Inc.

and our wholly owned subsidiary Creative Realities Canada, Inc., a Canadian corporation.

wholly owned subsidiaries are effectively dormant:

Creative Realities, LLC, a Delaware limited liability company, ConeXus World

Global, LLC, a Kentucky limited liability company, and Allure Global Solutions, Inc., a Georgia corporation.

We generate revenue by:

consulting with our customers to determine the technologies and solutions required to achieve their specific goals, strategies, and objectives;

designing our customers’

digital marketing experiences, content, and interfaces;

engineering the systems architecture delivering the digital marketing experiences we design –

both software and hardware –

and integrating those systems into a customized, reliable, and effective digital marketing experience;

managing the efficient, timely and cost-effective deployment of our digital marketing technology solutions for our customers;

delivering and updating the content of our digital marketing technology solutions using a suite of advanced media, content, and network management software products;

maintaining our customers’

digital marketing technology solutions by:

providing content production and related services;

creating additional software-based features and functionality;

hosting the solutions;

monitoring solution service levels;

and responding to and/or managing remote or onsite field service maintenance, troubleshooting and support calls.

These activities generate revenue through

bundled-solution sales;

consulting services, experience design, content development and production, software development, engineering,

implementation, and field services;

software subscription license fees;

and maintenance and support services related to our software,

managed systems and solutions.

We currently market and sell our technology

and solutions primarily through our sales and business development personnel, but we also utilize agents, strategic partners, and

lead generators who provide us with access to additional sales, business development and licensing opportunities.

Our digital marketing technology solutions

have application in a wide variety of industries.

The industries in which we sell our solutions are established and include

automotive, apparel & accessories, banking, baby/children, beauty, CPG, department stores, digital out-of-home (“DOOH”),

electronics, fashion, fitness, foodservice/quick service restaurant (“QSR”), financial services, gaming, luxury, mass

merchants, mobile operators, and pharmacy retail;

however, the planning, development, implementation and maintenance of technology-enabled

experiences involving combinations of digital marketing technologies is relatively new and evolving.

Moreover, a number of

participants in these industries have only recently started considering or expanding the adoption of these types of technologies,

solutions and experiences as part of their overall marketing strategies.

As a result, we remain without an established history

of profitability.

We believe that the adoption and evolution

of digital marketing technology solutions will increase substantially in years to come in the industries in which we currently

focus and in others;

however, adoption has not yet accelerated to the extent we expected, in part due to delays in capital expenditures

from our current and potential customer base as a result of the COVID-19 pandemic.

We also believe that adoption of our solutions

depends not only upon the services and solutions that we provide but also upon the cost of hardware used to process and display

While the costs of hardware configurations and software media players have historically decreased and we believe they

will continue to do so at an accelerating rate, flat panel displays and players typically constitute a large portion of the expenditure

customers make relative to the entire cost of implementing a digital marketing system implementation and can be a barrier to customer

As a result, we believe that the broader adoption of digital marketing technology solutions is likely to increase,

although we cannot predict the rate at which such adoption will occur.

Another key component of our business strategy,

given the evolving dynamics of the industry in which we operate, is to acquire and integrate other operating companies in the industry

in conjunction with pursuing our organic growth objectives.

We believe that the selective acquisition and successful integration

of certain companies will:

(“Creative Realities”,

or the “Company”) provides digital solutions to enhance communications in a wide-ranging variety of out-of-home environments

by providing innovative digital signage solutions for key market segments and use cases, including:

● Entertainment and Sports Venues

● Restaurants, including quick-serve restaurants (“QSR”)

● Convenience Stores

● Financial Services

● Medical and Healthcare Facilities

● Mixed Use Developments

● Corporate Communications, Employee Experience

● Digital out of Home (DOOH) Advertising Networks

We serve market-leading companies, so there is

a good chance that if you leave your home today to shop, work, eat or play, you will encounter one or more of our digital signage experiences.

Our solutions are increasingly visible because we help our enterprise clients achieve a wide range of business objectives including:

● Increased brand awareness/engagement

● Improved customer support

● Enhanced employee productivity and satisfaction

● Increased revenue and profitability

● Improved guest experience

● Increased customer/guest engagement

● Improved patient outcomes

Through a combination of organically grown platforms

and a series of strategic acquisitions, including our recent acquisition of Reflect Systems, Inc.

in February 2022, the Company assists

clients to design, deploy, manage, and monetize their digital signage networks.

The Company sources leads and opportunities for its solutions

through its digital and content marketing initiatives, close relationships with key industry partners, equipment manufacturers, and the

direct efforts of its in-house industry sales experts.

Client engagements focus on consultative conversations that ensure the Company’s

solutions are positioned to help clients achieve their business objectives in the most cost-effective manner possible.

When comparing Creative Realities to other digital

signage competitors, our customers value the following competitive advantages:

Breadth of solutions – Creative Realities offers true solutions to our clients.

Creative Realities is one of only a few companies in the industry capable of providing the full portfolio of products and services required to implement and run an effective digital signage network.

We leverage a ‘single vendor’ approach, providing clients with a one-stop-shop for sourcing digital signage solutions from design through day two services.

Managed labor pool – Unlike most companies in our industry, we have a curated labor pool including thousands of qualified and vetted field technicians available to service clients quickly nationwide.

We can meet tight schedules even in exceptionally large deployments and still ensure quality and consistency.

In-house creative resources – We assist clients in creating new content or repurposing existing content for digital signage experiences, an activity for which the Company has won several design awards in recent years.

In each instance, our services can be essential in helping clients develop an effective content program.

Network scalability and reliability – Our software as a service (“SaaS”) content management platforms power some of the largest and most complex digital signage networks in North America evidencing our ability to manage enterprise scale projects.

This also provides us purchasing power to source products and services for our customers, enabling us to deliver cost effective, reliable and powerful solutions to small and medium size business clients.

Ad management platform – Our customers are increasingly interested in monetizing their digital signage networks through advertising content.

However, efficiently scheduling advertising content into digital signage playlists to meet campaign objectives can be a challenging and labor-intensive process.

AdLogic, our home-grown, content management-agnostic platform, automates this process, allowing network owners to capture more revenue with less expense.

Media sales – Few, if any other digital signage solution providers, can offer their clients media sales as a service.

We have in-house media sales expertise to elevate conversations with our clients interested in better understanding network monetization.

We believe this meaningful differentiation in the sales process provides an additional revenue stream to Creative Realities compared to our competitors.

Market sector expertise – Creative Realities has in-house experts in key market segments such as automotive, retail, quick-serve restaurants (QSR), convenience stores, and Digital Out of Home (DOOH) advertising.

Our expertise in these business segments enables our teams to provide meaningful business conversations and offer tailored solutions with prospects and customers to their unique business objectives.

These experts build industry relationship and create thought leadership that drives lead flow and new opportunities for our business.

Logistics – Implementing a large digital signage project can be a logistics nightmare that can stall an initiative even before deployment.

Our expertise in logistics improves deployment efficiency, reduces delays and problems, and saves customers time and money.

Technical support – Digital signage networks present unique challenges for corporate IT departments.

Creative Realities helps simplify and improve end user support by leveraging our own Network Operations Center (“NOC”) in Louisville Kentucky.

The NOC resolves many issues remotely and when field support is required, it can be dispatched quickly from the NOC, leveraging our managed labor pool to resolve customer issues quickly and effectively.

Integrations and Application Development – The future of digital signage is not still images and videos on a screen.

Interactive applications and integrations with other data sources will dominate the future.

From social media feeds, mobile integrations, corporate data stores, or Point of Sale (“POS”) systems, our proven ability to build scalable applications and integrations is a key advantage clients can leverage to deliver more compelling and engaging experiences for their customers.

Hardware support – A number of digital signage providers sell a proprietary media player or align themselves with just one operating system.

We utilize a range of media players including Windows, Android and BrightSign to provide clients the flexibility they need to select the appropriate hardware for any application knowing the entire network can still be served by a single digital signage platform, reducing complexity and improving the productivity of their teams.

The three primary sources of revenue for the company are:

● Hardware sales from reselling digital signage hardware from

original equipment manufacturers such as Samsung and BrightSign.

● Services revenue from helping customers design, deploy and

manage their digital signage network, including:

o Hardware system design/engineering

o Hardware installation

o Content development

o Content scheduling

o Post-deployment network and field support

o Media sales, as a result of our acquisition of Reflect

● Recurring subscription licensing and support revenue from

our digital signage software platforms, which are generally sold via a SaaS model.

These include:

o ReflectView , the Company’s core digital signage

platform for most applications, scalable and cost effective from 10 to 100,000+ devices

o Reflect Xperience , a web-based interface that allows

customers to give content scheduling access to local users via the web or mobile devices, while still maintaining centralized programming

o Reflect AdLogic , the Company’s ad management

platform for digital signage networks, which presently delivers approximately 50 million ads daily

o Reflect Clarity , the Company’s menu board solution,

which has become a market leader for a range of restaurant and convenience store applications

o Reflect Zero Touch , which allows customers to turn

any screen into an interactive experience by allowing guests to engage using their mobile device

o iShowroomProX , an omni-channel digital sales support

platform targeted at original equipment manufacturers in the transportation sector, which integrates with dozens of key data services

including dealer inventory at the VIN level

o OSx+ , a digital VIN-level checklist used to assist

in the tracking and delivery of new vehicles in the transportation sector, providing measurable lift in customer satisfaction scores and

connected vehicle enrollments and subscription activations.

While hardware sales and support services revenues

can fluctuate more significantly year over year based on new, large-scale network deployments, the Company expects to see continuous growth

in recurring SaaS revenue for the foreseeable future as digital signage adoption/utilization continues to expand across the vertical markets

We believe that the adoption and evolution of our

digital signage technology solutions will increase substantially in years to come in the industries in which we currently focus and in

however it has been delayed in recent years.

First, our current and potential customer base reduced capital expenditures as a

result of the COVID-19 pandemic, including capital expenditures that would be used to implement digital technology solutions.

of hardware configurations and software media players used to process and display content have also increased recently.

Throughout 2021,

we faced significant supply chain challenges which limited the availability of each of these components to our sold solutions and expect

the availability of those products to continue to face supply constraints at least through the first half of 2022.

Nevertheless, we believe

that the costs of such hardware will decrease over time as it has done so historically, and will do so at an accelerating rate.

displays and players typically constitute a large portion of the expenditure customers make relative to the entire cost of implementing

a digital marketing system implementation and can be a barrier to customer deployment.

As a result, we believe that the broader adoption

of digital marketing technology solutions is likely to increase, although we cannot predict the rate at which such adoption will occur.

key component of our business strategy, given the evolving dynamics of the industry in which we operate, is to acquire and integrate

other operating companies in the industry in conjunction with pursuing our organic growth objectives.

We believe that the selective acquisition

and successful integration of certain companies will:

accelerate our growth in targeted vertical and operating markets;

enable us to cost-effectively aggregate

multiple customer bases onto a single business and technology platform;

provide us with greater operating scale on a consolidated

cost-effectively aggregate multiple customer bases onto a single business and technology platform;

provide us with greater operating

scale on a consolidated basis;

enable us to leverage a common set of processes and tools, and cost efficiencies company-wide;

and ultimately result in

higher operating profitability and cash flow from operations.

Our management team evaluates acquisition opportunities on an ongoing

and ultimately

result in higher operating profitability and cash flow from operations.

Our management team evaluates acquisition opportunities on an

ongoing basis.

Our management team and Board of Directors have broad experience with the execution, integration, and financing of acquisitions.

We believe that the COVID-19 pandemic has adversely affected our smaller competitors, and as a result, there may exist acquisition

opportunities in the future.We also believe that, based on the foregoing, we can successfully serve as a consolidator of multiple

business and technology platforms serving similar markets.

In addition to our historical product offerings

and solutions, in April 2020, we announced the joint launch of an AI-integrated non-contact temperature inspection kiosk known

as the “Thermal Mirror”

with our partner, InReality, LLC for use by businesses as COVID-19 related workplace restrictions

are reduced or eliminated.

The Thermal Mirror involves the development, marketing and sale of a new product to new customers involving

a joint effort with InReality compared to our historical products and services.

The product also uses hardware and technologies

that have not been used with our other customers.

Throughout 2020, the Company and InReality continued to develop incremental use

cases and subsequently launched a suite of Safe Space Solutions products addressing this market, each of which operate consistently

with our primary business model in that they represent a sale of hardware and a SaaS-based subscription license services contract.

You may read and copy any materials we file

with the SEC at the SEC’s public reference room at 100 F Street NE, Washington, DC 20549.

The public may obtain information

about the operation of the public reference room by calling the SEC at 1-800-SEC-0330.

The SEC also maintains an Internet site

that contains reports, proxy and information statements, and other information regarding issuers that file electronically with

The website of the SEC is www.sec.gov .

Additional information about the Company and its public disclosures

is available on our website at www.cri.com.

Corporate Organization

Our principal offices are located at 13100

Magisterial Drive, Ste 100, Louisville, Kentucky 40223, and our telephone number at that office is (502) 791-8800.

We originally incorporated and organized

as a Minnesota corporation under the name “Wireless Ronin Technologies, Inc.”

in March 2003.

Our business initially

focused on the provision of expertise in digital media marketing solutions to customers, including digital signage, interactive

kiosks, mobile, social media and web-based media solutions.

We acquired the assets and business of Broadcast International, Inc.,

a Utah corporation and public registrant, through a merger transaction that was effective as of August 1, 2014.

Then on August

20, 2014, we consummated a merger transaction with Creative Realities, LLC, a privately owned Delaware limited liability company,

in which we issued a majority of our issued and outstanding shares of common stock.

In that merger transaction, we acquired the

interactive marketing technology business of Creative Realities that we currently operate.

Shortly after that merger, we changed

our corporate name from “Wireless Ronin Technologies, Inc.”

to “Creative Realities, Inc.”

On October 15,

2015, we acquired the assets and business of ConeXus World Global, LLC, a privately-owned Kentucky limited liability company for

which we issued preferred and common stock.

In that merger transaction, we acquired the systems integration and marketing technology

business of ConeXus World that we currently operate.

On May 23, 2016, we dissolved Broadcast International, Inc.

On November 20,

2018, we acquired Allure Global Solutions, Inc.

(“Allure”), an enterprise software development company (as further

described below).

Business Strategy

We believe that our existing business model

is highly scalable and can be expanded successfully as we continue to grow organically and integrate our recent merger transactions,

acquire and integrate other companies which operate directly in our target markets, strengthen our operational practices and procedures,

further streamline our administrative office functions, and continue to capitalize on various marketing programs and activities.

Industry Background

We believe that the COVID-19 pandemic has adversely affected our smaller competitors, and as a result, there may exist acquisition opportunities

in the future.

We also believe that, based on the foregoing, we can successfully serve as a consolidator of multiple business and technology

platforms serving similar markets.

part of our acquisition strategy, we acquired Allure in 2018, and in February 2022, we consummated our acquisition of Reflect.

Acquisition of Reflect

On November 12, 2021, the Company and Reflect Systems,

Inc., or “Reflect,” entered into an Agreement and Plan of Merger (as amended on February 8, 2022, the “Merger Agreement”)

pursuant to which a direct, wholly owned subsidiary of Creative Realities, CRI Acquisition Corporation, or “Merger Sub”, merged

with and into Reflect, with Reflect surviving as a wholly owned subsidiary of Creative Realities, , which transaction is referred to herein

as the “Merger.” On February 17, 2022, the parties consummated the Merger.

Reflect provides digital

signage solutions, including software, strategic and media services to a wide range of companies across the retail, financial, hospitality

and entertainment, healthcare, and employee communications industries in North America.

Reflect offers digital signage platforms, including

ReflectView, a platform used by companies to power hundreds of thousands of active digital displays.

Through its strategic services, Reflect

assists its customers with designing, deploying and optimizing their digital signage networks, and through its media services, Reflect

assists customers with monetizing their digital advertising networks.

Subject to the terms and

conditions of the Merger Agreement, upon the closing of the Merger, Reflect stockholders as of the effective time of the Merger collectively

received from the Company, in the aggregate, the following Merger consideration:

(i) $16,166 payable in cash, (ii) 2,333,334 shares of

common stock of Creative Realities (valued based on an issuance price of $2 per share) (the “CREX Shares”), (iii) the Secured

Promissory Note (as described below), and (iv) supplemental cash payments (the “Guaranteed Consideration”), if any, payable

on or after the three-year anniversary of the effective time of the Merger (subject to the Extension Option described below, the “Guarantee

Date”), in an amount by which the value of the CREX Shares on such anniversary is less than $6.40 per share, or if certain customers

of Reflect collectively achieve over 85,000 billable devices online at any time on or before December 31, 2022, is less than $7.20 per

share (such applicable amount, the “Guaranteed Price”), multiplied by the amount of CREX Shares held by the Reflect stockholders

on the Guarantee Date (subject to the Extension Option described below), subject to the terms of the Merger Agreement.

Creative Realities may exercise an extension option

(the “Extension Option”) to extend the Guarantee Date from the three-year anniversary of the Closing Date to six (6) months

thereafter if (i) the Extension Threshold Price is greater than or equal to 70% of the Guaranteed Price described above, and (ii) Creative

Realities provides written notice of its election to exercise the Extension Option at least ten (10) days prior to the three-year anniversary

of the Closing.

The “Extension Threshold Price” means the average closing price per share of Creative Realities Shares as

reported on the Nasdaq Capital Market (or NYSE) in the fifteen (15) consecutive trading day period ending fifteen (15) days prior to the

three-year anniversary of the Closing Date.

If the Extension Threshold Price is less than 80% of the Guaranteed Price, then the Guaranteed

Price will be increased by $1.00 per share.

We believe that our existing business model is

highly scalable and can be expanded successfully as we continue to grow organically and integrate operations with Reflect as a result

of the Merger, acquire and integrate other companies in our target markets, strengthen our operational practices and procedures, further

streamline our administrative office functions, and continue to capitalize on various marketing programs and activities.

We believe certain digital marketing technology

industry trends are creating the opportunity for retailers, brands, venue-operators, enterprises, non-profits and other organizations

to create innovative shopping, marketing, and informational experiences for their customers and other stakeholders in various venues

to create innovative shopping, marketing, and informational experiences for their customers and other stakeholders in various venues worldwide.

These trends include:

(i) the expectations of technology-savvy consumers;

(ii) addressing on-line competitors by improving

physical experiences;

(iii) accelerating decline in the cost of hardware configurations (primarily flat panel displays) and software

media players;

(iv) the continued evolution of mobile, social, software and hardware technologies, applications and tools;

increasing sophistication of social networking platforms;

(vi) increasingly complex customer requirements related to their specific

digital marketing technology and solution objectives;

and (vii) customers challenging service providers with the delivery of a

satisfactory consumer experience with the traditional pressure on reducing installation and ongoing operating costs.

As a result, a growing number of retailers,

brands, venue-operators and other organizations have identified the need and opportunity to implement increasingly cost-effective

and “sales-lifting”

digital marketing, and interactive experiences to market to their customers.

These experiences

include creating unique and customized experiences for targeted, timely offerings and relevant promotions;

improving engagement

resulting in increased sales;

(ii) addressing on-line competitors by improving physical experiences;

(iii) a decline in the cost of hardware configurations (primarily flat panel displays) and software media players;

(iv) the continued

evolution of mobile, social, software and hardware technologies, applications and tools;

(v) increasing sophistication of social networking

(vi) increasingly complex customer requirements related to their specific digital marketing technology and solution objectives;

and (vii) customers challenging service providers with the delivery of a satisfactory consumer experience with the traditional pressure

on reducing installation and ongoing operating costs.

a result, a growing number of retailers, brands, venue-operators and other organizations have identified the need and opportunity to

implement increasingly cost-effective and “sales-lifting” digital marketing, and interactive experiences to market to their

These experiences include creating unique and customized experiences for targeted, timely offerings and relevant promotions;

improving engagement resulting in increased sales;

and increasing shopping basket size.

We believe our clients consider capitalizing on these industry

trends to be increasingly critical to any successful “store of the future”

retail and brand sales environment, especially

where sales staff turnover is high, training outcomes are inconsistent and product knowledge is low.

Companies are accomplishing their strategies

by implementing various digital marketing technology solutions, which:

are implemented in multiple forms and types of configurations

and locations;

attempt to achieve any of a broad range of individual or combination of objectives;

We believe our clients consider capitalizing

on these industry trends to be increasingly critical to any successful “store of the future” retail and brand sales environment,

especially where sales staff turnover is high, training outcomes are inconsistent and product knowledge is low.

Companies are implementing various digital marketing

technology solutions, which:

are implemented in multiple forms and types of configurations and locations;

attempt to achieve any of a

broad range of individual or combination of objectives;

contain various levels of targeting;

have the ability to instantly manage single or multiple locations remotely from a customer’s desktop or other connected device

at each location;

and are built to deliver or contain a standard or customized experience unique to and within the customer’s

Examples of such solutions include:

Digital Merchandising Systems, which aim to inform and interact with customers through various types of content in an integrated experience, improve in-store customer experiences and increase overall sales, upsells, and/or cross-sales;

Digital Sales Assistants, which aim to replace or augment existing sales resources and the level of interactive and informational sales assistance inside the store;

Digital Way-Finders, which aim to help customers navigate their way around individual retail stores and multi-store locations or venues, or within individual brand categories;

Digital Kiosks, which aim to provide data, specialized

and customized broadcasts, promotional information and coupons, train, and other forms of information and interaction with customers

in a variety of deployment forms, types, configurations and experiences;

Digital Menu-Board Systems, which aim to enable various types of restaurant operators the ability to remotely and on a scheduled basis, update and modify menu information, promotions, and other forms of content dynamically;

Dynamic Digital Signage which aims to deliver and manage in-store marketing and advertising campaigns, specialized and customized broadcasts, and various other forms of messaging targeting customers in a particular experience or environment.

We currently market and sell our marketing

technology solutions through our direct sales force, inside sales team, and word-of-mouth referrals from existing customers.

strategic partnerships and lead generation programs also drive business to the Company through targeted business development initiatives.

We market to companies that seek digital marketing solutions across multiple connected devices and who specifically seek or could

benefit from enhancements to the customer experience offered in their stores, venues, brands or organizations.

In addition to our

direct sales force, we market our Safe Space Solutions suite of products through a network of distribution and reseller partners

through which we have expanded our market presence and reach.

have the ability to instantly manage single

or multiple locations remotely from a customer’s desktop or other connected device at each location;

and are built to deliver or

contain a standard or customized customer experience unique to and within the customer’s environment.

Examples of such solutions

Merchandising Systems, which aim to inform and interact with customers through various types of content in an integrated experience,

improve in-store customer experiences and increase overall sales, upsells, and/or cross-sales;

Sales Assistants, which aim to replace or augment existing sales resources and the level of interactive and informational sales assistance

inside the store;

Way-Finders, which aim to help customers navigate their way around individual retail stores and multi-store locations or venues,

or within individual brand categories;

Kiosks, which aim to provide data, specialized and customized broadcasts, promotional information and coupons, train, and other forms

of information and interaction with customers in a variety of deployment forms, types, configurations and experiences;

Menu-Board Systems, which aim to enable various types of restaurant operators the ability to remotely and on a scheduled basis, update

and modify menu information, promotions, and other forms of content dynamically;

Digital Signage, including Advertising Networks, which aim to deliver and manage in-store marketing and advertising campaigns, specialized

and customized broadcasts, and various other forms of messaging targeting customers in a particular experience or environment.

currently market and sell our marketing technology solutions through our direct sales force, inside sales team, and word-of-mouth referrals

from existing customers.

Select strategic partnerships and lead generation programs also drive business to the Company through targeted

business development initiatives.

We market to companies that seek digital marketing solutions across multiple connected devices and

who specifically seek or could benefit from enhancements to the customer experience offered in their stores, venues, brands or organizations.

In addition to our direct sales force, we market our Safe Space Solutions suite of products through a network of distribution and reseller

partners through which we have expanded our market presence and reach.

Distributors operate on either a consignment or direct drop ship

approach and no revenue is recognized until a sale is made and product is delivered.

Our digital marketing technology solutions

have application in a wide variety of industries.

The industries in which we sell our solutions are established and include

automotive, apparel & accessories, banking, baby/children, beauty, CPG, department stores, digital out-of-home (“DOOH”),

electronics, fashion, fitness, foodservice/quick service restaurant (“QSR”), financial services, gaming, luxury, mass

merchants, mobile operators, and pharmacy retail;

however, the planning, development, implementation and maintenance of technology-enabled

experiences involving combinations of digital marketing technologies is relatively new and evolving.

Moreover, a number of

participants in these industries have only recently started considering or expanding the adoption of these types of technologies,

digital marketing technology solutions have application in a wide variety of industries.

The industries in which we sell our solutions

are established and include automotive, apparel & accessories, banking, baby/children, beauty, CPG, department stores, digital out-of-home

(“DOOH”), electronics, fashion, fitness, foodservice/quick service restaurant (“QSR”), financial services, gaming,

luxury, mass merchants, mobile operators, and pharmacy retail;

however, the planning, development, implementation and maintenance of

technology-enabled experiences involving combinations of digital marketing technologies are relatively new and evolving.

a number of participants in these industries have only recently started considering or expanding the adoption of these types of technologies,

solutions and experiences as part of their overall marketing strategies.

A portion of our customer activity is influenced

by seasonal effects related to traditional end of calendar year peak retail sales periods, traditional spring stadium/venue opening

seasons, and certain other factors that arise from our target customer base.

Nevertheless, our revenues can be materially affected

by the launch of new markets, the timing of production rollouts, and other factors, any of which have the ability to reduce or

outweigh certain seasonal effects.

Effect of General Economic Conditions

on our Business

We believe that demand for our services

will increase in part because of new construction and remodeling activities of pre-existing retail, convenience store, stadium

and event venues.

While we do see reductions in retail footprints across the U.S., we see a continued focus on integration of digital

into the retail marketplace and a focus on digital refreshes within the retail space to stay relevant in an evolving e-commerce

Recent general economic improvements generally make it easier for our customers to justify decisions to invest in

digital marketing technology solutions.

portion of our customer activity is influenced by seasonal effects related to traditional end of calendar year peak retail sales periods,

traditional spring stadium/venue opening seasons, and certain other factors that arise from our target customer base.

Nevertheless, our

revenues can be materially affected by the launch of new markets, the timing of production rollouts, and other factors, any of which

have the ability to reduce or outweigh certain seasonal effects.

of General Economic Conditions on our Business

We believe that demand for our services will increase

in the future in part because of new construction and remodeling activities of pre-existing retail, convenience store, stadium and event

While we do see reductions in retail footprints across the U.S., we see a continued focus on integration of digital into the retail

marketplace and a focus on digital refreshes within the retail space to stay relevant in an evolving e-commerce marketplace.

Recent general

economic improvements generally make it easier for our customers to justify decisions to invest in digital marketing technology solutions.

A change in the macroeconomic trend in the U.S.

could have a negative impact on our customers’

ability and/or willingness to advance their digital initiatives.

We are subject to regulation by various

federal and state governmental agencies.

Such regulation includes radio frequency emission regulatory activities of the U.S.

Communications Commission, the consumer protection laws of the U.S.

Federal Trade Commission, product safety regulatory activities

Consumer Product Safety Commission, and environmental regulation in areas in which we conduct business.

hardware components that we supply to customers may contain hazardous or regulated substances, such as lead.

A number of U.S.

have adopted or are considering “takeback”

bills addressing the disposal of electronic waste, including CRT style and

flat panel monitors and computers.

could have a negative impact on our customers’ ability and/or willingness to advance

their digital initiatives.

Effect of Supply Chain Constraints

A key component of our business includes the sale

of digital media players and digital displays supplied by third parties, each of which require semiconductors to complete the manufacturing

Throughout 2021, we experienced disruptions and delays related to fulfillment of inventory purchases from vendors, which represent

the key components to our digital signage solutions, because of a global shortage of semiconductor chips.

In instances in which inventory

was available, we experienced delays in transportation of these goods from manufacturers to the Company, and in delivery of our solutions

to our customers.

We expect the availability of these products to continue to face supply constraints at least through the first half

are subject to regulation by various federal and state governmental agencies.

Such regulation includes radio frequency emission regulatory

activities of the U.S.

Federal Communications Commission, the consumer protection laws of the U.S.

Federal Trade Commission, product

safety regulatory activities of the U.S.

Consumer Product Safety Commission, and environmental regulation in areas in which we conduct

Some of the hardware components that we supply to customers may contain hazardous or regulated substances, such as lead.

number of U.S.

states have adopted or are considering “takeback” bills addressing the disposal of electronic waste, including

CRT style and flat panel monitors and computers.

Electronic waste legislation is developing.

Some of the bills passed or under consideration

may impose on us, or on our customers or suppliers, requirements for disposal of systems we sell and the payment of additional

fees to pay costs of disposal and recycling.

Presently, we do not believe that any such legislation or proposed legislation will

have a materially adverse impact on our business.

Our Thermal Mirror and other Safe Space

Solutions products are utilized by employers, in part, to evaluate the temperature of their respective employees or guests to their

Consequently, regulations from the U.S.

Food and Drug Administration, as well as state regulations related to consumer

and employee privacy rights, may apply to the sale and use of such devices within the United States.

Similarly, because the devices

are sold in Canada, regulations related to consumer and employee privacy in provinces where such regulations exist may apply to

the sale and use of such devices in those provinces in Canada.

Presently, we do not believe that any such legislation or proposed

legislation will have a materially adverse impact on our business.

While we believe there is presently no direct

competitor with the comprehensive offering of technologies, solutions and services we provide to our customers, there are multiple

individual competitors who offer pieces of our solutions.

These include digital signage software companies such as Stratacache,

Four Winds Interactive, and Reflect Systems;

marketing services companies such as Sapient Nitro or digital signage systems integrators

such as SageNet.

Some of these competitors may have significantly greater financial, technical and marketing resources than we

do and may be able to respond more rapidly than we can to new or emerging technologies or changes in customer requirements.

believe that our sales and business development capabilities, network operations / field service management capabilities, our comprehensive

offering of digital marketing technology and solutions, brand awareness, and proprietary processes are the primary factors affecting

our competitive position.

Major Customers

We had two (2) and one (1) customer(s) that

accounted for 27.8% and 18.5% of revenue for the years ended December 31, 2020 and 2019, respectively.

Decisions by one or more of these key customers

to not renew, terminate or substantially reduce their use of our products, technology, services, and platform could substantially

slow our revenue growth and lead to a decline in revenue.

Our business plan assumes continued growth in revenue, and it is unlikely

that we will become profitable without a continued increase in revenue.

For the years ended December 31, 2020 and

2019, we had sales of $1,058 (6.1% of consolidated sales) and $1,103 (3.5% of consolidated sales), respectively, with 33 Degrees

Convenience Connect, Inc., a related party that is approximately 17.5% owned by a member of our senior management (“33 Degrees”).

We sell products and services primarily

throughout North America.

We have approximately 75 employees as of

March 8, 2021.

We do not have any employees that operate under collective-bargaining agreements.

may impose on us, or on our customers or suppliers, requirements for disposal of systems we sell and the payment of additional fees to

pay costs of disposal and recycling.

Presently, we do not believe that any such legislation or proposed legislation will have a materially

adverse impact on our business.

While we believe there is presently no direct competitor

with the comprehensive offering of technologies, solutions and services we provide to our customers, there are multiple individual competitors

who offer pieces of our solutions.

These include digital signage software companies such as Stratacache and Four Winds Interactive;

services companies such as Sapient Nitro or digital signage systems integrators such as SageNet.

Some of these competitors may have significantly

greater financial, technical and marketing resources than we do and may be able to respond more rapidly than we can to new or emerging

technologies or changes in customer requirements.

We believe that our holistic sales and business development capabilities, network operations

/ field service management capabilities, our comprehensive offering of digital signage technology and solutions, brand awareness, and

proprietary processes are the primary factors providing our competitive advantage.

had two (2) customers that accounted for 41.1% and 27.8% of revenue for the years ended December 31, 2021 and 2020, respectively.

We had two (2) customers that in the aggregate

accounted for 56.6% and 42.6% of accounts receivable as of December 31, 2021 and December 31, 2020, respectively.

by one or more of these key customers to not renew, terminate or substantially reduce their use of our products, technology, services,

and platform could substantially slow our revenue growth and lead to a decline in revenue.

Our business plan assumes continued growth

in revenue, and it is unlikely that we will become profitable without a continued increase in revenue.

sell products and services primarily throughout North America, with limited software licensing agreements operating in other international

jurisdictions.

We have a workforce comprised of approximately

105 employees as of March 22, 2022, which represents a 40% year-over-year increase in employee headcount, driven primarily by our acquisition

of Reflect in February 2022, which is further discussed in Recent Developments in Item 7 of this Annual Report.

We do not have

any employees that operate under collective-bargaining agreements.

Our principal offices are located at 13100 Magisterial

Drive, Ste 100, Louisville, Kentucky 40223, and our telephone number at that office is (502) 791-8800.

We have additional offices in the

Dallas, TX, Atlanta, GA, and Windsor, Ontario (Canada) metro areas.

Corporate Organization

We originally incorporated and organized as a Minnesota

corporation under the name “Wireless Ronin Technologies, Inc.” in March 2003 and focused on our expertise in digital media

marketing solutions, including digital signage, interactive kiosks, mobile, social media and web-based media solutions.

We acquired the

interactive marketing technology business that we currently operate in a 2014 merger with Creative Realities, LLC.

Shortly after that

merger, we changed our corporate name from “Wireless Ronin Technologies, Inc.” to “Creative Realities, Inc.” On

October 15, 2015, we acquired the systems integration and marketing technology business of ConeXus World Global, LLC.

On November 20,

2018, we acquired Allure, an enterprise software development company.

On February 17, 2022, we acquired Reflect pursuant to the Merger.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business