Creative Realities, Inc. (“Creative Realities,” “CRI,” or the
“Company”) (NASDAQ: CREX, CREXW), a leading provider of digital
signage and media solutions, announced its financial results for
the three and nine-month periods ended September 30, 2023.
Rick Mills, Chief Executive Officer, commented,
“I am pleased to report overall record quarterly revenue and gross
profit of $11.6 million and $5.3 million, respectively. These
numbers exceed current consensus analyst estimates. The third
quarter gross profit margin of 45.8% is a 500 basis-point
improvement over the third quarter of last year and a continuation
of the improved year-over-year trend in margins demonstrated in the
first two quarters of the year. This brings the Company’s
year-to-date gross profit to a record $14.7 million at a record
gross profit margin in any year of 47.8%. This is approximately a
790 basis-point improvement over 2022.”
Mr. Mills continued, “The march to value
creation continues as we execute our strategy acquire new
enterprise customers utilizing our fully integrated offering- from
hardware to SaaS to an extensive array of services. Our
SaaS-related ARR is now at a record $15.6 million run-rate and on
target to meet or exceed $16 million by year-end.” Mr. Mills added,
“Ongoing growth in ARR, already seeded as we work through our
backlog, is additionally bolstered by the momentum of a near 70%
RFP win rate this year.”
“The company is poised for another
transformational year in 2024. Through the first nine months of
2023, we have paid down debt principal by approximately $3.9.
million. This, in addition to our equity offering in August of this
year, reduced our net debt to $8.4 million. We had $8.4 million in
cash on hand as of the end of the third quarter. Our leverage ratio
reduced from 4.9 times as of December 31, 2022 to 2.6 times as of
September 30, 2023 leveraging the trailing twelve months Adjusted
EBITDA. We project record fourth quarter revenue of $15.8 million
to $17.8 million to yield between a record $46.4 million to $48.4
million for fiscal year 2023. The anticipated continuation of
record revenue, improvements in margins and debt reduction into
2024 is expected to translate to free cash flow generation for the
first time in the Company’s history in 2024. We believe we have the
business prospects and, now, balance sheet, to drive value.”
2024 Guidance
The Company is issuing 2024 Revenue and Adjusted
EBITDA projections in ranges of $60.0 million to $80 million, and
$7.2 million to $12 million, respectively, with a 2024 targeted
exit ARR run-rate of $18.0 million. The Company projects a 2024
year-end exit leverage ratio of between 1.2 and 1.5 times, barring
any additional financings or strategic opportunities.
Mr. Mills encouraged investors to attend the
Company’s earnings release call, “In addition to providing
additional context to our third quarter earnings, we will convey
several important announcements and updates relating to new
customer acquisitions and the scaling of our CMS platforms.”
Our backlog remains steady at greater than $110
million as of September 30, 2023. Revenue backlog is primarily
related to projected network deployments and project work, which
upon execution will result in additional ARR. The Company’s backlog
calculation is comprised of the full rollout of projects that have
been communicated to us by our current customers under contract,
and includes all revenues to be received by the Company by
deploying all of our products and services necessary to service
such stated projects, including projected revenues that are not
currently subject to binding purchase orders or firm
commitments.
3Q 2023 Financial Overview
All references to “current year” and “prior
year” represent references to the three months ended September 30,
2023 and 2022, respectively.
Key Highlights:
- Revenue in excess of analyst
consensus at $11.6 million.
- Expansion of gross margin
percentage to 45.8% in the current year from 40.4% in the prior
year.
- Expansion of Annualized Recurring
Revenue to forward run-rate of ~$15.6 million.
Revenue, gross profit, and gross margin:
- Sales were $11,568, representing an
increase of $388, or 3%, as compared to the same period in 2022.
Hardware revenues were $4,847 for the current year,
a decrease of $168, or 3%, as compared to the prior year,
of which approximately $3.0 million were earned from customers new
to the Company in 2023.
- Services and other revenues were
$6,721 for the three month period ended September 30,
2023, an increase of $556, or 9%, compared to prior year driven by
increases of (1) $543 in media sales attributable to the addition
of sales resources and restructuring of third party selling
contracts to expand its access to such agents, and (2) $420 in
managed services revenue as a result of increased SaaS licenses
that drive annual recurring revenue. These increases in
services revenue in the current year were partially offset by a
$505 decrease in installation services revenue as deployment
of hardware sold during the current year associated with multiple
advertising networks did not begin installation activities until
the fourth quarter of 2023.
- Gross profit increased $789, or 17%
during the current year as compared to the prior year driven by
enhanced margins on hardware revenues and an increase in services
revenue.
- Gross profit margin increased to
46% during the current year, from 40% in the prior year driven by
(1) favorable revenue mix during the current year as managed
services, which includes higher margin SaaS and other services
revenues, increased to 37% of total revenue as compared to 35% of
total revenues in the prior year, and (2) a 6% margin expansion
associated with hardware revenues generated in the current year
primarily generated from sales of custom manufactured kiosks
purchased for deployment of an advertising network.
Operating expenses:
- Sales and marketing expenses
generally include the salaries, taxes, and benefits of our sales
and marketing personnel, as well as trade show activities, travel,
and other related sales and marketing costs. Sales and marketing
expenses in the current year increased by $583, or 81%, compared to
the prior year driven primarily by seasonality in the Company’s
media sales business unit and the Company’s enhanced investments
into sales and marketing activities. Following the Company’s
acquisition of Reflect Systems, Inc. via merger in 2022 (the
“Merger”), the Company adopted certain tools, technology, and
processes – particularly with respect to lead generation and brand
marketing – that were historically undercapitalized by the Company
and have since accelerated new customer acquisition. Through
completion of the Merger, the Company also acquired a media sales
business unit that serves to monetize customer networks via the
direct sale of advertising to be displayed on digital
advertising networks owned by those customers. This business
utilizes internal and third-party sales agents - the salaries and
commissions of which are included within Sales and Marketing
Expense within the Condensed Consolidated Statement of
Operations.
- Research and development
expenses generally include personnel and development tools costs
associated with the continued development of the Company’s content
management systems and other related application development. The
Company capitalizes certain of these expenses and amortizes those
costs through the Condensed Consolidated Statement of Operations on
a straight-line basis over the economic useful life of the software
feature or functionality. Research and development expenses
increased by $155, or 65%, for the current year as compared to the
prior year driven primarily by incremental headcount added
via completion of the Merger on February 17, 2022 and a higher
rate of bug and maintenance work as compared to capitalized
activities during the current year.
- General and administrative expenses
decreased $215, or 8% during the current year as compared to the
prior year driven by a decrease of $492 in stock compensation
expense as outstanding performance awards were fully expensed as of
December 31, 2022. This decrease was partially offset by
increased personnel costs in the current year as a result of higher
headcount following the Merger and scaled up operations in response
to an increase in customer acquisition and associated planned
deployments.
Operating loss, net loss, and EBITDA:
- Operating income was $160 thousand
in the current year as compared to an operating loss of $284
thousand in the prior year, inclusive of approximately $0.8 million
in non-cash amortization of fixed and intangible assets in both the
current and prior year.
- Net loss was $1.9 million for the
current year as compared to net loss of $0.6 million for the prior
year. Excluding the non-cash change in the fair value of contingent
consideration issuable in the Merger, the net loss was $0.6 and
$1.0 million in the current and prior year periods,
respectively.
- Adjusted EBITDA and associated
Adjusted EBITDA margin were approximately $1.0 million and 8.8% in
the current year as compared to $1.2 million and 11.2% in the prior
year. See the table at the end of this press release for a
description of these non-GAAP financial measures and reconciliation
to our net income/(loss) for the current and prior years.
Other notes:
- Cash: The
Company’s cash on hand as of September 30, 2023 increased to $8.4
million from $1.6 million as of December 31, 2022 as a result of
the Company’s receipt of $5.4 million in net proceeds from the
Company’s public offering completed in August 2023, as well as
incremental collections on accounts receivable, annual billings
associated with our SaaS-based contracts, and increases in customer
deposits on future deployments, partially offset by investments in
software development projects and repayment of debt.
- Debt: Through
September 30, 2023, the Company repaid in the current calendar year
in excess of $3.9 million in principal on debt in the current
calendar year, reducing the Company’s leverage ratio from
approximately 4.9 times to approximately 2.6 times.
Conference Call Details
The Company will host a conference call to
review the results of the Company’s third quarter 2023, and provide
additional commentary about the Company’s recent performance, on
Friday, November 10, 2023 at 9:00 am Eastern Time.
Prior to the call, participants should register at
https://bit.ly/CRIearnings2023Q3. Once registered, participants can
use the dial-in information provided in the registration email to
listen to the Company’s prepared remarks and participate in the
live question and answer session. An archived edition of the
conference call will also be posted on our website at www.cri.com
later that same day and will remain available to interested parties
via the same link for one year.
About Creative Realities,
Inc.
Creative Realities helps clients use place-based
digital media to achieve business objectives such as increased
revenue, enhanced customer experiences, and improved productivity.
The Company designs, develops and deploys digital signage
experiences for enterprise-level networks, and is actively
providing recurring SaaS and support services across diverse
vertical markets, including but not limited to retail, automotive,
digital-out-of-home (DOOH) advertising networks, convenience
stores, foodservice/QSR, gaming, theater, and stadium venues.
With its recent acquisition of Reflect Systems,
Inc. (“Reflect”), a leading provider of digital signage software
platforms, the Company is poised to extend its product and service
offering and accelerate growth in SaaS revenue. While Reflect
provided a broad range of digital signage solutions, Reflect’s
flagship products are the market-leading ReflectView digital
signage platform and Reflect AdLogic ad management platform.
ReflectView is the industry’s most comprehensive, scalable,
enterprise-grade digital signage platform, powering enterprise
customer networks. Meanwhile, Reflect AdLogic has become the
benchmark for digital signage powered ad networks, delivering
nearly 50 million ads daily. The acquisition of Reflect also
brought to the Company a media sales division with the expertise
and relationships to help any digital signage venue owner develop
and execute a monetization plan for their network.
Use of Non-GAAP Measures
Creative Realities, Inc. prepares its
consolidated financial statements in accordance with United States
generally accepted accounting principles (“GAAP”). In addition to
disclosing financial results prepared in accordance with GAAP, the
Company discloses information regarding “EBITDA” and “Adjusted
EBITDA.” CRI defines “EBITDA” as earnings before interest, income
taxes, depreciation and amortization of intangibles. CRI defines
“Adjusted EBITDA” as EBITDA excluding stock-based compensation,
fair value adjustments and both cash and non-cash non-recurring
gains and charges. EBITDA and Adjusted EBITDA are not measures of
performance defined in accordance with GAAP. However, EBITDA and
Adjusted EBITDA are used internally in planning and evaluating the
Company’s operating performance. Accordingly, management believes
that disclosure of these metrics offers investors, bankers and
other stakeholders an additional view of the Company’s operations
that, when coupled with the GAAP results, provides a more complete
understanding of the Company’s financial results.
EBITDA and Adjusted EBITDA should not be
considered as an alternative to net income/(loss) or to net cash
used in operating activities as measures of operating results or
liquidity. Our calculation of EBITDA and Adjusted EBITDA may not be
comparable to similarly titled measures used by other companies,
and the measures exclude financial information that some may
consider important in evaluating the Company’s performance. A
reconciliation of GAAP net income/(loss) to EBITDA and Adjusted
EBITDA is included in the accompanying financial schedules.
For further information, please refer to
Creative Realities, Inc.’s filings available online at www.sec.gov,
including its Annual Report on Form 10-K filed with the Securities
and Exchange Commission on March 30, 2023.
Cautionary Note on Forward-Looking
Statements
This press release contains "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, Section 21E of the Securities Exchange Act of
1934, as amended, and the Private Securities Litigation Reform Act
of 1995, and includes, among other things, discussions of our
business strategies, product releases, future operations and
capital resources. Words such as "estimates," "projected,"
"expects," "anticipates," "forecasts," "plans," "intends,"
"believes," "seeks," "may," "will," "should," "future," "propose"
and variations of these words or similar expressions (or the
negative versions of such words or expressions) are intended to
identify forward-looking statements. Forward-looking statements are
not guarantees of future performance, conditions or results. They
are based on the opinions, estimates and beliefs of management as
of the date such statements are made, and they are subject to known
and unknown risks, uncertainties, assumptions and other factors,
many of which are outside of our control, that may cause the actual
results, level of activity, performance or achievements to be
materially different from those expressed or implied by such
forward-looking statements. Some of these risks are discussed in
the “Risk Factors” section contained in Item 1A of our Annual
Report on Form 10-K for the year ended December 31, 2022 and in our
Quarterly Report on Form 10-Q for the period ended June 30, 2023,
and the Company’s subsequent filings with the U.S. Securities and
Exchange Commission. Important factors, among others, that may
affect actual results or outcomes include: our strategy for
customer retention, growth, product development, market position,
financial results and reserves, our ability to execute on our
business plan, our ability to retain key personnel, our ability to
remain listed on the Nasdaq Capital Market, our ability to realize
the revenues included in our future guidance and backlog reports,
our ability to satisfy our upcoming debt obligations and other
liabilities, the ability of the Company to continue as a going
concern, potential litigation, supply chain shortages, and general
economic and market conditions impacting demand for our products
and services. Readers should not place undue reliance upon any
forward-looking statements. We assume no obligation to update or
revise the forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
Contact
Christina Daviescdavies@ideagrove.com
Investor Relations:ir@cri.com
https://investors.cri.com/
|
CREATIVE REALITIES, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(In thousands, except
per share amounts) |
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
(unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
8,376 |
|
|
$ |
1,633 |
|
Accounts receivable, net |
|
|
5,865 |
|
|
|
8,263 |
|
Work-in-process and inventories, net |
|
|
2,306 |
|
|
|
2,267 |
|
Prepaid expenses and other current assets |
|
|
960 |
|
|
|
1,819 |
|
Total current assets |
|
$ |
17,507 |
|
|
$ |
13,982 |
|
Property and equipment, net |
|
|
513 |
|
|
|
201 |
|
Operating lease right-of-use assets |
|
|
1,198 |
|
|
|
1,584 |
|
Intangibles, net |
|
|
23,975 |
|
|
|
23,752 |
|
Goodwill |
|
|
26,453 |
|
|
|
26,453 |
|
Other assets |
|
|
43 |
|
|
|
43 |
|
TOTAL ASSETS |
|
$ |
69,689 |
|
|
$ |
66,015 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,340 |
|
|
$ |
3,757 |
|
Accrued expenses |
|
|
4,499 |
|
|
|
3,828 |
|
Deferred revenues |
|
|
3,507 |
|
|
|
1,223 |
|
Customer deposits |
|
|
3,532 |
|
|
|
2,478 |
|
Current maturities of operating leases |
|
|
575 |
|
|
|
711 |
|
Short-term portion of Secured Promissory Note |
|
|
521 |
|
|
|
1,248 |
|
Short-term portion of related party Consolidation Term Loan, net of
$747 and $745 discount, respectively |
|
|
3,690 |
|
|
|
1,251 |
|
Short-term related party Term Loan (2022) |
|
|
- |
|
|
|
2,000 |
|
Total current liabilities |
|
|
19,664 |
|
|
|
16,496 |
|
Long-term Secured Promissory Note |
|
|
- |
|
|
|
208 |
|
Long-term related party Acquisition Term Loan, net of $963 and
$1,484 discount, respectively |
|
|
9,037 |
|
|
|
8,516 |
|
Long-term related party Consolidation Term Loan, net of $282 and
$840 discount, respectively |
|
|
1,537 |
|
|
|
4,349 |
|
Long-term obligations under operating leases |
|
|
623 |
|
|
|
873 |
|
Contingent acquisition consideration, at fair value |
|
|
11,250 |
|
|
|
9,789 |
|
Other liabilities |
|
|
175 |
|
|
|
205 |
|
TOTAL LIABILITIES |
|
|
42,286 |
|
|
|
40,436 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Common stock, $0.01 par value, 66,666 shares authorized; 10,409 and
7,266 shares issued and outstanding, respectively |
|
|
104 |
|
|
|
72 |
|
Additional paid-in capital |
|
|
82,064 |
|
|
|
75,916 |
|
Accumulated deficit |
|
|
(54,765 |
) |
|
|
(50,409 |
) |
TOTAL SHAREHOLDERS’
EQUITY |
|
|
27,403 |
|
|
|
25,579 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
69,689 |
|
|
$ |
66,015 |
|
|
|
|
|
|
|
|
|
|
|
CREATIVE REALITIES, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In
thousands, except per share
amounts)(Unaudited) |
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hardware |
|
$ |
4,847 |
|
|
$ |
5,015 |
|
|
$ |
12,606 |
|
|
$ |
17,141 |
|
Services and other |
|
|
6,721 |
|
|
|
6,165 |
|
|
|
18,102 |
|
|
|
15,719 |
|
Total sales |
|
|
11,568 |
|
|
|
11,180 |
|
|
|
30,708 |
|
|
|
32,860 |
|
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hardware |
|
|
3,384 |
|
|
|
3,811 |
|
|
|
9,314 |
|
|
|
13,803 |
|
Services and other |
|
|
2,881 |
|
|
|
2,855 |
|
|
|
6,704 |
|
|
|
5,989 |
|
Total cost of sales |
|
|
6,265 |
|
|
|
6,666 |
|
|
|
16,018 |
|
|
|
19,792 |
|
Gross profit |
|
|
5,303 |
|
|
|
4,514 |
|
|
|
14,690 |
|
|
|
13,068 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
|
1,301 |
|
|
|
718 |
|
|
|
3,666 |
|
|
|
2,572 |
|
Research and development expenses |
|
|
393 |
|
|
|
238 |
|
|
|
1,136 |
|
|
|
897 |
|
General and administrative expenses |
|
|
2,632 |
|
|
|
2,847 |
|
|
|
8,125 |
|
|
|
8,269 |
|
Depreciation and amortization expense |
|
|
817 |
|
|
|
885 |
|
|
|
2,393 |
|
|
|
2,060 |
|
Deal and transaction expenses |
|
|
- |
|
|
|
110 |
|
|
|
- |
|
|
|
538 |
|
Total operating expenses |
|
|
5,143 |
|
|
|
4,798 |
|
|
|
15,320 |
|
|
|
14,336 |
|
Operating income (loss) |
|
|
160 |
|
|
|
(284 |
) |
|
|
(630 |
) |
|
|
(1,268 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, including amortization of debt discount |
|
|
(734 |
) |
|
|
(757 |
) |
|
|
(2,324 |
) |
|
|
(1,956 |
) |
Change in fair value of warrant liability |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,902 |
|
Change in fair value of equity guarantee |
|
|
(1,369 |
) |
|
|
442 |
|
|
|
(1,461 |
) |
|
|
369 |
|
Loss on debt waiver consent |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,212 |
) |
Loss on warrant amendment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(345 |
) |
Gain/(loss) on settlement of obligations |
|
|
- |
|
|
|
37 |
|
|
|
- |
|
|
|
(237 |
) |
Other income (expense) |
|
|
(3 |
) |
|
|
(2 |
) |
|
|
132 |
|
|
|
3 |
|
Total other income (expense) |
|
|
(2,106 |
) |
|
|
(280 |
) |
|
|
(3,653 |
) |
|
|
4,524 |
|
Net (loss) income before income taxes |
|
|
(1,946 |
) |
|
|
(564 |
) |
|
|
(4,283 |
) |
|
|
3,256 |
|
Benefit (provision) for income taxes |
|
|
15 |
|
|
|
10 |
|
|
|
(73 |
) |
|
|
(46 |
) |
Net (loss) income |
|
$ |
(1,931 |
) |
|
$ |
(554 |
) |
|
$ |
(4,356 |
) |
|
$ |
3,210 |
|
Basic (loss) earnings per
common share |
|
$ |
(0.22 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.56 |
) |
|
$ |
0.50 |
|
Diluted (loss) earnings per
common share |
|
$ |
(0.22 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.56 |
) |
|
$ |
0.50 |
|
Weighted average shares
outstanding - basic |
|
|
8,713 |
|
|
|
7,250 |
|
|
|
7,775 |
|
|
|
6,461 |
|
Weighted average shares
outstanding - diluted |
|
|
8,713 |
|
|
|
7,250 |
|
|
|
7,775 |
|
|
|
6,461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CREATIVE REALITIES, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)(Unaudited) |
|
|
|
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
2023 |
|
|
2022 |
|
Operating Activities: |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(4,356 |
) |
|
$ |
3,210 |
|
Adjustments to reconcile net
(loss) income to net cash provided by operating activities |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,393 |
|
|
|
2,060 |
|
Amortization of debt discount |
|
|
1,078 |
|
|
|
904 |
|
Amortization of stock-based compensation |
|
|
539 |
|
|
|
1,587 |
|
Loss on debt waiver consent |
|
|
- |
|
|
|
1,212 |
|
Loss on warrant amendment |
|
|
- |
|
|
|
345 |
|
Loss on settlement of obligations |
|
|
- |
|
|
|
237 |
|
Bad debt expense |
|
|
318 |
|
|
|
105 |
|
Gain on change in fair value of warrants |
|
|
- |
|
|
|
(7,902 |
) |
Loss (Gain) on change in fair value of contingent
consideration |
|
|
1,461 |
|
|
|
(369 |
) |
Deferred income taxes |
|
|
44 |
|
|
|
- |
|
Changes to operating assets
and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
2,080 |
|
|
|
(2,835 |
) |
Work-in-process and inventories |
|
|
(39 |
) |
|
|
(1,032 |
) |
Prepaid expenses and other current assets |
|
|
859 |
|
|
|
682 |
|
Accounts payable |
|
|
(53 |
) |
|
|
(227 |
) |
Accrued expenses |
|
|
683 |
|
|
|
533 |
|
Deferred revenues |
|
|
2,284 |
|
|
|
1,019 |
|
Customer deposits |
|
|
1,054 |
|
|
|
(585 |
) |
Other |
|
|
(39 |
) |
|
|
6 |
|
Net cash provided by (used in) operating activities |
|
|
8,306 |
|
|
|
(1,050 |
) |
Investing
activities |
|
|
|
|
|
|
|
|
Acquisition of business, net of cash acquired |
|
|
- |
|
|
|
(17,186 |
) |
Purchases of property and equipment |
|
|
(287 |
) |
|
|
(123 |
) |
Capitalization of labor for software development |
|
|
(2,851 |
) |
|
|
(2,959 |
) |
Net cash used in investing activities |
|
|
(3,138 |
) |
|
|
(20,268 |
) |
Financing
activities |
|
|
|
|
|
|
|
|
Principal payments on finance leases |
|
|
(14 |
) |
|
|
- |
|
Proceeds from sale of common stock, net of offering expenses |
|
|
5,454 |
|
|
|
- |
|
Proceeds from sale of common stock in PIPE, net of offering
expenses |
|
|
- |
|
|
|
1,814 |
|
Proceeds from sale & exercise of pre-funded warrants in PIPE,
net of offering expenses |
|
|
- |
|
|
|
8,295 |
|
Proceeds from Acquisition Loan, net of offering expenses |
|
|
- |
|
|
|
9,868 |
|
Repayment of Term Loan (2022) |
|
|
(2,000 |
) |
|
|
- |
|
Repayment of Consolidation Term Loan |
|
|
(930 |
) |
|
|
- |
|
Repayment of Secured Promissory Note |
|
|
(935 |
) |
|
|
(723 |
) |
Net cash provided by financing activities |
|
|
1,575 |
|
|
|
19,254 |
|
Increase (decrease) in
Cash and Cash Equivalents |
|
|
6,743 |
|
|
|
(2,064 |
) |
Cash and Cash
Equivalents, beginning of period |
|
|
1,633 |
|
|
|
2,883 |
|
Cash and Cash
Equivalents, end of period |
|
$ |
8,376 |
|
|
$ |
819 |
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP NET LOSS TO
ADJUSTED EBITDA (in thousands,
unaudited)
Creative Realities, Inc. prepares its
consolidated financial statements in accordance with United States
generally accepted accounting principles (“GAAP”). In addition to
disclosing financial results prepared in accordance with GAAP, the
Company discloses information regarding “EBITDA” and “Adjusted
EBITDA.” CRI defines “EBITDA” as earnings before interest, income
taxes, depreciation and amortization of intangibles. CRI defines
“Adjusted EBITDA” as EBITDA excluding stock-based compensation,
fair value adjustments and both cash and non-cash non-recurring
gains and charges.
EBITDA and Adjusted EBITDA are non-GAAP
financial measures and should not be considered as a substitute for
net income (loss), operating income (loss) or any other performance
measure derived in accordance with United States generally accepted
accounting principles (“GAAP”) or as an alternative to net cash
provided by operating activities as a measure of CRI’s
profitability or liquidity. CRI’s management believes EBITDA and
Adjusted EBITDA are useful financial metrics because they allow
external users of CRI’s financial statements, such as industry
analysts, investors, lenders and rating agencies, to more
effectively evaluate CRI’s operating performance, compare the
results of its operations from period to period and against CRI’s
peers without regard to CRI’s financing methods, hedging positions
or capital structure and because it highlights trends in CRI’s
business that may not otherwise be apparent when relying solely on
GAAP measures. CRI also presents EBITDA and Adjusted EBITDA because
it believes EBITDA and Adjusted EBITDA are important supplemental
measures of its performance that are frequently used by others in
evaluating companies in its industry. Because EBITDA and Adjusted
EBITDA exclude some, but not all, items that affect net income
(loss) and may vary among companies, the EBITDA and Adjusted EBITDA
CRI presents may not be comparable to similarly titled measures of
other companies.
The following table presents a reconciliation of
EBITDA and Adjusted EBITDA from net loss, CRI’s most directly
comparable financial measure calculated and presented in accordance
with GAAP.
|
|
|
|
|
|
Quarters Ended |
|
|
|
September 30 |
|
|
June 30 |
|
|
March 31 |
|
|
December 31 |
|
|
September 30 |
|
Quarters ended |
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
GAAP net loss |
|
$ |
(1,931 |
) |
|
$ |
(1,425 |
) |
|
$ |
(1,000 |
) |
|
$ |
(1,334 |
) |
|
$ |
(554 |
) |
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt discount |
|
|
363 |
|
|
|
358 |
|
|
|
356 |
|
|
|
364 |
|
|
|
363 |
|
Other interest, net |
|
|
371 |
|
|
|
429 |
|
|
|
447 |
|
|
|
423 |
|
|
|
394 |
|
Depreciation/amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
766 |
|
|
|
754 |
|
|
|
754 |
|
|
|
743 |
|
|
|
848 |
|
Amortization of employee share-based awards |
|
|
3 |
|
|
|
151 |
|
|
|
225 |
|
|
|
448 |
|
|
|
456 |
|
Depreciation of property & equipment |
|
|
50 |
|
|
|
43 |
|
|
|
25 |
|
|
|
30 |
|
|
|
37 |
|
Income tax
expense/(benefit) |
|
|
(15 |
) |
|
|
45 |
|
|
|
43 |
|
|
|
33 |
|
|
|
(10 |
) |
EBITDA |
|
$ |
(393 |
) |
|
$ |
355 |
|
|
$ |
850 |
|
|
$ |
707 |
|
|
$ |
1,534 |
|
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on settlement of obligations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(37 |
) |
Loss (Gain) on fair value of equity guarantee |
|
|
1,369 |
|
|
|
16 |
|
|
|
76 |
|
|
|
(705 |
) |
|
|
(442 |
) |
Disposal of Safe Space Solutions inventory |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
909 |
|
|
|
- |
|
Deal and transaction expenses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
54 |
|
|
|
110 |
|
Other expense (income) |
|
|
3 |
|
|
|
(123 |
) |
|
|
(12 |
) |
|
|
7 |
|
|
|
2 |
|
Stock-based compensation – Director grants |
|
|
43 |
|
|
|
43 |
|
|
|
43 |
|
|
|
56 |
|
|
|
82 |
|
Adjusted EBITDA |
|
$ |
1,022 |
|
|
$ |
291 |
|
|
|
957 |
|
|
|
1,028 |
|
|
|
1,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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