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SUMMARY OF THE MATERIAL TERMS OF THE PROPOSALS

This summary, together with the sections entitled “Questions and Answers for all Creative Realities Shareholders and Reflect Stockholders,” “Questions and Answers about the Creative Realities Proposals” and “Questions and Answers about the Reflect Proposals” summarizes certain information contained in this joint proxy statement/prospectus, but does not contain all of the information that is important to you. You should read carefully this entire joint proxy statement/prospectus, including the attached annexes, for a more complete understanding of the matters to be considered at the Creative Realities Meeting or the Reflect Meeting, as applicable.

Parties to the Merger

Creative Realities, Inc.

Creative Realities, Inc. is a Minnesota corporation that provides innovative digital marketing technology solutions to a broad range of companies, individual brands, enterprises, and organizations throughout the United States and in certain international markets. Creative Realities has expertise in a broad range of existing and emerging digital marketing technologies across approximately 15 vertical markets, as well as the related media management and distribution software platforms and networks, device and content management, product management, customized software service layers, systems, experiences, workflows, and integrated solutions. Creative Realities’ technology and solutions include: digital merchandising systems and omni-channel customer engagement systems; content creation, production and scheduling programs and systems; a comprehensive series of recurring maintenance, support, and field service offerings; 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.

Creative Realities’ main operations are conducted directly through Creative Realities, Inc. and its wholly owned subsidiary Creative Realities Canada, Inc., a Canadian corporation. Other wholly owned subsidiaries are effectively dormant: Creative Realities, LLC, a Delaware limited liability company, ConeXus World Global, LLC, a Kentucky limited liability company, and Allure Global Solutions, Inc., a Georgia corporation. 

Creative Realities’ common stock is traded on the Nasdaq Capital Market under the symbol “CREX.”

The mailing address of Creative Realities’ principal executive office is 13100 Magisterial Drive, Suite 100, Louisville, Kentucky 40223.

Reflect Systems, Inc.

Reflect provides digital signage solutions, including software, strategic and media services to a wide range of companies across the retail, financial, hospitality and entertainment, healthcare, and employee communications industries in North America. Reflect offers digital signage platforms, including ReflectView, which successfully delivers content to more than 75,000 playback devices. Through its strategic services, Reflect assists its customers with designing, deploying and optimizing their digital signage networks, and through its media services, Reflect assists customers with monetizing their digital advertising networks.

The mailing address of Reflect Systems’ principal executive office is 2221 Lakeside Boulevard, Number 1200, Richardson, Texas 75082.

The Merger Proposal

Creative Realities and Reflect have agreed to a Merger under the terms of the Merger Agreement dated as of November 12, 2021 by and among Creative Realities, Merger Sub and Reflect. The terms and conditions of the Merger are set forth in the Merger Agreement, the terms of which are described under the captions “The Merger Proposal” beginning on page 70, and “The Merger Agreement” beginning on page 71. A copy of the Merger Agreement, excluding the schedules thereto, is included as Annex A to this joint proxy statement/prospectus.

The Merger Agreement provides for the Merger of Merger Sub with and into Reflect, with Reflect continuing as the surviving corporation in the Merger. Subject to the terms and conditions set forth in the Merger Agreement, at the Effective Time of the Merger: (i) all shares of Reflect Stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive the Merger Consideration; and (ii) each outstanding option to acquire Reflect Stock (whether vested or unvested) shall be terminated in advance of the Effective Time.

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Merger Consideration

As consideration for the Merger, Reflect stockholders as of immediately prior to the Effective Time collectively will receive from Creative Realities, in the aggregate the following Merger Consideration: (i) $18,666,667 payable in cash, (ii) 2,333,334 Creative Realities Shares (valued based on an issuance price of $2.00 per share) (the “CREX Shares Consideration”), and (iii) supplemental cash payments, if any, payable on or after the three-year anniversary of the effective time of the Merger (subject to an extension period described below), in an amount by which the value of the CREX Shares Consideration on such anniversary is less than $6.40 per share, or if certain customers of Reflect collectively achieve (i.e. account for) over 85,000 billable devices online at any time on or before December 31, 2022, $7.20 per share, multiplied by the amount of CREX Shares Consideration held by the Reflect stockholders on the three-year anniversary of the effective time of the Merger (subject to an extension period described below), subject to the terms of the Merger Agreement.

Required Approvals

The Merger Agreement and the consummation of the Merger and the other transactions contemplated thereby requires the approval of Reflect stockholders and of Creative Realities shareholders with respect to the Creative Realities Proposals. Creative Realities agreed, as soon as practicable after the date of the Merger Agreement, and in no event later than 10 business days, to prepare, with the reasonable assistance of Reflect, and file with the Securities and Exchange Commission (the “SEC”), a registration statement on Form S-4 (as amended, the “Registration Statement”) in connection with the registration under the Securities Act of 1933, as amended (the “Securities Act”), of the issuance of the CREX Shares Consideration to the Reflect stockholders, and containing a joint proxy statement/prospectus for the purpose of (i) Creative Realities soliciting proxies from the shareholders of Creative Realities to approve the issuance of the CREX Shares Consideration, the adoption of the Retention Bonus Plan, the non-binding advisory approval of executive compensation arrangements for the executive officers of Creative Realities to be effective upon the Closing and related matters (the “Creative Realities Shareholder Approval”) at a special meeting of Creative Realities’ shareholders (the “Creative Realities Meeting”), and (ii) Reflect soliciting proxies from the stockholders of Reflect to approve the Merger Agreement, the transactions contemplated thereby and related matters (the “Reflect Stockholder Approval”) at a special meeting of Reflect’ stockholders (the “Reflect Meeting”).

Reflect’s directors, officers and 5% stockholders who collectively own approximately 54.6% of the outstanding common stock and preferred stock of Reflect, have executed Voting and Lock-up Agreements in favor of the Reflect Stockholder Approval. Creative Realities’ directors, officers and certain of its stockholders who collectively own approximately 44.9% of the outstanding common stock of Creative Realities, have executed Voting Agreements in favor of the Creative Realities Shareholder Approval. Specifically, holders of 25.7% of the Reflect Series A Preferred Stock, 24.5% of the Reflect Series B Preferred Stock, 23.1% of the Reflect Series C Preferred Stock, 36.2% of the Reflect Series C-1 Preferred Stock, 96.7% of the Reflect Series D Preferred Stock and 42.5% of all of the Reflect preferred stock, have executed such agreement. In addition, Reflect and certain holders of Reflect preferred stock are party to an Investors’ Rights Agreement dated October 19, 2007 (the “Investors Rights Agreement”) pursuant to which such holders of Reflect preferred stock have consented to certain drag-along rights. Pursuant to the drag-along provisions of the Investors Rights Agreement, if the Reflect Board of Directors and at least a majority of the then outstanding shares of Preferred Stock, voting together as a class, vote in favor of any sale or transfer of all of the capital stock of the Company (an “Approved Sale”), all stockholders party to the Investors Rights Agreement have agreed to consent to and raise no objections against such Approved Sale, subject to certain conditions. See “Description of Reflect Capital Stock—Investors Rights Agreement.”

Conditions to Consummation of the Merger

In order to close the Merger, the Creative Realities shareholders will need to approve the Bonus Plan Proposal and the Share Issuance Proposal. The Reflect stockholders will also need to approve the Merger Proposal and the Reflect Charter Amendment Proposals in order to close the Merger.

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The obligations of the parties to consummate the Merger is subject to additional conditions, including the following mutual conditions of the parties unless waived:

In addition, unless waived by Reflect, the obligations of Reflect to consummate the Merger are subject to the satisfaction of the following conditions, in addition to customary certificates and other closing deliveries:

Unless waived by Creative Realities, the obligations of Creative Realities and the Merger Sub to consummate the Merger are subject to the satisfaction of the following conditions, in addition to customary certificates and other closing deliveries:

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If the Merger Agreement is terminated, all further obligations of the parties under the Merger Agreement will terminate and will be of no further force and effect (except that certain obligations related to public announcements, confidentiality, termination and certain general provisions will continue in effect), and no party will have any further liability to any other party thereto except for liability for knowing or intentional breach of any representation, warranty, covenant or agreement contained in the Merger Agreement prior to such termination.

Indemnification; Escrow

The Merger Agreement contains customary indemnification provisions. At Closing, $2.5 million of the cash Merger Consideration will be deposited into an escrow account as the sole remedy to secure the indemnification obligations of Reflect Stockholders; provided that claims related to breaches of certain representations, warranties and covenants will not be limited by the escrow account and will be limited by the Merger Consideration. Losses must exceed $200,000 before Reflect Stockholders would be liable for any indemnification obligations, in which event Reflect Stockholders would be responsible for the amount of all losses above such amount. Creative Realities may offset from the Additional Contingent Merger Consideration the amount of losses that Creative Realities is finally determined to be entitled under the indemnification provisions of the Merger Agreement.

An additional $250,000 of the cash Merger Consideration will be deposited into an escrow account to secure any required payments by the Reflect stockholders as part of the post-closing purchase price adjustments set forth in the Merger Agreement, including a working capital adjustment, and $250,000 of the cash Merger Consideration will be deposited in an escrow account for post-closing expenses of the Stockholders’ Representative.

Voting and Lock-up Agreements

The Merger Agreement requires Reflect to execute and deliver, and use its commercially reasonable efforts to cause certain Reflect Stockholders that own 5% or more of the Reflect Stock (on a converted to Reflect common stock basis) to execute and deliver, contemporaneously with the execution of the Merger Agreement, a Voting and Lock-up Agreement in the form attached to the Merger Agreement as Exhibit D, pursuant to which, among other things, such Reflect stockholders will agree to vote the Shares owned by them in favor of the Merger Agreement and the transactions contemplated thereby, including the Merger. Reflect stockholders owning 54.6% of the Reflect common stock and preferred stock have executed such agreement. Specifically, holders of 25.7% of the Reflect Series A Preferred Stock, 24.5% of the Reflect Series B Preferred Stock, 23.1% of the Reflect Series C Preferred Stock, 36.2% of the Reflect Series C-1 Preferred Stock, 96.7% of the Reflect Series D Preferred Stock and 42.5% of all of the Reflect preferred stock, have executed such agreement.

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The Voting and Lock-up Agreement further provides that Reflect Stockholders will agree that they will not, subject to certain exceptions, transfer, sell, tender or otherwise dispose of any of the CREX Share Consideration that they will receive as a result of the Merger for a period of six months after the Effective Time. Reflect’s directors, officers and Reflect Stockholders that own 5% or more of the Reflect Stock immediately prior to the Effective Time (on an as-converted to Reflect common stock basis) will agree to an additional lock-up period as requested by any underwriter in connection with any debt or equity financing of Creative Realities Shares conducted between the execution of the Merger Agreement and the Closing Date (the “Lock-up Period”); provided that such restrictions will not extend longer than one year following the Closing Date. Please read the section entitled “The Merger Proposal —Voting and Lock-Up Agreements.” 

Reflect will use commercially reasonably best efforts to obtain joinder agreements in forms reasonably acceptable to Creative Realities, pursuant to which Reflect stockholders entitled to receive 90% or more of the aggregate Merger Consideration agree to be bound by the terms of the Merger Agreement, and to not sell or transfer any of the CREX Shares Consideration during the Lock-up Period.

Accounting Treatment

Creative Realities prepares its financial statements in accordance with GAAP. The Merger will be accounted for by applying the acquisition method, which requires the identification of the acquirer, the determination of the acquisition date, the recognition and measurement, at fair value, of the identifiable assets acquired, liabilities assumed and any noncontrolling interest in the consolidated subsidiaries of Reflect and recognition and measurement of goodwill or a gain from a bargain purchase. The accounting guidance for business combinations, referred to as ASC 805, provides that in a business combination involving the exchange of equity interests, the entity issuing the equity interests is usually the acquirer; however, all pertinent facts and circumstances must be considered, including the relative voting rights of the shareholders of the constituent companies in the combined entity, the composition of the board of directors and senior management of the combined entity, the relative size of the company and the terms of the exchange of equity interests in the business combination, including payment of a premium.

Based on the fact that Creative Realities is the entity issuing the equity securities, that continuing Creative Realities common shareholders will own approximately 84% of the issued and outstanding common shares of the combined company, and that Creative Realities board members and senior management will represent the board and senior management of the combined company, Creative Realities is considered the acquirer for accounting purposes. Therefore, Creative Realities will recognize and measure, at fair value, the identifiable assets acquired, liabilities assumed, and Creative Realities will recognize and measure goodwill and any gain from a bargain purchase, in each case, upon completion of the Merger.

The Bonus Plan Proposal

At the Closing, Creative Realities will adopt the Retention Bonus Plan in substantially the form attached as Exhibit C to the Merger Agreement, pursuant to which Creative Realities will pay to key members of Reflect’s management team an aggregate of $1,333,333 in cash, which will be paid 50% at the Closing, and subject to continuous employment with Reflect or Creative Realities, 25% on the one-year anniversary of Closing and 25% on the two-year anniversary of the Closing. The future cash payments due on the one-year and two-year anniversaries of the Closing will be deposited into a “rabbi” trust at Closing. The Retention Bonus Plan also will require Creative Realities to issue Creative Realities Shares having an aggregate value of $666,667 to the plan participants as follows: 50% of the value of such shares will be issued at the Closing, and subject to continuous employment with Reflect or Creative Realities, 25% of the value of such shares will be issued on the one-year anniversary of Closing and the remaining 25% of the value of such shares will be issued on the two-year anniversary of the Closing. The shares to be issued on the Closing will be valued at $2.00 per share, and the shares to be issued after the Closing will be determined based on dividing the value of shares issuable on such date divided by the trailing 10-day volume weighed average price (VWAP) of the shares as of such date as reported on the Nasdaq Capital Market.

Upon the resignation of a participant’s employment for “good reason,” or Reflect’s or Creative Realities’ termination of the employment of a participant without “cause,” each as defined in the Retention Bonus Plan, the participant will be fully vested and will receive all cash and shares allocated to such participant under the Retention Bonus Plan. Any amounts unpaid by reason of a lapse in continuous employment or otherwise will be reallocated among the remaining Retention Bonus Plan participants.

The Creative Realities Board has concluded that the adoption of the Retention Bonus Plan is in the best interest of Creative Realities’ shareholders.

A summary of the Retention Bonus Plan is set forth in the section entitled “The Bonus Plan Proposal” of this joint proxy statement/prospectus and a complete copy of the Retention Bonus Plan is attached to the Merger Agreement as Exhibit C. Please see the section entitled “The Bonus Plan Proposal.”

The Share Issuance Proposal

The Nasdaq listing rules require that Creative Realities obtain shareholder approval for issuances of securities in excess of 20% of its issued and outstanding common stock prior to the issuance. At the meeting, Creative Realities’ shareholders will be asked to consider and vote upon a proposal to approve, for purposes of complying with applicable Nasdaq listing rules, the issuance of securities in excess of 20% of Creative Realities’ issued and outstanding common stock, in connection with the issuance of Creative Realities Shares issued or issuable in connection with (i) the Merger, (ii) one or more financings consummated subsequent to the date of the Merger Agreement and prior to, or in connection with, the Closing, including Creative Realities Shares issuable upon the exercise of any warrants, and the conversion or payment of any principal or accrued interest outstanding under any convertible promissory notes, in each case that may be issued in such financings, and (iii) the conversion of any outstanding debt owed to Slipstream Communications, LLC, Creative Realities’ current lender, in connection with obtaining such financing. Please see the section entitled “The Share Issuance Proposal.”

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The Advisory Compensation Proposal

The Creative Realities Board approved a compensation package for its senior executives to be implemented in connection with the closing of the Merger, in which the salary of such executives will be increased upon the Closing, and Will Logan, Chief Financial Officer, will be entitled to a $75,000 cash bonus. A summary of such compensation is set forth in the section entitled “The Advisory Compensation Proposal” of this joint proxy statement/prospectus.

The Creative Realities Adjournment Proposal

The Creative Realities Adjournment Proposal, if adopted, will allow the Creative Realities Board to adjourn the special meeting of shareholders to a later date or dates to permit further solicitation of proxies. The Creative Realities Adjournment Proposal will only be presented to Creative Realities’ shareholders in the event that, based on the tabulated votes, there are not sufficient votes at the time of the Creative Realities Meeting to approve one or more of the Creative Realities Proposals presented at such meeting. In no event will the Creative Realities Board adjourn the Creative Realities Meeting beyond the Outside Date. Please see the section entitled “The Creative Realities Adjournment Proposal.”

Summary of Risk Factors 

The Merger, including the possibility that the Merger may not be completed, involves a number of risks to Creative Realities and its shareholders. In evaluating the proposals set forth in this joint proxy statement/prospectus, you should carefully read this joint proxy statement/prospectus, including the annexes, and especially consider the factors discussed in the section entitled “Risk Factors” beginning on page 38. Below is a summary of such risk factors:

Risks Related to the Merger

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Risks related to Creative Realities’ Business and Industry

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Risks related to Creative Realities Common Stock

General Creative Realities Risk Factors

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Risks related to Reflect’s Business and Industry

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Risks related to Cyber Security and Intellectual Property

Risks related to Government Regulation

Appraisal Rights

No appraisal rights are available to Creative Realities’ shareholders in connection with the Creative Realities Proposals. Appraisal rights are available to Reflect’s stockholders in connection with the Merger Proposal.

Information about the Creative Realities Meeting

Date, Time and Place of Creative Realities Meeting

The Creative Realities Meeting will be held at 9 a.m. Eastern time, on January 28, 2022, at Creative Realities’ headquarters located at 13050 Magisterial Drive, Suite 102, Louisville, Kentucky 40223, or at such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the Creative Realities Proposals.

Creative Realities Record Date; Outstanding Shares; Shareholders Entitled to Vote

Creative Realities has fixed the close of business on December 27, 2021, as the Creative Realities Record Date for determining Creative Realities shareholders entitled to notice of and to attend and vote at the Creative Realities Meeting. As of the close of business on December 27, 2021, there were 12,005,129 Creative Realities Shares outstanding and entitled to vote. Each Creative Realities Share is entitled to one vote per share at the Creative Realities Meeting.

In connection with the execution of the Merger Agreement, Creative Realities delivered to Reflect Voting Agreements signed by certain shareholders, including Creative Realities’ officers and directors, collectively holding 5,342,469 Creative Realities Shares, representing 44.9% of the Creative Realities Shares entitled to vote at the Special Meeting. Under the Voting Agreements, such shareholders agree to vote all of their Creative Realities Shares in favor of the Merger Agreement and related transactions and to otherwise take certain other actions in support of the Merger Agreement and related transactions, and provide a proxy to Creative Realities to vote such Creative Realities Shares accordingly.

Proxy Solicitation

Proxies with respect to the Creative Realities Meeting may be solicited by telephone, by facsimile, by mail, on the Internet or in person. Creative Realities, its directors and executive officers may be deemed to be participants in the solicitation of consents with respect to the Creative Realities Proposals. Information regarding Creative Realities’ directors and executive officers and their ownership of Creative Realities Shares is contained in the section of this joint proxy statement/prospectus entitled “Beneficial Ownership of Securities of Creative Realities,” and is supplemented by other public filings to be made with the SEC. As of December 27, 2021, Creative Realities’ directors and executive officers beneficially own approximately 11.05% of the outstanding Creative Realities Shares. If a Creative Realities shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the Creative Realities Meeting. A shareholder may also change its vote by submitting a later-dated proxy, as described in the section entitled “Special Meeting of the Shareholders of Creative Realities — Revoking Your Proxy-Changing Your Vote.”

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Creative Realities Board Reasons for the Approval of the Merger

The Creative Realities Board has witnessed accelerate consolidation of companies in the digital signage market in which Creative Realities operates. The Creative Realities Board considered a number of companies with the assistance of its financial advisors to identify Reflect as an ideal acquisition target due to Reflect’s current market offerings, including:

The Creative Realities Board has also considered a number of factors to approve the Merger, including, but not limited to:

Quorum and Required Vote for Creative Realities Proposals at the Creative Realities Meeting

A quorum of Creative Realities shareholders is necessary to hold a valid meeting. The presence, in person or by proxy, of the holders of a majority of the total number of outstanding Creative Realities Shares entitled to vote constitutes a quorum for the transaction of business at the Creative Realities Meeting. Votes cast by proxy or in person at such meeting will be tabulated by the election inspectors appointed for such meeting who will determine whether a quorum is present. Broker non-votes will not be counted for purposes of establishing a quorum.

Approval of each of the Bonus Plan Proposal, the Share Issuance Proposal, and, if presented, the Creative Realities Adjournment Proposal requires the affirmative vote of a majority of the votes cast by Creative Realities’ shareholders present in person or represented by proxy at the Creative Realities Meeting. Accordingly, an Creative Realities shareholder’s failure to vote by proxy or to vote in person at the Creative Realities Meeting or the failure of a Creative Realities shareholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee (a “broker non-vote”) will result in that shareholder’s shares not being counted towards the number of Creative Realities Shares required to validly establish a quorum, and if a valid quorum is otherwise established, it will but will have no effect on the outcome of the proposals. Abstentions will be counted in connection with the determination of whether a valid quorum is established, and will have the same effect as a vote against each proposal.

Recommendation to Creative Realities Shareholders

The Creative Realities Board believes that each of the Bonus Plan Proposal, the Share Issuance Proposal, the Advisory Compensation Proposal, and, if presented, the Creative Realities Adjournment Proposal, to be presented at the Creative Realities Meeting is in the best interests of Creative Realities and our shareholders and unanimously recommends that Creative Realities’ shareholders vote “FOR” each of these proposals.

When you consider the recommendation of the Creative Realities Board favor of approval of these proposals, you should keep in mind that Creative Realities’ directors and officers have interests in the Creative Realities Proposals that are different from or in addition to (and which may conflict with) the interests of Creative Realities’ shareholders. These interests include, among other things the following compensation that is payable only if the Merger is consummated:

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Information about the Reflect Meeting

Date, Time and Place of Reflect Meeting

The Reflect Meeting will be held at 2221 Lakeside Blvd #1200, Richardson, Texas 75082, on January 28, 2022, at 9:00 a.m. Central Time, or at such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the Reflect Proposals.

Reflect Record Date; Outstanding Reflect Stock; Stockholders Entitled to Vote

The record date for the Reflect Meeting is January 3, 2022, or the Reflect Record Date. Only record holders of shares of Reflect common stock and Reflect preferred stock at 5:00 p.m. Central Time, or the close of business, on the Reflect Record Date are entitled to notice of the Reflect Meeting. At the close of business on the Reflect Record Date, the only outstanding securities of Reflect with a right to vote on the proposals were:

Each share of Reflect common stock and Reflect preferred stock outstanding on the Reflect Record Date is entitled to one vote on each Reflect Proposal. Holders of at least a majority of the outstanding shares of Reflect common stock and preferred stock voting together, and holders of at least two-thirds of the outstanding shares of Reflect preferred stock, must vote in favor of the Merger Agreement and the Merger in order to permit consummation of the Merger and other transactions contemplated thereby. In addition, holders of at least a majority of the common stock and preferred stock voting together as a class and at least a majority of the outstanding shares of each series of Reflect preferred stock must vote in favor of the Reflect Charter Amendment Proposals, which include: (i) a proposal to approve an amendment to the Reflect Certificate of Incorporation to provide that the Merger Consideration payable to the holders of each series of Reflect preferred stock under the Merger Agreement would fully, sufficiently and finally satisfy the preferred liquidation preference of each such series of preferred stock. and (ii) a proposal to approve an amendment to the Reflect Certificate of Incorporation to provide that the Merger Consideration payable to the holders of each series of Reflect preferred stock under the Merger Agreement would be subject to any and all escrows established under the Merger Agreement and related escrow agreements.

Voting by Reflect’s Directors and Executive Officers

At the close of business on the Reflect Record Date, Reflect directors and executive officers and their affiliates were entitled to vote 46.9% of the shares of Reflect common stock outstanding on that date. At the close of business on the Reflect Record Date, Reflect directors and executive officers and their affiliates were entitled to vote 41.8% of the shares of Reflect preferred stock outstanding on that date. Reflect currently expects that its directors and executive officers and their affiliates, many of whom have entered into a voting agreement in respect of their shares, will vote their shares of Reflect common stock and preferred stock in favor of each of the Reflect Proposals. A total of 54.6% of the outstanding common stock and preferred stock of Reflect were subject to such voting agreement, the terms of which require such Reflect stockholders to vote in favor of such proposals. Specifically, holders of 25.7% of the Reflect Series A Preferred Stock, 24.5% of the Reflect Series B Preferred Stock, 23.1% of the Reflect Series C Preferred Stock, 36.2% of the Reflect Series C-1 Preferred Stock, 96.7% of the Reflect Series D Preferred Stock and 42.5% of all of the Reflect preferred stock, were subject to such voting agreement. In addition, Reflect and certain holders of Reflect preferred stock are party to the Investors Rights Agreement pursuant to which such holders of Reflect preferred stock have consented to certain drag-along rights. Pursuant to the drag-along provisions of the Investors Rights Agreement, if the Reflect Board of Directors and at least a majority of the then outstanding shares of Preferred Stock, voting together as a class, vote in favor of an Approved Sale, all stockholders party to the Investors Rights Agreement have agreed to consent to and raise no objections against such Approved Sale, subject to certain conditions. See “Description of Reflect Capital Stock—Investors Rights Agreement.”

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Proxy Solicitation

The Reflect board of directors is soliciting proxies for the Reflect Meeting from holders of shares of Reflect common stock and Reflect preferred stock entitled to vote at such special meeting. In accordance with the Merger Agreement, Reflect will pay its own cost of soliciting proxies from its stockholders, including the cost of mailing this joint proxy statement/prospectus. In addition to solicitation of proxies by mail, proxies may be solicited by Reflect’s officers, directors and regular employees, without additional remuneration, by personal interview, telephone or other means of communication.

Reflect Board Reasons for the Approval of the Merger

Reflect’s board of directors has unanimously approved the Merger Agreement and unanimously recommends that the Reflect’s stockholders vote “FOR” approval of the Merger Agreement and the Merger.

Reflect’s board of directors has determined that the Merger is fair to, and in the best interests of, Reflect’s stockholders. In approving the Merger Agreement, Reflect’s board of directors consulted with Innovation Advisors with respect to the financial aspects of the Merger and with its outside legal counsel as to its legal duties and the terms of the Merger Agreement. In arriving at its determination, Reflect’s board of directors also considered a number of factors, including the following:

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The reasons set out above for the Merger are not intended to be exhaustive, but do include all material factors considered by Reflect’s board of directors in approving the Merger. In reaching its determination, the Reflect board of directors did not assign any relative or specific weights to different factors, and individual directors may have given different weights to different factors. Based on the reasons stated, the Reflect board believed that the Merger was in the best interest of Reflect’s stockholders, and therefore the board of directors of Reflect unanimously approved the Merger Agreement, the Merger and the Reflect Charter Amendment Proposals. In addition, all members of Reflect’s board of directors and certain officers have entered into a voting agreement requiring them to vote the shares of Reflect common stock and preferred stock over which they have voting authority in favor of the Merger Agreement.

REFLECT’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT HOLDERS OF REFLECT COMMON STOCK AND PREFERRED STOCK VOTE FOR THE MERGER AGREEMENT AND THE MERGER AND FOR EACH OF THE REFLECT CHARTER AMENDMENT PROPOSALS AND FOR THE REFLECT ADJOURNMENT PROPOSAL.

Quorum and Required Vote for the Reflect Proposals at the Reflect Meeting

No business may be transacted at the Reflect Meeting unless a quorum is present. The holders of a majority of the common stock and preferred stock issued and outstanding and entitled to vote at a meeting of the stockholders, present in person or represented by proxy, constitutes a quorum at all meetings of the stockholders for the transaction of business, but the holders of at least two-thirds of the shares of all of the Reflect preferred stock entitled to vote at the Reflect Meeting and at least a majority of each series of Reflect preferred stock, in each case entitled to vote at the Reflect Meeting, must be present, in person or by proxy, at the Reflect Meeting in order to have the necessary vote to be able to take action on the Merger Proposal and the Reflect Charter Amendment Proposals. Holders of at least a majority of the outstanding shares of Reflect common stock and Reflect preferred stock voting together as a class and holders of at least two-thirds of the outstanding shares of all of the Reflect preferred stock, must vote in favor of the Merger Agreement and the Merger, and holders of at least a majority of the outstanding shares of Reflect common stock and Reflect preferred stock voting together as a class and holders of at least a majority of each series of Reflect preferred stock must vote for each of the Reflect Charter Amendment Proposals, in order to permit consummation of the Merger and other transactions contemplated thereby. As a result, if shares representing at least (i) a majority of the shares of Reflect common stock and Reflect preferred stock outstanding on the close of business on the Reflect Record Date, (ii) two-thirds of the shares of Reflect preferred stock outstanding on the close of business on the Reflect Record Date and (iii) a majority of each series of Reflect preferred stock outstanding on the close of business on the Reflect Record Date are not present at the Reflect Meeting, then the presence of a quorum will still not permit the Merger to be approved at the Reflect Meeting.

If the applicable quorum is not present, or if fewer shares than are required to approve the Merger Agreement, the Merger and the Reflect Charter Amendment Proposals are voted in favor of the proposal to approve the Merger Agreement, the Merger and the Reflect Charter Amendment Proposals, as applicable, then the Reflect Meeting may be adjourned to allow for the solicitation of additional proxies provided that such proposal to adjourn the Reflect Meeting is approved by the holders of a majority of the shares of Reflect common stock and preferred stock voting together as a class, two-thirds of the shares of all of the Reflect preferred stock and the majority of the shares of each series of Reflect preferred stock who are entitled to vote at the Reflect Meeting and are present or represented by proxy at the Reflect Meeting.

No notice of an adjourned Reflect Meeting need be given unless, after the adjournment, a new record date is fixed for the adjourned Reflect Meeting, in which case a notice of the adjourned Reflect Meeting shall be given to each Reflect stockholder of record entitled to vote at the Reflect Meeting. At any adjourned Reflect Meeting, all proxies will be voted in the same manner as they would have been voted at the original convening of the Reflect Meeting, except for any proxies that have been effectively revoked or withdrawn prior to the adjourned Reflect Meeting.

All shares of Reflect common stock and Reflect preferred stock represented at the Reflect Meeting, including shares of Reflect common stock and Reflect preferred stock that are represented but that vote to abstain, will be treated as present for purposes of determining the presence or absence of a quorum.

Reflect Stockholder Vote Required to Approve the Merger Agreement, the Reflect Charter Amendment Proposals and the Adjournment Proposal

You may vote at the special meeting of Reflect stockholders if you owned Reflect common stock or any Reflect preferred stock as of 5:00 p.m. on January 3, 2022. You can cast one vote for each share of Reflect common stock and one vote for each share of Reflect preferred stock (regardless of series) that you owned of record at that time.  As of January 3, 2022, there were 6,258,505 shares of Reflect common stock outstanding, 21,200,056 shares of Reflect preferred stock outstanding, 3,000,000 shares of Reflect Series A preferred stock outstanding, 2,472,443 shares of Reflect Series B preferred stock outstanding, 3,727,613 shares of Reflect Series C preferred stock outstanding, 8,000,000 shares of Reflect Series C-1 preferred stock outstanding and 4,000,000 shares of Reflect Series D preferred stock outstanding. 

Approval of the Merger Agreement requires the affirmative vote of both (i) the holders of at least two-thirds of the shares of all series of Reflect preferred stock outstanding and entitled to vote as of 5:00 p.m. on the Reflect Record Date, voting together as a class and (ii) holders of a majority of Reflect common stock and all series of Reflect preferred stock outstanding and entitled to vote as of 5:00 p.m. on the Reflect Record Date voting together as a class. Approval of each of the Reflect Charter Amendment Proposals requires the affirmative vote of (i) holders of a majority of each series of Reflect preferred stock entitled to vote as of 5:00 p.m. on the Reflect Record Date, each voting as separate classes and (ii) holders of a majority of Reflect common stock and all series of Reflect preferred stock outstanding and entitled to vote as of 5:00 p.m. on the Reflect Record Date, voting together as a class.

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Reflect and certain holders of Reflect preferred stock are party to the Investors Rights Agreement pursuant to which such holders of Reflect preferred stock have consented to certain drag-along rights. Pursuant to the drag-along provisions of the Investors Rights Agreement, if the Reflect Board of Directors and at least a majority of the then outstanding shares of preferred stock, voting together as a class, vote in favor of an Approved Sale (as defined in the Investors’ Rights Agreement and such definition would include the Merger contemplated by the Merger Agreement), all stockholders party to the Investors Rights Agreement have agreed to consent to and raise no objections against such Approved Sale and waive any dissenters rights, appraisal rights or similar rights, subject to certain conditions. If the Approved Sale is structured as a sale of all the capital stock of the Company, the stockholders party to the Investors Rights Agreement have agreed to sell all of their shares of Reflect stock, which are the subject of the Approved Sale. The Reflect stockholders party to the Investors’ Rights Agreement shall take all necessary and desirable actions in connection with the consummation of an Approved Sale, including using their reasonable best efforts to obtain the execution of such agreements and such instruments and other actions reasonably necessary to (A) provide customary representations, warranties, indemnities, and escrow arrangements related to such Approved Sale and (B) effectuate the allocation and distribution of the aggregate consideration upon the Approved Sale.

If you fail to vote, it will have the effect of a vote against the Merger Agreement and the Reflect Charter Amendment Proposals. The Reflect Meeting may be adjourned to allow for the solicitation of additional proxies provided that such proposal to adjourn the Reflect Meeting is approved by the holders of a majority of the shares of Reflect common stock and preferred stock voting together as a class, two-thirds of the shares of Reflect preferred stock and the majority of the shares of each series of Reflect preferred stock who are entitled to vote at the Reflect Meeting and are present or represented by proxy at the Reflect Meeting.

Voting of Proxies by Holders of Record of Reflect Common Stock and Reflect Preferred Stock

If you were a record holder of Reflect common stock or Reflect preferred stock at the close of business on the Reflect Record Date, a proxy card is enclosed for your use. Reflect requests that you vote your shares as promptly as possible by and returning the enclosed proxy card by following the instructions regarding delivery on such proxy card, or as otherwise provided by Reflect. When the accompanying proxy card is properly executed, dated and returned, the shares of Reflect common stock and/or Reflect preferred stock represented by it will be voted at the Reflect Meeting or any adjournment thereof in accordance with the instructions contained in the proxy card.

If a proxy card is returned without an indication as to how the shares of Reflect common stock or Reflect preferred stock represented by it are to be voted with regard to a particular proposal, the shares of Reflect common stock or Reflect preferred stock represented by the proxy will be voted in accordance with the recommendation of the Reflect board of directors and, therefore, such shares will be voted:

“FOR” Reflect Merger Proposal approving the Merger Agreement and the Merger;

“FOR” each of the Reflect Charter Amendment Proposals; and

“FOR” Reflect Adjournment Proposal approving the adjournment of the Reflect Meeting if necessary to permit solicitation of additional proxies or for any other reason that the board of directors determines is necessary.

At the date hereof, the Reflect board of directors has no knowledge of any business that will be presented for consideration at the Reflect Meeting and that would be required to be set forth in this joint proxy statement/prospectus or the related proxy card other than the matters set forth in the Reflect Notice of Special Meeting of Stockholders.

No other matter can be brought up or voted upon at the Reflect Meeting.

Your vote is important. Accordingly, if you were a record holder of Reflect common stock or Reflect preferred stock on the Reflect Record Date, please sign and return the enclosed proxy card, whether or not you plan to attend the Reflect Meeting in person.

Attending the Meeting; Voting in Person

Only record holders of Reflect common stock or Reflect preferred stock on the Reflect Record Date, the persons duly appointed as proxies to vote shares of Reflect common stock or Reflect preferred stock, and invited guests may attend the Reflect Meeting. Only the holders of record of shares of the Reflect common stock and Reflect preferred stock as of the Reflect Record Date will be entitled to vote at the Reflect Meeting. All attendees must present government-issued photo identification (such as a driver’s license or passport) for admittance. The additional items, if any, that attendees must bring to gain admittance to the Reflect Meeting depend on whether they are Reflect stockholders of record or proxy holders.

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A person who holds a validly executed proxy entitling such person to vote on behalf of a record owner of shares of Reflect common stock or Reflect preferred stock who desires to attend the Reflect Meeting in person must bring the validly executed proxy naming such person as the proxy holder, signed by the Reflect stockholder of record, and proof of the signing stockholder’s record ownership of shares of Reflect common stock or Reflect preferred stock as of the Reflect Record Date.

No cameras, recording equipment or other electronic devices will be allowed in the meeting room. Failure to provide the requested documents at the door or failure to comply with the procedures for the Reflect Meeting may prevent Reflect stockholders or their proxies from being admitted to the Reflect Meeting.

Revocation of Proxies

A Reflect stockholder entitled to vote at the Reflect Meeting may revoke a previously provided proxy at any time before such time that the proxy card for any such holders of Reflect common stock or Reflect preferred stock must be received at the Reflect Meeting by taking any of the following three actions:

Merely attending the Reflect Meeting will not, by itself, revoke your proxy; a holder of Reflect common stock or Reflect preferred stock must cast a subsequent vote at the Reflect Meeting using a ballot provided at the Reflect Meeting for that purpose. The last valid vote that Reflect receives before or at the Reflect Meeting is the vote that will be counted.

Tabulation of Votes

Reflect has appointed Matt Schmitt to serve as the Inspector of Election for the Reflect Meeting. The Inspector of Election will independently tabulate affirmative votes, negative votes and abstentions.

Adjournments

Any adjournment of the Reflect Meeting may be made from time to time provided that such proposal to adjourn the Reflect Meeting is approved by the holders of a majority of the shares of Reflect common stock and Reflect preferred stock voting together as a single class, two-thirds of the shares of Reflect preferred stock voting together as a single class and the majority of the shares of each series of Reflect preferred stock who are entitled to vote at the Reflect Meeting and are present or represented by proxy at the Reflect Meeting, whether or not a quorum exists at the Reflect Meeting. Such adjournment may be made without further notice other than by an announcement made at the Reflect Meeting, unless a new record date for the adjourned Reflect Meeting is fixed. If a quorum is not present at the Reflect Meeting or if a quorum is present at the Reflect Meeting but there are not sufficient votes at the time of the Reflect Meeting to approve the proposals, then Reflect stockholders may be asked to vote on a proposal to adjourn the Reflect Meeting so as to permit solicitation of additional proxies. A proposal to adjourn the meeting may also be made for any reason the board of directors of Reflect determines is necessary.

Recommendation to Reflect Stockholders

The Reflect Board believes that the Merger Proposal, each of the Reflect Charter Amendment Proposals and the Reflect Adjournment Proposal to be presented at the Reflect Meeting is in the best interests of Reflect and its stockholders and unanimously recommends that Reflect stockholders vote “FOR” the Merger Proposal, “FOR” each of the Reflect Charter Amendment Proposals and “FOR” the Reflect Adjournment Proposal.

When you consider the recommendation of the Reflect Board favor of approval of these proposals, you should keep in mind that Reflect’s directors and officers have interests in the Merger that are different from or in addition to (and which may conflict with) the interests of Reflect’s stockholders. These interests include, among other things: retention bonuses paid to certain of Reflect’s executive officers pursuant to the Retention Bonus Plan and transaction payments paid to certain of Reflect’s executive officers and non-employee directors in consideration of, among other things, severance and surrendering of all potential option rights. See “Certain Relationships and Related Party Transactions of Reflect.”

These interests may have influenced our directors in making their recommendation that you vote in favor of the approval of the Merger, the Reflect Charter Amendment Proposals and the transactions contemplated thereby. These interests were considered by the Reflect Board when it approved the Merger Agreement and the Merger.

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QUESTIONS AND ANSWERS FOR ALL CREATIVE REALITIES SHAREHOLDERS AND

REFLECT STOCKHOLDERS

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the Creative Realities Meeting and at the Reflect Meeting, including questions relating to the proposed Merger. The following questions and answers do not include all the information that is important to our and Reflect’ shareholders. Creative Realities and Reflect urge their respective shareholders and stockholders to read carefully this entire joint proxy statement/prospectus, including the annexes and the other documents referred to herein.

Consummation of the Merger requires the approval of the following:

With respect to Creative Realities, the following approvals of: each of the Bonus Plan Proposal, Share Issuance Proposal, Advisory Compensation Proposal, and, if presented, the Creative Realities Adjournment Proposal, each of which requires the affirmative vote of a majority of the votes cast by Creative Realities’ shareholders present in person or represented by proxy at the Creative Realities Meeting.

With respect to Reflect, the approval of: the Merger Proposal, which requires the affirmative vote of both (i) the holders of at least two-thirds of the shares of all series of Reflect preferred stock outstanding and entitled to vote as of 5:00 p.m. on the Reflect Record Date and (ii) holders of a majority of Reflect common stock and all series of Reflect preferred stock outstanding and entitled to vote as of the Reflect Record Date voting together as a class, and each of the Reflect Charter Amendment Proposals, which requires the affirmative vote of (i) the majority of each series of Reflect preferred stock entitled to vote as of the Reflect Record Date, and (ii) holders of a majority of Reflect common stock and all series of Reflect preferred stock outstanding and entitled to vote as of 5:00 p.m. on the Reflect Record Date, voting together as a class.

YOUR VOTE IS IMPORTANT. YOU ARE ENCOURAGED TO VOTE AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS JOINT PROXY STATEMENT/PROSPECTUS.

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In addition, the Creative Realities Board considered a number of factors, including the following:

The reasons set out above for the Merger are not intended to be exhaustive but do include all material factors considered by Reflect’s board of directors in approving the Merger. In reaching its determination, the Reflect board of directors did not assign any relative or specific weights to different factors, and individual directors may have given different weights to different factors. Based on the reasons stated, the board believed that the Merger was in the best interest of Reflect’s stockholders, and therefore the board of directors of Reflect unanimously approved the Merger Agreement and the Merger. In addition, all members of Reflect’s board of directors and certain officers have entered into a voting agreement requiring them to vote the shares of Reflect common stock over which they have voting authority in favor of the Merger Agreement.

In light of the foregoing, the Merger presents an opportunity to increase shareholder value for Creative Realities’ shareholders. However, there is no assurance that shareholder value will increase as a result of the Merger.

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QUESTIONS AND ANSWERS ABOUT THE CREATIVE REALITIES PROPOSALS

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the Creative Realities Meeting. The following questions and answers do not include all the information that is important to our shareholders. Creative Realities urges shareholders to read carefully this entire proxy statement, including the annexes and the other documents referred to herein.

The Bonus Plan Proposal, Share Issuance Proposal, Advisory Compensation Proposal and the Creative Realities Adjournment Proposal are collectively referred to as the “Creative Realities Proposals.”

This joint proxy statement and its annexes contain important information about the proposed Merger and the Creative Realities Proposals. You should read this joint proxy statement and its annexes carefully and in their entirety.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement and its annexes.

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Creative Realities, Inc.

Attn: Will Logan, CFO

13100 Magisterial Drive, Suite 100

Louisville, KY 40223

(502) 791-8800

To obtain timely delivery, Creative Realities shareholders must request the materials no later than five business days prior to the Creative Realities Meeting.

You may also obtain additional information about us from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

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QUESTIONS AND ANSWERS ABOUT THE REFLECT PROPOSALS

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the Reflect Meeting, including with respect to the proposed Merger. The following questions and answers do not include all the information that is important to Reflect’s stockholders. Reflect urges its stockholders to read carefully this entire joint proxy statement, including the annexes and the other documents referred to herein.

What proposals are stockholders of Reflect being asked to vote upon?

Under the Merger Agreement, the approval of the Merger Proposal, is a condition to the consummation of the Merger. If Reflect’s stockholders do not approve Merger Proposal, under Delaware law and the Certificate of Incorporation of Reflect, Reflect cannot complete the Merger. Further, if holders of Reflect’s capital stock do not approve the Reflect Charter Amendment Proposals, under the Certificate of Incorporation of Reflect, Reflect cannot complete the Merger.

Reflect will hold the special meeting of its stockholders to consider and vote upon the Merger Proposal, each of the Reflect Charter Amendment Proposals and the Reflect Adjournment Proposal. This joint proxy statement/prospectus contains important information about the proposed Merger and the other matters to be acted upon at the Reflect Meeting. Stockholders of Reflect should read it carefully.

After careful consideration, the Reflect Board has determined that the Merger Proposal, each of the Reflect Charter Amendment Proposals and the Reflect Adjournment Proposal are in the best interests of Reflect and its stockholders and recommends that you vote or give instruction to vote “FOR” the Merger Proposal, “FOR” each of the Reflect Charter Amendment Proposals and “FOR” the Reflect Adjournment Proposal.

The existence of any financial and personal interests of one or more of Reflect’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of Reflect and its stockholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders vote for the Reflect Proposals. See the section entitled “Reflect Merger Proposal — Interests of Reflect’s Directors and Officers in the Merger” for a further discussion.

THE VOTE OF REFLECT STOCKHOLDERS IS IMPORTANT. REFLECT STOCKHOLDERS ARE ENCOURAGED TO VOTE AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS JOINT PROXY STATEMENT/PROSPECTUS.

What happens if the Merger is not consummated?

If the Merger is not completed for any reason, including for the reason that the Merger Agreement is not adopted by Reflect stockholders, Reflect will remain an independent private company with only its current product and service offerings.

Do I have appraisal rights in connection with the Merger?

Yes. Reflect stockholders have appraisal rights with respect to the Merger. See the section entitled “Appraisal Rights” for a further discussion and Annex C for the text of the Delaware appraisal rights statute.

What are the U.S. federal income tax consequences of the Merger to me?

U.S. stockholders will recognize gain or loss measured by the difference between the total consideration received in the Merger and such stockholders’ tax basis in the shares of Reflect surrendered in the Merger. Each stockholder of Reflect is urged to consult his, her or its tax advisor regarding the manner in which gain or loss should be calculated among different classes of Reflect capital stock surrendered in the Merger. The aggregate tax basis in the shares of Creative Realities Shares received pursuant to the Merger will be equal to the fair market value of such shares as of the closing date of the Merger. The holding period of such shares of Creative Realities will begin on the date immediately following the closing date of the Merger.

What do I need to do now?

Reflect urges you to read carefully and consider the information contained in this joint proxy statement/prospectus, including the annexes and to consider how the Merger will affect you as a stockholder of Reflect. Reflect stockholders should then vote as soon as possible in accordance with the instructions provided in this joint proxy statement/prospectus and on the enclosed proxy card.

How do I vote on the Reflect Proposals?

If you are a holder of record of Reflect Stock on the Reflect Record Date, you may vote in person at the Reflect Meeting or by submitting a proxy in advance of the Reflect Meeting. You may submit a proxy to Reflect by completing, signing, dating and returning the enclosed proxy card by following the instructions regarding delivery on such proxy card, or as otherwise provided by Reflect.

When and where will the Reflect Meeting be held?

The Reflect Meeting will be held at 2221 Lakeside Blvd #1200, Richardson, Texas 75082, on January 28, 2022, at 9:00 a.m. Central Time, unless the Reflect Meeting is adjourned.

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Who is entitled to vote at the Reflect Meeting?

Reflect has fixed January 3, 2022 as the Reflect Record Date for voting at the Reflect Meeting. If you were a common or preferred stockholder of Reflect at the close of business on the Reflect Record Date, you are entitled to notice of and to vote on matters that come before the Reflect Meeting. However, a stockholder may only vote his or her shares if he or she is present in person or is represented by proxy at the Reflect Meeting.

What constitutes a quorum at the Reflect Meeting?

The holders of a majority of the common stock and preferred stock issued and outstanding and entitled to vote at a meeting of the stockholders, present in person or represented by proxy, constitutes a quorum at all meetings of the stockholders for the transaction of business, but the holders of at least two-thirds of the shares of all of the Reflect preferred stock entitled to vote at the Reflect Meeting and at least a majority of each series of Reflect preferred stock, in each case entitled to vote at the Reflect Meeting, must be present, in person or by proxy, at the Reflect Meeting in order to have the necessary vote to be able to take action on the Merger Proposal and the Reflect Charter Amendment Proposals. Holders of at least a majority of the outstanding shares of Reflect common stock and Reflect preferred stock voting together as a class and holders of at least two-thirds of the outstanding shares of all of the Reflect preferred stock, must vote in favor of the Merger Agreement and the Merger, and holders of at least a majority of the outstanding shares of Reflect common stock and Reflect preferred stock voting together as a class and holders of at least a majority of each series of Reflect preferred stock must vote for each of the Reflect Charter Amendment Proposals, in order to permit consummation of the Merger and other transactions contemplated thereby. As a result, if shares representing at least (i) a majority of the shares of Reflect common stock and Reflect preferred stock outstanding on the close of business on the Reflect Record Date, (ii) two-thirds of the shares of Reflect preferred stock outstanding on the close of business on the Reflect Record Date and (iii) a majority of each series of Reflect preferred stock outstanding on the close of business on the Reflect Record Date are not present at the Reflect Meeting, then the presence of a quorum will still not permit the Merger to be approved at the Reflect Meeting.

If the applicable quorum is not present, or if fewer shares than are required to approve the Merger Agreement, the Merger and the Reflect Charter Amendment Proposals are voted in favor of the proposal to approve the Merger Agreement, the Merger and the Reflect Charter Amendment Proposals, as applicable, then the Reflect Meeting may be adjourned to allow for the solicitation of additional proxies provided that such proposal to adjourn the Reflect Meeting is approved by the holders of a majority of the shares of Reflect common stock and preferred stock voting together as a class, two-thirds of the shares of all of the Reflect preferred stock and the majority of the shares of each series of Reflect preferred stock who are entitled to vote at the Reflect Meeting and are present or represented by proxy at the Reflect Meeting.

Reflect and certain holders of Reflect preferred stock are party to the Investors Rights Agreement pursuant to which such holders of Reflect preferred stock have consented to certain drag-along rights. Pursuant to the drag-along provisions of the Investors Rights Agreement, if the Reflect Board of Directors and at least a majority of the then outstanding shares of preferred stock, voting together as a class, vote in favor of an Approved Sale (as defined in the Investors’ Rights Agreement and such definition would include the Merger contemplated by the Merger Agreement), all stockholders party to the Investors Rights Agreement have agreed to consent to and raise no objections against such Approved Sale and waive any dissenters rights, appraisal rights or similar rights, subject to certain conditions. If the Approved Sale is structured as a sale of all the capital stock of the Company, the stockholders party to the Investors Rights Agreement have agreed to sell all of their shares of Reflect stock, which are the subject of the Approved Sale. The Reflect stockholders party to the Investors’ Rights Agreement shall take all necessary and desirable actions in connection with the consummation of an Approved Sale, including using their reasonable best efforts to obtain the execution of such agreements and such instruments and other actions reasonably necessary to (A) provide customary representations, warranties, indemnities, and escrow arrangements related to such Approved Sale and (B) effectuate the allocation and distribution of the aggregate consideration upon the Approved Sale.

What vote is required to approve each proposal at the Reflect Meeting?

The required votes to approve the Reflect Proposals are as follows:

Merger Proposal: approving the Merger Agreement and the Merger requires the affirmative vote of at least a majority of the outstanding shares of Reflect common stock and Reflect preferred stock entitled to vote at the Reflect Meeting, voting together, and of at least two-thirds of the outstanding shares of Reflect preferred stock entitled to vote at the Reflect Meeting, voting together. Failures to vote and abstentions will have the same effect as a vote against this proposal. Please note that only the shares of Reflect common stock and Reflect preferred stock are entitled to be voted at the Reflect Meeting.

Reflect Charter Amendment Proposals: (i) approving an amendment to the Reflect Certificate of Incorporation to provide that the Merger Consideration payable to the holders of each series of Reflect preferred stock under the Merger Agreement would fully, sufficiently and finally satisfy the preferred liquidation preference of each such series of preferred stock and (ii) approving an amendment to the Reflect Certificate of Incorporation to provide that the Merger Consideration payable to the holders of each series of Reflect preferred stock under the Merger Agreement would be subject to any and all escrows established under the Merger Agreement and related escrow agreements each requires the affirmative vote of (A) holders of a majority of each series of Reflect preferred stock entitled to vote at the Reflect Meeting, each voting as separate classes and (B) holders of a majority of Reflect common stock and all series of Reflect preferred stock outstanding and entitled to vote at the Reflect Meeting, voting together as a class. Please note that only the shares of Reflect common stock and Reflect preferred stock are entitled to be voted at the Reflect Meeting.

Reflect Adjournment Proposal: approving the adjournment of the Reflect Meeting to allow, if necessary, for the solicitation of additional proxies or for any other reason that the board of directors of Reflect determines is necessary will require the affirmative vote of at least the majority of the shares of Reflect common stock and Reflect preferred stock, voting together, two-thirds of the shares of all series of Reflect preferred stock voting together, and the majority of the shares of each series of Reflect preferred stock who are entitled to vote at the Reflect Meeting and are present or represented by proxy at the Reflect Meeting, regardless of whether there is a quorum present at the Reflect Meeting. Failures to vote and abstentions will have the same effect as a vote against the proposal. Please note that only the shares of Reflect common stock and Reflect preferred stock are entitled to be voted at the Reflect Meeting. 

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What are the recommendations of the Reflect Board?

The Reflect Board believes that the Merger Proposal is in the best interest of Reflect’s stockholders and recommends that its stockholders vote “FOR” the Merger Proposal, “FOR” each of the Reflect Charter Amendment Proposals and “FOR” Reflect Adjournment Proposal approving the adjournment of the Reflect Meeting if necessary to permit solicitation of additional proxies or for any other reason that the board of directors determines is necessary.

The existence of any financial and personal interests of one or more of Reflect’ directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of Reflect and its stockholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that Reflect stockholders vote for each of the Reflect Proposals. See the section entitled “Merger Proposal — Interests of Reflect’ Directors and Officers in the Merger” for a further discussion of this.

How do other Reflect stockholders intend to vote?

Reflect’ directors, officers and 5% stockholders, representing approximately 54.6% of the outstanding common stock and preferred stock of Reflect, have agreed to vote in favor of the Reflect Proposals. Specifically, holders of 25.7% of the Reflect Series A Preferred Stock, 24.5% of the Reflect Series B Preferred Stock, 23.1% of the Reflect Series C Preferred Stock, 36.2% of the Reflect Series C-1 Preferred Stock, 96.7% of the Reflect Series D Preferred Stock and 42.5% of all of the Reflect preferred stock, have executed such agreement. See “The Merger Proposal—Voting and Lock-Up Agreements.”

What happens if I sell my shares of Reflect Stock before the Reflect Meeting?

The Reflect Record Date for the Reflect Meeting is earlier than the date of the Reflect Meeting and earlier than the date that the Merger is expected to be completed. If you transfer your Reflect Stock after the Reflect Record Date, but before the Reflect Meeting, unless you grant a proxy to the transferee, you will retain your right to vote at the Reflect Meeting. You would not, however, be entitled to receive any of the Merger Consideration.

May I change my vote after I have mailed my signed proxy card?

Yes. Reflect Stockholders may send a later-dated, signed proxy card to Reflect Systems, Inc., Matt Schmitt, President, 2221 Lakeside Blvd #1200, Richardson, TX 75082 so that it is received by Reflect prior to the vote at the Reflect Meeting or attend the Reflect Meeting in person or by proxy and vote. Reflect stockholders also may revoke their proxy by sending a notice of revocation to Matt Schmitt, Reflect’s President, which must be received by Matt Schmitt prior to the vote at the Reflect Meeting.

What happens if I fail to take any action with respect to the Reflect Meeting?

If you fail to take any action with respect to the Reflect Meeting and the Merger Agreement is approved by Reflect stockholders and the Merger is consummated, you will become a shareholder of Creative Realities. If you fail to take any action with respect to the Reflect Meeting and the Merger Agreement is not approved, you will remain a stockholder of Reflect.

What do I have to do to receive my Merger Consideration if the Merger is approved?

Each Reflect stockholder shall be entitled to receive its portion of the Merger Consideration after the closing of the Merger, subject to the terms of the Merger Agreement. Reflect will provide Creative Realities’ transfer agent with the name of each Reflect stockholder and the Merger Consideration to which the stockholder is entitled, including the such stockholder’s portion of the cash Merger Consideration, the CREX Shares Consideration and the Additional Contingent Merger Consideration. Upon receipt of the necessary documentation from the Reflect stockholder, including an executed letter of transmittal and original stock certificates (or affidavits of loss in lieu of such certificates), the transfer agent will pay the cash to which such stockholder is entitled (less the escrow amount allocated to the stockholder’s shares), and issue the Creative Realities Shares to the stockholder’s account in book entry. Upon the expiration of the lockup period, the stockholder may at any time have the shares transferred to his, her or its brokerage account.

Who can help answer my questions?

If you have any questions about how to vote or direct a vote in respect of your shares of Reflect Stock, you may contact Lee Summers, Chief Executive Officer of Reflect, at (214)-413-3200.

Will my Creative Realities Shares I receive in the Merger be registered under the Securities Act?

Creative Realities has filed a registration statement on Form S-4 covering the issuance of the CREX Shares Consideration, and this joint proxy statement/prospectus is a part of the registration statement. Unless you are an affiliate of Creative Realities, you will receive Creative Realities Shares that are may be sold in the open market after expiration of the applicable lock-up restrictions. The applicable lock-up restrictions are described in more detail in the section titled “The Merger Proposal—Voting and Lock-up Agreements” beginning on page 80 of this joint proxy statement/prospectus. Reflect stockholders who are affiliates of Creative Realities are limited to the manner of sale pursuant to Rule 145, which requires compliance with certain of the provisions of Rule 144.

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

(In dollars except share amounts)

Defined terms included below have the same meaning as terms defined and included elsewhere in this joint proxy statement/prospectus.

On November 12, 2021, Creative Realities, Inc. (“Creative Realities”, the “Company”, or “Parent”), announced the execution of an Agreement and Plan of Merger which anticipates the acquisition of Reflect Systems, Inc. (“Reflect”) by the Company.  The acquisition of Reflect is expected to close on or about January 31, 2022 and is referred to as the “Transaction.”

The following unaudited pro forma condensed combined financial information is provided to aid you in your analysis of the financial aspects of the Transaction and has been prepared in accordance with Article 11 of Regulation S-X, as amended by the final rule, release 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Certain capitalized terms below are defined elsewhere in this proxy statement/prospectus.

The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2021 and for the twelve months ended December 31, 2020 give effect to the acquisition of Reflect as if it had occurred on January 1, 2020 and combine the historical statements of operations for both Creative Realities and Reflect for the respective periods presented.

The unaudited pro forma condensed combined balance sheet as of September 30, 2021 gives effect to the acquisition of Reflect as if it had occurred on September 30, 2021 and includes adjustments that give effect to factually supportable events that are directly attributable to the Transaction.

The notes to the unaudited pro forma condensed combined financial information describe the pro forma amounts and adjustments presented. The unaudited pro forma condensed combined financial information are primarily based on and should be read in conjunction with the Company’s historical consolidated financial statements and accompanying notes included in the Company’s periodic reports previously filed with the Securities and Exchange Commission and included in our Registration Statement filed on Form S-4 and any related amendments, along with the historical financial statements and accompanying notes for Reflect included in our Registration Statement filed on Form S-4 and any related amendments. 

The unaudited combined pro forma financial information does not include the realization of any cost savings from operating efficiencies, synergies, dis-synergies or other restructuring activities which might result from the Transaction, and therefore, such charges are not reflected in the unaudited condensed combined pro forma financial information.

The pro forma adjustments reflecting the completion of the Transaction are based upon the acquisition method of accounting, under ASC 805 “Business Combinations,” in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) and upon the assumptions set forth in the Notes included in this section, with Creative Realities, Inc. deemed to be the acquirer for financial accounting purposes.  The pro forma adjustments related to the allocation of purchase price within the unaudited pro forma condensed combined balance sheet are preliminary and subject to change and are based on the estimated fair value of the identifiable assets acquired and liabilities assumed with the excess purchase price allocated to goodwill.  The final purchase price allocation will be completed no later than one year after the date of completion of the Transaction.

27

CREATIVE REALITIES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS

As of September 30, 2021

(In thousands)

See notes to unaudited pro forma consolidated financial information 

28

CREATIVE REALITIES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

For the Year Ended December 31, 2020

(In thousands, except per share data)

29

CREATIVE REALITIES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

For the Nine Months Ended September 30, 2021

(In thousands, except per share data)