What changed in this filing

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Item 5. Other Information

2024-05-10 compared with 2023-11-09 · 5 added, 92 removed, 24 unchanged (80% of the section changed)

1 unchanged sentence

Rule 10b5 - 1 Trading Plans

During the quarter ended September 30, 2023, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement."

Resignation of Dennis McGill

On November 8, 2023, Dennis McGill resigned as Chairman and as a director of the Company effective immediately.

McGill resigned for family reasons, and did not resign as a result of any matter relating to the Company's operations, policies or practices.

As a result of Mr.

McGill’s resignation, Richard Mills has been appointed to serve as Chairman of the Board of Directors. 

Following Mr.

McGill’s resignation, the Board of Directors approved a reduction in the size of the Board to four directors.

In consideration of Mr.

McGill’s service to the Company, the Board accelerated the vesting of 25 options previously issued to Mr.

McGill, that would have vested on November 17, 2023.

2023 Stock Incentive Plan

In April 2023, the Company’s 2014 Stock Incentive Plan, as amended, expired by its terms (other than with respect to outstanding options issued under the 2014 Stock Incentive Plan).

On November 8, 2023, our Board of Directors approved a 2023 Stock Incentive Plan (the “Plan”), pursuant to which 1,500,000 shares of common stock are reserved for issuance under the Plan to key employees, executives, consultants, and other individuals who provide services to the Company.

The following summary of the Plan does not purport to be a complete description and is qualified in its entirety by the specific language of the Plan, a copy of which is attached to this Quarterly Report on Form 10-Q as Exhibit 10.1.

The purpose of the Plan is to increase shareholder value and to advance the interests of the Company by furnishing a variety of economic incentives designed to attract, retain and motivate employees, certain key consultants, independent contractors and directors of the Company.

The Plan will be administered by a stock option or Compensation Committee of the Board of Directors, or if no such committee exists, by the entire Board of Directors.

The Compensation Committee may grant incentives to employees (including officers) or our subsidiaries, members of the Board of Directors, and consultants or other independent contractors who provide services to us or our subsidiaries, in the following forms:

incentive stock options and non-statutory stock options;

stock appreciation rights;

stock awards;

restricted stock;

restricted stock units;

performance shares.

In addition our Chief Executive Officer or Chief Financial Officer may, on a discretionary basis and without review or approval by the Compensation Committee, grant stock options to our new employees who are not officers of the Company.

Such discretionary grants shall not exceed, in the aggregate, incentives that the Board of Directors or Compensation Committee has allocated for such purpose.

Subject to Plan.

 We may issue up to 1,500,000 shares of common stock under the Plan. 

If an incentive granted under the Plan expires or is terminated or canceled unexercised as to any shares of common stock or forfeited or reacquired by us pursuant to rights reserved upon issuance thereof, we may again issue such shares under the Plan pursuant to another incentive.

Description of Incentives

Stock Options.

 Stock options may be granted to eligible individuals to purchase shares of common stock from the Company.

The Plan confers on the Compensation Committee the discretion, with respect to any such stock option, to determine the term of each option, the time or times during its term when the option becomes exercisable and the number and purchase price of the shares subject to the option.

Nevertheless, the term of each option shall not exceed ten years and one day from the grant date.

The option price per share for stock options may not be less than the fair market value of the common stock on the grant date.

We must grant all stock options within ten years from the date of the Plan’s adoption by the Board of Directors.

Incentive Stock Options .

The grant of incentive stock options is intended to comply with Section 422 of the U.S.

Internal Revenue Code of 1986, as amended from time to time (the “Code”).

The fair market value of incentive stock options granted to eligible individuals shall not, as of the grant date, exceed $100,000.

Additionally, if incentive stock options are granted to an eligible individual who, at the time such option is granted, would own (as such term is described in Code Section 422) stock possessing more than 10% of the total combined voting power of the Company, the option price for such incentive stock option cannot be less than 110% of the fair market value of the common stock, and such incentive stock options will expire no later than five years after the grant date.

Stock Appreciation Rights.

A stock appreciation right is a right to receive, without payment to the Company, a number of shares of common stock, the amount of which is determined by dividing (a) the number of shares of common stock as to which the stock appreciation right is exercised multiplied by the amount of the appreciation in such shares —

i.e., the amount by which the fair market value of the shares of common stock subject to the stock appreciation right on the exercise date exceeds (1) in the case of a stock appreciation right related to a stock option, the purchase price of the shares of common stock under the stock option or (2) in the case of an stock appreciation right granted alone, without reference to a related stock option, an amount which shall be determined by the Compensation Committee at the time of grant;

by (b) the fair market value of a share of common stock on the exercise date.

Our Compensation Committee has the discretion to determine the number of shares as to which a stock appreciation right will relate as well as the duration and exercisability of a stock appreciation right.

The exercise price may not be less than the fair market value of our common stock on the grant date.

Stock Awards.

 Stock awards consist of the transfer by the Company to an eligible participant of shares of common stock, without other payment, as additional compensation for services to the Company.

The number of shares transferred pursuant to any stock award is determined by the Compensation Committee.

Restricted Stock.

 Restricted stock consists of the sale or transfer by the Company to an eligible participant of one or more shares of our common stock that are subject to restrictions on their sale or other transfer by the employee, which restrictions will lapse after a period of time as determined by the Compensation Committee.

If restricted stock is sold to a participant, the sale price will be determined by the Compensation Committee, and the price may vary from time to time and among participants and may be less than the fair market value of the shares at the date of sale.

Subject to these restrictions and the other requirements of the Plan, a participant receiving restricted stock shall have all of the rights of a shareholder as to those shares. The Compensation Committee may grant the right to receive cash, shares of stock, or other property equal in value to dividends paid with respect to the number of shares represented by restricted stock units.

Restricted Stock Units .

Restricted stock units represent the right to receive shares of common stock at a future date, subject to vesting criteria.

Performance Awards .

An eligible individual’s right to exercise or receive a grant or settlement of any incentive, and the timing thereof, may be subject to certain performance conditions specified by the Compensation Committee.

The Compensation Committee may use business criteria and other measures of performance as it may deem appropriate in establishing performance conditions, and may exercise its discretion to change the amounts payable under any incentive subject to performance conditions.

Other Plan Terms

Limitation on Non-Employee Director Grants . During any one fiscal year, we may not grant to any non-employee director incentives that exceed in the aggregate $100,000 in value (such value computed as of the date of grant in accordance with applicable financial accounting rules) in any calendar year.

Transferability of Incentives.

 Incentives granted under the Plan may not be transferred, pledged or assigned by the holder thereof, except in the event of the holder’s death, by will or the laws of descent and distribution or pursuant to a qualified domestic relations order.

However, stock options other than those intended to qualify as incentive stock options may be transferred by the holder thereof to certain family members or related entities.

Duration, Termination and Amendment of the Incentive Plan and Incentives.

 The Plan will remain in effect until all incentives granted under the Plan have been satisfied or terminated and all restrictions on shares issued under the Plan have lapsed.

We may not grant incentives under the Plan after the tenth anniversary of the approval of the Plan by the Board of Directors.

The Board of Directors may amend or discontinue the Plan at any time.

However, no such amendment or discontinuance may adversely change or impair a previously granted incentive without the consent of the recipient thereof.

Certain Plan amendments require shareholder approval, including amendments that would increase the maximum number of shares of common stock which may be issued to all participants under the Plan, change or expand the types of incentives that may be granted under the Plan, change the class of persons eligible to receive incentives under the Plan, or materially increase the benefits accruing to participants under the Plan.

Generally, the terms of an existing incentive may be amended by agreement between the Compensation Committee and the participant.

However, in the case of a stock option or stock appreciation right, no such amendment shall (a) extend the term of the incentive;

nor (b) reduce the exercise price per share below the fair market value of the common stock on the date the incentive was granted, unless, in either case, the amendment complies with the requirements of Internal Revenue Code Section 409A.

Effect of Sale, Merger, Exchange or Liquidation.

In the event of an acquisition of the Company through the sale of substantially all of its assets or a change in control through a merger, exchange, reorganization or liquidation of the Company or a similar event, all as determined by the Compensation Committee in its sole discretion, the Compensation Committee shall be authorized to take any and all action it deems equitable under the circumstances, including but not limited to accelerating the vesting of all incentives, terminating the Plan and issuing to the holders of outstanding vested options and stock appreciation rights the stock, securities or assets, including cash, they would have received if the incentives had been exercised immediately before the transaction, or other specified actions.

Board Policies .

The Plan provides that any incentives are subject to any insider trading, clawback and recovery policies adopted from time to time by the Board of Directors and subject to forfeiture and disgorgement to the extent required by law or applicable stock exchange listing standards.

The Board of Directors may also impose such other clawback, recovery or recoupment provisions as the Board of Directors determines necessary or appropriate, including a right to repurchase shares previously issued under the Plan and any incentive.

Plan Benefits

The amount and timing of all awards under the Plan are determined in the sole discretion of our Compensation Committee (or if no committee is designated, the entire Board of Directors, and subject, however, to limited discretionary authority on the part of our Chief Executive Officer as described above) and therefore cannot be determined in advance.

Shareholder Approval of Plan

Consistent with the Nasdaq Listing Rules, the Plan provides that until the Plan is approved by the Company’s shareholders, (i) no shares of Common Stock may be issued under the Plan, and (ii) no options issued under the Plan may be exercised.

If the Company’s shareholders do not approve the Plan on or prior to November 8, 2024, or if this Plan is submitted to a vote of shareholders and not approved, then the Plan and all Incentives granted thereunder will be null and void.

During the quarter ended March 31, 2024 , none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5 - 1 (c) or any “non-Rule 10b5 - 1 trading arrangement."

Earnings Release

On November 9, 2023, the Company issued a press release announcing its financial condition and results of operations for the three and nine months ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 and is incorporated by reference into this Item 5 in lieu of separately furnishing such press release under Item 2.02 of Form 8-K.

This disclosure, including Exhibit 99.1 hereto, shall not be deemed “filed”

for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

2023 Stock Incentive Plan

On May 10, 2024, the Company issued a press release announcing its financial condition and results of operations for the three months ended March 31, 2024 .

A copy of the press release is furnished as Exhibit 99.1 and is incorporated by reference into this Item 5 in lieu of separately furnishing such press release under Item 2.02 of Form 8 -K.

This disclosure, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Chief Executive Officer Certification pursuant to Exchange Act Rule 13a-14(a).

4 unchanged sentences

Section 1350.

Press Release dated November 9, 2023

Press Release dated May 10, 2024

Inline XBRL Instance Document

5 unchanged sentences

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* Filed herewith

1 unchanged sentence

Creative Realities, Inc.

November 9, 2023

/s/ Richard Mills

4 unchanged sentences

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-Q

Item 5. Other Information