CREATIVE REALITIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(unaudited)

NOTE1: NATURE OF ORGANIZATION AND OPERATIONS

Unless the context otherwise indicates, references in these Notes to the accompanying condensed 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, Cineplex Digital Media Inc., a Canadian corporation (“CDMI”), and Cineplex Digital Media U.S. Inc., a Delaware corporation (“CDMUS”).

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 is required to evaluate 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 condensed consolidated financial statements are issued.

As disclosed in the Company’s Annual Report on Form10-K for the year ended* December 31, 2025and Quarterly Report on Form10*-Q for the quarter ended* March 31, 2026,there was substantial doubt about the ability of the Company to continue as a going concern for at leastone* year from the date those respective financial statements were issued. These conclusions resulted from a combination of factors, including recurring net losses and cash used in operating activities, the ongoing integration of the Cineplex Digital Media business that the Company acquired on* November 7, 2025 (see Note4*), which expected synergies and financial impacts werenot yet fully known, and the dependence on improving cash flows from operations or securing additional sources of liquidity (or both), to fund ongoing operations to meet the Company’s financial obligations.

As of* June 30, 2026,the Company has an accumulated deficit of $76,487, cash and cash equivalents of $10,703 and negative working capital of $3,716. During thethree* months ended* June 30, 2026the Company began realizing synergies and cost savings from the acquisition of the Cineplex Digital Media business. Accordingly, the Company was able to improve its operating results (net loss of $3,896, which was reduced from a net loss of $7,461 during the prior quarter) and generated positive cash flows from operating activities of $1,003 for thesix* months ended* June 30, 2026.In addition, on June 30, 2026,the Company completed an underwritten public offering and received net proceeds of $10,784. These actions have alleviated the substantial doubt about the Company’s ability to continue as a going concern that previously existed, and accordingly, thereno* longer exists substantial doubt about the Company’s ability to continue as a going concern for at leasttwelve months after these condensed consolidated financial statements are issued. The Company expects that its cash and cash equivalents on hand, cash to be generated from operations and availability under its revolving credit facility will be sufficient to fund its operations for at leasttwelve months from the date the condensed consolidated financial statements are issued.

The Company continues to monitor ongoing compliance with its credit facilities and will continue to monitor its ability to meet its obligations as they become due. The Company* mayneed to seek additional forms of debt or equity financing in the future. If the Company is unable to obtain adequate financing on terms that are satisfactory to the Company, when the Company requires it, the Company’s ability to continue to grow or support the business and to respond to business challenges could be significantly limited, which may*adversely affect the Company’s business plans.

NOTE2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Since the Annual Report for the year ended* December 31, 2025,there have beenno* material changes to the Company’s significant accounting policies, except as disclosed in this note.

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1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form10-Q and Article8 of Regulation S-X. Accordingly, they donot include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of* June 30, 2026and for thethree* andsix months then ended. The results of operations for thethree andsix months ended* June 30, 2026arenot* necessarily indicative of the operating results for the full year ending* December 31, 2026*or any other period.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company and related footnotes for the year ended* December 31, 2025,included in the Company’s Annual Report on Form10*-K filed with the Securities and Exchange Commission on* April 15, 2026.*

2. Recently Issued and Adopted Accounting Pronouncements

In* July 2025,the FASB issued ASU2025*-05, Financial Instruments—Credit Losses (Topic326):Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments introduce a practical expedient that permits entities to assume current conditions as of the balance sheet date donot change for the remaining life of current accounts receivable and current contract assets within the scope of Accounting Standards Codification (“ASC606”),Revenue from Contracts with Customers when developing reasonable and supportable forecasts of expected credit losses, thereby removing the requirement to incorporate macroeconomic forecasts for those assets. The ASU also provides an accounting policy election to consider post-balance-sheet collection activity in estimating expected credit losses; this election is available only to entities other than public business entities and is thereforenot available to the Company. The amendments are effective for annual reporting periods beginning after* December 15, 2025,and interim periods within those annual periods, with early adoption permitted. The Company adopted this standard on January 1, 2026.The adoption of ASU2025*-05 didnot have a material impact on its condensed consolidated financial statements and related disclosures.

In* April 2026,the FASB issued ASU2026*-01, Equity (Topic505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock. The amendments in this update require entities to initially measure paid-in-kind (“PIK”) dividends on equity-classified preferred stock using the PIK dividend rate stated in the preferred stock agreement, rather than at fair value. The ASU is effective for annual periods beginning after* December 15, 2026,including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of ASU2026*-01 on its condensed consolidated financial statements and related disclosures.

3. Cash Concentrations

Cash consists 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* June 30, 2026or December 31, 2025.Balances mayexceed the Federal Deposit Insurance Corporation (“FDIC”) limit of$250* USD in the United States and* mayexceed the Canada Deposit Insurance Corporation (“CDIC”) limit of$100* CAD in Canada. As of* June 30, 2026and December 31, 2025,the Company had USD cash in excess of FDIC limits of $9,349 and $0, respectively. As of June 30, 2026and December 31, 2025,the Company had CAD cash in excess of CDIC insurance limits of $938 and $1,037, respectively. The Company doesnot* believe the balances present a material credit risk, as the cash is held with reputable financial institutions and the Company has never experienced any losses related to these balances, althoughno assurance can be provided that it willnot experience any losses in the future.

4. Revenue Recognition

We recognize revenue in accordance with ASC606 applying thefive-step model. The Company evaluates each customer contract to identify the distinct performance obligations promised therein. A performance obligation is considered distinct if the customer can benefit from the good or service on its own or together with other resources that are readily available, and if the Company's promise to transfer the good or service is separately identifiable from other promises in the contract. If an individual promised good or service isnot distinct from another promised good or service, the Company combines those promised goods or services into a single combined performance obligation. The total contract transaction price is allocated to the identified distinct 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. For contracts whenone or more performance obligations have observable standalone selling prices, the residual approach is applied to determine the allocation for highly variable components, including SaaS and support pricing, which both vary based on engagement size.

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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. The Company generally doesnot accept returns or provide refunds related to its customer contracts.

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 offers material extended payment terms (most commonly in multi-year arrangements), the Company determines whether a significant financing component exists. Where the Company acts as an agent to a transaction on behalf of its customers (primarily for the sale of extended warranties that are performed by the equipment manufacturer), the Company recognizes revenue on a net basis. 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.

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 or as the Company satisfies 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.

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 condensed consolidated balance sheets.

The Company had the following activity for its allowance for credit losses for thesix months ended* June 30, 2026and2025:*

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:

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7. Basic and Diluted Net (Loss) Income per Common Share

The Company’s net (loss) income per common share is calculated using thetwo-class method in accordance with ASC260, Earnings Per Share. Thetwo-class method allocates net income between common stockholders and holders of participating securities. The Company’s Series A Redeemable Convertible Preferred Stock are deemed to be participating securities due to their rights to participate in dividends with common stock. However, thetwo-class method hasno impact on the calculation of net loss per common share during periods when the Company has a net loss, because the holders of participating securities arenot required to absorb losses.

Basic net (loss) income per common share is computed by dividing net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net (loss) income per common share is computed by dividing net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding, plus fully vested shares that are subject to issuance for little orno monetary consideration and the number of additional common shares that would have been outstanding if the potential common shares had been issued (computed using the more dilutive of the treasury stock or the if converted method, as applicable, and thetwo-class method).

Shares reserved for outstanding stock options, including stock options with performance restricted vesting, and warrants totaling 7,932,750 and 30,000 shares of the Series A Redeemable Convertible Preferred Stock, convertible into 10,000,000 shares of common stock as of* June 30, 2026were excluded from the computation of diluted net loss per common share for thethree* andsix months ended* June 30, 2026as the Company was in a net loss position and their inclusion would have been anti-dilutive. Shares reserved for outstanding stock options, including stock options with performance restricted vesting, and warrants totaling 7,290,816 at June 30, 2025were excluded from the computation of diluted net loss per common share for thethree* months ended* June 30, 2025as the Company was in a net loss position and their inclusion would have been anti-dilutive, and also excluded from the computation of diluted net income per common share for thesix* months ended* June 30, 2025*as the strike prices on the options and warrants were higher than the Company’s average market price of its common stock during the period and therefore anti-dilutive.

8. Foreign Currency Translation

The functional currency of the Company's Canadian subsidiaries is the Canadian dollar. The financial statements of these subsidiaries are translated into U.S. dollars in accordance with ASC830, Foreign Currency Matters. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expense accounts are translated at the average exchange rates during the period. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within shareholders' equity. Gains and losses arising from foreign currency transactions are included in other expense (income), net in the condensed consolidated statements of operations.

9. 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: the fair value of assets acquired and liabilities assumed in business combinations, including identifiable intangible assets; allowance for credit losses; valuation allowances related to deferred tax assets, including the realizability of acquired Canadian deferred tax assets; assumptions and estimates used to evaluate the recoverability of goodwill and other intangible assets and the related amortization methods and periods; the incremental borrowing rate used to measure right-of-use assets and lease liabilities; the fair value of stock-based compensation awards; and the assessment of the Company's ability to continue as a going concern, including projected cash flows and available liquidity. Actual results could differ from those estimates.

10. Reclassifications

Certain prior year amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current year presentation. These reclassifications hadno effect on previously reported net loss, total assets, total liabilities, shareholders’ equity, or cash flows from operations. Management has evaluated these reclassifications and determined that they arenot material, individually or in the aggregate, to the condensed consolidated financial statements taken as a whole.

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NOTE3: REVENUE RECOGNITION

The Company applies ASC606 for revenue recognition. The table below disaggregates the Company’s revenue by major source as follows:

The following table presents the activities in deferred revenue for thesix months ended* June 30, 2026:*

There wereno significant revenues recognized during thesix months ended* June 30, 2026and2025* from performance obligations that were satisfied (or partially satisfied) in prior periods as a result of contract price changes, changes in estimates or variable consideration true-ups.

As of* June 30, 2026,*the aggregate amount of the transaction price allocated to remaining performance obligations (i.e., unsatisfied or partially unsatisfied performance obligations) was $8,645. The following table presents the expected timing of recognition of that amount:

The remaining performance obligations in the table above primarily consist of non-cancellable multi-year SaaS and maintenance agreements, under which the Company recognizes SaaS and maintenance revenue ratably over the contract term. The Company has elected the optional exemption under ASC606-10-50-14 and doesnot disclose information about remaining performance obligations for contracts with an original expected duration ofone year or less, which primarily consist of short-term digital media advertising contracts, month-to-month support agreements, media revenue, and transactional arrangements (e.g., hardware and installation, software design and development, content creation).

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