CREATIVE REALITIES, INC. 10-K

ITEM 1 BUSINESS Our Company Creative Realities, Inc. (“Creative Realities”, the “Company”, “we”, “us” or “our”) provides innovative digital signage and media solutions in North America to enhance communications in a wide-ranging variety of out-of-home environments, key market segments and use cases, including: ● Retail ● Entertainment and Sports Venues ● Restaurants, including quick-serve restaurants (“QSR”) ● Convenience Stores ● Financial Services ● Automotive ● Lottery ● Mixed Use Developments ● Digital out of Home (“DOOH”) Advertising Networks We serve market-leading companies, so there is a good chance that if you leave your home today to shop, work, eat or play, you will encounter one or more of our digital signage experiences. Our solutions are increasingly viable because we help our enterprise customers achieve a wide range of business objectives including: ● Increased brand awareness/engagement ● Improved customer support ● Enhanced employee productivity and satisfaction ● Increased revenue and profitability ● Improved guest experience ● Increased customer/guest engagement ● Traffic content and advertising Through a combination of organically grown platforms and a series of strategic acquisitions, the Company assists customers to design, deploy, manage, and monetize their digital signage and in-store retail media networks. The Company sources leads and opportunities for its solutions through its digital and content marketing initiatives, close relationships with key industry partners, equipment manufacturers, and the direct efforts of its in-house industry sales experts. Customer engagements focus on consultative conversations that ensure the Company’s solutions are positioned to help customers achieve their business objectives in the most cost-effective manner possible. When comparing Creative Realities to other digital signage competitors, our customers value the following competitive advantages: ● Breadth of solutions – Creative Realities offers true solutions to our customers. Creative Realities is one of only a few companies in the industry capable of providing the full portfolio of products and services required to implement and run an effective digital signage and in-store retail media networks. We leverage a ‘single vendor’ approach, providing customers with a one-stop-shop for sourcing digital signage and media solutions from design through day two services. 1 Table of Contents ● Managed labor pool – Unlike most companies in our industry, we have a curated labor pool of qualified and vetted field technicians available to service customers quickly nationwide. We can meet tight schedules even in exceptionally large deployments and still ensure quality and consistency. ● In-house creative resources – We assist customers in creating new content or repurposing existing content for digital signage experiences, an activity for which the Company has won several design awards in recent years. In each instance, our services can be essential in helping customers develop an effective content program. ● Network scalability and reliability – Our software as a service (“SaaS”) content management platforms power some of the largest and most complex digital signage networks in North America, evidencing our ability to manage enterprise scale projects. This also provides us purchasing power to source products and services for our customers, enabling us to deliver cost effective, reliable, and powerful solutions to small and medium size business customers. ● AdTech platforms – The Company has developed and deployed the AdLogic and CPM+ platforms, which, working in conjunction with our CMS platforms, present completely integrated digital advertising solutions for existing and prospective customers seeking to monetize their in-store retail media networks. These platforms anchor the Company's vertical expansion into AdTech bringing new, and expanding existing, addressable markets. ● Market sector expertise – Creative Realities has in-house experts in key market segments such as retail, quick-serve restaurants (“QSR”), convenience stores, and Digital Out of Home (“DOOH”) advertising. Our expertise in these business segments enables our teams to provide meaningful business conversations and offer tailored solutions with prospects and customers to their unique business objectives. These experts build industry relationship and create thought leadership that drives lead flow and new opportunities for our business. ● Logistics – Implementing a large digital signage project can be a logistical nightmare that can stall an initiative, even before deployment. Our expertise in logistics improves deployment efficiency, reduces delays and problems, and saves customers time and money. ● Technical support – Digital signage networks present unique challenges for corporate IT departments. We simplify and improve end user support by leveraging our own Network Operations Center (“NOC”) in Louisville, Kentucky. The NOC resolves many issues remotely and when field support is required, it can be dispatched quickly from the NOC, leveraging our managed labor pool to resolve customer issues quickly and effectively. ● Integrations and Application Development – From social media feeds, mobile integrations, corporate data stores, and Point of Sale (“POS”) systems, our proven ability to build scalable applications and integrations is a key advantage that customers can leverage to deliver more compelling and engaging experiences for their customers. ● Hardware support – Some digital signage providers sell a proprietary media player or align themselves with just one operating system. We utilize a range of media players including Windows, Android and BrightSign to provide customers the flexibility they need to select the appropriate hardware for any application knowing the entire network can still be served by a single digital signage platform, reducing complexity and improving the productivity of our customers. ● Retail Media Network – The Company owns and operates the largest mall shopping network in Canada. The three primary sources of revenue for the Company are: ● Hardware sales from reselling digital signage hardware from original equipment manufacturers such as Samsung and BrightSign. ● Services revenue from helping customers design, deploy and manage their digital signage and in-store retail media networks, including: ○ Hardware system design/engineering ○ Hardware installation ○ Content development 2 Table of Contents ○ Content scheduling ○ Post-deployment network and field support ○ AdTech to traffic advertising and content directly and through programmatic channels ● Recurring subscription licensing and support revenue from our digital signage software platforms, which are generally sold via a SaaS model. Our platforms include: ○ ReflectView , the Company’s core digital signage platform for most applications, scalable and cost effective from 10 to 100,000+ devices; ○ Reflect Xperience , a web-based interface that allows customers to give content scheduling access to local users via the web or mobile devices, while still maintaining centralized programming control; ○ AdLogic , the Company’s AdTech management platform for digital signage networks, which presently delivers approximately 50 million ads daily; ○ CPM+ , the Company’s demand side and supply side platform with campaign management and extensive capabilities for programmatic advertising; ○ Clarity , the Company’s digital signage platform for menu board solutions, which has become a market leader for a range of restaurant, including QSR and convenience store applications; and ○ iShowroomProX , an omni-channel digital sales support platform targeted at original equipment manufacturers in the transportation sector, which integrates with dozens of key data services including dealer inventory at the VIN level. While hardware sales and support services revenues can fluctuate more significantly year over year based on new, large-scale network deployments, the Company is focusing on maintaining and increasing recurring SaaS revenue as digital signage adoption/utilization expands across the vertical markets we serve. We believe that the adoption and evolution of our digital signage technology solutions will increase substantially in years to come in the industries in which we currently focus and in other industries. We believe that the costs of such hardware will decrease over time as it has done so historically. Flat panel displays, along with LED technology and digital media players typically constitute a large portion of the expenditure customers make relative to the entire cost of implementing a digital marketing system implementation and can be a barrier to customer deployment. As a result, we believe that the broader adoption of digital marketing technology solutions is likely to increase, although we cannot predict the rate at which such adoption will occur. We believe the proliferation of in-store retail media networks will be an industrial catalyst for infrastructure and AdTech sales for which the Company is well situated from product set and technology stack standpoints. Another component of our business strategy is to acquire and integrate other operating companies in the industries we operate. We believe that the selective acquisition and successful integration of certain companies will: accelerate our growth in targeted vertical and operating markets; enable us to cost-effectively aggregate multiple customer bases onto a single business and technology platform; provide us with greater operating scale on a consolidated basis; enable us to leverage a common set of processes and tools, and cost efficiencies company-wide; and ultimately result in higher operating profitability and cash flow from operations. Our management team’s primary focus is the continued acceleration of organic growth, but secondarily evaluates acquisition opportunities on an ongoing basis. Our management team and Board of Directors have broad experience with the execution, integration, and financing of acquisitions and seek only accretive strategic transactions with material cost synergies as a result of overlapping or concurrent content management system capabilities with focus on eliminating the associated cost structure for these systems. Business Strategy We believe that our existing business model is highly scalable and can be expanded successfully as we continue to grow organically, seek to acquire and integrate other companies in our target markets, strengthen our operational practices and procedures, further streamline our administrative office functions, and continue to capitalize on various marketing programs and activities. With a focus on SaaS revenues, we believe that our gross margins will rise as our business scales. 3 Table of Contents Industry Background We believe certain digital marketing technology industry trends are creating the opportunity for retailers, brands, venue-operators, enterprises, non-profits and other organizations to create innovative shopping, marketing, and informational experiences for their customers and other stakeholders in various venues worldwide. These trends include: (i) the expectations of technology-savvy consumers; (ii) addressing on-line competitors by improving physical experiences; (iii) a decline in the cost of hardware configurations (primarily flat panel displays) and software media players; (iv) the continued evolution of mobile, social, software and hardware technologies, applications and tools; (v) increasing sophistication of social networking platforms; (vi) increasingly complex customer requirements related to their specific digital marketing technology and solution objectives; and (vii) customer expectations of satisfactory consumer experiences with reduced installation and operating costs. As a result, a growing number of retailers, brands, venue-operators, and other organizations have identified the need and opportunity to implement increasingly agile, automated, targeted and cost-effective and “sales-lifting” digital marketing, and interactive experiences to market to their customers. These experiences include creating unique and customized experiences for targeted, timely offerings and relevant promotions; improving engagement resulting in increased sales; and increasing shopping basket size. We believe our customers consider capitalizing on these industry trends to be increasingly critical to any successful “store of the future” retail and brand sales environment, especially where sales staff turnover is high, training outcomes are inconsistent and product knowledge is low. Companies are implementing various digital marketing technology solutions, which: are implemented in multiple forms and types of configurations and locations; attempt to achieve any of a broad range of individual or combination of objectives; contain various levels of targeting; have the ability to instantly manage single or multiple locations remotely from a customer’s desktop or other connected device at each location; and are built to deliver or contain a standard or customized customer experience unique to and within the customer’s environment. Examples of such solutions include: ● Digital Merchandising Systems, to inform and interact with customers through various types of content in an integrated experience, improve in-store customer experiences and increase overall sales, upsells, and/or cross-sales; ● Digital Sales Assistants, to replace or augment existing sales resources and the level of interactive and informational sales assistance inside the store; ● Digital Way-Finders, to help customers navigate their way around individual retail stores and multi-store locations or venues, or within individual brand categories; ● Digital Kiosks, to provide data, specialized and customized broadcasts, promotional information and coupons, train, and other forms of information and interaction with customers in a variety of deployment forms, types, configurations and experiences; ● Digital Menu-Board Systems, to enable various types of restaurant operators the ability to remotely and on a scheduled basis, update and modify menu information, promotions, and other forms of content dynamically; and ● Dynamic Digital Signage, including Advertising Networks, to deliver and manage in-store marketing and advertising campaigns, specialized and customized broadcasts, and various other forms of messaging targeting customers in a particular experience or environment. Our Markets We currently market and sell our marketing technology solutions through our direct sales force, inside sales team, and word-of-mouth referrals from existing customers. Select strategic partnerships and lead generation programs also drive business to the Company through targeted business development initiatives. We market to companies that seek digital marketing solutions across multiple connected devices and who specifically seek or could benefit from enhancements to the customer experience offered in their stores, venues, brands or organizations. Our digital marketing technology solutions apply in a wide variety of industries. The industries in which we primarily sell our solutions are established and include automotive, retail, DOOH including advertising networks and retail media networks, foodservice/QSR, financial services, gaming, and sports and entertainment venues. A number of participants in these industries have only recently started considering or expanding the adoption of these types of technologies, solutions, and experiences as part of their overall marketing strategies. Seasonality A portion of our customer activity is influenced by seasonal effects related to traditional end of calendar year peak retail sales periods, traditional spring stadium/venue opening seasons, and certain other factors that arise from our target customer base. Nevertheless, our revenues can be materially affected by the launch of new markets, the timing of production rollouts, and other factors, any of which have the ability to reduce or outweigh certain seasonal effects. 4 Table of Contents Effect of General Economic Conditions on our Business We believe that demand for our services will increase in the future in part because of new construction and remodeling activities of pre-existing retail, convenience store, stadium, and event venues. While we do see reductions in retail footprints across the U.S., we see a continued focus on integration of digital into the retail marketplace and a focus on digital refreshes within the retail space to stay relevant in an evolving e-commerce marketplace. Recent general economic conditions have generally made it easier for our customers to justify decisions to invest in digital marketing technology solutions. A change in the macroeconomic trend in the U.S. could have a negative impact on our customers’ ability and/or willingness to advance their digital initiatives. Government Regulation We are regulated by various U.S. and Canadian federal and state/provincial governmental agencies. Such regulation includes radio frequency emission regulatory activities of the U.S. Federal Communications Commission, the consumer protection laws of the U.S. Federal Trade Commission, product safety regulatory activities of the U.S. Consumer Product Safety Commission, and environmental regulation in areas in which we conduct business. Some of the hardware components that we supply to customers may contain hazardous or regulated substances, such as lead. A number of U.S. states have adopted or are considering “takeback” bills addressing the disposal of electronic waste, including CRT style and flat panel monitors and computers. Electronic waste legislation is developing. Some of the bills passed or under consideration may impose on us, or on our customers or suppliers, requirements for disposal of systems we sell and the payment of additional fees to pay costs of disposal and recycling. Presently, we do not believe that any such legislation or proposed legislation will have a materially adverse impact on our business. Our Canadian operations through CDM are headquartered in Waterloo, Ontario, and subject to a range of Canadian federal and provincial laws applicable to our digital signage, media network, and data management operations. At the federal level, CDM’s commercial activities are governed by the Personal Information Protection and Electronic Documents Act (Canada) (“PIPEDA”) (S.C. 2000, c. 5), which regulates the collection, use, and disclosure of personal information in the course of commercial activity. PIPEDA applies to CDM with respect to customer and client data (s. 4(1)(a)) and personal information transferred to related entities and third-party processors, including transfers to CRI, CDM’s U.S. parent operations, for which CDM remains accountable under contractual and other protective obligations (Schedule 1, Principle 4.1.3). Depending on the technologies deployed in CDM’s digital signage and audience measurement operations, certain data collected or processed in connection with those activities may also constitute personal information subject to PIPEDA, including where applicable regulatory guidance issued by the Office of the Privacy Commissioner of Canada is engaged. CDM employs employees in Canada. Those employees are subject to applicable provincial employment-related legislation, for example, in Ontario, the Employment Standards Act, 2000 (Ontario) , Ontario Human Rights Code , the Ontario Labour Relations Act, 1995 , the Workplace Safety and Insurance Act , the Occupational Health and Safety , and the Accessibility for Ontarians with Disabilities Act, 2005 (“AODA”). Such provincial employment legislation will govern most aspects of the employment relationship. The employment standards legislation specifically governs minimum notice and severance requirements, which differ materially from the at-will employment framework applicable to some of our U.S. workforce. In the absence of precisely draft termination clauses in employment agreements, common law principles often provide more generous termination entitlements for employees, specifically the concept of “reasonable notice” for termination of employment without cause. CDM also operates digital media display networks in shopping centres throughout different provinces across Canada, including Quebec, where the Charter of the French Language (as amended by Bill 96) imposes French-language requirements on commercial signage and certain digital interfaces. CDM is also subject to applicable Quebec privacy legislation for intra-provincial commercial activity. Competition While we believe there is presently no direct competitor with the comprehensive offering of technologies, solutions, and services we provide to our customers, there are multiple individual competitors who offer subsets of our product and service offerings in the digital signage, DOOH and retail media network spaces. Our legacy operations continue to compete in the U.S. with digital signage software companies such as Stratacache and Poppulo; marketing services companies such as Sapient Nitro; digital signage systems integrators such as SageNet. CDM competes in Canada with digital signage software companies such as Coates Group, ICON, Stratacache, and Stingray; DOOH providers Quebecor (formerly NEO), Branded Cities, Pattison, and Bell Media; and retail media networks Pattison and Adapt Media. Some of these competitors may have significantly greater financial, technical, and marketing resources than we do and may be able to respond more rapidly than we can to new or emerging technologies or changes in customer requirements. We believe that our holistic sales and business development capabilities, network operations / field service management capabilities, our comprehensive offering of digital signage technology and solutions, brand awareness, and proprietary processes are the primary factors providing our competitive advantage. Major Customers We had one customer that accounted for 10% of revenue for the year ended December 31, 2025. Three customers accounted for 15%, 13% and 10% of revenue for the year ended December 31, 2024. We had one customer that accounted for 12% of accounts receivable as of December 31, 2025 and one customer that accounted for 16% of accounts receivable as of December 31, 2024. Decisions by one or more of these key customers to not renew, terminate, or substantially reduce their use of our products, technology, services, and platform could substantially slow our revenue growth and lead to a decline in revenue. Our business plan assumes continued growth in revenue, and it is unlikely that we will become profitable without a continued increase in revenue. For more information, see Item 1A. Risk Factors, “Our continued growth and financial performance could be adversely affected by the loss of several key customers.” Territories We sell products and services primarily throughout North America, with limited software licensing agreements operating in other international jurisdictions. Human Capital We strive to foster a great work environment and offer an exceptional experience through competitive pay, benefits, and training programs to our employees. Our objective is to attract, develop, retain, and reward individuals with the talent and skills to help support our business objectives. As of December 31, 2025, we had 238 employees. 5 Table of Contents Corporate Organization We originally incorporated and organized as a Minnesota corporation under the name “Wireless Ronin Technologies, Inc.” in March 2003 and focused on our expertise in digital media marketing solutions, including digital signage, interactive kiosks, mobile, social media, and web-based media solutions. We acquired the interactive marketing technology business that we currently operate in a 2014 merger with Creative Realities, LLC. Shortly after that merger, we changed our corporate name from “Wireless Ronin Technologies, Inc.” to “Creative Realities, Inc.” On October 15, 2015, we acquired the systems integration and marketing technology business of ConeXus World Global, LLC. On November 20, 2018, we acquired Allure, an enterprise software development company. On February 17, 2022, we acquired Reflect Systems, Inc (“Reflect”). On November 7, 2025, we acquired DDC Group International, Inc., an Ontario corporation and wholly owned subsidiary of Cineplex (“DDC”). DDC is the parent company of its wholly owned subsidiary, Cineplex Digital Media Inc., an Ontario corporation (“CDMI”), and CDMI’s wholly owned subsidiary, Cineplex Digital Media US Inc., a Delaware corporation (“CDMUS”). On November 7, 2025, we effectuated two post-closing amalgamations which resulted in CDMI and CDMUS becoming wholly owned by us, which we refer to as “CDM”. Our principal offices are located at 13100 Magisterial Drive, Suite 201, Louisville, Kentucky 40223, and our telephone number at that office is (502) 791-8800. We have additional offices in the Atlanta, Georgia and Waterloo, Ontario (Canada) metropolitan areas. Our internet address is www.cri.com. Information on our website does not constitute part of this Report.