CREATIVE REALITIES, INC. 10-K

ITEM 9A CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of December 31, 2024, and designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management ’ s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our internal control over financial reporting as of December 31, 2024 based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment and those criteria, management believes that we maintained effective internal control over financial reporting as of December 31, 2024. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B OTHER INFORMATION Rule 10b5 - 1 Trading Plans During the quarter ended December 31, 2024, none of the officers (as defined in Exchange Act Rule 16a - 1 (f)) or directors of the Company adopted or terminated a “Rule 10b5 - 1 trading arrangement,” (as defined in Item 408 (a) of Regulation S-K) intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5 - 1 (c) or any non-Rule 10b5 - 1 trading arrangement. Earnings Release On March 14, 2025, the Company issued a press release announcing its financial condition and results of operations for the three months and year ended December 31, 2024. A copy of the press release is furnished as Exhibit 99.1 and is incorporated by reference into this Item 9B 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. ITEM 9C DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 33 Table of Contents PART III ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Our Board of Directors consists of Richard Mills (Chairman and CEO), David Bell, Donald Harris, and Stephen Nesbit. The following table sets forth the name, age and position of each of our current directors and executive officers. Name Age Positions David Bell 81 Director Donald A. Harris 72 Director Richard Mills 69 Chief Executive Officer and Director Stephen Nesbit 74 Director David Ryan Mudd 37 Interim Chief Financial Officer The biographies of the above-identified individuals are set forth below: David Bell joined our Board of Directors in August 2014 in connection with our acquisition of Creative Realities, LLC. Mr. Bell brings over 40 years of advertising and marketing industry experience to the Board, including serving as CEO of three of the largest companies in the industry — Bozell Worldwide, True North Communications and The Interpublic Group of Companies, Inc. Mr. Bell has previously led Slipstream Communications, LLC which is an international company providing strategic branding, digital marketing, and public relations services and served as a Senior Advisor to Google Inc. from 2006 to 2009. Mr. Bell previously served as an Operating Advisor at Pegasus Capital Advisors. He was a Senior Advisor to AOL from 2008 to 2016 and has also served on the boards of multiple publicly traded companies, including Lighting Science Group Corporation and Point Blank Solutions, Inc., and Primedia, Inc., and served as President and CEO of The Interpublic Group of Companies Inc. from 2003 to 2005. Mr. Bell served as an independent director on the Board of Directors of Time, Inc. from June 2014 to January 2018. Donald A. Harris was appointed to our Board of Directors in August 2014 in connection with our acquisition of Broadcast International, Inc. He has been President of 1162 Management, and the General Partner of 5 Star Partnership, a private equity firm, since June 2006. Mr. Harris has been President and Chief Executive Officer of UbiquiTel Inc., a telecommunications company organized by Mr. Harris and other investors, since its inception in September 1999 and also its Chairman since May 2000. Mr. Harris served as the President of Comcast Cellular Communications Inc. from March 1992 to March 1997. Mr. Harris received a Bachelor of Science degree from the United States Military Academy and an MBA from Columbia University. Mr. Harris’s experience in the telecommunications industry and his association with private equity funding is valuable to the Company. Richard Mills is currently our Chief Executive Officer, a member of our Board of Directors and Chairman of the Board. Mr. Mills has served as our Chief Executive Officer and a member of our Board of Directors since 2015, and has served as Chairman of the Board since November 2023. Mr. Mills possesses over 32 years of industry experience. He was previously Chief Executive Officer of ConeXus World Global, a leading digital media services company, which he founded in 2010, and which was acquired by the Company. Prior to founding ConeXus, Mr. Mills was President and Director at Beacon Enterprise Solutions Group, Inc., a public telecom and technology infrastructure services provider. Previous to that, he joined publicly traded Pomeroy Computer Resources, Inc. in 1993 and served as Chief Operating Officer and a member of the Board of Directors from 1995 until 1999. Mr. Mills helped grow sales at Pomeroy during his time there from $100 million to $700 million. Mr. Mills was also a founder of Strategic Communications LLC. Stephen Nesbit was appointed to our Board of Directors in 2019. Mr. Nesbit has been in the digital signage and digital advertising industry for over 20 years. He is currently the Managing Director of Prestonwood Trail Holdings LLC and has provided advisory services for companies in the Digital Signage and Digital Media Industry for the past 10 years. He has directed and advised projects in North America, Europe, Asia proper, Southeast Asia, the Middle East, Australia and Africa. Prior to founding Prestonwood Trail, Mr. Nesbit was the President/COO at Reflect Systems, a prominent software and services company in the Digital Signage business. He joined Reflect after serving as President/COO of MarketForward, the Global Digital Media Division owned by the Publicis Groupe S.A. in Paris France. Mr. Nesbit began his career in Digital Signage as the EVP Global Operations & GM International Business for Next Generation Network. NGN was one of the first Digital Place Based Advertising companies in the industry before its sale to Anschutz Investments where the company changed its name to National Cinemedia (NASDAQ: NCMI). He began his career at IBM in the Data Processing Division holding various field and HQ management positions. Mr. Nesbit also held management and executive positions at Wang Labs and BBN Communications Inc., the communications company that was the original architect of the Internet. Mr. Nesbit holds an undergraduate degree from the University of Notre Dame and earned an MBA from the Indiana University Kelly Graduate School of Business. 34 Table of Contents David Ryan Mudd has served as the Interim Chief Financial Officer of the Company since February 1, 2025. Mr. Mudd joined the Company as Controller in November 2022. From January 2012 until November 2022, Mr. Mudd was employed by Ernst & Young in the assurance services group where he primarily worked with large publicly traded clients. Mr. Mudd brings over ten years of experience in SEC reporting, technical accounting matters and Sarbanes-Oxley compliance expertise as well as expertise in initial public offerings, acquisitions and integration. He has a B.S. degree and a Masters in Accountancy from University of Kentucky and is a Certified Public Accountant. Under our corporate bylaws, all of our directors serve for annual terms expiring upon the next annual meeting of our shareholders. When considering whether directors and nominees have the experience, qualifications, attributes and skills to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of our business and structure, the Board of Directors focuses primarily on the industry and transactional experience, in addition to any unique skills or attributes associated with a director. With regard to Mr. Bell, the Board considered his deep experience within the advertising and marketing industries and his prior management of large enterprises. With regard to Mr. Mills, the Board of Directors considered his extensive background and experience in the industry. With regard to Mr. Harris, the Board of Directors considered his extensive experience in the telecommunications industry and association with private equity investors. Finally, with regard to Mr. Nesbit, the Board of Directors considered his extensive experience in the digital signage industry, having run several companies in the industry and acted as a consultant broadly for digital signage companies over the past twenty years. The Board of Directors has determined that there are presently three “independent” directors, as such term is defined in Section 5605(a)(2) of the Nasdaq listing rules, each of whom also meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934. The directors whom the board has determined to be independent are Messrs. Bell, Harris, and Nesbit. Board Committee Membership Our Board of Directors has created a standing Compensation Committee and Audit Committee, which are described below. The Company’s committees have separately adopted charters that are available on the Company’s website at https://investors.cri.com. Mr. Bell, Mr. Harris, and Mr. Nesbit qualify as “independent” members of the board as described above. The Board of Directors has not created a separate committee for nomination or corporate governance. Instead, the entire Board of Directors shares the responsibility of identifying potential director-nominees to serve on the Board of Directors. Nevertheless, nominees to serve as directors on our Board of Directors are selected by those directors on our board who are independent. Compensation Committee Information . Our Compensation Committee consists of Stephen Nesbit, Donald Harris, and David Bell. Mr. Nesbit serves as chair of the committee. Each of the members of the Compensation Committee is independent under the applicable Nasdaq listing standards. The Compensation Committee did not meet during the fiscal year ended December 31, 2024. The Compensation Committee has a written charter. The Compensation Committee’s duties, which are specified in the Compensation Committee charter, include, but are not limited to: • reviewing and approving on an annual basis the corporate goals and objectives relevant to the Company’s Chief Executive Officer’s compensation, evaluating the Company’s Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of the Company’s Chief Executive Officer based on such evaluation; • reviewing and approving the compensation of all of our other executive officers; • reviewing our executive compensation policies and plans; • implementing and administering our incentive compensation equity-based remuneration plans; • assisting management in complying with our proxy statement and annual report disclosure requirements, and reviewing specific disclosures in the proxy statement and reports; • if required, producing a report on executive compensation to be included in our annual proxy statement; • reviewing, evaluating, and recommending changes, if appropriate, to the remuneration for directors; and • reviewing and reassessing, on an annual basis, the adequacy of the charter and recommending to the Board any proposed changes to the charter. 35 Table of Contents Audit Committee Information . Our Audit Committee consists of David Bell, Stephen Nesbit, and Donald Harris. Mr. Bell serves as chair of the committee. The Board of Directors has determined that at least one member of the Audit Committee, Mr. Bell, is an “audit committee financial expert” as that term is defined in Regulation S-K promulgated under the Securities Exchange Act of 1934. Mr. Bell’s relevant experience in this regard is detailed above in his biography. The Board of Directors has determined that each director serving on the Audit Committee is able to read and understand fundamental financial statements. The audit committee met four times during the fiscal year ended December 31, 2024. Pursuant to our audit committee charter, responsibilities of the Audit Committee include: • reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our required disclosures; • reviewing and discussing interim financial statements prior to the filing of quarterly reports and earnings releases; • approving the committee report, as required by the SEC rules, to be included in the Company’s annual proxy statement or annual report; • discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; • discussing with management major risk assessment and risk management policies; • monitoring the independence of our independent auditor; • verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; • inquiring and discussing with management our compliance with applicable laws and regulations; • pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; • appointing or replacing the independent auditor; • determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; • establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and • reviewing and reassessing on an annual basis the adequacy of the charter and recommending to the Board any proposed changes to the charter. Communications with Board Members Our Board of Directors has provided the following process for shareholders and interested parties to send communications to our Board and/or individual directors. All communications should be addressed to Creative Realities, Inc., 13100 Magisterial Drive, Ste. 100, Louisville, KY 40223, Attention: Corporate Secretary. Communications to individual directors may also be made to such director at our Company’s address. All communications sent to any individual director will be received directly by such individuals and will not be screened or reviewed by any Company personnel. Any communications sent to the Board in the care of the Corporate Secretary will be reviewed by the Corporate Secretary to ensure that such communications relate to the business of the Company before being reviewed by the Board. Code of Ethics We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions) and directors. Our Code of Business Conduct and Ethics is designed to help ensure our business is conducted in accordance with the highest standards of ethical behavior and satisfies the requirements of Item 406(b) of Regulation S-K. Our Code of Business Conduct and Ethics is available, free of charge, on the Company’s website at https://investors.cri.com, or upon written request to our Corporate Secretary at 13100 Magisterial Drive, Ste. 100, Louisville, KY 40223. 36 Table of Contents Insider Trading Policy We have adopted an insider trading policy applicable to members of the Board of Directors, executive officers of the Company, and all employees of the Company (“Insiders”). The Company may also determine that other persons should be subject to the policy, such as contractors or consultants who have access to material non-public information. The policy prohibits any Insider, as well as any family member of any Insider or any entities over which an Insider has influence or control, from engaging in transactions involving the purchase or sale of the Company’s securities while such person has access to material nonpublic information, as well as from trading in the securities of other companies in breach of a fiduciary duty or other relationship of trust and confidence while in possession of material nonpublic information about such company or its securities. ITEM 11 EXECUTIVE COMPENSATION Executive Compensation Summary Compensation Table The following table sets forth information concerning the compensation of our named executive officers for 2024 and 2023 (table and footnotes in whole dollars) : Non-Equity Stock Option Incentive Plan All Other Salary Bonus Awards Awards Compensation Compensation Total Name and Principal Position(a) Years ($) ($)(b) ($) ($)(d) ($)(e) ($) ($) Richard Mills 2024 450,000 — — — — — 450,000 Chief Executive Officer and Director 2023 450,000 — — — — — 450,000 Will Logan 2024 350,000 50,000 — — — — 400,000 Chief Financial Officer 2023 350,000 — — — — — 350,000 (a) Mr. Mills joined the Company effective October 15, 2015. Mr. Logan joined the Company effective November 6, 2017 and resigned as Chief Financial Officer on January 31, 2025. (b) On November 13, 2024, the Company awarded Mr. Logan, a $50,000 bonus for his services rendered in 2023. 37 Table of Contents The material terms of employment agreements of Richard Mills, Chief Executive Officer of the Company, and Will Logan, Chief Financial Officer of the Company, and payments to be made upon a change in control are discussed below. Our named executive officers are eligible for retirement benefits on the same terms as non-executives under the Company’s defined contribution 401(k) retirement plan. Employees may contribute pretax or after-tax compensation to the plan in accordance with current maximum contribution levels proscribed by the Internal Revenue Service. The Company contributes an employer contribution match of 50% of employee wages up to 6%, for an effective match of 3%. Richard Mills Employment Agreement The Company employs Richard Mills as its Chief Executive Officer. Mr. Mills and the Company entered into an employment agreement on November 12, 2021. The employment agreement is effective for a one-year term, which automatically renews for additional one-year periods unless either the Company or Mr. Mills elects not to extend the term. The agreement provided for an initial annual base salary of $330,000 subject to annual increases but generally not subject to decreases. In accordance with the agreement, Mr. Mills’ annual base salary was adjusted automatically on February 17, 2022 upon the closing of the Merger to $450,000, subject to annual increases but not generally subject to decreases. Under the agreement, Mr. Mills is eligible to participate in performance-based cash bonus or equity award plans for Company senior executives. Mr. Mills will participate in Company employee benefit plans, policies, programs, perquisites and arrangements to the extent he meets applicable eligibility requirements. In the event of a termination of employment for good reason, as defined, without cause, as defined, or within 12 months following a change in control, as defined, other than for reason of death, disability or for cause, Mr. Mills will be entitled to receive aggregate severance payments equal to twelve months of his base salary. The agreement provides that any severance payments would be paid in installments over the course of the severance. The agreement contains certain non-solicitation and non-competition provisions that continue after employment for a period of one year. The agreement also contains other customary restrictive and other covenants relating to the confidentiality of information, the ownership of inventions and other matters. On June 15, 2022, the Board approved an amendment to certain aspects of Mr. Mills’ compensation as further described below. Will Logan Employment Agreement The Company employed Will Logan as its Chief Financial Officer until his resignation effective January 31, 2025. Mr. Logan and the Company entered into an employment agreement on November 12, 2021. The employment agreement was effective for a one-year term, which automatically renewed for additional one-year periods through Mr. Logan’s resignation. The agreement provided for an initial annual base salary of $249,000 subject to annual increases but generally not subject to decreases. In accordance with the employment agreement, Mr. Logan’s annual base salary was automatically adjusted upon the closing of the Merger to $350,000, subject to annual increases but not generally subject to decreases, and Mr. Logan received a $75,000 cash bonus upon the closing of the Merger. Under the agreement, Mr. Logan was eligible to participate in performance-based cash bonus or equity award plans for Company senior executives. Mr. Logan participated in Company employee benefit plans, policies, programs, perquisites, and arrangements to the extent he met applicable eligibility requirements. In the event of a termination of employment for good reason, as defined, without cause, as defined, or within 12 months following a change in control, as defined, other than for reason of death, disability or for cause, Mr. Logan would have been entitled to receive aggregate severance payments equal to six months of his base salary. The agreement provided that any severance payments would be paid in installments over the course of the severance. The agreement contains certain non-solicitation and non-competition provisions that continue after employment for a period of one year. The agreement also contains other customary restrictive and other covenants relating to the confidentiality of information, the ownership of inventions and other matters. On June 15, 2022, the Board approved an amendment to certain aspects of Mr. Logan’s compensation as described below. 38 Table of Contents Outstanding Equity Awards at Fiscal Year-End The following table sets forth certain information concerning outstanding stock options and restricted stock awards held by our named executive officers as of December 31, 2024: Option Awards(a) Stock Awards Market Number value Number of Number of of shares of shares Securities Securities or units of or units of Underlying Underlying Option stock stock Unexercised Unexercised Exercise Option that has that have Options (#) Options (#) Price Expiration not vested not vested Name Exercisable Non-Exercisable ($) Date (#) ($) Richard Mills 160,000(a) —(a) 7.59 6/1/2030 — — 160,000(b) —(b) 7.59 6/1/2030 — — —(c) 333,334(c) 3.00 6/15/2032 — — Will Logan 6,389(d) —(d) 26.10 11/6/2027 — — 5,556(e) —(e) 22.50 9/20/2028 — — 80,000(a) —(a) 7.59 6/1/2030 — — 80,000(b) —(b) 7.59 6/1/2030 — — —(c) 200,000(c) 3.00 6/15/2032 (a) These stock options vested in three equal installments on June 1 annually, beginning in 2021 and ending in 2023. (b) These stock options (the “Performance Options”) become vested in increments of 16.67 percent of the total shares purchasable under this issuance subject to satisfying Company revenue target and earnings before interest, taxes, depreciation and amortization (“EBITDA”) target for the applicable year. In each of calendar years 2020, 2021 and 2022, one-third of the total shares may vest (if the revenue and EBITDA targets are met), and the shares that are subject to vesting each year are allocated equally to each of the revenue and EBITDA targets for such year, with each target and vesting being independently achieved without regard for the other. These Performance Options include a catch-up provision, where any options that did not vest during a prior year due to the Company’s failure to meet a prior revenue or EBITDA target may vest in a subsequent vesting year if the revenue or EBITDA target, as applicable, is met in the future year. The revenue and EBITDA targets for the subject years are as follows: Calendar Year Revenue Target (millions) EBITDA Target (millions) 2022 $ 35 $ 3.1 2023 $ 38 $ 3.5 The executives met the foregoing EBITDA target for calendar year 2021. On June 15, 2022, the Board approved of an amendment to the Performance Options to provide that the revenue target for the calendar year 2022 set forth therein ($38 million) is eliminated, and the remaining shares that are available for vesting under the Performance Options (106,667 unvested shares for Mr. Mills and 53,334 for Mr. Logan) (including the unvested portions of shares based on the satisfaction of the revenue targets for 2020 and 2021 by virtue of the catch-up provisions in the Performance Options) will fully vest upon the achievement of the updated EBITDA target for calendar year 2022 of $3.6 million. 39 Table of Contents The Performance Options state that the calculation of EBITDA set forth in the Performance Options shall be calculated in a form consistent with the Company’s 2022 approved budget, which: (i) excludes any impact on EBITDA of: (a) the accounting treatment (including any “mark-to-market accounting”) of the Company’s warrants or the “Guaranteed Consideration” (as defined in the Merger Agreement), (b) non-recurring transaction expenses associated with the Merger and the capital raising financing activities of the Company to effectuate the Merger, and (c) any write-down or write-off of any Company inventory of Safe Space Solutions products. (iii) includes deductions related to any cash or stock bonuses paid or payable to any employees of the Company for services provided in calendar year 2022 (even if such bonuses are actually paid after calendar year 2022), including bonuses paid pursuant to the terms of the 2022 Cash Bonus Plan (as described above) (collectively, the “EBITDA Calculations”). The unvested portion of the Performance Options as of December 31, 2022 vested in full effective as of March 30, 2023 upon confirmation by the Board of Directors of achievement of the performance metrics for the year ended December 31, 2022. (c) Messrs. Mills and Logan received ten-year options to purchase 333,334 and 200,000 shares of common stock, respectively (the “New Options”). The New Options are eligible to vest at any time on or prior to the date on which the “Guaranteed Price” is agreed upon by the Company and RSI Exit Corporation, or finally determined in accordance with the terms of the Merger Agreement, if the trailing 10-trading day VWAP of the Company’s common stock, as reported on the Nasdaq Capital Market, exceeds the share price targets below, subject to such executive serving the Company as a director, officer, employee or consultant at such time: Guaranteed Total Executive Share Price Targets Price Shares $ 6.00 $ 9.00 $ 12.00 $ 15.00 $ 18.00 Mills’ Shares Vested 16,667 33,334 50,000 66,667 83,333 83,333 333,334 Logan’s Shares Vested 10,000 20,000 30,000 40,000 50,000 50,000 200,000 Percentage of Shares Vested 5 % 10 % 15 % 20 % 25 % 25 % (d) These stock options become exercisable in increments of 25 percent of the total shares purchasable under this issuance on November 6 annually, beginning in 2018 and ending in 2021. (e) These stock options become exercisable in increments of 25 percent of the total shares purchasable under this issuance on September 20 annually, beginning in 2019 and ending in 2022. Director Compensation The Company’s Board of Directors had a director compensation plan to compensate non-officer directors as follows: • Annual grant of shares of unrestricted common stock of the Company, issuable on November 17, 2021, 2022 and 2023, having an annual value of $24,000, with the per-share price to be determined based upon the closing price of the Company’s common stock as reported on Nasdaq on such issuance date. No shares were issued on November 17, 2023 as the Company’s ability to issue shares under the 2014 Stock Incentive Plan expired. • An option issuable to each non-executive director to purchase 60,000 shares of Company common stock (or in the case of Dennis McGill, prior Chairman of the Company Board, 75,000 shares), which vested in three equal installments on November 17, 2021, 2022 and 2023, subject to continuing service as a director as of such vesting date. The exercise price of such options is $2.21, the closing price of the Company’s common stock as reported on Nasdaq on the date of adoption of such plan. 40 Table of Contents The table below sets forth the compensation paid to Company non-employee directors during 2024: Director Compensation (table and footnotes in whole dollars) Fees Nonqualified earned Non-equity deferred or paid Stock incentive plan compensation All other in cash awards Option awards compensation earnings compensation Total Name ($)(a) ($) ($) ($) ($) ($) ($) David Bell — — — — — — — Donald A. Harris — — — — — — — Stephen Nesbit — — — — — — — (a) The Company is evaluating the terms by which its directors may be compensated for their services in 2024 and for subsequent years. As of the date of this Report, the Company has not adopted any plan for director compensation. Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid to our Principal Executive Officer (“PEO”) and our Principal Financial Officer (“PFO”) and certain financial performance of the Company. Pay Versus Performance Summary Summary Compensation Compensation Compensation Compensation Value of Initial Fixed $100 Table Total for Actually Table Total for Actually Paid to Investment Based On: Net Income(6) PEO(1) Paid to PEO(2) Non-PEO NEO(3) Non-PEO NEO(4) Total Shareholder Return(5) (in thousands) Year ($) ($) ($) ($) ($) ($) (a) (b) (c) (d) (e) (f) (g) 2024 450,000 438,154 400,000 392,893 63 (3,508 ) 2023 450,000 498,678 350,000 373,292 61 (2,937 ) 2022 797,163 80,977 613,834 230,168 45 1,876 (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Richard Mills (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation—Summary Compensation Table." (2) The dollar amounts reported in column (c) represent the amounts of “compensation actually paid” to Mr. Mills, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Mills during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Mills’ total compensation for each year to determine the compensation actually paid: 41 Table of Contents Reported Summary Compensation Reported Equity Compensation Table Total Value of Equity Awards Actually Paid to for PEO Awards(a) Adjustments(b) PEO Year ($) ($) ($) ($) 2024 450,000 — (11,846 ) 438,154 2023 450,000 — 48,678 498,678 2022 797,163 253,119 (463,067 ) 80,977 (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: Fair Value of Year over Fair Value Dividends or other Year over Year Change in at the End Earnings Paid on Year Change in Fair Value as of Fair Value of of the Prior Year Stock or Option Fair Value of Vesting Date of Equity Awards of Equity Awards Awards not Year End Outstanding Equity Awards Granted in that Failed to Otherwise Reflected Total Fair Value and Unvested Granted Prior Years Meet Vesting in Fair Value Equity of Equity Equity and Vested that Vested Conditions or Total Award Awards Awards in the Year in the Year in the Year Compensation Adjustments Year ($) ($) ($) ($) ($) ($) ($) 2024 — (11,846 ) — — — — (11,846 ) 2023 — (10,465 ) — 59,143 — — 48,678 2022 22,311 (321,138 ) — (164,240 ) — — (463,067 ) (3) The dollar amounts reported in column (d) represent the amounts reported for the NEO (excluding our PEO) in the “Total” column of the Summary Compensation Table in each applicable year. The NEO (excluding our PEO) included for purposes of calculating the amounts in each applicable year was Will Logan, our Chief Financial Officer as of the applicable time periods. (4) The dollar amounts reported in column (e) represent the amounts of “compensation actually paid” to the NEO (excluding our PEO), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEO (excluding our PEO) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEO (excluding our PEO) for each year to determine the compensation actually paid, using the same methodology described above in Note (2): 42 Table of Contents Reported Summary Compensation Compensation Table Total Reported Equity Actually Paid for Non-PEO Value of Awards to Non-PEO NEO Equity Awards(a) Adjustments(b) NEO Year ($) ($) ($) ($) 2024 400,000 — (7,107 ) 392,893 2023 350,000 — 23,292 373,292 2022 613,834 151,872 (231,794 ) 230,168 (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: Fair Value of Year Over Value as of Year over Year Fair Value Dividends or other Year Vesting Date Change in at the End of the Earnings Paid on Change in of Equity Fair Value of Prior Year of Stock or Option Year End Fair Value of Awards Equity Awards Equity Awards that Awards not Total Fair Value Outstanding and Granted Granted in Prior Failed to Meet Otherwise Reflected Equity of Equity Unvested and Vested Years that Vested Vesting Conditions in Fair Value or Award Awards Equity Awards in the Year in the Year in the Year Total Compensation Adjustments Year ($) ($) ($) ($) ($) ($) ($) 2024 — (7,107 ) — — — — (7,107 ) 2023 — (6,279 ) — 29,571 — — 23,292 2022 13,386 (160,905 ) — (84,275 ) — — (231,794 ) (5) Cumulative total shareholder return (Cumulative TSR) is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. (6) The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. 43 Table of Contents Analysis of the Information Presented in the Pay versus Performance Table In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table above. Compensation Actually Paid and Cumulative TSR The following graph sets forth the relationship between Compensation Actually Paid to our PEO, the Compensation Actually Paid to our Non-PEO NEO, and the Company’s cumulative TSR over the three most recently completed fiscal years. 44 Table of Contents Compensation Actually Paid and Net Income The following graph sets forth the relationship between Compensation Actually Paid to our PEO, the Compensation Actually Paid to our Non-PEO NEO, and the Company’s net income over the three most recently completed fiscal years. Policies and Practices for Granting Certain Equity Awards While the granting of options and other equity awards to officers, directors and other employees is not expressly addressed in our Insider Trading Policy, we generally follow the same principles set forth in the Insider Trading Policy when granting equity awards, including options, to our officers, directors and other employees with access to material nonpublic information. Generally our Board of Directors or Compensation Committee does not approve grants of such awards during a blackout period and does not take material nonpublic information into account when determining the timing and terms of such an award. Further, we do not have a policy or practice of timing the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. 45 Table of Contents ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The table below sets forth certain information with respect to beneficial ownership of our common stock as of March 14, 2025, on which date there were 10,446,659 shares of issued and outstanding common stock. The following table sets forth the number of common shares, and percentage of outstanding common shares, beneficially owned by: • each director of the Company; • each named executive officer; • all current directors and officers of the Company as a group; and • each person or entity known by the Company to beneficially own more than 5% of our common stock. Unless otherwise indicated in the table or its footnotes, the address of each of the following persons or entities is 13100 Magisterial Drive, Suite 100, Louisville, KY 40223, and each such person has sole voting and investment power with respect to the shares set forth opposite his, her or its name. Common Shares Percentage of Beneficially Common Name and Address Owned (1) Shares (1) Slipstream Funding, LLC (2) c/o Pegasus Capital Advisors, L.P. 750 E Main St., Suite 600 Stamford, CT 06902 317,455 3.0 % Slipstream Communications, LLC (3) c/o Pegasus Capital Advisors, L.P. 750 E Main St., Suite 600 Stamford, CT 0690 3,156,985 25.9 % Stephen Nesbit (4) 79,564 0.8 % Donald A. Harris (5) 168,769 1.6 % David Bell (6) 50,897 0.5 % Richard Mills (7) 980,371 8.8 % Will Logan (8) 386,468 3.6 % David Ryan Mudd (9) — * All current executive officers and directors as a group (5 persons) (10) 1,279,601 11.5 % (1) Beneficial ownership is determined in accordance with the rules of the SEC, and includes general voting power and/or investment power with respect to securities. Shares of common stock issuable upon exercise of options or warrants that are currently exercisable or exercisable within 60 days of March 14, 2025, and shares of common stock issuable upon conversion of other securities currently convertible or convertible within 60 days, are deemed outstanding for computing the beneficial ownership percentage of the person holding such securities but are not deemed outstanding for computing the beneficial ownership percentage of any other person. Under applicable SEC rules, each person’s beneficial ownership is calculated by dividing the total number of shares with respect to which they possess beneficial ownership by 10,466,659, the total number of outstanding shares of the Company as of March 14, 2025. In any case where an individual has beneficial ownership over securities that are not outstanding, but are issuable upon the exercise of options or warrants or similar rights within the next 60 days, that same number of shares is added to the denominator in the calculation described above. Because the calculation of each person’s beneficial ownership set forth in the “Percentage of Common Shares” column of the table may include shares that are not presently outstanding, the sum total of the percentages set forth in such column may exceed 100%. (2) Investment and voting power over shares held by Slipstream Funding, LLC is held by Slipstream Communications, LLC, its sole member, and may deemed to be directly or indirectly controlled by Craig Cogut, Chairman and Chief Executive Officer of Pegasus Capital Advisors, LLC. See table footnote 3 for further information regarding Slipstream Communications, LLC. 46 Table of Contents (3) Investment and voting power over shares held by Slipstream Communications, LLC may be deemed to be directly or indirectly controlled by Craig Cogut, Chairman and Chief Executive Officer of Pegasus Capital Advisors, LLC. Slipstream Communications, LLC (“Slipstream Communications”) is the sole member of Slipstream Funding, LLC (“Slipstream Funding”). BCOM Holdings, LP (“BCOM Holdings”) is the managing member of Slipstream Communications. BCOM GP LLC (“BCOM GP”) is the general partner of BCOM Holdings. Business Services Holdings, LLC (“Business Services Holdings”) is the sole member of BCOM GP. PP IV BSH, LLC (“PP IV BSH”), Pegasus Investors IV, L.P. (“Pegasus Investors”) and Pegasus Partners IV (AIV), L.P. (“Pegasus Partners (AIV)”) are the members of Business Services Holdings. Pegasus Partners IV, L.P. (“Pegasus Partners”) is the sole member of PP IV BSH. Pegasus Investors IV, L.P. (“Pegasus Investors”) is the general partner of each of Pegasus Partners (AIV) and Pegasus Partners and Pegasus Investors IV GP, L.L.C. (“Pegasus Investors GP”) is the general partner of Pegasus Investors. Pegasus Investors GP is wholly owned by Pegasus Capital, LLC (“Pegasus Capital”). Pegasus Capital may be deemed to be directly or indirectly controlled by Craig Cogut. The share figure includes the 317,455 shares of common stock issued to and held by Slipstream Funding, LLC in connection with the merger transaction with Creative Realities, LLC. Share figure also includes 1,731,499 common shares purchasable upon exercise of outstanding warrants issued to and held by Slipstream Communications, LLC. (4) Mr. Nesbit is a director of the Company. Share figure includes 20,000 shares purchasable upon the exercise of outstanding options. (5) Mr. Harris is a director of the Company. Share figure includes 20,000 shares purchasable upon the exercise of outstanding options. (6) Mr. Bell is a director of the Company. Share figure includes 20,000 shares purchasable upon the exercise of outstanding options. (7) Mr. Mills is a director of the Company, Chairman of the Board and Chief Executive Officer. Share figure includes 320,000 shares purchasable upon the exercise of outstanding options and 333,334 shares purchasable upon the exercise of outstanding performance-restricted options upon which vesting requires achievement of certain targeted share trading prices. (8) Mr. Logan served as the Chief Financial Officer of the Company until January 31, 2025. Share figure includes 171,945 shares purchasable upon the exercise of outstanding options and 200,000 shares purchasable upon the exercise of outstanding performance-restricted options upon which vesting requires achievement of certain targeted share trading prices. (9) Mr. Mudd became the Interim Chief Financial Officer of the Company on February 1, 2025. (10) Includes Messrs. Mills, Bell, Harris, Nesbit and Mudd. Securities Authorized for Issuance Under Equity Compensation Plans The table below sets forth certain information, as of the close of business on December 31, 2024, regarding equity compensation plans (including individual compensation arrangements) under which our securities were then authorized for issuance. Number of Securities to be Weighted-Average Number of Securities Remaining Issued Upon Exercise of Exercise Price of Available for Issuance Under Equity Outstanding Options, Outstanding Options, Compensation Plans (excluding Warrants and Rights Warrants and Rights securities reflected in column (a)) Equity compensation plans approved by stockholders 1,565,231 (1) $ 6.19 2,500,000 (2) Equity compensation plans not approved by stockholders None N/A None (1) Shares reflected are issuable upon exercise of outstanding stock options issued under the 2014 Stock Incentive Plan. The Company’s ability to issue new awards under its 2014 Stock Incentive Plan expired in 2023. (2) On October 18, 2024, the Company’s shareholders approved the Company’s 2023 Stock Incentive Plan, which authorizes the issuance of up to 2,500,000 shares. No awards have been issued under the Plan as of December 31, 2024. For information regarding the material features of each of the above plans see Note 11 Stock-based Compensation in our Consolidated Financial Statements included in this Report. 47 Table of Contents ITEM 13 CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE (All currency in this Item 13 is rounded to the nearest thousand, except share and per share amounts.) Merger Agreement On February 17, 2025 and February 23, 2025, the parties to the Merger Agreement entered into the fourth and fifth amendments to the Merger Agreement, respectively, pursuant to which the commencement date of the 30-day period for which Reflect stockholders may seek payment of the Guaranteed Consideration was delayed from February 17, 2025 to February 24, 2025 and thereafter March 17, 2025. The foregoing transactions were approved by our Board of Directors after full disclosure of any conflicts of interest. No directors had any conflicting interest in the transactions. Independence The Board of Directors has not created a separate committee for nomination or corporate governance. Instead, the entire Board of Directors shares the responsibility of identifying potential director-nominees to serve on the Board of Directors. Nevertheless, nominees to serve as directors on our Board of Directors are selected by those directors on our board who are independent. The Board of Directors has determined that there are presently three “independent” directors, as such term is defined in Section 5605(a)(2) of the Nasdaq listing rules, each of whom also meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934. The directors whom the board has determined to be independent are Messrs. Bell, Harris, and Nesbit. ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES The following table presents fees (in thousands) for audit and other services provided by our principal accountant for 2023, Deloitte & Touche LLP (“Deloitte”), and by our principal accountant for 2024, Grant Thornton LLP (“Grant Thornton”). 2024 2023 Audit fees (a) $ 399 $ 743 Audit related fees — — Tax fees — — All other fees — — $ 399 $ 743 (a) Audit fees for 2024 and 2023 relate to professional services provided in connection with the audit of our consolidated financial statements, the reviews of our quarterly condensed consolidated financial statements, and audit services provided in connection with other regulatory filings. Our Board of Directors pre-approved the audit services rendered by our principal accountant during 2024 and 2023 and concluded that such services were compatible with maintaining the auditor’s independence. Pre-Approval Policies and Procedures of Audit Committee All services provided by our current independent registered public accounting firm, Grant Thornton, are subject to pre-approval by our Audit Committee. The Audit Committee has authorized each of its members to approve services by our independent registered public accounting firm in the event there is a need for such approval prior to the next full Audit Committee meeting. Any interim approval given by an Audit Committee member must be reported to the Audit Committee no later than its next scheduled meeting. Before granting any approval, the Audit Committee (or a committee member if applicable) gives due consideration to whether approval of the proposed service will have a detrimental impact on the independence of our independent registered public accounting firm. The Audit Committee pre-approved all services provided by Deloitte during 2023, and provided by Grant Thornton during 2024. 48 Table of Contents PART IV ITEM 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) See “Index to Consolidated Financial Statements” on page F-1 . (b) See “Exhibit Index” on page 50 . (c) Not applicable. 49 Table of Contents EXHIBIT INDEX Exhibit No. Description 2.1 Agreement and Plan of Merger, dated as of November 12, 2021, by and between the registrant, CRI Acquisition Corporation, Reflect Systems, Inc., and RSI Exit Corporation (incorporated by reference to Exhibit 2.1 to the registrant’s Current Report on Form 8-K filed on November 15, 2021) 2.2 Amendment to Agreement and Plan of Merger, dated as of February 8, 2022, by and among the registrant, CRI Acquisition Corporation, Reflect Systems, Inc., and RSI Exit Corporation (incorporated by reference to Exhibit 2.1 to the registrant’s Current Report on Form 8-K filed February 9, 2022) 2.3 Second Amendment to Agreement and Plan of Merger dated as of February 11, 2023 by and among the registrant, Reflect Systems, Inc. and RSI Exit Corporation (incorporated by reference to Exhibit 10.1 to the registrant ’ s Current Report on Form 8-K filed February 15, 2023) 3.1 Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 21, 2024) 3.2 Amended and Restated Bylaws (incorporated by reference to the registrant’s Current Report on Form 8-K filed on November 2, 2011) 4.1 Specimen certificate evidencing shares of Common Stock (incorporated by reference to Exhibit 4.2 of the Registrant’s Registration Statement on Form SB-2 (File No. 333-136972)) 4.2 Description of Securities (incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 21, 2024) 4.3 Warrant dated January 16, 2018, issued in favor of Slipstream Communications, LLC (incorporated by reference to the registrant’s Form S-1 filed with the SEC on June 25, 2018) 4.4 Warrant to Purchase Common Stock issued to Slipstream Communications, LLC on April 27, 2018 (incorporated by reference to Exhibit 10.31 of the registrant’s Form S-1 filed with the SEC on June 25, 2018). 4.5 Investor Warrant dated June 30, 2022 (incorporated by reference to Exhibit 10.2 of the registrant ’ s Current Report on Form 8-K filed July 7, 2022) 4.6 Lender Warrant dated June 30, 2022 (incorporated by reference to Exhibit 10.1 of the registrant ’ s Current Report on Form 8-K filed July 7, 2022) 4.7 Investor Warrant dated June 30, 2022 (incorporated by reference to Exhibit 10.3 of the registrant ’ s Current Report on Form 8-K filed July 7, 2022) 4.8 Lender Warrant dated October 17, 2024 (incorporated by reference to the registrant’s Registration Statement on Form S-3 filed with the SEC on October 17, 2024) 10.1+ Employment Agreement dated as of November 12, 2021 by and between the registrant and Rick Mills (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed November 15, 2021). 10.2+ Employment Agreement dated as of November 12, 2021 by and between the registrant and Will Logan (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed November 15, 2021) 10.3 Second Amended and Restated Loan and Security Agreement by and among the registrant, its subsidiaries and Slipstream Communications, LLC (incorporated by reference to Exhibit 10.1 of the registrant’s Current Report on Form 8-K filed February 18, 2022) 50 Table of Contents Exhibit No. Description 10.4 First Amendment to Second Amended and Restated Loan and Security Agreement (incorporated by reference to Exhibit 10.4 to the registrant ’ s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2022) 10.5 $10,000,000 Acquisition Term Note (incorporated by reference to Exhibit 10.2 of the registrant’s Current Report on Form 8-K filed February 18, 2022) 10.6 $7,185,319.06 Consolidation Term Note (incorporated by reference to Exhibit 10.3 of the registrant’s Current Report on Form 8-K filed February 18, 2022) 10.7 Note and Security Agreement (incorporated by reference to Exhibit 10.4 of the registrant’s Current Report on Form 8-K filed February 18, 2022) 10.8 First Amendment to Note and Security Agreement (incorporated by reference to Exhibit 10.2 of the registrant ’ s Current Report on Form 8-K filed February 15, 2023) 10.9+ 2014 Stock Incentive Plan, as amended (incorporated by reference to Exhibit A to the registrant ’ s definitive proxy statement on Schedule 14A filed with the SEC on June 12, 2020) 10.10*+ 2023 Stock Incentive Plan, as amended 10.11+ Amendment to Stock Option Agreement dated June 15, 2022 between the Company and Rick Mills (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2022) 10.12+ Amendment to Stock Option Agreement dated June 15, 2022 between the Company and Will Logan (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2022) 10.13+ Stock Option Agreement dated June 15, 2022 between the Company and Rick Mills (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2022) 10.14+ Stock Option Agreement dated June 15, 2022 between the Company and Will Logan (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2022) 10.15 Credit Agreement dated May 23, 2024 by and among Creative Realities, Inc., First Merchants Bank and other parties thereto (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on May 28, 2024) 10.16 $22,100,000 Revolving Credit Note dated May 23, 2024 (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on May 28, 2024) 10.17 Security Agreement dated May 23, 2024 by and among Creative Realities, Inc., First Merchants Bank and other parties thereto (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on May 28, 2024) 10.18 Guaranty dated May 23, 2024 by Creative Realities Canada, Inc. in favor of First Merchants Bank (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on May 28, 2024) 10.19 Security Agreement dated May 23, 2024 granted by Creative Realities Canada, Inc. in favor of First Merchants Bank (incorporated by reference to Exhibit 10.5 to the registrant’s Current Report on Form 8-K filed with the SEC on May 28, 2024) 10.20 Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2024) 14.1 Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018) 51 Table of Contents Exhibit No. Description 19.1 Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 21, 2024) 21.1* List of Subsidiaries 23.1* Consent of Grant Thornton LLP 23.2* Consent of Deloitte & Touche LLP 31.1* Chief Executive Officer Certification pursuant to Exchange Act Rule 13a-14(a). 31.2* Chief Financial Officer Certification pursuant to Exchange Act Rule 13a-14(a). 32.1* Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350. 32.2* Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350. 97.1* Clawback Policy. 99.1* Press Release dated March 14, 2025 101.INS* Inline XBRL Instance Document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Filed herewith + Compensatory Plan or arrangement required to be filed pursuant to Item 15(b) of Form 10-K. ITEM 16. FORM 10-K SUMMARY . None. 52 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. March 14, 2025. Creative Realities, Inc. By /s/ Richard Mills Richard Mills Chief Executive Officer By /s/ David Ryan Mudd David Ryan Mudd Interim Chief Financial Officer In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Signature Title Date /s/ Richard Mills Chief Executive Officer (Principal Executive Officer) March 14, 2025 Richard Mills and Chairman of the Board of Directors /s/ David Ryan Mudd Interim Chief Financial Officer (Principal Financial and March 14, 2025 David Ryan Mudd Principal Accounting Officer) /s/ David Bell Director March 14, 2025 David Bell /s/ Donald Harris Director March 14, 2025 Donald Harris /s/ Steve Nesbit Director March 14, 2025 Steve Nesbit 53 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID No. 248 ) F-2 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) F-3 Consolidated Financial Statements Consolidated Balance Sheets F-4 Consolidated Statements of Operations F-5 Consolidated Statements of Shareholders’ Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-8 F-1 Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Shareholders Creative Realities, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheet of Creative Realities, Inc. (a Minnesota corporation) and subsidiaries (the “Company”) as of December 31, 2024, the related consolidated statements of operations, shareholders’ equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Going concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company is experiencing difficulty in generating sufficient cash flow to service its contingent consideration obligations, which raises substantial doubt about its ability to continue as a going concern. These conditions, along with other matters as set forth in Note 1, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical audit matter Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. We have served as the Company’s auditor since 2024. /s/ Grant Thornton LLP Cincinnati, Ohio March 14, 2025 F-2 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Creative Realities, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Creative Realities, Inc. and subsidiaries (the "Company") as of December 31, 2023, the related consolidated statements of operations, shareholders' equity, and cash flows, for the year ended December 31, 2023, and the related notes to the financial statements (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Going Concern The 2023 financial statements of the Company were prepared assuming that the Company would continue as a going concern. As of the date of issuance of the Company's 2023 financial statements, the Company was experiencing difficulty in generating sufficient cash flow to service its debt and contingent consideration obligations, which raised substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters were also described in the 2023 financial statements. The 2023 financial statements did not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Deloitte & Touche LLP Louisville, Kentucky March 21, 2024 We began serving as the Company’s auditor in 2020. In 2024 we became the predecessor auditor. F-3 Table of Contents CREATIVE REALITIES, INC. CONSOLIDATED BALANCE SHEETS (in thousands) December 31, December 31, 2024 2023 ASSETS Current Assets: Cash and cash equivalents $ 1,037 $ 2,910 Accounts receivable, net 10,605 12,468 Inventories, net 1,995 2,567 Prepaid expenses and other current assets 859 665 Total Current Assets 14,496 18,610 Property and equipment, net 321 499 Goodwill 26,453 26,453 Other intangible assets, net 22,841 24,062 Operating lease right-of-use assets 787 1,041 Other non-current assets 312 112 Total Assets $ 65,210 $ 70,777 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 6,354 $ 7,876 Accrued expenses and other current liabilities 3,210 3,761 Deferred revenues 1,137 1,132 Customer deposits 2,181 3,233 Current maturities of operating leases 466 505 Short-term portion of related party term debt - 3,690 Short-term contingent consideration, at fair value 12,815 - Total Current Liabilities 26,163 20,197 Revolving credit facility 13,044 - Long-term related party term debt - 9,829 Long-term obligations under operating leases 342 536 Long-term contingent consideration, at fair value - 11,208 Other non-current liabilities 201 176 Total Liabilities 39,750 41,946 Shareholders' Equity Common stock, $ 0.01 par value, 66,666 shares authorized; 10,447 and 10,409 shares issued and outstanding, respectively 104 104 Additional paid in capital 82,210 82,073 Accumulated deficit ( 56,854 ) ( 53,346 ) Total Shareholders' Equity 25,460 28,831 Total Liabilities and Shareholders' Equity $ 65,210 $ 70,777 See accompanying Notes to Consolidated Financial Statements. F-4 Table of Contents CREATIVE REALITIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) For the Years Ended December 31, 2024 2023 Sales Hardware $ 18,259 $ 20,303 Services and other 32,595 24,863 Total sales 50,854 45,166 Cost of sales Hardware 13,521 15,280 Services and other 13,322 7,703 Total cost of sales 26,843 22,983 Gross profit 24,011 22,183 Operating expenses: Sales and marketing 6,015 5,247 General and administrative 17,058 15,590 Total operating expenses 23,073 20,837 Operating income 938 1,346 Other expense (income): Interest expense, including amortization of debt discount 1,775 2,992 Loss on change in fair value of contingent consideration 1,608 1,419 Loss on debt extinguishment 1,059 - Other expenses (income), net ( 102 ) ( 211 ) Total other expense (income) 4,340 4,200 Net loss before income taxes ( 3,402 ) ( 2,854 ) Income tax expense ( 106 ) ( 83 ) Net loss $ ( 3,508 ) $ ( 2,937 ) Net loss per common share - basic $ ( 0.34 ) $ ( 0.35 ) Net loss per common share - diluted $ ( 0.34 ) $ ( 0.35 ) Weighted average shares outstanding - basic 10,440 8,479 Weighted average shares outstanding - diluted 10,440 8,479 See accompanying Notes to Consolidated Financial Statements. F-5 Table of Contents CREATIVE REALITIES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS ’ EQUITY For the years ended December 31, 2024 and 2023 (in thousands, except shares) Additional Common Stock paid in Accumulated Year ended December 31, 2024 Shares Amount capital Deficit Total Balance as of December 31, 2023 10,409,027 $ 104 $ 82,073 $ ( 53,346 ) $ 28,831 Stock-based compensation - - 13 - 13 Shares issued to employees pursuant to the Retention Bonus Plan 37,632 - 124 - 124 Net loss - - - ( 3,508 ) ( 3,508 ) Balance as of December 31, 2024 10,446,659 $ 104 $ 82,210 $ ( 56,854 ) $ 25,460 Additional Common Stock paid in Accumulated Year ended December 31, 2023 Shares Amount capital Deficit Total Balance as of December 31, 2022 7,266,382 $ 72 $ 75,916 $ ( 50,409 ) $ 25,579 Stock-based compensation - - 445 - 445 Shares issued to directors as compensation 51,616 1 95 - 96 Shares issued to vendors as compensation 28,554 - 55 - 55 Shares issued to employees pursuant to the Retention Bonus Plan 62,475 1 138 - 139 Issuance of common stock, net 3,000,000 30 5,424 - 5,454 Net loss - - - ( 2,937 ) ( 2,937 ) Balance as of December 31, 2023 10,409,027 $ 104 $ 82,073 $ ( 53,346 ) $ 28,831 See accompanying Notes to Consolidated Financial Statements. F-6 Table of Contents CREATIVE REALITIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Years Ended December 31, 2024 2023 Operating Activities: Net loss $ ( 3,508 ) $ ( 2,937 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 4,078 3,221 Amortization of debt discount 569 1,443 Amortization of stock-based compensation 13 563 Amortization of deferred financing costs 63 - Loss on extinguishment of debt 1,059 - Bad debt expense 13 153 Provision for inventory reserves ( 43 ) 109 Loss on change in fair value of contingent consideration 1,608 1,419 Deferred income taxes 61 44 Changes to operating assets and liabilities: Accounts receivable 1,850 ( 4,358 ) Inventories 615 ( 409 ) Prepaid expenses and other current assets ( 194 ) 952 Accounts payable ( 1,388 ) 4,486 Accrued expenses and other current liabilities ( 395 ) ( 47 ) Deferred revenue 5 ( 91 ) Customer deposits ( 1,052 ) 755 Other, net 27 ( 136 ) Net cash provided by operating activities 3,381 5,167 Investing activities Purchases of property and equipment ( 11 ) ( 306 ) Capitalization of labor for software development ( 2,790 ) ( 3,721 ) Net cash used in investing activities ( 2,801 ) ( 4,027 ) Financing activities Proceeds from sale of common stock, net of offering expenses - 5,454 Proceeds from borrowings under revolving credit facility 31,459 - Repayment of borrowings under revolving credit facility ( 18,415 ) - Payment of deferred financings costs ( 306 ) - Repayment of term debt ( 15,147 ) ( 5,294 ) Principal payments on finance leases ( 44 ) ( 23 ) Net cash (used in) provided by financing activities ( 2,453 ) 137 Increase (decrease) in Cash and Cash Equivalents ( 1,873 ) 1,277 Cash and Cash Equivalents, beginning of year 2,910 1,633 Cash and Cash Equivalents, end of year $ 1,037 $ 2,910 See accompanying Notes to Consolidated Financial Statements. F-7 Table of Contents CREATIVE REALITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) NOTE 1: NATURE OF ORGANIZATION AND OPERATIONS Unless the context otherwise indicates, references in these Notes to the accompanying Consolidated Financial Statements to “ we, ” “ us, ” “ our ” and “ the Company ” refer to Creative Realities, Inc. and its subsidiaries. Nature of the Company ’ s Business Creative Realities, Inc. is a Minnesota corporation that provides innovative digital marketing technology and solutions to retail companies, individual retail brands, enterprises and organizations throughout the United States and in certain international markets. The Company has expertise in a broad range of existing and emerging digital marketing technologies, as well as the related media management and distribution software platforms and networks, device 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, 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. We have expertise in a broad range of existing and emerging digital marketing technologies, as well as the following related aspects of our business: content, network management, and connected device software and firmware platforms; customized software service layers; hardware platforms; digital media workflows; and proprietary processes and automation tools. Our main operations are conducted directly through Creative Realities, Inc., and under our wholly owned subsidiaries Allure Global Solutions, Inc., a Georgia corporation (“Allure”), Creative Realities Canada, Inc., a Canadian corporation (“CRI Canada”), and Reflect Systems, Inc., a Delaware corporation (“Reflect”). Public Offering On August 17, 2023, the Company conducted a public offering for the sale by the Company of an aggregate of 3,000,000 shares of common stock, par value $ 0.01 per share at a public offering price of $ 2.00 per share and received approximately $ 5,454 in net proceeds, after deducting underwriting fees of $ 478 and offering costs of $ 68 . Reverse stock split On March 27, 2023, the Company effected a 1 -for- 3 stock split of the shares of the Company’s common stock, par value $ 0.01 per share. As a result of the reverse stock split, effective 12:01 am on March 27, 2023, every three shares of common stock then-issued and outstanding automatically combined into one share of common stock, with no change in par value per share. All fractional shares resulting from the reverse split were rounded up to the nearest whole share of common stock. In connection with the reverse stock split, the total number of shares of common stock authorized for issuance was reduced from 200,000,000 shares to 66,666,666 shares in proportion to the outstanding shares of common stock. Effective as of the same time as the reverse stock split, the number of shares of common stock available for issuance under the Company’s equity compensation plans were reduced in proportion to the reverse stock split. The reverse stock split also resulted in the number of shares of shares of common stock issuable upon exercise of outstanding warrants, or the exercise or vesting of equity awards, in proportion to the reverse stock split and caused a proportionate increase in exercise price or share-based performance criteria, where applicable. Liquidity and Financial Condition In accordance with Accounting Standards Update (“ASU”) No. 2014 - 15, Disclosure of Uncertainties about an Entity ’ s Ability to Continue as a Going Concern (Subtopic 205 - 40 ) ( “ ASU 205 - 40 ” ) , the Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the Consolidated Financial Statements are issued. F- 8 Table of Contents At December 31, 2024, the Company has an accumulated deficit of $ 56,854 , and negative working capital of $ 11,667 . For the year ended December 31, 2024, the Company generated operating income of $ 938 and generated positive net cash flows from operations of $ 3,381 . The Company’s contingent consideration obligation was dependent upon the market value of the Company’s share price at February 17, 2025, and contractually must be settled in cash. The estimated liability for financial statement accounting purposes is $ 12,815 as of December 31, 2024 . While the Company is currently generating cash from operations and refinanced its debt in 2024, the Credit Agreement (as defined in Note 7 Debt below) limits, via specific reserve, utilization of the Company’s line of credit to no more than $ 4,000 (or such lesser amount determined by the lender in its sole and absolute discretion) for payments to satisfy the contingent consideration obligation. Should the contingent consideration require a cash payment in excess of the specific reserve, the Company may not have sufficient liquidity to settle this obligation without (i) receipt of a waiver under the Credit Agreement, (ii) an amendment to the Credit Agreement to permit additional funds from the line of credit to be used for payment of the contingent consideration obligation, (iii) raising additional capital on the capital markets, the proceeds of which would be used, in whole or in part, to satisfy the contingent consideration obligation, or (iv) a reduction in the amount of the contingent consideration obligation. The conditions and events raise substantial doubt about the Company's ability to continue as a going concern under the technical framework within ASU 205 - 40 . In response to these conditions, the Company continues to evaluate its available options for amending its debt facilities or accessing the capital markets via equity financing. However, these plans have not been finalized, are subject to market conditions, in some respects are not within the Company’s control, and therefore cannot be deemed probable. As a result, the Company has concluded that management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern. The Consolidated Financial Statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Subsequent events The Company has evaluated subsequent events occurring after the balance sheet date through the date the Consolidated Financial Statements were issued and has determined that there were no such events that would require recognition or disclosure in the financial statements. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies consistently applied in the preparation of the accompanying Consolidated Financial Statements follows: 1. Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10 -K and Article 8 of Regulation S- X and include all of the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”) for annual financial reporting. The Consolidated Financial Statements include the accounts of Creative Realities, Inc. and our wholly owned subsidiaries Allure, CRI Canada, and Reflect. All intercompany balances and transactions have been eliminated in consolidation, as applicable. Certain amounts have been reclassified to conform to current period presentation. 2. Recently Issued and Adopted Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023 - 07, Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures , which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023 - 07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023 - 07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted the new standard for the fiscal year ending December 31, 2024. See Note 12 Segment Reporting for new required disclosures. F- 9 Table of Contents In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures , which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023 - 09. 3. Cash and cash equivalents Cash and cash equivalents consist of cash on deposit in financial institutions, in both the United States and Canada. The Company does not hold any investments that qualify as cash equivalents as of December 31, 2024. As of December 31, 2024, the Company had approximately $ 981 in cash that was held in a Canadian financial institution. The Company does not believe the balance presents a material concentration of credit risk, as the cash is held with a reputable financial institution. 4. Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers , applying the five -step model. If an arrangement involves multiple performance obligations, the obligations are analyzed to determine the separate units of accounting, whether the obligations have value on a standalone basis and whether there is objective and reliable evidence of their standalone selling price. The total contract transaction price is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations. The standalone selling price is based on an observable price for services sold to other comparable customers, when available, or an estimated selling price using a cost plus margin approach. The Company estimates the amount of total contract consideration it expects to receive for variable arrangements by determining the most likely amount it expects to earn from the arrangement based on the expected quantities of services it expects to provide and the contractual pricing based on those quantities. The Company only includes some or a portion of variable consideration in the transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company considers the sensitivity of the estimate, its relationship and experience with the customer and variable services being performed, the range of possible revenue amounts and the magnitude of the variable consideration to the overall arrangement. The Company receives variable consideration in very few instances. Revenue is recognized when a customer obtains control of promised goods or services under the terms of a contract and is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The Company has very few contracts with material extended payment terms as payment is typically due at or shortly after the time of the sale, typically ranging between thirty and ninety days. In those instances where the Company has material extended payment terms (most commonly in multi-year arrangements where the Company acts as an agent to a transaction on behalf of its customers), the Company evaluates and applies constraints to arrive at the revenue recognized in the period in which a contract is entered. Observable prices are used to determine the standalone selling price of separate performance obligations or a cost plus margin approach when one is not available. Sales, value-added and other taxes collected concurrently with revenue producing activities are excluded from revenue. The Company recognizes contract assets or unbilled receivables related to revenue recognized for services completed but not yet invoiced to the customers. A contract liability is recognized as deferred revenue when the Company invoices customers in advance of performing the related services under the terms of a contract. Deferred revenue is recognized as revenue when the Company has satisfied the related performance obligation. The Company uses the practical expedient for recording an immediate expense for incremental costs of obtaining contracts, including certain design/engineering services, commissions, incentives and payroll taxes, as these incremental and recoverable costs have terms that do not exceed one year. F- 10 Table of Contents 5. Allowance for Credit Losses The allowance for credit losses is the Company's best estimate of the amount of expected lifetime credit losses in the Company's accounts receivable. The Company regularly reviews the adequacy of its allowance for credit losses. The Company estimates losses over the contractual life using assumptions to capture the risk of loss, even if remote, based principally on how long a receivable has been outstanding. Account balances are charged off against the allowance for credit losses after all reasonable means of collection have been exhausted and the potential for recovery is considered remote. Other factors considered include historical write-off experience, current economic conditions, customer credit, and past transaction history with the customer. The allowance for credit losses is included in accounts receivable, net in the accompanying Consolidated Balance Sheets. The Company had the following activity for its allowance for credit losses from December 31, 2022 to December 31, 2024: Balance as of December 31, 2022 $ 984 Provision for credit losses 153 Write-offs charged against the allowance ( 436 ) Balance as of December 31, 2023 $ 701 Provision for credit losses 13 Recoveries 47 Write-offs charged against the allowance ( 53 ) Balance as of December 31, 2024 $ 708 6. Inventories Inventories are stated at the lower of cost or net realizable value, determined by the first -in, first -out (FIFO) method, and consist of the following: December 31, December 31, 2024 2023 Raw materials $ 1,465 $ 2,063 Work-in-process 530 504 Total inventories $ 1,995 $ 2,567 The reserve for obsolete inventory at December 31, 2024 and 2023 was $ 112 and $ 160 , respectively. 7. Impairment of Long-Lived Assets We review the carrying value of all long-lived assets, including property and equipment, for impairment in accordance with ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets . Under ASC 360, impairment losses are recorded whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. If the impairment tests indicate that the carrying value of the asset is greater than the expected undiscounted cash flows to be generated by such asset, an impairment loss would be recognized. The impairment loss is determined as the amount by which the carrying value of such asset exceeds its fair value. We generally measure fair value by considering sale prices for similar assets or by discounting estimated future cash flows from such assets using an appropriate discount rate. Assets to be disposed of are carried at the lower of their carrying value or fair value less costs to sell. Considerable management judgment is necessary to estimate the fair value of assets, and accordingly, actual results could vary significantly from such estimates. 8. Basic and Diluted Loss per Common Share Basic and diluted loss income per common share for all periods presented is computed using the weighted average number of common shares outstanding. Basic weighted average shares outstanding includes only outstanding common shares. Diluted weighted average shares outstanding includes outstanding common shares and potential dilutive common shares outstanding in accordance with the treasury stock method. Shares reserved for outstanding stock options, including stock options with performance restricted vesting, and warrants totaling approximately 6,152,233 and 6,223,134 at December 31, 2024 and 2023 , respectively were excluded from the computation of loss per share as the strike price on the options and warrants were higher than the Company's market price and therefore anti-dilutive. F- 11 Table of Contents 9. Income Taxes Deferred income taxes are recognized in the financial statements for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences arise from a number of matters including, but not limited to, net operating losses, differences in basis of intangibles, stock-based compensation, reserves for uncollectible accounts receivable and inventory, differences in depreciation methods, and accrued expenses. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company accounts for uncertain tax positions utilizing an established recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We had no uncertain tax positions as of December 31, 2024 and 2023. 10. Goodwill and Definite-Lived Intangible Assets We follow the provisions of ASC 350, Goodwill and Other Intangible Assets. Pursuant to ASC 350, goodwill acquired in a purchase business combination is not amortized, but instead tested for impairment at least annually. The Company uses an annual measurement date of September 30 to assess impairment of goodwill and indefinite-lived intangible assets, or as indicators are identified. Definite-lived intangible assets are amortized straight-line in accordance with their identified useful lives. 11. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Our significant estimates include: contingent purchase consideration valuation, allowance for credit losses, valuation allowances related to deferred taxes, and assumptions and estimates used to evaluate the recoverability of goodwill and other intangible assets and the related amortization methods and periods. Actual results could differ from those estimates. 12. Property and Equipment Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over the estimated service lives, principally using straight-line methods. Leasehold improvements are amortized over the shorter of the life of the improvement or the lease term, using the straight-line method. Property and equipment consist of the following at December 31, 2024 and 2023 : December 31, 2024 2023 Equipment $ 277 $ 334 Leasehold improvements 141 298 Furniture and fixtures 189 205 Other depreciable assets 78 135 Total property and equipment 685 972 Less: accumulated depreciation and amortization ( 364 ) ( 473 ) Net property and equipment $ 321 $ 499 The estimated useful lives used to compute depreciation and amortization are as follows: Asset class Useful life assigned (in years) Equipment 3 – 5 Furniture and fixtures 3 – 5 Leasehold improvements Shorter of 5 years or term of lease Depreciation expense was $ 201 and $ 166 for the years ended December 31, 2024 and 2023 , respectively. The Company disposed of certain fully depreciated fixed assets with an acquisition value of $ 310 and $ 150 for the years ended December 31, 2024 and 2023 , respectively. F- 12 Table of Contents 13. Contingent Consideration On November 12, 2021, the Company, Reflect, CRI Acquisition Corporation, a direct wholly owned subsidiary of the Company (“CRI Acquisition”), and RSI Exit Corporation, representative of the former Reflect stockholders (“RSI”), entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”), pursuant to which CRI Acquisition merged with and into Reflect, with Reflect surviving the merger and becoming our wholly owned subsidiary (the “Merger”). At the effective time of the Merger, which occurred on February 17, 2022, all shares of Reflect’s capital were converted into the right to receive cash and a total of 2,333,334 shares of Creative Realities common stock (the “Merger Shares”). The Merger Agreement also requires the Company to pay to the former Reflect stockholders additional contingent cash payments (the “Guaranteed Consideration”), if any, payable on or after February 17, 2025 ( subject to the Extension Option described below, the “Guarantee Date”), in an amount by which the value of the Merger Shares on the Guarantee Date is less than $ 6.40 per share (such applicable amount, the “Guaranteed Price”), multiplied by the number of Merger Shares held by the Reflect stockholders on the Guarantee Date. On March 23, 2023, after the closing of the Merger, the Company completed a 1 -for- 3 reverse stock split (the “Reverse Split”) primarily intended to bring the Company into compliance with the minimum bid price requirements to maintain the listing of its common stock on the Nasdaq Capital Market. As a result of the Reverse Split, the number of Merger Shares decreased from 2,333,334 to 777,778 . The Company and RSI have engaged in discussions regarding the impact that the Reverse Split had on the calculation of the Guaranteed Consideration, given that the Merger Agreement provides for a Guaranteed Price of $6.40 per share and does not provide for any adjustment to the Guaranteed Price as a result of the Reverse Stock Split or other similar transaction with respect to the Company’s common stock. To date, the Company and RSI have not reached any agreement regarding the methodology for calculating Guaranteed Consideration under the plain terms of the Merger Agreement, and commencing March 17, 2025, former Reflect stockholders seeking payment of Guaranteed Consideration may submit written demands to the Company for a 30 -day period. The contingent liability associated with the Guaranteed Consideration is recorded in the Company’s Consolidated Balance Sheets at fair value and is remeasured at each reporting period in accordance with ASC 805 - 30 - 35 - 1 using a Monte Carlo simulation model. For financial statement purposes, consistent with prior reporting periods since the Reverse Split, the Company has and continues to book a contingent liability as of December 31, 2024 related to the Guaranteed Consideration as though the Reverse Split increased the Guaranteed Price from $6.40 per share to $ 19.20 per share, thereby recording an estimated potential liability for contingent consideration, at fair value of $ 12,815 . The contingent liability, at fair value, as of December 31, 2024 related to the Guaranteed Consideration that would be calculated using a Guaranteed Price of $6.40 per share would result in an estimated liability of $ 3,017 . The Company engaged an outside independent valuation firm to calculate the fair value of the Guaranteed Consideration at both the $6.40 and $19.20 Guaranteed Prices. While we believe that the Merger Agreement provides no adjustment to the Guaranteed Price as a result of the Reverse Split, resulting in a lower amount of Guaranteed Consideration than the contingent liability reflected in our financial statements, no assurance can be provided that our interpretation of the Merger Agreement will ultimately be accepted by RSI and the former Reflect stockholders, or by any arbitrator or court that ultimately adjudicates the matter. The Company may exercise an extension option (the “Extension Option”) to extend the Guarantee Date by six ( 6 ) months, from February 17, 2025 to August 17, 2025, if (i) the Extension Threshold Price is greater than or equal to 70 % of the Guaranteed Price described above, and (ii) the Company provides written notice of its election to exercise the Extension Option no later than February 7, 2025. The “Extension Threshold Price” means the average closing price per share of Creative Realities common stock as reported on the Nasdaq Capital Market (or NYSE) in the fifteen ( 15 ) consecutive trading day period ending February 2, 2025. The Merger Agreement provides that 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 (which amount has not been adjusted as a result of the Reverse Split). F- 13 Table of Contents NOTE 3: FAIR VALUE MEASUREMENT We measure certain financial assets, including cash equivalents, at fair value on a recurring basis. In accordance with ASC 820 - 10 - 30, fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 - 10 - 35 establishes a three -level hierarchy that prioritizes the inputs used in measuring fair value. The three hierarchy levels are defined as follows: Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets. Level 2 — Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. Level 3 — Valuations based on inputs that are unobservable and involve management judgment and the reporting entity’s own assumptions about market participants and pricing. The Company previously recorded warrant liabilities that were measured at fair value on a recurring basis using a binomial option pricing model. The calculation of the fair value of the contingent consideration contains inputs which are unobservable and involve management judgment and are considered Level 3 estimates. Additionally, the separately identifiable intangible assets rely on a discounted cash flow model which utilizes inputs including the calculation of the weighted average cost of capital and management’s forecast of future financial performance which are unobservable and involve management judgment and are considered Level 3 estimates. The calculation of the weighted average cost of capital and management’s forecast of future financial performance utilized within our discounted cash flow model for the impairment of goodwill contains inputs which are unobservable and involve management judgment and are considered Level 3 estimates. NOTE 4: REVENUE RECOGNITION The Company applies ASC 606 for revenue recognition. The following table disaggregates the Company’s revenue by major source for the years ended December 31, 2024 and 2023 : Year Year Ended Ended December 31, December 31, 2024 2023 Hardware $ 18,259 $ 20,303 Services: Managed Services 19,547 15,916 Installation Services 8,968 4,892 Other Services 4,080 4,055 Total Services 32,595 24,863 Total Hardware and Services $ 50,854 $ 45,166 Hardware System hardware revenue is recognized generally upon shipment of the product or customer acceptance depending upon contractual arrangements with the customer in instances in which the sale of hardware is the sole performance obligation. Shipping charges billed to customers are included in hardware sales and the related shipping costs are included in hardware cost of sales. The cost of freight and shipping to the customer is recognized in cost of sales at the time of transfer of control to the customer. F- 14 Table of Contents Managed Services Software as a service license sales Software as a service includes revenue from software licensing and delivery in which software is licensed on a subscription basis and is centrally hosted by the Company. These services often include software updates which provide customers with rights to unspecified software product upgrades and maintenance releases and patches released during the term of the support period. Contracts for these services are generally 12 - 36 months in length and typically have perpetual autorenewal terms. We account for revenue from these services in accordance with ASC 985 - 20 - 15 - 5 and recognize revenue ratably over the performance period. Maintenance and support services The Company sells support services that include access to technical support personnel for software and hardware troubleshooting. The Company offers a hosting service through our network operations center, or NOC, allowing the ability to monitor and support our customers’ networks 7 days a week, 24 hours a day. These contracts are generally 12 - 36 months in length and typically have autorenewal terms. Revenue is recognized over the term of the agreement in proportion to the costs incurred in fulfilling performance obligations under the contract. Maintenance and support fees are based on the level of service provided to end customers, which can range from monitoring the health of a customer’s network, supporting a sophisticated web-portal, or managing the end-to-end hardware and software of a digital marketing system. These agreements are renewable by the customer. Rates for maintenance and support, including subsequent renewal rates, are typically established based upon a fee per location, per device, or a specified percentage of net software license fees as set forth in the arrangement. These contracts are generally 12 - 36 months in length. Revenue is recognized ratably and evenly over the service period. The Company also performs time and materials-based maintenance and repair work for customers. Revenue is recognized at a point in time when the performance obligation has been fully satisfied. Installation Services The Company performs installation services associated with system hardware sales to customers and recognizes revenue upon completion of the installations. Installation services also include engineering and configuration services required to be performed to design and deploy a digital signage system that subsequently becomes an installation project. When system hardware sales include installation services to be performed by the Company, the goods and services in the contract are, in certain instances, not distinct as the customer contract contemplates an installed solution, inclusive of system hardware. In those instances, the arrangement is accounted for as a single performance obligation. Our customers may control the work-in-process and can make changes to the design specifications over the contract term. In these circumstances, revenues are recognized over time as the installation services are completed based on the relative portion of labor hours completed as a percentage of the budgeted hours for the installation. Typically, in large scale deployments that include installation services, the contract terms segregate performance obligations related to hardware sales and installation services by providing for different legal transfer of title and risk of loss. In those circumstances, installation services are deemed to be a separate performance obligation. In each instance, installation services are recognized at the time of completion. F- 15 Table of Contents Other Services Software design and development services Software design and custom development sales represent fixed fee orders for work on a time and materials basis and are recognized as revenue when the application, feature, or custom software code has been received and delivery has occurred to the customer. Revenue is recognized generally upon customer acceptance (point-in-time) of the software product and verification that it meets the required specifications. Software is delivered to customers electronically. Media sales Media revenues are derived from selling (i) promotion and sponsorship packages to monetize customer infrastructure assets, including mobile takeover or physical presence, or (ii) digital advertising inventory to advertisers on digital displays or other outdoor structures, owned or controlled by our customers, each within physical venues. We sell advertising or sponsorship opportunities on behalf of our media network owner customers to brands and advertisers. We generally do not own the devices that display the sold digital advertising. The Company has concluded that it acts as an agent and reports media revenues on a net basis, with the Company recording its commission, which typically is between thirty percent ( 30 %) and forty percent ( 40 %) of the total media sales contract, as revenue in the consolidated financial statements. The media sales contracts we facilitate on behalf of our customers range from a single day to eight years. The Company invoices advertisers on behalf of our customers and remits the net cash to our customer after the advertiser has paid the Company the fees owed for such advertising. Media revenue services are recognized when the Company has completed its performance obligations under the contract with our customers, which typically has concluded upon facilitating execution of contracts between our customer and a brand/advertiser. The Company applies time-based constraints in accordance with ASC 606 to evaluate the earned portion of the contract to record at execution. For revenues generated through the use of a subcontracted advertising agency, commissions are calculated based on a stated percentage of gross advertising revenue and reported in the Consolidated Statements of Operations within Sales and Marketing Expenses. NOTE 5: SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION Year Ended December 31, 2024 2023 Supplemental non-cash Investing and Financing activities Capitalized software labor in accounts payable $ 67 $ 201 Supplemental disclosure information for cash flow Cash paid during the period for: Interest $ 1,195 $ 1,685 Income taxes $ 52 $ 78 F- 16 Table of Contents NOTE 6: INTANGIBLE ASSETS AND GOODWILL Intangible Assets Intangible assets consisted of the following at December 31, 2024 and 2023: December 31, December 31, 2024 2023 Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization Technology platform $ 7,140 3,041 $ 6,900 2,255 Purchased and developed software 13,780 5,006 5,284 3,405 In-Process internally developed software platform - - 6,080 - Customer relationships 13,910 4,350 13,910 3,054 Trademarks and trade names 1,260 852 1,260 660 Noncompete - - 30 28 Total amortizable intangible assets 36,090 13,249 33,464 9,402 Accumulated amortization 13,249 9,402 Net book value of amortizable intangible assets $ 22,841 $ 24,062 For the years ended December 31, 2024 and 2023 , amortization of intangible assets charged to operations was $ 3,877 and $ 3,055 , respectively. For the year ended December 31, 2024, the Company wrote-off a $ 30 fully amortized noncompete asset and the related accumulated amortization. For the year ended December 31, 2023, the Company wrote-off a $ 340 fully amortized trade name asset, a $ 1,090 fully amortized customer list asset, a $ 2,864 fully amortized technology asset , a $ 758 fully amortized capitalized software and the related accumulated amortization. There was no impact on the Company’s Consolidated Balance Sheet or Consolidated Statement of Operations as a result of these write-offs during the period. Estimated amortization is as follows: Estimated Future Year ending December 31, Amortization 2025 $ 4,390 2026 3,757 2027 3,199 2028 2,889 2029 2,889 Thereafter 5,717 Total $ 22,841 Intangible assets include the following and are being amortized over their estimated useful lives as follows: Amortization Period: Acquired Intangible Asset: (years) Technology platform and patents 3 - 10 Purchased and developed software 3 - 7 Trade names 5 Customer relationships 10 - 15 F- 17 Table of Contents Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill is subject to an impairment review at a reporting unit level, on an annual basis at September 30th each fiscal year, when an event occurs, or circumstances change that would indicate potential impairment. The Company has only one reporting unit, and therefore the entire goodwill is allocated to that reporting unit. Using the quantitative approach, fair value of the reporting unit is estimated using both ( 1 ) a market approach, leveraging recent industry merger and acquisition activity as well as comparable public company information, and ( 2 ) a discounted cash flow analyses consisting of various assumptions, including expectations of future cash flows based on projections or forecasts derived from analysis of business prospects and economic or market trends that may occur. Specifically, the Company gives significant consideration to actual historic financial results, including revenue growth rates in the current and preceding three years, further informed by known backlog and customer acquisitions. Using the qualitative approach, the Company reviews macroeconomic conditions, industry and market conditions and entity specific factors, including strategies and financial performance for potential indicators of impairment. The Company performed its annual impairment of goodwill qualitatively in 2024, and quantitatively in 2023 to determine whether it is more likely than not that the fair value of our reporting unit is below its carrying amount. Based on the Company’s assessment, we determined that the fair value of our reporting unit exceeded its carrying value, and accordingly, the goodwill associated with the reporting unit was not considered to be impaired at September 30, 2024 and 2023. No indicators of potential impairment were identified as of December 31, 2024. We believe our implied fair value continues to exceed our total carrying value as of December 31, 2024. The Company recognizes that any changes in our projected 2025 results could potentially have a material impact on our assessment of goodwill impairment. The Company will continue to monitor the actual performance of its operations against expectations and assess indicators of possible impairment. The valuation of goodwill and intangible assets is subject to a high degree of judgment, uncertainty and complexity. Should any indicators of impairment occur in subsequent periods, the Company will be required to perform an analysis in order to determine whether goodwill is impaired. NOTE 7: DEBT Debt of the Company consists of the following: Issuance Maturity December 31, December 31, Interest Rate Debt Instrument Date Date 2024 2023 Warrants Information Revolving Credit Facility 5/23/2024 5/23/2027 $ 13,044 $ - None See Below Acquisition Term Loan 2/17/2022 2/15/2025 $ - $ 10,000 833,334 8 % Consolidation Term Loan 2/17/2022 2/15/2025 - 5,147 898,165 10 % Total debt, gross $ 13,044 $ 15,147 Less: Deferred financing costs 243 1,628 Total debt, net $ 12,801 $ 13,519 Less: Current portion - 3,690 Total long-term debt, net $ 12,801 $ 9,829 F- 18 Table of Contents Secured Promissory Note On February 17, 2022, in connection with the Closing, the Company issued to RSI Exit Corporation (“Stockholders’ Representative”), the representative of Reflect stockholders, a $ 2,500 Note and Security Agreement (the “Secured Promissory Note”). The Secured Promissory Note accrued interest at 0.59 % per annum (the applicable federal rate on the date of issuance of the Secured Promissory Note) and required the Company and Reflect to collectively pay equal monthly principal installments of $ 104 on the fifteenth ( 15th ) day of each month, commencing on March 15, 2022. Any remaining or unpaid principal was due and payable on February 17, 2023. All payments under the Secured Promissory Note were paid to the escrow agent in the Merger Agreement to be placed into the escrow account to secure the Reflect stockholders’ indemnification obligations until released on February 17, 2023 ( the one -year anniversary of the closing of the Merger), at which time any remaining proceeds not subject to a pending indemnification claim would be paid to the exchange agent for payment to the Reflect stockholders pursuant to the Merger Agreement. The Secured Promissory Note is secured by a first -lien security interest in certain contracts of Reflect, including obligations arising out of those certain contracts. The Company has the right to offset amounts payable under the Secured Promissory Note upon a final, non-appealable decision of a court that entitles the Company or its affiliates to any damages for indemnification under the Merger Agreement, or the Stockholders’ Representative’s agreement in writing to such damages. On February 11, 2023, the Company, Reflect and the Stockholders’ Representative, executed a Second Amendment to the Merger Agreement. The Second Amendment to the Merger Agreement provided that, among other things, the cash merger consideration payable in the Merger should be reduced by $ 242 , or the “Claim Amount,” subject to a reduction in the Claim Amount to the extent that Reflect or Creative Realities receive payments of certain accounts receivable of Reflect, up to $ 27 . An employer retention credit of $ 242 (the “ERC”) based on the operations of Reflect pre-Merger remains outstanding and will be paid to the Stockholders’ Representative for the benefit of former Reflect stockholders upon receipt, subject to the offset rights of Creative Realities. In addition, the Company and the Stockholders’ Representative executed an amendment (the “Note Amendment”) to the Secured Promissory Note on February 11, 2023. The Note Amendment eliminated the balloon payment, extended the maturity date for a one -year period, to February 17, 2024. During the extended period, the Company continued to make monthly principal payments of $ 104 , and the annual interest rate on the outstanding principal increased from 0.59 % to 4.60 %, which accrued and is payable in full on the new maturity date. On December 15, 2023, the Company paid $ 110 as final settlement of the Secured Promissory Note, including accrued interest through the settlement date. All rights to payment of the ERC were retained by the Reflect stockholders as part of this settlement. F- 19 Table of Contents Second Amended and Restated Loan and Security Agreement On February 17, 2022, the Company and its subsidiaries (collectively, the “Borrowers”) refinanced their debt facilities with Slipstream, pursuant to a Second Amended and Restated Credit and Security Agreement (the “Credit Agreement”). The Borrowers include Reflect, which became a wholly owned subsidiary of the Company as a result of the Closing on February 17, 2022. The debt facilities continue to be fully secured by all assets of the Borrowers. The Credit Agreement also provides that the Company’s outstanding loans from Slipstream at December 31, 2021, consisting of its pre-existing $ 4,767 senior secured term loan and $ 2,418 secured convertible loan, with an aggregate of $ 7,185 in outstanding principal and accrued and unpaid interest under such loans, were consolidated into a term loan (the “Consolidation Term Loan”). The Consolidation Term Loan has an interest rate of 10.0 %, with 75.0 % warrant coverage (or 898,165 warrants). On the first day of each month, commencing March 1, 2022 through February 1, 2025, the Borrowers will make interest-only payments on the Consolidation Term Loan. Commencing on September 1, 2023, and on the first day of each month thereafter until the Maturity Date, the Borrowers will make a payment on the Consolidation Term Loan, in an equal monthly installment of principal sufficient to fully amortize the Consolidation Term Loan in eighteen equal installments. In addition to refinancing the existing debt with Slipstream, the Company issued to Slipstream a $ 10,000 , 36 -month senior secured term loan (the “Acquisition Term Loan”) resulting in $ 10,000 in gross proceeds, or $ 9,950 in net proceeds. The Acquisition Term Loan matured on February 17, 2025 ( the “Maturity Date”) and had an interest rate of 8.0 %, with 50.0 % warrant coverage (or 833,334 warrants). On the first day of each month, commencing March 1, 2022 through February 1, 2025, the Borrowers were required to make interest-only payments on the Acquisition Term Loan. No principal payments on the Acquisition Term Loan were payable until the Maturity Date. In connection with the Acquisition Term Loan and Consolidation Term Loan warrant coverage, the Company issued to Slipstream a warrant to purchase an aggregate of 1,731,499 shares of Company common stock (the “Lender Warrant”). The Lender Warrant has a five -year term, an initial exercise price of $ 6.00 per share, subject to adjustments in the Lender Warrant, and was not exercisable until August 17, 2022. The warrants were assessed in accordance with ASC 470 and ASC 815 Derivatives and were deemed to represent bifurcated derivative instruments that should be recorded as liabilities in the Consolidated Balance Sheets. The Company performed a Black-Scholes valuation of the warrants as of the issuance date, resulting in a fair value of $ 2.4387 per warrant. In recording the warrant liability, the Company recorded a debt discount associated with each of the Acquisition and Consolidation Term Loans in an amount of $ 2,032 and $ 2,190 , respectively. These amounts are amortized straight-line through interest expense over the life of the loans. In certain circumstances, upon a fundamental transaction of the Company (e.g., a disposal or sale of all or the greater part of the assets or undertaking of the Company, an amalgamation or merger with another company, or implementation of a scheme of arrangement), the holder of the Lender Warrant will have the right to require the Company to repurchase the Lender Warrant at its fair value using a Black Scholes option pricing formula; provided that such holder may not require the Company or its successor entity to repurchase the Lender Warrant for the Black Scholes value in connection with a fundamental transaction that is not approved by the Company’s Board of Directors, and therefore not within the Company’s control. Effective June 30, 2022, the Company amended the terms of the Lender Warrant to remove the holder’s option to exercise such warrant on a cashless basis utilizing the VWAP of the Company’s common stock on the trading day immediately preceding the date of a notice of cashless exercise in certain circumstances, and remove the condition to exercising such warrant that the Company’s shareholders approve the exercise thereof (which had already been obtained). The amendments to the Lender Warrant also extend the term of such warrants for an additional one year, such that the Lender Warrant will expire on February 17, 2028. The foregoing amendments to the Lender Warrant caused such warrants to be accounted for as equity instruments in the Company’s Consolidated Financial Statements. On October 31, 2022, the Borrowers and Slipstream amended the Credit Agreement to provide the Borrowers with a $ 2,000 term loan ("Term Loan ( 2022 )"), the net proceeds of which were used by the Company to accelerate an active software development project with potential to expand SaaS revenues associated with an existing customer. The Term Loan ( 2022 ) had an annual interest rate of 12.5 % and matured on September 1, 2023. Commencing on February 1, 2023, the Company made monthly installment payments of approximately $ 270 until the maturity date, consisting of principal and interest sufficient to fully amortize the Term Loan ( 2022 ) through the maturity date. As of December 31, 2023, the Term Loan 2022 has been repaid in full to Slipstream. F- 20 Table of Contents Revolving credit facility On May 23, 2024, the Company entered into a Credit Agreement (the "Credit Agreement") with First Merchants Bank (the "Bank"). The Credit Agreement provides the Company with a $ 22,100 secured revolving credit facility, with an uncommitted accordion feature that provides for additional borrowing capacity of up to $ 5,000 , subject to the Bank's approval and other customary terms and conditions set forth in the Credit Agreement. The revolving credit facility matures on May 23, 2027, subject to any earlier default under the Credit Agreement. The Credit Agreement requires the Company to pay the entire unpaid principal balance of the revolving credit facility on the maturity date, subject to any earlier default under the Credit Agreement. The Credit Agreement includes, among other things, the occurrence of any event which could reasonably be anticipated to cause or result in a “Material Adverse Effect” (as defined in the Credit Agreement) as an event of default under which the outstanding balance could become due and payable to the Bank. The Company has determined that the risk of such event is not probable and therefore has classified the outstanding balance in long-term liabilities in the Consolidated Balance Sheets based on the maturity date. Obligations under the Credit Agreement are secured by all assets of the Company. On May 23, 2024, the Company borrowed $ 13,667 under the revolving credit facility to repay all obligations owing to its prior lender, Slipstream Communications, LLC, including the outstanding principal balance of $ 10,000 on the Acquisition Term Loan, the outstanding principal balance of $ 3,593 on the Consolidation Term Loan and accrued interest expense incurred through the payoff date of $ 74 . The Company recognized a $ 1,059 loss on extinguishment of debt equal to the unamortized portion of debt discount at May 23, 2024 associated with the Acquisition Term Loan and Consolidation Term Loan. The revolving credit facility accrues interest at a floating rate equal to the 1 -month SOFR, plus 0.11 %, plus a floating margin ranging from 2.00 % to 3.50 % that adjusts quarterly, depending upon the Company's Senior Funded Debt to EBITDA Ratio. The floating margin is determined as follows: Senior Funded Debt to EBITDA Ratio Floating Margin < 1.00 to 1 2.00 % ≥ 1.00 to 1.00 but < 2.00 to 1.00 2.50 % ≥ 2.00 to 1.00 but < 3.00 to 1.00 3.00 % ≥ 3.00 to 1.00 3.50 % The effective interest rate at December 31, 2024 was 7.16 %. The Company pays accrued interest monthly on the first day of each successive calendar month. The Company incurred $ 306 of deferred financing costs that were capitalized and recorded as other non-current assets within the Consolidated Balance Sheets. Deferred financing costs are being amortized as interest expense over the respective debt instrument period, 36 months. The Company had $ 13,044 in outstanding borrowings under the revolving credit facility as of December 31, 2024. Total availability under the revolving facility was $ 5,056 , after accounting for $ 4,000 reserved under the Credit Agreement until resolution of the Contingent Consideration. As of December 31, 2024, the Company was in compliance with all applicable debt covenants. F- 21 Table of Contents NOTE 8: COMMITMENTS AND CONTINGENCIES The Company is not party to any material legal proceedings, other than ordinary routine litigation incidental to the business, and there were no other such proceedings pending during the period covered by this Report. NOTE 9: INCOME TAXES Income tax expense consisted of the following: Year ended December 31, 2024 2023 Tax provision summary: State income tax $ 46 $ 39 Deferred tax expense – federal 41 9 Deferred tax expense – state 19 35 Tax expense $ 106 $ 83 The income tax expense includes federal and state income taxes currently payable and those deferred or prepaid because of temporary differences between financial statement and tax bases of assets and liabilities. The Company records income taxes under the liability method. Under this method, deferred income taxes are recognized for the estimated future tax effects of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws. A reconciliation of the statutory income tax rate to the effective income tax rates as a percentage of income before income taxes is as follows: 2024 2023 Federal statutory rate 21.0 % 21.0 % State taxes, net of federal benefit 0.5 % 1.3 % Foreign rate differential 1.0 % 1.1 % Fair value of Contingent Consideration ( 9.7 )% ( 6.5 )% Provision-to-return adjustments ( 5.6 )% 0.5 % Net operating loss expirations ( 24.5 )% ( 2.5 )% Deferred tax true-ups ( 0.2 )% ( 1.0 )% State rate changes ( 0.5 )% 2.0 % Other permanent ( 1.6 )% ( 1.2 )% Changes in valuation allowance 16.5 % ( 16.5 )% Effective tax rate ( 3.1 )% ( 1.8 )% F- 22 Table of Contents The net deferred tax assets and liabilities recognized in the accompanying Consolidated Balance Sheets, determined using the income tax rate applicable to each period, consist of the following: December 31, 2024 2023 Deferred tax assets (liabilities): Reserves $ 239 $ 249 Property and equipment 41 57 Accrued expenses 325 514 Right-of-use Asset ( 207 ) ( 254 ) Right-of-use Liability 212 254 IRC 163(j) Interest Carryforward 651 704 Debt issuance costs - 135 Non-qualified stock options 1,645 1,708 IRC Section 174 1,962 593 Net foreign carryforwards 4,148 3,753 Research and development credits 2,312 2,312 US net operating loss and contribution carryforwards 37,437 38,010 Intangibles ( 5,244 ) ( 3,818 ) Total deferred tax liabilities, net 43,521 44,217 Valuation allowance ( 43,654 ) ( 44,290 ) Net deferred tax liabilities $ ( 133 ) $ ( 73 ) As of December 31, 2024 , the Company had no reserves recorded as a liability for unrecognized tax benefits for U.S. federal and state tax jurisdictions. There were no unrecognized tax benefits as of December 31, 2024 that, if recognized, would affect the tax rate. It is the Company’s policy to accrue interest and penalties related to liabilities for income tax contingencies in the provision for income taxes. As of December 31, 2024 , the Company had no accrued interest or penalties related to uncertain tax positions. Our deferred tax assets are primarily related to net federal and state operating loss carryforwards (NOLs). As of December 31, 2024 , the Company has federal net operating loss carryforwards of $ 36,433 , federal contribution carryforwards of $ 13 , and state net operating loss carryforwards of $ 991 expiring between 2025 and 2044, $ 2,631 of which have an indefinite carryforward period but are subject to limitation on usage such that they cannot be utilized to offset more than 80% of taxable income in a given tax year. The federal statute of limitations remains open for tax years 2020 through 2023 and state tax jurisdictions generally have statutes of limitations open for tax years 2020 through 2023. We have substantial NOLs that are limited in usage by IRC Section 382. IRC Section 382 generally imposes an annual limitation on the amount of NOLs that may be used to offset taxable income when a corporation has undergone significant changes in stock ownership within a statutory testing period. We have performed a preliminary analysis of the annual NOL carryforwards and limitations that are available to be used against taxable income. Based on the history of losses of the Company, there continues to be a full valuation allowance against the net deferred tax assets of the Company. F- 23 Table of Contents NOTE 10: WARRANTS A summary of outstanding warrants accounted for as equity instruments in the Company's Consolidated Financial Statements for the years ended December 31, 2024 and 2023 is included below: Warrants Weighted Weighted Average Average Exercise Remaining Amount Price Contractual Life Balance December 31, 2022 5,824,027 $ 6.56 4.21 Warrants expired ( 1,237,025 ) $ 12.70 - Balance December 31, 2023 4,587,002 $ 4.90 4.11 Warrants expired - - - Balance December 31, 2024 4,587,002 $ 4.90 3.11 F- 24 Table of Contents NOTE 11: STOCK-BASED COMPENSATION A summary of outstanding options as of December 31, 2024 is included below: Time Vesting Options Weighted Average Weighted Weighted Remaining Average Average Range of Exercise Number Contractual Exercise Options Exercise Prices between Outstanding Life Price Exercisable Price $4.01 - $8.00 506,672 5.66 $ 7.40 506,672 $ 7.40 8.01+ 85,225 1.20 22.51 85,225 22.51 591,897 5.01 $ 9.58 591,897 $ 9.58 Performance Vesting Options Weighted Average Weighted Weighted Remaining Average Average Number Contractual Exercise Options Exercise Outstanding Life Price Exercisable Price 240,000 5.42 $ 7.59 240,000 $ 7.59 Market Vesting Options Weighted Average Weighted Weighted Remaining Average Average Number Contractual Exercise Options Exercise Outstanding Life Price Exercisable Price 733,334 7.46 $ 3.00 - $ - Market Vesting Options Time Vesting Options Performance Vesting Options Weighted Weighted Weighted Average Average Average Options Exercise Options Exercise Options Exercise Date/Activity Outstanding Price Outstanding Price Outstanding Price Balance, December 31, 2023 733,334 3.00 662,798 10.00 240,000 $ 7.59 Granted - - - - - - Forfeited or expired - - ( 70,901 ) 13.56 - - Balance, December 31, 2024 733,334 3.00 591,897 9.57 240,000 $ 7.59 The weighted average remaining contractual life for options exercisable is 5.1 years as of December 31, 2024 . Shares authorized for issuance under the Company's 2014 Stock Incentive Plan is 2,000,000 . There are 1,565,231 options outstanding under the 2014 Stock Incentive Plan. The Company’s ability to issue new awards under its 2014 Stock Incentive Plan expired in 2023. On October 18, 2024, the Company’s shareholders approved the Company’s 2023 Stock Incentive Plan, which authorizes the issuance of up to 2,500,000 shares. No awards have been issued under the Plan as of December 31, 2024. F- 25 Table of Contents Employee Awards Stock-based compensation expense recognized for the issuance of stock options to employees for the years ended December 31, 2024 and 2023 of $ 13 and $ 383 , respectively, was included in general and administrative expense in the Consolidated Financial Statements. At December 31, 2024 , there was $ 2 of total unrecognized compensation expense related to unvested share-based awards with market vesting criteria for employees. Compensation expense related to market vesting options will be recognized over the next 1.5 months and will be adjusted for any future forfeitures as they occur. The fair value of options on the grant date varied between $ 0.63 and $ 1.11 per award as determined using the Monte Carlo model. Non-Employee Awards Compensation expense recognized for the issuance of stock options, including those options awarded to our Board of Directors, for the years ended December 31, 2024 and 2023 of $ 0 and $ 150 , respectively, was included in general and administrative expense in the Consolidated Financial Statements. At December 31, 2024 , there was no unrecognized compensation expense related to share-based awards to non-employees. NOTE 12: SEGMENT REPORTING Segment Information We currently operate in one reportable segment, marketing technology solutions. The marketing technology solutions segment generates revenue through three primary sources which includes ( 1 ) hardware sales from reselling digital signage hardware from original equipment manufacturers, ( 2 ) services from helping customers design, deploy, and manage their digital signage and ad-based networks, and ( 3 ) recurring subscription licensing and support revenue from our digital signage and ad-tech software platforms, which are generally sold via a SaaS model. Our Chief Executive Officer is our chief operating decision maker (the “CODM”). Our CODM evaluates performance and makes operating decisions about allocating resources based on financial data presented on a consolidated basis, accompanied by information about revenue disaggregated by service. Our CODM uses the segment information primarily to evaluate the profitability and strategic growth potential of the segment. The reported measures of profit or loss are benchmarked against historical performance and market expectations. Based on this analysis, the CODM determines whether or not to invest in new technology or reallocate operating expenses - namely personnel. In addition, the CODM reviews supplementary metrics such as disaggregated revenue as disclosed in Note 4 Revenue Recognition and customer growth to ensure that our strategic decisions are aligned with long-term performance goals. The measure used by our CODM to assess performance and make operating decisions is net loss as reported on our Consolidated Statements of Operations. Significant segment expenses are reported as total expenses on the Consolidated Statements of Operations. Segment assets are disclosed in the Consolidated Balance Sheets. Significant Customers We had three customers that accounted for 15 %, 13 % and 10 % of revenue for the year ended December 31, 2024. No customer accounted for more than 10% of revenue for the year ended December 31, 2023. We had one customer that accounted for 16 % of accounts receivable at December 31, 2024 and two customers that accounted for 26 % and 23 % of accounts receivable at December 31, 2023. Significant Vendors We had two vendors that accounted for 27 % and 10 % of outstanding accounts payable at December 31, 2024, and one vendor that accounted for 38 % of outstanding accounts payable at December 31, 2023. F- 26 Table of Contents NOTE 13: LEASES The Company's lease portfolio is primarily comprised of operating leases for office space and finance leases for computer equipment. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on whether the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. Leases are classified as operating or finance leases at the commencement date of the lease. Leases may include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company determines the discount rate used to measure lease liabilities based on the rate implicit in the lease, if readily determinable. If the implicit rate is not available, the Company an incremental borrowing rate, which is determined based on the rate at which the Company could borrow on a collateralized basis over a similar term and in a similar economic environment to the lease. The following table summarizes the classification of operating and finance lease assets and obligations in the Company's Consolidated Balance Sheet as of December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Assets Operating lease assets Operating lease right-of-use assets $ 787 $ 1,041 Finance lease assets Property and equipment, net 114 146 Total leased assets $ 901 $ 1,187 Liabilities Short-term: Operating lease obligation Current maturities of operating leases $ 466 $ 505 Finance lease obligation Accrued expenses and other current liabilities 46 42 Long-term Operating lease obligation Long-term obligations under operating leases 342 536 Finance lease obligation Other non-current liabilities 68 104 Total lease obligations $ 922 $ 1,187 The following table summarizes the classification of lease expense in the Company's Consolidated Statements of Operations for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Operating lease expense: Operating lease expense $ 584 $ 753 Finance lease expense: Amortization of right-of-use assets 44 23 Interest on lease obligations 8 5 Total lease expense $ 636 $ 781 F- 27 Table of Contents The following table provides lease term and discount rate information related to operating leases as of December 31, 2024: Year Ended Year Ended December 31, December 31, 2024 2023 Weighted average remaining lease term (years) Operating leases 2.1 2.6 Finance leases 2.3 3.4 Weighted average discount rate Operating leases 9.6 % 10.0 % Finance leases 5.5 % 5.7 % The following table sets forth the scheduled maturities of lease obligations as of December 31, 2024: Operating Finance Total Leases Leases Leases 2025 $ 516 $ 51 $ 567 2026 219 47 266 2027 150 23 173 2028 - 1 1 Total undiscounted cash flows 885 122 1,007 Less imputed interest ( 77 ) ( 8 ) ( 85 ) Present value of lease liabilities $ 808 $ 114 $ 922 The following table provides supplemental information related to the Company's Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023: Year Ended Year Ended December 31, December 31, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 575 $ 753 Operating cash flows paid for finance leases $ 7 $ 5 Financing cash flows paid for finance leases $ 44 $ 23 Right-of-use assets obtained in exchange for new finance lease liabilities $ 13 $ 169 NOTE 14: PROFIT-SHARING PLAN We have a defined contribution 401 (k) retirement plans for eligible associates in the United States. Associates may contribute up to 15 % of their pretax compensation to the plan subject to IRS limitations. The Company contributes an employer contribution match of 50 % of employee wages up to 6 %, for an effective match of 3 %. We have a Registered Retirement Savings Plan for eligible associates in Canada. Associates may contribute up to 18 % of earned income reported on their tax return in the previous year, subject to legal contribution limits. The Company contributes an employer contribution match of 50 % of employee wages up to 6 %, for an effective match of 3 %. The Company contributed $ 288 and $ 253 to employee retirement plans for the year-ended December 31, 2024 and 2023 , respectively. F-28