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 first quarter ended March 31, 2023.
Rick Mills, Chief Executive Officer, commented
“I am pleased to report that the Company generated first quarter
2023 revenue of $9.9 million with first quarter records of $5.1
million and approximately $960 thousand in gross profit and
Adjusted EBITDA, respectively. This translates to first quarter
gross profit and Adjusted EBITDA margins of 51.2% and 9.6%,
respectively. The former is a record gross profit margin percentage
for a quarter and the first time this number has exceeded 50%.
While not a quarterly record, the first quarter Adjusted EBITDA
margin percentage is a 370 basis-point improvement over the same
period in 2022 and 120 basis-points above the full year results for
fiscal year 2022. The Company’s run-rate on annual recurring
revenue (ARR) is also at a record level of $14.8 million. These
results highlight two critical factors for investors –we believe
the Company’s baseline revenue levels have grown to equal $10
million in periods without material active hardware deployments,
and we continued to enhance profitability in such periods driven by
continued growth in our SaaS subscription revenue contracts, or
ARR.
“Our first quarter typically reflects a number
of seasonal influences,” stated Mr. Mills. Mr. Mills continued “Our
top-line revenue for the first quarter is in line with expectations
we previously articulated on our year-end 2022 results earnings
call and the results required for us to drive towards the $60
million in guidance for 2023.” Mr. Mills further stated, “As we
have previously communicated, we have secured material new client
deployments which will ramp up significantly throughout 2023,
particularly as we enter the second half of the year and throughout
2024.” Mr. Mills added, “Importantly, we are continually driving
improvements in our profitability associated with both scale and
new deployments, which drive our SaaS and other downstream
recurring and services revenue at significantly more favorable
margins. Increases in high-margin ARR increase the Company’s gross
profit margin, which exceeded 50% in the period, with further
improvements projected for our Adjusted EBITDA flow-through as we
seek an Adjusted EBITDA run-rate of 15% exiting 2023.”
The Company is reaffirming its previously
disclosed 2023 full-year revenue guidance of $60 million at a
projected Adjusted EBITDA margin percentage of 15% and an annual
recurring revenue of $17 million, each on an annualized exit
run-rate basis. The Company previously announced revenue backlog
from opportunities with existing customers at $110 million.
Our revenue backlog is primarily related to
projected network deployments and project work, which upon
execution will result in 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.
2023 Q1 Financial OverviewAll
references to current year and prior year represent references to
the three months ended March 31, 2023 and 2022, respectively.
Key Highlights:
- Expansion of gross margin
percentage to 51.2% in the current year from 36.2% in the prior
year.
- Expansion of Adjusted EBITDA margin
percentage to 9.6% in the current year from 5.9% in the prior year
and 8.9% for the full year 2022.
- Revenue in-line with previously
communicated expectations for first quarter 2023, reaffirming
expectations for full year revenue of $60 million.
Revenue, gross profit, and gross margin:
- Sales were $9,944, representing a
decrease of $813, or 8%, as compared to the same period in
2022. Hardware revenues were $4,322 for the three month period
ending March 31, 2023, a decrease of $2,137, or 33%, as
compared to the prior year which included a hardware refresh for
two significant customers in the prior year that did not recur in
the current year. Services and other revenues were $5,622 for
the three month period ended March 31, 2023, an increase of
$1,324, or 31%, driven by growth in managed services
revenue. Managed services revenue, which includes both
software-as-a-service (“SaaS”) and help desk technical subscription
services, were $4,072 in the three months ended March 31, 2023
as compared to $2,703 in the same period in 2022, driven by
expansion in the Company's SaaS subscription revenue, or ARR, and
the inclusion of revenue from Reflect’s operations for a full three
months in the current period as compared to approximately one and
one-half months during the prior period as a result of the Merger
closing on February 17, 2022. This represents a year-over-year
growth rate of 51% in our higher margin, typically
subscription-based, managed services revenue.
- Gross profit increased by $1,197,
or 31% during the three months ended March 31, 2023 as
compared to the same period in 2022 driven by an increase in (1)
managed services revenue of $1,369 due to expansion in software
subscription revenues and the inclusion of such revenues from
Reflect operations for the full period in the current year as
compared to approximately one and one-half months in the prior
period following the Merger on February 17, 2022, (2) software
development revenue of $340 which has a higher contribution margin
than other services, and (3) improvements in hardware gross
margins as a result of a significant deployment with gross
margin of approximately 25%.
- Gross profit margin
increased to 51.2% from 36.2% driven by more favorable revenue
mix during the three months ended March 31, 2023 as managed
services, which include high margin software subscription revenues,
increased to 41% of total revenue as compared to 25% of total
revenues in the three months ended March 31, 2022. The increase as
a result of margin expansion in hardware and mix associated with
increased managed services was partially offset by reduced
revenue in the current year.
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 increased by $429, or 61%, driven primarily by (i) the
acquisition of Reflect via the Merger on February 17, 2022, and
(ii) the Company’s enhanced investments into sales and marketing
activities post-COVID-19 pandemic. Immediately following the
Merger, the Company integrated the sales and marketing functions
and did not disaggregate expenses between the two legacy companies.
Following the Merger and through integration activities between the
date of the Merger and March 31, 2023, the Company adopted certain
tools, technology, and processes – particularly with respect to
lead generation and brand marketing – that were undercapitalized
historically by the Company. Additionally, through completion of
the Merger, the Company acquired a media sales business unit that
sells advertising on behalf of our customers to be displays 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. As a result, we expect the sales and marketing
expenses of the Company for the three months ended March 31, 2023
to adequately reflect the pace for spend in these areas in future
reporting periods.
- 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.
Research and development expenses increased by $125, or 52%, for
the three months period ended March 31, 2023 as compared to the
same period in 2022 driven primarily by the completion of the
Merger on February 17, 2022. Through the Merger, we acquired a
fully staffed, experienced software development team and elected to
keep that team in-tact, particularly given competitive employment
market conditions with respect to talented software engineers. We
have integrated the pre-existing CRI development team with the
acquired team and have experienced enhanced speed to market on new
feature and functionality development activities from increasing
this resource pool. We expect a continued elevated level of
capitalized activity through the third quarter of 2023 associated
with a customer-facing opportunity, followed by a return to
spending levels consistent with the Company’s results for the
second quarter of 2022, which adequately reflect the pace for spend
in these areas in future reporting periods.
- General and administrative expenses
were effectively flat, increasing $38, or 1%. As compared
to the three months ended March 31, 2022, the Company experienced
decreases of (1) $283 in stock compensation expense as all
expense associated with outstanding performance awards was recorded
as of December 31, 2022, and (2) reductions in certain
expenses following completion of integration
activities/projects completed during 2022 following the Reflect
Merger (including but not limited to consolidation of CMS tools,
cloud hosting environments, IT tools) that materialized through the
balance of 2022. These decreases were partially offset by increases
of (1) $117 in increased personnel costs, (2) $122 in legal
expenses associated with the Company's establishment of a Special
Committee of the Board of Directors to consider and respond
to an unsolicited proposal of a Company shareholder to acquire
certain outstanding shares of common stock of the Company and
settlement of two open litigation matters during the period, and
(3) other operating costs, each primarily associated with the
consolidation of Reflect for three months in 2023 as compared to
approximately one and one-half months during the three months ended
March 31, 2022 as a result of completion of the Reflect Merger on
February 17, 2022.
Operating loss, net loss, and EBITDA:
- Operating loss was $0.1 million for
the current year ended as compared to $1.0 million in the prior
year, inclusive of approximately $0.8 million in non-cash
amortization of fixed and intangible assets in each period.
- Net loss was $1.0 million for the
current period as compared to net income of $2.5 million for the
same period in 2022, which was based on a prior year gain of $5.4
million on mark-to-market liabilities no longer included in the
Company’s condensed consolidated balance sheet.
- Adjusted EBITDA was approximately
$1.0 million in the current period as compared to $0.6 million in
the prior period, with an expansion in Adjusted EBITDA margin
percentage from 5.6% in the prior period to 9.6% in the current
period. See the appendix for a description of these non-GAAP
financial measures and reconciliation to our net income.
Other notes:
- Cash: The
Company’s cash on hand as of March 31, 2023 increased to $3.9
million from $1.6 million as of December 31, 2022 as a result of
collections on accounts receivable and annual billings associated
with our SaaS-based contracts.
- Reverse Stock
Split: Effective March 27, 2023, the Company effectuated a
one-for-three stock split of the shares of the Company's common
stock, par value $0.01 per share. The Company now has approximately
7.4 million shares outstanding. The Company’s condensed
consolidated financial statements as of and for the three months
ended March 31, 2023 reflect this reverse stock split for the
current and all prior periods presented.
- Annual Shareholder
Meeting: The Company’s annual shareholder meeting will be
held on June 26, 2023 at the Company’s corporate headquarters.
Shareholders can review the definitive proxy statement filed with
the SEC for a description of the matters to be considered at the
meeting.
Conference Call DetailsThe
Company will host a conference call to review the results of the
Company’s first quarter 2023, and provide additional commentary
about the Company’s recent performance, on May 15, 2023 at 9:00 am
Eastern Time.
Prior to the call, participants should register at
http://bit.ly/CRIearnings2022Q4. 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., 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.
The combined company has operations across North
America with active installations in more than 10 countries.
Use of Non-GAAP
MeasuresCreative 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 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 ability to effectively integrate
Reflect’s business operations, 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, 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, including those as
a result of the COVID-19 pandemic. 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.comhttps://investors.cri.com/
CREATIVE REALITIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands, except per share amounts)
|
|
March 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
(unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,905 |
|
|
$ |
1,633 |
|
Accounts receivable, net |
|
|
6,849 |
|
|
|
8,263 |
|
Work-in-process and inventories, net |
|
|
1,479 |
|
|
|
2,267 |
|
Prepaid expenses and other current assets |
|
|
804 |
|
|
|
1,819 |
|
Total current assets |
|
$ |
13,037 |
|
|
$ |
13,982 |
|
Property and equipment, net |
|
|
245 |
|
|
|
201 |
|
Operating lease right-of-use assets |
|
|
1,504 |
|
|
|
1,584 |
|
Intangibles, net |
|
|
23,819 |
|
|
|
23,752 |
|
Goodwill |
|
|
26,453 |
|
|
|
26,453 |
|
Other assets |
|
|
44 |
|
|
|
43 |
|
TOTAL ASSETS |
|
$ |
65,102 |
|
|
$ |
66,015 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,087 |
|
|
$ |
3,757 |
|
Accrued expenses |
|
|
3,726 |
|
|
|
3,828 |
|
Deferred revenues |
|
|
3,605 |
|
|
|
1,223 |
|
Customer deposits |
|
|
785 |
|
|
|
2,478 |
|
Current maturities of operating leases |
|
|
712 |
|
|
|
711 |
|
Short-term portion of Secured Promissory Note |
|
|
1,146 |
|
|
|
1,248 |
|
Short-term portion of related party Consolidation Term Loan, net of
$747 and $745 discount, respectively |
|
|
2,048 |
|
|
|
1,251 |
|
Short-term related party Term Loan (2022) |
|
|
1,750 |
|
|
|
2,000 |
|
Total current liabilities |
|
|
16,859 |
|
|
|
16,496 |
|
Long-term Secured Promissory Note |
|
|
- |
|
|
|
208 |
|
Long-term related party Acquisition Term Loan, net of $1,312 and
$1,484 discount, respectively |
|
|
8,688 |
|
|
|
8,516 |
|
Long-term related party Consolidation Term Loan, net of $654 and
$840 discount, respectively |
|
|
3,736 |
|
|
|
4,349 |
|
Long-term obligations under operating leases |
|
|
792 |
|
|
|
873 |
|
Contingent acquisition consideration, at fair value |
|
|
9,865 |
|
|
|
9,789 |
|
Other liabilities |
|
|
80 |
|
|
|
205 |
|
TOTAL LIABILITIES |
|
|
40,020 |
|
|
|
40,436 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Common stock, $0.01 par value, 66,666 shares authorized; 7,394 and
7,266 shares issued and outstanding, respectively |
|
|
74 |
|
|
|
72 |
|
Additional paid-in capital |
|
|
76,417 |
|
|
|
75,916 |
|
Accumulated deficit |
|
|
(51,409 |
) |
|
|
(50,409 |
) |
Total shareholders’ equity |
|
|
25,082 |
|
|
|
25,579 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
65,102 |
|
|
$ |
66,015 |
|
CREATIVE REALITIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
amounts)(Unaudited)
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
Sales |
|
|
|
|
|
|
|
|
Hardware |
|
$ |
4,322 |
|
|
$ |
6,459 |
|
Services and other |
|
|
5,622 |
|
|
|
4,298 |
|
Total sales |
|
|
9,944 |
|
|
|
10,757 |
|
Cost of sales |
|
|
|
|
|
|
|
|
Hardware |
|
|
3,206 |
|
|
|
5,382 |
|
Services and other |
|
|
1,649 |
|
|
|
1,483 |
|
Total cost of sales |
|
|
4,855 |
|
|
|
6,865 |
|
Gross profit |
|
|
5,089 |
|
|
|
3,892 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
|
1,136 |
|
|
|
707 |
|
Research and development expenses |
|
|
366 |
|
|
|
241 |
|
General and administrative expenses |
|
|
2,898 |
|
|
|
2,860 |
|
Depreciation and amortization expense |
|
|
779 |
|
|
|
707 |
|
Deal and transaction expenses |
|
|
- |
|
|
|
391 |
|
Total operating expenses |
|
|
5,179 |
|
|
|
4,906 |
|
Operating loss |
|
|
(90 |
) |
|
|
(1,014 |
) |
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
Interest expense, including amortization of debt discount |
|
|
(803 |
) |
|
|
(449 |
) |
Change in fair value of warrant liability |
|
|
- |
|
|
|
5,469 |
|
Change in fair value of equity guarantee |
|
|
(76 |
) |
|
|
- |
|
Loss on extinguishment/settlement of obligations |
|
|
- |
|
|
|
(295 |
) |
Loss on debt waiver consent |
|
|
- |
|
|
|
(1,212 |
) |
Other income |
|
|
12 |
|
|
|
6 |
|
Total other income (expense) |
|
|
(867 |
) |
|
|
3,519 |
|
Net (loss) income before income taxes |
|
|
(957 |
) |
|
|
2,505 |
|
Provision for income taxes |
|
|
(43 |
) |
|
|
(3 |
) |
Net (loss) income |
|
$ |
(1,000 |
) |
|
$ |
2,502 |
|
Basic (loss) earnings per
common share |
|
$ |
(0.14 |
) |
|
$ |
0.51 |
|
Diluted (loss) earnings per
common share |
|
$ |
(0.14 |
) |
|
$ |
0.51 |
|
Weighted average shares
outstanding - basic |
|
|
7,351 |
|
|
|
4,873 |
|
Weighted average shares
outstanding - diluted |
|
|
7,351 |
|
|
|
4,873 |
|
CREATIVE REALITIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In
thousands)(Unaudited)
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
Operating Activities: |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(1,000 |
) |
|
$ |
2,502 |
|
Adjustments to reconcile net
(loss) income to net cash provided by operating activities |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
779 |
|
|
|
707 |
|
Amortization of debt
discount |
|
|
356 |
|
|
|
181 |
|
Amortization of stock-based
compensation |
|
|
298 |
|
|
|
551 |
|
Employee Retention and other
Government Credits |
|
|
- |
|
|
|
16 |
|
Loss on extinguishment of
debt |
|
|
- |
|
|
|
295 |
|
Loss on debt waiver
consent |
|
|
- |
|
|
|
1,212 |
|
Bad debt expense |
|
|
237 |
|
|
|
116 |
|
Gain on change in fair value
of warrants |
|
|
- |
|
|
|
(5,469 |
) |
Loss on change in fair value
of contingent consideration |
|
|
76 |
|
|
|
- |
|
Deferred income taxes |
|
|
24 |
|
|
|
- |
|
Changes to operating assets
and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
1,177 |
|
|
|
(3,724 |
) |
Work-in-process and
inventories |
|
|
788 |
|
|
|
52 |
|
Prepaid expenses and other
current assets |
|
|
1,015 |
|
|
|
777 |
|
Accounts payable |
|
|
(486 |
) |
|
|
2,292 |
|
Accrued expenses |
|
|
(45 |
) |
|
|
35 |
|
Deferred revenues |
|
|
2,382 |
|
|
|
1,901 |
|
Customer deposits |
|
|
(1,693 |
) |
|
|
(213 |
) |
Other |
|
|
(40 |
) |
|
|
(30 |
) |
Net cash provided by operating
activities |
|
|
3,868 |
|
|
|
1,201 |
|
Investing
activities |
|
|
|
|
|
|
|
|
Acquisition of business, net
of cash acquired |
|
|
- |
|
|
|
(17,184 |
) |
Purchases of property and
equipment |
|
|
(31 |
) |
|
|
(10 |
) |
Capitalization of labor for
software development |
|
|
(1,003 |
) |
|
|
(775 |
) |
Net cash used in investing
activities |
|
|
(1,034 |
) |
|
|
(17,969 |
) |
Financing
activities |
|
|
|
|
|
|
|
|
Principal payments on finance
leases |
|
|
(2 |
) |
|
|
- |
|
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) |
|
|
(250 |
) |
|
|
- |
|
Repayment of Secured
Promissory Note |
|
|
(310 |
) |
|
|
(104 |
) |
Net cash (used in) provided by
financing activities |
|
|
(562 |
) |
|
|
19,873 |
|
Increase in Cash and
Cash Equivalents |
|
|
2,272 |
|
|
|
3,105 |
|
Cash and Cash
Equivalents, beginning of period |
|
|
1,633 |
|
|
|
2,883 |
|
Cash and Cash
Equivalents, end of period |
|
$ |
3,905 |
|
|
$ |
5,988 |
|
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 |
|
|
|
March 31 |
|
|
December 31 |
|
|
September 30 |
|
|
June 30 |
|
|
March 31 |
|
Quarters ended |
|
2023 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
GAAP net income (loss) |
|
$ |
(1,000 |
) |
|
$ |
(1,334 |
) |
|
$ |
(554 |
) |
|
$ |
1,262 |
|
|
$ |
2,502 |
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt discount |
|
|
356 |
|
|
|
364 |
|
|
|
363 |
|
|
|
360 |
|
|
|
181 |
|
Other interest, net |
|
|
447 |
|
|
|
423 |
|
|
|
394 |
|
|
|
390 |
|
|
|
268 |
|
Depreciation/amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
754 |
|
|
|
743 |
|
|
|
848 |
|
|
|
431 |
|
|
|
680 |
|
Amortization of employee share-based awards |
|
|
225 |
|
|
|
448 |
|
|
|
456 |
|
|
|
316 |
|
|
|
469 |
|
Depreciation of property, equipment |
|
|
25 |
|
|
|
30 |
|
|
|
37 |
|
|
|
37 |
|
|
|
27 |
|
Income tax
expense/(benefit) |
|
|
43 |
|
|
|
33 |
|
|
|
(10 |
) |
|
|
53 |
|
|
|
3 |
|
EBITDA |
|
$ |
850 |
|
|
$ |
707 |
|
|
$ |
1,534 |
|
|
$ |
2,849 |
|
|
$ |
4,130 |
|
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on fair value of warrant liability |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,433 |
) |
|
|
(5,469 |
) |
(Gain)/loss on settlement of obligations |
|
|
- |
|
|
|
- |
|
|
|
(37 |
) |
|
|
(21 |
) |
|
|
295 |
|
Loss on debt waiver consent |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,212 |
|
Loss on warrant amendment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
345 |
|
|
|
- |
|
(Gain)/loss on fair value of equity guarantee |
|
|
76 |
|
|
|
(705 |
) |
|
|
(442 |
) |
|
|
73 |
|
|
|
- |
|
Disposal of Safe Space
Solutions inventory |
|
|
- |
|
|
|
909 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Deal and transaction expenses |
|
|
- |
|
|
|
54 |
|
|
|
110 |
|
|
|
37 |
|
|
|
391 |
|
Other (income)/expense |
|
|
(12 |
) |
|
|
7 |
|
|
|
2 |
|
|
|
1 |
|
|
|
(6 |
) |
Stock-based compensation – Director grants |
|
|
43 |
|
|
|
56 |
|
|
|
82 |
|
|
|
82 |
|
|
|
82 |
|
Adjusted EBITDA |
|
$ |
957 |
|
|
|
1,028 |
|
|
|
1,249 |
|
|
|
933 |
|
|
|
635 |
|
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