CREATIVE REALITIES, INC.

(in thousands, except share and per share amounts)

NOTE1: 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 a1*-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, effective12:01 am on* March 27, 2023,everythree* shares of common stock then-issued and outstanding automatically combined intoone share of common stock, withno 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 (Subtopic205*-40) (“ASU205-40*”), 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 withinone year after the date that the Consolidated Financial Statements are issued.

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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 in2024, the Credit Agreement (as defined in Note7* Debt* below) limits, via specific reserve, utilization of the Company’s line of credit tono 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* maynot* 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 ASU205-40*.*

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 havenot been finalized, are subject to market conditions, in some respects arenot within the Company’s control, and therefore cannot be deemed probable. As a result, the Company has concluded that management's plans donot alleviate substantial doubt about the Company's ability to continue as a going concern.

The Consolidated Financial Statements donot 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 wereno such events that would require recognition or disclosure in the financial statements.

NOTE2: 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 Form10-K and Article8 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 ASU2023*-07, Segment Reporting (Topic280*): 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 ASU2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC280 on an interim and annual basis. ASU2023-07 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 Note12* Segment Reporting* *for new required disclosures.

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In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740*): 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. ASU2023-09 is effective for fiscal years beginning after* December 15, 2024,with early adoption permitted. The Company is currently evaluating the impact of adopting ASU2023*-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 doesnot 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 doesnot* 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 thefive-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 willnot 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 betweenthirty andninety 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 whenone isnot 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 butnot 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 donot exceedone year.

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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, 2022to December 31, 2024:*

6. Inventories

Inventories are stated at the lower of cost or net realizable value, determined by thefirst-in,first-out (FIFO) method, and consist of the following:

The reserve for obsolete inventory at* December**31,* 2024 and2023 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 ASC360, Accounting for the Impairment or Disposal of Long-Lived Assets. Under ASC360, 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, 2024and2023*, 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.

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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, butnot 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 hadno uncertain tax positions as of* December 31, 2024and2023.*

10. Goodwill and Definite-Lived Intangible Assets

We follow the provisions of ASC350, Goodwill and Other Intangible Assets. Pursuant to ASC350, goodwill acquired in a purchase business combination isnot 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, 2024and2023*:

The estimated useful lives used to compute depreciation and amortization are as follows:

Depreciation expense was $201 and $166 for the years ended* December 31, 2024and2023*, respectively. The Company disposed of certain fully depreciated fixed assets with an acquisition value of $310 and $150 for the years ended* December 31, 2024and2023*, respectively.

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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 a1*-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 from2,333,334 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 doesnot 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 havenot 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 maysubmit written demands to the Company for a30*-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 ASC805-30-35-1 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, 2024related 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, 2024related 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 providesno 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* mayexercise an extension option (the “Extension Option”) to extend the Guarantee Date bysix* (6) months, from* February 17, 2025to 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 Optionno* 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 thefifteen* (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 hasnot* been adjusted as a result of the Reverse Split).

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NOTE3: FAIR VALUE MEASUREMENT

We measure certain financial assets, including cash equivalents, at fair value on a recurring basis. In accordance with ASC820-10-30, 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, ASC820-10-35 establishes athree-level hierarchy that prioritizes the inputs used in measuring fair value. Thethree hierarchy levels are defined as follows:

Level1 — Valuations based on unadjusted quoted prices in active markets for identical assets.

Level2 — Valuations based on observable inputs (other than Level1 prices), such as quoted prices for similar assets at the measurement date; quoted prices in markets that arenot active; or other inputs that are observable, either directly or indirectly.

Level3 — 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 Level3 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 Level3 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 Level3 estimates.

NOTE4: REVENUE RECOGNITION

The Company applies ASC606 for revenue recognition. The following table disaggregates the Company’s revenue by major source for the years ended* December 31, 2024and2023*:

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.

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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 ASC985-20-15-5 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’ networks7 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 generally12-36 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.

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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 donot 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 betweenthirty percent (30%) andforty 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 asingle day toeight 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 ASC606 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.

NOTE5: SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION

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NOTE6: INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

Intangible assets consisted of the following at* December 31, 2024and2023:*

For the years ended* December 31, 2024and2023*, 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 wasno* 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:

Intangible assets include the following and are being amortized over their estimated useful lives as follows:

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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 onlyone 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* mayoccur. Specifically, the Company gives significant consideration to actual historic financial results, including revenue growth rates in the current and precedingthree* 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 in2024, and quantitatively in2023 to determine whether it is more likely thannot 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 wasnot considered to be impaired at* September 30, 2024and2023.* 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 projected2025 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.

NOTE7: DEBT

Debt of the Company consists of the following:

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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 thefifteenth (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 (theone*-year anniversary of the closing of the Merger), at which time any remaining proceedsnot 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 afirst-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 aone*-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.

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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 thefirst* day of each month, commencing* March 1, 2022through February 1, 2025,the Borrowers will make interest-only payments on the Consolidation Term Loan. Commencing on September 1, 2023,and on thefirst* 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 ineighteen 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 thefirst* day of each month, commencing* March 1, 2022through 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 afive-year term, an initial exercise price of $6.00 per share, subject to adjustments in the Lender Warrant, and wasnot exercisable until* August 17, 2022.The warrants were assessed in accordance with ASC470* and ASC815 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 isnot approved by the Company’s Board of Directors, and thereforenot 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 additionalone* 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 Loan2022* has been repaid in full to Slipstream.

F-20

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 isnot* 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 the1-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:

The effective interest rate at* December 31, 2024was 7.16%. The Company pays accrued interest monthly on thefirst* 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.

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NOTE8: COMMITMENTS AND CONTINGENCIES

The Company isnot party to any material legal proceedings, other than ordinary routine litigation incidental to the business, and there wereno other such proceedings pending during the period covered by this Report.

NOTE9: INCOME TAXES

Income tax expense consisted of the following:

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:

F-22

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:

As of* December 31, 2024*, the Company hadno reserves recorded as a liability for unrecognized tax benefits for U.S. federal and state tax jurisdictions. There wereno 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 hadno 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 between2025 and2044, $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 than80% of taxable income in a given tax year. The federal statute of limitations remains open for tax years2020 through2023 and state tax jurisdictions generally have statutes of limitations open for tax years2020 through2023.

We have substantial NOLs that are limited in usage by IRC Section382. IRC Section382 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.

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NOTE10: WARRANTS

A summary of outstanding warrants accounted for as equity instruments in the Company's Consolidated Financial Statements for the years ended* December 31, 2024and2023* is included below:

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NOTE11: STOCK-BASED COMPENSATION

A summary of outstanding options as of* December 31, 2024* is included below:

Time Vesting Options

Performance Vesting Options

Market Vesting Options

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's2014 Stock Incentive Plan is 2,000,000. There are 1,565,231 options outstanding under the2014 Stock Incentive Plan. The Company’s ability to issue new awards under its2014 Stock Incentive Plan expired in2023.

On* October 18, 2024,the Company’s shareholders approved the Company’s2023* 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

Employee Awards

Stock-based compensation expense recognized for the issuance of stock options to employees for the years ended* December 31, 2024and2023* 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 next1.5 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, 2024and2023* of $0 and $150, respectively, was included in general and administrative expense in the Consolidated Financial Statements. At* December 31, 2024*, there wasno unrecognized compensation expense related to share-based awards to non-employees.

NOTE12: SEGMENT REPORTING

Segment Information

We currently operate inone reportable segment, marketing technology solutions. The marketing technology solutions segment generates revenue throughthree 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 ornot 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 Note4 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 hadthree customers that accounted for 15%,13% and 10% of revenue for the year ended* December 31, 2024.No customer accounted for more than10%* of revenue for the year ended* December 31, 2023.*

We hadone customer that accounted for 16% of accounts receivable at* December 31, 2024andtwo customers that accounted for 26% and 23% of accounts receivable at December 31, 2023.*

Significant Vendors

We hadtwo vendors that accounted for 27% and 10% of outstanding accounts payable at* December 31, 2024,andone vendor that accounted for 38% of outstanding accounts payable at December 31, 2023.*

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NOTE13: 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* mayincludeone* or more options to renew. We donot assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Our lease agreements donot 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 isnot 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, 2024and2023:*

The following table summarizes the classification of lease expense in the Company's Consolidated Statements of Operations for the years ended* December 31, 2024and2023:*

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The following table provides lease term and discount rate information related to operating leases as of* December 31, 2024:*

The following table sets forth the scheduled maturities of lease obligations as of* December 31, 2024:*

The following table provides supplemental information related to the Company's Consolidated Statements of Cash Flows for the years ended* December 31, 2024and2023:*

NOTE14: PROFIT-SHARING PLAN

We have a defined contribution401(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, 2024and2023*, respectively.