Filed Pursuant to Rule 424(b)(3)

Registration No. 333-261048

 

PROPOSED MERGER
YOUR VOTE IS VERY IMPORTANT

_____________________________________

To the Shareholders of Creative Realities, Inc. and the Stockholders of Reflect Systems, Inc.,

Creative Realities, Inc., a Minnesota corporation, or “Creative Realities,” and Reflect Systems, Inc., a Delaware corporation, or “Reflect,” entered into an Agreement and Plan of Merger, or the “Merger Agreement,” on November 12, 2021, pursuant to which a direct, wholly owned subsidiary of Creative Realities, CRI Acquisition Corporation, or “Merger Sub,” will merge with and into Reflect, with Reflect surviving as a wholly owned subsidiary of Creative Realities, and the surviving company of the merger, which transaction is referred to herein as the “Merger.” Reflect following the Merger is referred to herein as the “combined company.”

At the effective time of the Merger, all of Reflect’s shares of common stock and preferred stock, par value $0.001 per share, collectively referred to herein as the “Reflect shares,” will be converted into the right to receive a portion of (i) $18,666,667 in cash, subject to certain adjustments set forth in the Merger Agreement, (ii) 2,333,334 shares of Creative Realities common stock, par value $0.01 per share, referred to herein as the “Creative Realities shares,” and (iii) contingent cash payable on or after the three-year anniversary of the effective time of the Merger, in an amount by which the closing price of the Creative Realities shares on such anniversary are less than $6.40 per share, or if certain Reflect customers 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 Creative Realities Shares held by the Reflect stockholders at such time as described in more detail in the section titled “The Merger Proposal — Merger Consideration” beginning on page 81 of the accompanying joint proxy statement/prospectus.

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.

Each share of Creative Realities common stock and option to purchase Creative Realities common stock that is issued and outstanding at the effective time of the Merger will remain issued and outstanding, and such shares will be unaffected by the Merger. As a result of the Merger and adoption of the Retention Bonus Plan, Creative Realities shareholders as of immediately prior to the Merger are expected to own approximately 84.2% of the outstanding shares of the combined company, and former Reflect stockholders and Reflect employees are expected to own approximately 15.8% of the outstanding shares of the combined company, assuming the issuance of 2,333,334 Creative Realities Shares in the Merger, the issuance of an estimated 333,334 Creative Realities Shares issuable under the Retention Bonus Plan (166,667 of which are issuable on the Closing Date and the remainder of which are issuable over a two-year period after the closing of the Merger as described in more detail in the section titled “The Bonus Plan Proposal” beginning on page 100 of the accompanying joint proxy statement/prospectus), and the issuance of 2,249,347 Creative Realities Shares to Slipstream Communications, LLC (“Slipstream”) to convert $2,483,279 of outstanding principal and accrued interest owed to Slipstream by Creative Realities as part of the Existing Debt Conversion.

In connection with the Merger, Creative Realities shareholders are cordially invited to attend the special meeting of Creative Realities shareholders (the “Creative Realities Meeting”) to be held on January 28, 2022 at 9 a.m. Eastern Time, unless postponed or adjourned to a later date, in order to obtain the Creative Realities shareholder approvals necessary to complete the Merger and related matters. The Creative Realities Meeting will be held at 13050 Magisterial

 

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Drive, Suite 102, Louisville, Kentucky 40223. Only shareholders who held Creative Realities shares at the close of business on December 27, 2021 will be entitled to notice of and to vote at the Creative Realities Meeting and at any adjournments and postponements thereof.

In connection with the Merger, Reflect stockholders are cordially invited to attend the special meeting of Reflect stockholders (the “Reflect Meeting”) to be held on January 28, 2022 at 9:00 a.m. Central Time, unless postponed or adjourned to a later date, in order to obtain the Reflect stockholder approvals necessary to complete the Merger and related matters. The Reflect Meeting will be held at 2221 Lakeside Blvd #1200, Richardson, TX 75082. Only stockholders who held Reflect shares at the close of business on January 3, 2022 will be entitled to notice of and to vote at the Reflect Meeting and at any adjournments and postponements thereof.

Creative Realities 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. It 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 Creative Realities’ customers to transform how they engage with consumers. Shares of Creative Realities common stock are currently listed on The Nasdaq Capital Market under the symbol “CREX.” On January 3, 2022, the closing sale price of Creative Realities common stock was $1.45 per share.

Reflect Systems, Inc., a Delaware corporation, 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.

At the Creative Realities Meeting, Creative Realities will ask its shareholders to vote on the following proposals, as more fully described in the accompanying joint proxy statement/prospectus: (i) the Share Issuance Proposal, (ii) the Bonus Plan Proposal, (iii) the Advisory Compensation Proposal, and (iv) the Creative Realities Adjournment Proposal, if presented (collectively, the “Creative Realities Proposals”).

Creative Realities’ Board of Directors unanimously determined that the Creative Realities Proposals are advisable, fair to and in the best interests of Creative Realities and its shareholders and unanimously recommends that Creative Realities’ shareholders vote “FOR” each of the Creative Realities Proposals.

At the Reflect Meeting, Reflect will ask its stockholders to vote on the following proposals, each as more fully described in the accompanying joint proxy statement/prospectus: (i) the Merger Proposal, (ii) each of the Reflect Charter Amendment Proposals and (iii) the Reflect Adjournment Proposal (collectively, the “Reflect Proposals”).

Reflect’s Board of Directors unanimously determined that the Reflect Proposals are advisable, fair to and in the best interests of Reflect and its stockholders and unanimously recommends that Reflect’s stockholders vote “FOR” each of the Reflect Proposals.

As described in the accompanying joint proxy statement/prospectus, certain Creative Realities shareholders who in the aggregate own approximately 44.9% of the outstanding shares of common stock of Creative Realities as of January 3, 2022, and certain Reflect stockholders who in the aggregate own approximately 54.6% of the outstanding shares of common stock and preferred stock of Reflect as of January 3, 2022, are parties to voting agreements with Creative Realities and Reflect, respectively, whereby such shareholders and stockholders have agreed to vote in favor of, and to adopt and approve, the Creative Realities Proposals and Reflect Proposals, respectively, at any meeting of Creative Realities’ shareholders or Reflect’s stockholders, as applicable (or any adjournment or postponement thereof), subject to the terms of the voting agreements.

 

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Your vote is very important.

The obligations of Creative Realities and Reflect to complete the Merger are subject to a number of conditions set forth in the Merger Agreement and are summarized in the accompanying joint proxy statement/prospectus. More information about Creative Realities, Reflect, the Creative Realities Meeting and the Reflect Meeting and the transactions contemplated by the Merger Agreement, is contained in the accompanying joint proxy statement/prospectus. You are encouraged to read the accompanying joint proxy statement/prospectus in its entirety, including the section entitled “Risk Factors” beginning on page 47.

We strongly support the Merger and the other transactions contemplated by the Merger Agreement and enthusiastically recommend that you vote in favor of the proposals presented to you for approval.

Creative Realities and Reflect are excited about the opportunities the Merger brings to Creative Realities’ shareholders and Reflect’s stockholders and thank you for your consideration and continued support.

Sincerely,

Richard Mills

 

Lee Summers

Chief Executive Officer

 

Chief Executive Officer

Creative Realities, Inc.

 

Reflect Systems, Inc.

This proxy statement/prospectus provides shareholders of Creative Realities and stockholders of Reflect with detailed information about the Merger and other matters to be considered at the Creative Realities Meeting and Reflect Meeting. We encourage you to read this entire document, including the Annexes and other documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 47 of this joint proxy statement/prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS JOINT PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

This proxy statement/prospectus is dated January 7, 2021, and is first being mailed to Creative Realities’ shareholders on or about January 11, 2021, and to the stockholders of Reflect, on or about January 7, 2021.

 

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ADDITIONAL INFORMATION

If you have questions about the Merger or the accompanying joint proxy statement/prospectus, would like additional copies of the accompanying joint proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, please contact one of the following individuals:

Will Logan

 

Lee Summers

Chief Financial Officer

 

Chief Executive Officer

Creative Realities, Inc.

 

Reflect Systems, Inc.

13100 Magisterial Drive, Suite 100

 

2221 Lakeside Blvd #1200

Louisville, KY 40223

 

Richardson, TX 75082

(502) 791-8800

 

(214)-413-3200

You will not be charged for any of these documents that you request.

See the section entitled “Where You Can Find More Information” beginning on page 175 of the accompanying joint proxy statement/prospectus for further information.

Information contained on, or that can be accessed through, the website of Creative Realities or Reflect or any other website is expressly not incorporated by reference into and is not a part of this joint proxy statement/prospectus.

To obtain timely delivery of the documents, you must request them no later than five business days before the date of the applicable meeting, or no later than January 21, 2022.

 

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CREATIVE REALITIES, INC.

13100 Magisterial Drive, Suite 100
Louisville, KY 40223

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To Be Held on January 28, 2022

TO THE SHAREHOLDERS OF CREATIVE REALITIES, INC.:

Please take notice that a special meeting of shareholders of Creative Realities, Inc. (“Creative Realities”) will be held, pursuant to due call by the Board of Directors, on January 28, 2022, at 9:00 a.m. (Eastern Time) at 13050 Magisterial Drive, Suite 102, Louisville, Kentucky 40223, or at any adjournment or adjournments thereof (the “Creative Realities Meeting”).

Creative Realities and Reflect Systems, Inc., or “Reflect,” entered into an Agreement and Plan of Merger, or the “Merger Agreement,” on November 12, 2021, pursuant to which a direct, wholly owned subsidiary of Creative Realities, CRI Acquisition Corporation, or “Merger Sub,” will merge with and into Reflect, with Reflect surviving as a wholly owned subsidiary of Creative Realities, and the surviving company of the Merger, which transaction is referred to herein as the “Merger.” Reflect following the Merger is referred to herein as the “combined company.” A copy of the Merger Agreement is attached as Annex A to the accompanying joint proxy statement/prospectus.

At the effective time of the Merger, all of Reflect’s shares of common stock and preferred stock, par value $0.001 per share, collectively referred to herein as the “Reflect shares,” will be converted into the right to receive a portion of (i) $18,666,667 in cash, subject to certain adjustments set forth in the Merger Agreement, (ii) 2,333,334 shares of Creative Realities common stock, par value $0.01 per share, referred to herein as the “Creative Realities shares,” and (iii) contingent cash payable on or after the three-year anniversary of the effective time of the Merger, in an amount by which the closing price of the Creative Realities shares on such anniversary are less than $6.40 per share, or if certain Reflect customers 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 Creative Realities Shares held by the Reflect stockholders at such time as described in more detail in the section titled “The Merger Proposal — Merger Consideration” beginning on page 81 of the accompanying joint proxy statement/prospectus.

Prior to the Merger, Reflect shall take all actions necessary to provide that each option and warrant to purchase Reflect shares, or “Reflect option,” and “Reflect warrant,” respectively, outstanding and unexercised immediately before the effective time of the Merger, automatically and without any action on the part of the holder thereof, shall be cancelled or converted into Reflect shares. All other securities of Reflect shall be canceled and shall be of no further force and effect from the effective time of the Merger and shall not be assumed or converted into a right to receive any shares of Creative Realities common stock.

Each share of Creative Realities common stock and options and warrants to purchase Creative Realities common stock that is issued and outstanding at the effective time of the Merger will remain issued and outstanding, and will be unaffected by the Merger.

As a result of the Merger (assuming, among other things, that no Reflect stockholders exercise appraisal rights with respect to their Reflect Stock in connection with consummation of the Merger), adoption of the Retention Bonus Plan, and consummation of the financings prior to the Merger, Creative Realities shareholders as of immediately prior to the Merger are expected to own approximately 81.8% of the outstanding shares of the combined company, and former Reflect stockholders and Reflect employees are expected to own approximately 18.2% of the outstanding shares of the combined company, assuming the issuance of (i) 2,333,334 Creative Realities Shares in the Merger, (ii) an estimated 333,334 Creative Realities Shares issuable under the Retention Bonus Plan (166,667 of which are issuable on the Closing Date and the remainder of which are issuable over a two-year period after the closing of the Merger as described in more detail in the section titled “The Bonus Plan Proposal” beginning on page 100 of the accompanying joint proxy statement/prospectus) and (iii) an estimated 2,249,347 Creative Realities Shares related to the conversion of the existing related party convertible note as part of the Existing Debt Conversion.

 

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Contemporaneously with the closing of the Merger, Creative Realities intends to close an equity and/or debt financing transaction and yield gross proceeds in the aggregate amount of up to $25 million, the net proceeds of which will be used to pay the $18,666,667 cash portion of the merger consideration payable at the closing, and to fund the $1,333,333 cash portion of the Retention Bonus Plan.

The Creative Realities Meeting will be held for Creative Realities shareholders to consider the following proposals:

1.      The Bonus Plan Proposal — Approve the Reflect employee bonus pool that will be established immediately prior to the effective time of the Merger (the “Retention Bonus Plan”) for certain employees of Reflect that will continue their services after the effective time of the Merger. The Retention Bonus Plan is attached as Exhibit C to the Merger Agreement.

2.      The Share Issuance Proposal — Approve the issuance and potential issuance of Creative Realities shares in connection with (i) the Merger contemplated by the Merger Agreement, (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 (the “Convertible Securities”), and (iii) Creative Realities shares that may be issued in connection with the conversion of any outstanding debt owed to Slipstream Communications, LLC, Creative Realities’ current lender, in connection with obtaining such financing.

3.      The Advisory Compensation Proposal — Approve, on a non-binding, advisory basis, the compensation that will or may become payable by Creative Realities to its named executive officers in connection with the Merger; and

4.      The Creative Realities Adjournment Proposal — Approve an adjournment of the Creative Realities special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2 and 3.

Each of these proposals is more fully described in the accompanying joint proxy statement/prospectus, which each shareholder is encouraged to review carefully.

Creative Realities’ Board of Directors has fixed December 27, 2021 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Creative Realities Meeting and any adjournment or postponement thereof. Only holders of record of shares of Creative Realities common stock at the close of business on the record date are entitled to notice of, and to vote at, the Creative Realities Meeting. At the close of business on the record date, Creative Realities had 12,005,129 shares of common stock outstanding and entitled to vote.

In connection with entry into the Merger Agreement, Creative Realities’ directors, officers and 5% stockholders, who own approximately 44.9% of Creative Realities’ outstanding common stock, have entered into voting agreements pursuant to which they have agreed to support and vote all of their shares of common stock in favor of the foregoing proposals.

Your vote is important. The affirmative vote of a majority of shares present in person or represented by proxy at the Creative Realities Meeting and entitled to vote on the subject matter, assuming a quorum is present, is required for approval of the Bonus Plan Proposal, Share Issuance Proposal and Advisory Compensation Proposal. The affirmative vote of a majority of shares present in person or represented by proxy at the Creative Realities Meeting and entitled to vote on the subject matter, whether or not a quorum is present, is required for approval of the Creative Realities Adjournment Proposal. Approval of the Bonus Plan Proposal and Share Issuance Proposal is a condition to the completion of the Merger. Therefore, the Merger cannot be consummated without the approval of the Bonus Plan Proposal and Share Issuance Proposal.

Even if you plan to attend the Creative Realities Meeting, Creative Realities requests that you sign and return the enclosed proxy or vote by mail or online to ensure that your shares will be represented at the Creative Realities Meeting if you are unable to attend. You may change or revoke your proxy at any time before it is voted at the Creative Realities Meeting.

 

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CREATIVE REALITIES’ BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS FAIR TO, IN THE BEST INTERESTS OF, AND ADVISABLE TO CREATIVE REALITIES AND ITS STOCKHOLDERS AND HAS APPROVED EACH SUCH PROPOSAL. CREATIVE REALITIES’ BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT CREATIVE REALITIES’ SHAREHOLDERS VOTE “FOR” EACH SUCH PROPOSAL.

Important Notice Regarding the Availability of Proxy Materials for the Shareholders’ Meeting to
Be Held on January 28, 2022 at 9 a.m. Eastern Time, Via the Internet
The joint proxy statement/prospectus is available at www.investorvote.com/CREX

 

By order of the Board of Directors:

       

/s/ Rick Mills

       

Chief Executive Officer and Director

       

January 7, 2022

 

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REFLECT SYSTEMS, INC.

2221 Lakeside Blvd #1200

Richardson, TX 75082

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held on January 28, 2022

To the holders of Reflect common stock and preferred stock:

A special meeting of holders of Reflect common stock and preferred stock will be held on January 28, 2022, at 9:00 a.m., Central Time, at 2221 Lakeside Blvd #1200, Richardson, TX 75082, for the following purposes:

1.      To consider and vote upon a proposal to approve the Agreement and Plan of Merger, or the Merger Agreement, dated as of November 12, 2021, by and among Reflect Systems, Inc. or “Reflect”, Creative Realities, Inc., or “Creative Realities”, CRI Acquisition Corporation, a Delaware corporation and a direct wholly owned subsidiary of Creative Realities, or “Merger Sub,” and RSI Exit Corporation, or the “Stockholder’s Representative”, pursuant to which Merger Sub will merge with and into Reflect, with Reflect continuing as the surviving corporation and a wholly owned subsidiary of Creative Realities, all on and subject to the terms and conditions contained in the Merger Agreement, and the Merger described therein;

2.      To consider and vote upon 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;

3.      To consider and vote upon 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 (together with Proposal No. 2, the “Reflect Charter Amendment Proposals”); and

4.      To consider and vote upon any proposal to adjourn the Reflect Meeting to a later date or dates if the board of directors of Reflect determines such an adjournment is necessary to permit solicitation of additional proxies if there are not sufficient votes at the time of the Reflect Meeting to constitute a quorum or to approve the Merger Agreement and/or the Reflect Charter Amendment Proposals.

Each of these proposals is more fully described in the accompanying joint proxy statement/prospectus, which each stockholder is encouraged to review carefully. Both the Merger Agreement and the Reflect Charter Amendment Proposals must be approved by the requisite votes for the Merger to be completed. No other business may be conducted at the Reflect Meeting.

If the Merger Agreement, the plan of merger contemplated thereby and the Reflect Charter Amendment Proposals are approved by the requisite holders of the Reflect common stock and Reflect preferred stock and the Merger is completed, each outstanding Reflect share will be converted into the right to receive a portion of (i) $18,666,667 in cash, subject to certain adjustments set forth in the Merger Agreement, (ii) 2,333,334 shares of Creative Realities common stock, par value $0.01 per share, referred to herein as the “Creative Realities shares,” and (iii) contingent cash payable on or after the three-year anniversary of the effective time of the Merger, in an amount by which the closing price of the Creative Realities shares on such anniversary is 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 Creative Realities shares held by the Reflect stockholders on the three-year anniversary of the effective time of the Merger (subject to an extension period described below), in each case subject to the terms of the Merger Agreement as described in more detail in the section titled “The Merger Proposal — Merger Consideration” beginning on page 81 of the accompanying joint proxy statement/prospectus.

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

 

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All holders of Reflect common stock and preferred stock of record as of 5:00 p.m. on January 3, 2022, will be entitled to notice of the Reflect Meeting and will be entitled to vote at the Reflect Meeting and any adjournments thereof. The Reflect Meeting may be adjourned from time to time upon approval of holders of Reflect common stock and preferred stock without any notice other than by announcement at the meeting of the adjournment thereof, and any and all business for which notice is hereby given may be transacted at such adjourned meeting.

The vote of every holder of Reflect common stock and Reflect preferred stock is very important. Whether you plan to attend the Reflect Meeting, if you hold shares of Reflect common stock or Reflect preferred stock, please vote by completing and returning the enclosed proxy card by following the instructions regarding delivery on such proxy card, or as otherwise provided by Reflect. We cannot complete the Merger unless holders of at least a majority of the issued and outstanding shares of Reflect common stock and the preferred stock, voting together and at least two-thirds of the issued and outstanding shares of Reflect preferred stock vote to approve the Merger Agreement and the Merger. In addition, we cannot complete the Merger unless the 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 issued and outstanding shares of each series of Reflect preferred stock vote to approve (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 (together, the “Reflect Charter Amendment Proposals”). The Reflect Charter Amendment reflecting the Reflect Charter Amendment Proposals is set forth in Annex B. Based on our reasons for the Merger described in the accompanying joint proxy statement/prospectus, Reflect’s Board of Directors believes that the transaction is fair, from a financial point of view, to and in the best interests of, the Reflect stockholders.

You are entitled to the right to seek appraisal of the fair value of your shares of Reflect common stock or preferred stock, as determined by the Delaware Court of Chancery with respect to the Merger under Section 262 of the Delaware General Corporation Law. A summary of the appraisal rights that may be available to you is described in the section titled “Appraisal Rights” beginning on page 170 and set forth in full in Annex C. A Reflect stockholder of record who desires to exercise appraisal rights, or preserve the ability to do so, must not vote in favor of the Merger Agreement or the Merger. Reflect stockholders seeking to exercise appraisal rights must also take all other steps necessary to perfect their appraisal rights.

If you have any questions concerning the Merger or the joint proxy statement/prospectus, would like additional copies of the joint proxy statement/prospectus, need a proxy card or need help voting your shares of Reflect common stock and preferred stock, please contact Lee Summers, Reflect’s Chief Executive Officer, at (469) 879-5288.

 

By Order of the Board of Directors,

   

/s/ William E. Warren

   

Executive Chairman of the Board of Directors

Richardson, Texas

January 7, 2022

The board of directors of Reflect unanimously recommends that holders of record of Reflect common stock and preferred stock entitled to vote at the Reflect Meeting vote “FOR” the proposals to approve the Merger Agreement and the Merger, “FOR” the 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, “FOR” the 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, and “FOR” any adjournment of the Reflect Meeting if such adjournment is necessary to permit solicitation of additional proxies if there are not sufficient votes at the time of the Reflect Meeting to constitute a quorum or to approve the Merger Agreement.

 

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TABLE OF CONTENTS

 

Page

FREQUENTLY USED TERMS

 

ii

SUMMARY OF THE MATERIAL TERMS OF THE PROPOSALS

 

1

QUESTIONS AND ANSWERS FOR ALL CREATIVE REALITIES SHAREHOLDERS AND REFLECT STOCKHOLDERS

 

21

QUESTIONS AND ANSWERS ABOUT THE CREATIVE REALITIES PROPOSALS

 

25

QUESTIONS AND ANSWERS ABOUT THE REFLECT PROPOSALS

 

30

SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

 

34

MARKET PRICE AND DIVIDEND INFORMATION

 

45

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

46

RISK FACTORS

 

47

THE REFLECT MEETING

 

76

THE MERGER PROPOSAL

 

81

BACKGROUND OF THE MERGER

 

92

THE REFLECT CHARTER AMENDMENT PROPOSALS

 

94

THE REFLECT ADJOURNMENT PROPOSAL

 

95

THE CREATIVE REALITIES MEETING

 

96

THE SHARE ISSUANCE PROPOSAL

 

99

THE BONUS PLAN PROPOSAL

 

100

THE ADVISORY COMPENSATION PROPOSAL

 

101

THE CREATIVE REALITIES ADJOURNMENT PROPOSAL

 

103

INFORMATION ABOUT CREATIVE REALITIES

 

104

CREATIVE REALITIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

118

BUSINESS OF REFLECT

 

131

MANAGEMENT OF REFLECT

 

135

BENEFICIAL OWNERSHIP OF SECURITIES OF REFLECT

 

138

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS OF REFLECT

 

140

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

 

142

DESCRIPTION OF REFLECT CAPITAL STOCK

 

145

REFLECT MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

149

DESCRIPTION OF SECURITIES OF CREATIVE REALITIES

 

157

BENEFICIAL OWNERSHIP OF SECURITIES OF CREATIVE REALITIES

 

160

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS OF CREATIVE REALITIES

 

163

MARKET INFORMATION

 

166

LEGAL MATTERS

 

169

EXPERTS

 

169

APPRAISAL RIGHTS

 

170

DELIVERY OF DOCUMENTS TO SHAREHOLDERS

   

TRANSFER AGENT

 

174

SUBMISSION OF SHAREHOLDER PROPOSALS OF CREATIVE REALITIES

 

174

FUTURE SHAREHOLDER PROPOSALS

   

WHERE YOU CAN FIND MORE INFORMATION

 

175

INDEX TO FINANCIAL STATEMENTS

 

F-1

     

ANNEXES

   

Annex A — Merger Agreement

 

A-1

Annex B — Reflect Charter Amendments

 

B-1

Annex C — Section 262 of the DGCL

 

C-1

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FREQUENTLY USED TERMS

As used in this joint proxy statement/prospectus, unless otherwise noted or the context requires:

Additional Contingent Merger Consideration” means a supplemental cash payment, if any, owed to the recipients of CREX Shares Merger Consideration, payable on or after the three-year anniversary of the effective time of the Merger, in an amount by which the aggregate 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, is less than $7.20 per share, subject to the terms of the Merger Agreement.

Advisory Compensation Proposal” means the proposal to be considered at the Creative Realities Meeting for the Creative Realities’ shareholders to adopt and approve, on a non-binding, advisory basis, the compensation that will or may become payable by Creative Realities to its named executive officers in connection with the Merger.

Bonus Plan Proposal” means the proposal to be considered at the Creative Realities Meeting for the shareholders to adopt and approve the Retention Bonus Plan.

Closing” means the closing of the Merger.

Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto, as amended. Reference to a specific section of the Code shall include such section and any valid treasury regulation promulgated thereunder.

Combined Company” refers to Creative Realities and the Reflect together following the consummation of the Merger.

Creative Realities,” “CREX,” “our,” “us” and “we” means Creative Realities, Inc., a Minnesota corporation.

Creative Realities Adjournment Proposal” means the proposal for Creative Realities shareholders to approve any decision by Creative Realities or its representatives to adjourn the Creative Realities Meeting to a later date or dates to permit further solicitation and vote of proxies if there are insufficient votes at the time of the Creative Realities Meeting to approve the Share Issuance Proposal or Bonus Plan Proposal.

Creative Realities Board” means the Board of Directors of Creative Realities.

Creative Realities Meeting” means the special meeting of the shareholders of Creative Realities, to be held at 13050 Magisterial Drive, Suite 102, Louisville, Kentucky 40223, on January 28, 2022 at Eastern Time, and any adjournments or postponements thereof.

Creative Realities Proposals” means (i) the Bonus Plan Proposal, (ii) the Share Issuance Proposal, (iii) the Advisory Compensation Proposal, and (iv) the Creative Realities Adjournment Proposal, if presented.

Creative Realities Shares” means the shares of common stock of Creative Realities, par value $0.01 per share.

CREX Shares Consideration” means 2,333,334 Creative Realities Shares issuable in connection with the Merger.

CREX Voting Agreements” means those voting agreements executed and delivered by certain officers, directors and shareholders of Creative Realities to Reflect in support of the Merger Agreement.

Delaware Law” means the Delaware General Corporation Law, as amended.

DWAC” means the depository trust company’s deposit/withdrawal at custodian system.

Effective Time” means the effective time of the Merger.

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

GAAP” means U.S. generally accepted accounting principles.

Merger” means the statutory merger of Merger Sub with and into Reflect under the applicable provisions of Delaware Law, with Reflect remaining as the surviving entity, upon the terms and conditions set forth in the Merger Agreement.

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Merger Agreement” means the agreement and plan of merger, dated as of November 12, 2021, by and among Creative Realities, Merger Sub and Reflect, as it may be amended and supplemented from time to time.

Merger Consideration” means, subject to the Merger Agreement, the sum of (i) $18,666,667 payable in cash, (ii) the CREX Shares Consideration, and (iii) the Additional Contingent Merger Consideration.

Merger Proposal” means the proposal to be considered at the Reflect Meeting to approve the Merger, the Merger Agreement and the transactions contemplated thereby.

Merger Sub” means CRI Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of Creative Realities.

Nasdaq” means the Nasdaq Stock Market, LLC.

Proposals” means the Creative Realities Proposals and the Reflect Proposals.

Record Date” means, in the case of the Creative Realities Meeting, December 27, 2021 (the “Creative Realities Record Date”) and in the case of the Reflect Meeting, January 3, 2022 (the “Reflect Record Date”).

Reflect” means Reflect Systems, Inc., a Delaware corporation.

Reflect Charter Amendment Proposals” means (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 approving 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. The Reflect Charter Amendment reflecting the Reflect Charter Amendment Proposals is set forth in Annex B.

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

Reflect Board” means the Board of Directors of Reflect.

Retention Bonus Plan” means the plan establishing the Reflect employee bonus pool that will be established immediately prior to the effective time of the Merger for certain employees of Reflect that will continue their services after the effective time of the Merger, the form of which is included as Exhibit C of the Merger Agreement.

Reflect Group” means Reflect and the direct and indirect subsidiaries of Reflect.

Reflect Proposals” means the Merger Proposal, the Reflect Charter Amendment Proposals and the Reflect Adjournment Proposal.

Reflect Meeting” means the special meeting of the stockholders of Reflect, to be held at on January 28, 2022 at 9:00 a.m. Central Time, and any adjournments or postponements thereof.

Reflect Stock” means all shares of Reflect preferred and common stock issued and outstanding immediately prior to the Effective Time.

Reflect Voting Agreements” means those voting agreements executed and delivered by certain officers, directors, and holders of 5% or more of the outstanding Reflect Shares to Creative Realities in the form attached as Exhibit D to the Merger Agreement.

Sarbanes Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended.

SEC” means the United States Securities and Exchange Commission.

Securities Act” means the Securities Act of 1933, as amended.

Share Issuance Proposal” means the proposal to be considered at the Creative Realities Meeting to approve, for purposes of complying with Nasdaq listing rules, the issuance of securities in excess of 20% of Creative Realities’

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issued and outstanding common stock, including the Creative Realities Shares (i) issuable to stockholders of Reflect as Merger Consideration pursuant to the Merger Agreement, and (ii) issuable in 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) Creative Realities shares that may be issued in connection with the conversion of any outstanding debt owed to Slipstream Communications, LLC, Creative Realities’ current lender, in connection with obtaining such financing.

U.S. Holder” means any beneficial owner of Creative Realities Shares that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States; (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust if (A) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control the trust or (B) it has a valid election in place to be treated as a U.S. person.

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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 81, and “The Merger Agreement” beginning on page 81. A copy of the Merger Agreement, excluding the schedules thereto, is included as Annex A to this joint proxy statement/prospectus.

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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.

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.”

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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.

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

•        There must not have been commenced or threatened against Creative Realities, Merger Sub, Reflect or against any of their affiliates, any claim (a) involving any challenge to, or seeking damages or other relief in connection with, the Merger or any transactions contemplated by the Merger Agreement, or that may have the effect of preventing, restraining, making illegal, or otherwise materially interfering with the Merger or any transactions contemplated by the Merger Agreement.

•        No governmental authority shall have enacted, issued, promulgated, enforced or entered into any law or order and no other legal or regulatory restraint or prohibition shall be in effect, in either case, which has the effect of making the Merger or any transactions contemplated by the Merger Agreement, illegal or that otherwise prohibits or requires the payment of any damages as a result of the Merger or any transactions contemplated by the Merger Agreement, and no claim in which any of the foregoing is sought shall be pending.

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:

•        The representations and warranties of Creative Realities and Merger Sub in the Merger Agreement will be true and correct in all material respects when made on the date of signing the Merger Agreement and as of the Closing Date.

•        All of the covenants and obligations that Creative Realities and Merger Sub are required to perform or to comply with pursuant to the Merger Agreement at or prior to the Closing have been performed and complied with in all material respects.

•        Creative Realities and Merger Sub shall have delivered all closing documents required by the Merger Agreement, including, in addition to customary deliverables, the following documents:

•        an Escrow Agreement duly executed by Parent and Merger Sub;

•        an Exchange Agent Agreement, duly executed by Parent.

•        a voting agreement executed by Slipstream Funding, LLC, Slipstream Communications, LLC, and the executive officers and directors of Parent indicating their commitment to vote in favor of the Merger in their capacity as stockholders of the Parent; and

•        evidence detailing that Nasdaq has reviewed and approved Creative Realities’ notice of listing of additional shares with respect to the CREX Stock Consideration, and that the Form S-4 Registration Statement has been declared and remains effective with the SEC.

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:

•        The representations and warranties of Reflect in the Merger Agreement will be true and correct in all material respects when made on the date of signing the Merger Agreement and as of the Closing Date.

•        All of the covenants and obligations that Reflect is required to perform or to comply with pursuant to the Merger Agreement at or prior to the Closing have been performed and complied with in all material respects.

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•        Reflect shall have delivered all closing documents required by the Merger Agreement, including, in addition to customary deliverables, the following documents:

•        letters of resignation by all officers and directors of Reflect;

•        executed payoff letters, releases or other similar instruments providing for the repayment in full of any debt of Reflect and a release of any security interests encumbering Reflect’s assets;

•        evidence that Reflect’s stock option plans and underlying options have been terminated in full.

•        two-year non-competition and non-solicitation agreements executed by all directors and officers of the Reflect and certain Reflect stockholders;

•        an Escrow Agreement, duly executed by the Stockholders’ Representative;

•        an Exchange Agent Agreement, duly executed by the Stockholders’ Representative; and

•        award agreements signed by each participant in the Retention Bonus Plan.

•        Creative Realities shall have obtained debt and/or equity financing sufficient to pay the $18,666,667 million cash portion of the Merger Consideration, as determined in its sole and absolute discretion.

•        Creative Realities shall have performed, at its cost and expense, and been satisfied with, in its sole and absolute discretion, its due diligence of the Reflect’s relationships with certain customers.

•        The annualized monthly recurring revenue of Reflect, including Reflect’s subscription revenue and maintenance revenue, will be $7,000,000 or more (calculated as the most recent annualized monthly recurring revenue dollar value for the month immediately preceding the Closing times twelve (12)).

•        The Voting and Lock-up Agreement will have been duly executed by certain Reflect stockholders and delivered to Creative Realities.

•        Amendments to the Certificate of Incorporation of Reflect shall have been duly executed, filed and accepted for filing with the office of the Secretary of State of the State of Delaware.

•        Reflect stockholders owning less than 5.0% of the Reflect Stock shall have exercised their appraisal rights under the DGCL.

•        Reflect shall have completed the dissolution of its defunct subsidiary, Reflect Acquisition, LLC, under Texas Law.

•        Reflect shall have delivered joinder agreements, pursuant to which Reflect stockholders entitled to receive 75% or more of the Merger Consideration agree to be bound by the terms of the Merger Agreement, and to not sell or transfer any of their CREX Shares Consideration during a six-month period after the closing of the Merger.

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.

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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.

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.

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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.”

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.”

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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 47. Below is a summary of such risk factors:

Risks Related to the Merger

•        The parties may not complete the Merger, which could negatively impact Creative Realities’ stock price and future operations.

•        The CREX Share Consideration that will be issued in the Merger will be $4,666,667, with each share valued based on a $2.00 issuance price, which could be below or above the market value of the Creative Realities Shares immediately prior to the Closing.

•        If the conditions to the Merger are not met, the Merger may not occur.

•        The Merger may not occur if Creative Realities is not satisfied with the results of due diligence of Reflect customers.

•        A Reflect stockholder must hold the Creative Realities Shares that such stockholder receives in the Merger for three to three and a half years, or he, she or it will not receive any payment as part of the Additional Contingent Merger Consideration.

•        The rights to receive the Additional Contingent Merger Consideration are non-transferable and non-tradeable.

•        The amount of the Additional Contingent Merger Consideration depends on events that are not determinable in advance of the Closing.

•        The rights to receive the Additional Contingent Merger Consideration are not guaranteed or secured by any assets of Creative Realities or Reflect, and Reflect stockholders are unsecured creditors with respect to any claims to the Additional Contingent Merger Consideration.

•        Creative Realities may be required to pay the Additional Merger Consideration after the Measurement Date, which amount may be substantial and could jeopardize Creative Realities’ ability to pay such consideration, and if paid may cause a material adverse effect on Creative Realities’ cash position, liquidity and financial results.

•        Reflect stockholders will be subject to a right of first refusal in favor of Creative Realities prior to selling a significant amount of Creative Realities Shares, which may delay such stockholders’ ability to sell the CREX Shares Consideration and reduce their net proceeds from such sales.

•        Creative Realities’ shareholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.

•        Prior to the Merger, Reflect is obligated pursuant to the Merger Agreement to conduct its business and operations in the ordinary course and in accordance in all material respects with past practices, which could limit favorable opportunities available to Reflect, which could adversely affect its business.

•        Because the lack of a public market for Reflect Stock makes it difficult to evaluate the fairness of the Merger, the stockholders of Reflect may receive consideration in the Merger that is less than the fair market value of the Reflect Stock, or Creative Realities may pay more than the fair market value of Reflect Stock.

•        Costs associated with the Merger are difficult to estimate, may be higher than expected, and may harm the financial results of the combined company.

•        The Merger may result in disruption of the existing businesses of Creative Realities and Reflect, distraction of their management and diversion of other resources.

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•        Any delay in completion of the Merger may significantly reduce the benefits expected to be obtained from the Merger.

•        The market price of Creative Realities Shares may decline as a result of the Merger and/or the issuance of additional shares to Slipstream in connection with the conversion of debt.

•        Each of Creative Realities, Reflect and the combined company will incur substantial transaction-related costs relating to the Merger.

•        Creative Realities’ ability to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments is limited by provisions of the Internal Revenue Code and may be subject to further limitation because of prior or future offerings of Creative Realities’ stock or other transactions.

•        Creative Realities will incur significant increased costs as a result of the completion of the Merger.

•        Creative Realities will not be able to consummate the Merger without obtaining financing.

•        Creative Realities may fail to realize the anticipated benefits of the Merger.

Risks related to Creative Realities’ Business and Industry

•        The ongoing COVID-19 pandemic has had, and may in the future have, a significant adverse impact on Creative Realities’ advertising revenue and also exposes Creative Realities’ business to other risks.

•        The sales of Creative Realities new Safe Space Solutions products may not be successful.

•        Creative Realities has generally incurred losses, and may never become or remain profitable.

•        The digital marketing business is evolving in a rapidly changing market, and Creative Realities cannot ensure the long-term successful operation of Creative Realities’ business or the execution of Creative Realities’ business plan.

•        Adequate funds for Creative Realities’ operations may not be available, requiring Creative Realities to raise additional financing or else curtail Creative Realities activities significantly.

•        Creative Realities does not have sufficient capital to engage in material research and development, which may harm Creative Realities’ long-term growth.

•        Creative Realities is reliant on the continued support of a related party for adequate financing of its operations.

•        Creative Realities expects that there will be significant consolidation in its industry. Creative Realities’ failure or inability to lead that consolidation would have a severe adverse impact on Creative Realities’ access to financing, customers, technology, and human resources.

•        Creative Realities’ success depends on its interactive marketing technologies achieving and maintaining widespread acceptance in its targeted markets.

•        Creative Realities’ financial condition and potential for continued net losses may negatively impact Creative Realities’ relationships with customers, prospective customers and third-party suppliers.

•        Because Creative Realities does not have long-term purchase commitments from Creative Realities’ customers, the failure to obtain anticipated orders or the deferral or cancellation of commitments could have adverse effects on Creative Realities’ business.

•        Creative Realities’ continued growth and financial performance could be adversely affected by the loss of several key customers, including a significant related party customer.

•        Most of Creative Realities’ contracts are terminable by Creative Realities’ customers with limited notice and without penalty payments, and early terminations could have a material adverse effect on Creative Realities’ business, operating results and financial condition.

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•        It is common for Creative Realities’ current and prospective customers to take a long time to evaluate Creative Realities’ products, most especially during economic downturns that affect Creative Realities customers’ businesses, including as a result of the COVID-19 pandemic. The lengthy and variable sales cycle makes it difficult to predict Creative Realities’ operating results.

•        Creative Realities’ industry is characterized by frequent technological change. If Creative Realities is unable to adapt Creative Realities’ products and services and develop new products and services to keep up with these rapid changes, Creative Realities will not be able to obtain or maintain market share.

•        A portion of Creative Realities’ business involves the use of software technology that it has developed or licensed. Industries involving the ownership and licensing of software-based intellectual property are characterized by frequent intellectual-property litigation, and Creative Realities could face claims of infringement by others in the industry. Such claims are costly and add uncertainty to Creative Realities’ operational results.

•        Creative Realities’ proprietary platform architectures and data tracking technology underlying certain of Creative Realities’ services are complex and may contain unknown errors in design or implementation that could result in system performance failures or inability to scale.

•        Creative Realities’ business may be adversely affected by malicious applications that interfere with, or exploit security flaws in, its products and services.

•        Creative Realities compete with other companies that have more resources, which puts Creative Realities at a competitive disadvantage.

•        Creative Realities’ future success depends on key personnel and its ability to attract and retain additional personnel.

•        Creative Realities is subject to cyber security risks and interruptions or failures in Creative Realities information technology systems and will likely need to expend additional resources to enhance Creative Realities’ protection from such risks. Notwithstanding Creative Realities’ efforts, a cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss.

•        Creative Realities’ reliance on information management and transaction systems to operate its business exposes Creative Realities to cyber incidents and hacking of sensitive information if Creative Realities’ outsourced service provider experiences a security breach.

•        Because Creative Realities’ technology, products, platform, and services are complex and are deployed in and across complex environments, they may have errors or defects that could seriously harm Creative Realities’ business.

•        Creative Realities may have insufficient network or server capacity, which could result in interruptions in its services and loss of revenues.

•        Creative Realities’ business operations are susceptible to interruptions caused by events beyond Creative Realities’ control.

•        The markets in which Creative Realities operates are rapidly emerging, and Creative Realities may be unable to compete successfully against existing or future competitors to its business.

Risks related to Creative Realities Common Stock

•        The variable sales cycle of some of Creative Realities’ products make it difficult to predict operating results.

•        Creative Realities’ largest shareholder possesses controlling voting power with respect to Creative Realities common stock, which will limit your influence on corporate matters.

•        The Articles of Incorporation of Creative Realities grant its Board of Directors the power to issue additional shares of common and preferred stock and to designate other classes of preferred stock, all without shareholder approval.

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•        Creative Realities does not intend to pay dividends on Creative Realities common stock for the foreseeable future.

•        Creative Realities does not have significant tangible assets that could be sold upon liquidation.

•        Creative Realities can provide no assurance that its securities will continue to meet Nasdaq listing requirements. If Creative Realities fails to comply with the continuing listing standards of the Nasdaq, Creative Realities’ securities could be delisted.

General Creative Realities Risk Factors

•        Unpredictability in financing markets could impair Creative Realities’ ability to grow its business through acquisitions.

•        Because Creative Realities has limited resources, it may not have in place various processes and protections common to more mature companies and may be more susceptible to adverse events.

•        General global market and economic conditions may have an adverse impact on Creative Realities’ operating performance and results of operations.

•        Significant issuances of Creative Realities common stock or common stock derivatives, or the perception that significant issuances may occur in the future, could adversely affect the market price for Creative Realities common stock.

•        There may not be an active market for shares of Creative Realities common stock.

Risks related to Reflect’s Business and Industry

•        The ongoing COVID-19 pandemic has had, and may in the future have, a significant adverse impact on Reflect’s advertising revenue and also exposes Reflect’s business to other risks.

•        Reflect may experience fluctuations in its operating results, which could make Reflect’s future operating results difficult to predict.

•        Disruption to Reflect’s supply chain could adversely affect its business.

•        Reflect’s digital signage business is evolving in a rapidly changing market and Reflect cannot ensure the long-term successful operation of its business or the execution of its business plan.

•        Reflect expects that there will be significant consolidation in Reflect’s industry. Reflect’s failure to participate in that consolidation could have a severe adverse impact on Reflect’s access to financing, customers, technology, and human resources.

•        Reflect’s success depends on Reflect’s digital signage technologies achieving and maintaining widespread acceptance in Reflect’s targeted markets.

•        Reflect’s continued growth and financial performance could be adversely affected by the loss of several key customers.

•        If Reflect does not manage its growth effectively, the quality of Reflect’s platform and solutions may suffer, and its business, results of operations and financial condition may be adversely affected.

•        Changes in a shift in product mix can have a significant impact on Reflect’s gross margins.

•        It is common for Reflect’s current and prospective customers to take a long time to evaluate Reflect’s products, most especially during economic downturns that affect Reflect’s customers’ businesses, including as a result of the COVID-19 pandemic. The lengthy and variable sales cycle makes it difficult to predict Reflect’s operating results.

•        Reflect is subject to payment-related risks if customers dispute or do not pay their invoices, and any decreases or significant delays in payments could have a material adverse effect on Reflect’s business, results of operations and financial condition.

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•        Reflect’s industry is characterized by frequent technological change. If Reflect is unable to adapt Reflect’s products and services and develop new products and services to keep up with these rapid changes, Reflect will not be able to obtain or maintain market share.

•        Reflect’s proprietary platform architectures and software underlying certain of its services are complex and may contain unknown errors in design or implementation that could result in system performance failures or inability to scale.

•        Reflect competes with other companies that have more resources, which puts Reflect at a competitive disadvantage.

•        Reflect may need additional capital in the future to meet its financial obligations and to pursue its business objectives and anticipated growth. Additional capital may not be available on favorable terms, or at all, which could compromise Reflect’s ability to meet Reflect’s financial obligations and grow Reflect’s business.

•        Reflect’s future success depends on key personnel and Reflect’s ability to attract and retain additional personnel.

•        Labor shortages or increases in labor costs could adversely impact Reflect’s business and results of operations.

•        Reflect’s reliance on information management and transaction systems to operate its business exposes Reflect to cyber incidents, hacking of its sensitive information and security breaches.

•        Because Reflect’s technology, products, platform, and services are complex and are deployed in and across complex environments, they may have errors or defects that could seriously harm Reflect’s business.

•        Reflect’s third party service providers may have insufficient network or server capacity or connectivity issues, which could result in interruptions in Reflect’s services and loss of revenues.

•        Reflect’s business operations are susceptible to interruptions caused by events beyond Reflect’s control.

•        The markets in which Reflect operates are rapidly evolving, and Reflect may be unable to compete successfully against existing or future competitors to its business.

Risks related to Cyber Security and Intellectual Property

•        Reflect is subject to cyber security risks and interruptions or failures in Reflect’s information technology systems and will likely need to expend additional resources to enhance Reflect’s protection from such risks. Notwithstanding Reflect’s efforts, a cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss.

•        Reflect’s business may be adversely affected by malicious applications that interfere with, or exploit security flaws in, Reflect’s products and services.

•        A portion of Reflect’s business involves the use of software technology that Reflect has developed or licensed. Industries involving the ownership and licensing of software-based intellectual property are characterized by frequent intellectual-property litigation, and Reflect could face claims of infringement by others in the industry. Such claims could be costly and add uncertainty to Reflect’s operational results.

Risks related to Government Regulation

•        Any actual or perceived failure by Reflect to comply with legal or regulatory requirements related to privacy or data security in one or multiple jurisdictions could result in proceedings, actions, or penalties against Reflect.

•        The technology industry is subject to increasing scrutiny that could result in government actions that could negatively affect Reflect’s business.

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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.”

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:

•        Attractive Omnichannel Model with Recurring Revenue Base and Multiple Venues for Growth.    Reflect serves its customers through multiple channels. Its content management system generates subscription-based revenues, with a growing customer base and low churn. Its ad technology platform is growing, with an expanding roster of programmatic advertising partners.

•        Potential for key industry partnerships.    The Reflect board of directors and management team includes individuals with relationships that the Board believes allow Creative Realities to strategically create synergistic collaborations and partnerships with other companies in the industry.

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•        Brand Recognition.    Reflect is an iconic brand in the digital signage industry with broad reach, engagement and distribution. Reflect’s brand is constantly focused on improving engagement and optimizing monetization by utilizing proprietary advertising technology.

•        Technology.    Reflect has built a best-in-class tech stack platform with the capability to seamlessly deliver content to hundreds of thousands of devices simultaneously at little cost, yielding operating leverage and efficiencies as the company continues to scale.

•        Synergies.    Creative Realities believes that the combined companies will enjoy both revenue synergies (via upsell and cross sell strategies as well as economies of scale) and cost synergies (via redundant personnel and infrastructure)

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

•        the business, history, and credibility of Reflect and its affiliates;

•        the likelihood that the Merger will be completed;

•        the terms of the Merger Agreement and the belief that the terms of the Merger Agreement, including the representations, warranties, covenants, and conditions to the parties’ respective obligations, are reasonable in light of the entire transaction;

•        the view of Creative Realities’ management as to the financial condition, results of operations, and business of Reflect before and after the Merger based on due diligence;

•        the fact that consummating the Merger will mean Creative Realities cannot pursue other alternatives that potentially could result in a greater value for Creative Realities’ shareholders;

•        the risk that the Merger may not be completed in a timely manner or at all; and

•        various other risks associated with the Merger.

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.

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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:

•        the annual base salary of Rick Mills, Chief Executive Officer of Creative Realities, will be increased from $330,000 to $450,0000;

•        the annual base salary of Will Logan, Chief Financial Officer of Creative Realities, will be increased from $249,000 to $350,0000; and

•        Will Logan will receive a $75,000 cash bonus.

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:

•        shares of Reflect common stock, with 6,258,505 shares of Reflect common stock being issued and outstanding at that time;

•        shares of Reflect Series A Convertible Preferred Stock, with 3,000,000 shares of Reflect Series A Convertible Preferred Stock being issued and outstanding at that time;

•        shares of Reflect Series B Preferred Stock, with 2,472,443 shares of Reflect Series B Preferred Stock being issued and outstanding at that time;

•        shares of Reflect Series C Preferred Stock, with 3,727,613 shares of Reflect Series C Preferred Stock being issued and outstanding at that time;

•        shares of Reflect Series C-1 Preferred Stock, with 8,000,000 shares of Reflect Series C-1 Preferred Stock being issued and outstanding at that time; and

•        shares of Reflect Series D Preferred Stock, with 4,000,000 shares of Reflect Series D Preferred Stock being issued and outstanding at that time.

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

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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.”

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:

•        the Board’s familiarity with and review of information concerning the business, results of operations, financial condition, competitive position and future prospects of Reflect;

•        the current and prospective environment in which Reflect operates, including national economic conditions, the competitive environment for providers of digital signage technology and services;

•        the results that Reflect could expect to obtain if it continued to operate independently, and the likely benefits to stockholders of that course of action, as compared with the value of the Merger Consideration offered by Creative Realities;

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•        the proposed amendment to the Reflect Certificate of Incorporation amending the liquidation preferences of the various series of Reflect preferred stock to accept the Merger Consideration received in the Merger as full satisfaction of such liquidation preferences;

•        that stockholders of Reflect will receive a portion of the Merger Consideration in shares of Creative Realities common stock, which is publicly traded on the Nasdaq Capital Market;

•        the ability of Creative Realities to obtain financing to close the transaction;

•        the ability of Creative Realities to receive the requisite regulatory approvals in a timely manner and to otherwise close the transaction;

•        the terms and conditions of the Merger Agreement, including the parties’ respective representations, warranties, covenants and other agreements, and the conditions to closing;

•        that under the Merger Agreement Reflect could not solicit competing proposals for the acquisition of Reflect;

•        the merger with a larger and more diversified company offering complementary services and products would provide the combined entity opportunities to realize economies of scale, increase efficiencies of operations and enhance the development of new products and services;

•        the perceived perception of the transaction in the marketplace, especially with customers;

•        that some of Reflect’s directors and executive officers have other financial interests in the Merger in addition to their interests as Reflect stockholders, including financial interests that are the result of existing compensation arrangements with Reflect and/or prospective compensation arrangements with Creative Realities and the manner in which such interests would be affected by the Merger;

•        the opportunities for Reflect employees in the combined entity, including leadership positions and compensation;

•        any rights to Reflect stock options will be cashed out and cancelled pursuant to the Reflect stock option plan and pursuant to agreements with the optionees; and

•        the requirement that Reflect conduct its business in the ordinary course and other restrictions on the conduct of Reflect’s business before completion of the Merger, which may delay or prevent Reflect from undertaking business opportunities that may arise before completion of the Merger.

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

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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.

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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.

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:

•        delivering written notice of revocation to Matt Schmitt, President, 2221 Lakeside Blvd #1200, Richardson, Texas 75082;

•        delivering a proxy card bearing a later date than the date of the proxy that such stockholder desires to revoke; or

•        attending the Reflect Meeting and voting in person.

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.

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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.

Q.     Why am I receiving this joint proxy statement/prospectus?

A.     Creative Realities and Reflect propose to enter into a Merger pursuant to the Merger Agreement, dated as of November 12, 2021, as may be amended or supplemented from time to time. A copy of the Merger Agreement is attached to this joint proxy statement/prospectus as Annex A, and you are encouraged to read the Merger Agreement in its entirety. Pursuant to the Merger Agreement, Merger Sub will merge with and into Reflect, with Reflect as the surviving corporation and the wholly-owned subsidiary of Creative Realities.

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.

Q:     What will happen in the Merger?

A:     At the Closing, Merger Sub will be merged with and into Reflect, following which Merger Sub shall cease existence and Reflect shall continue as the surviving entity as Creative Realities’ direct wholly-owned subsidiary. The Merger shall have the effects specified in Delaware Law. As the consideration for the Merger, all the issued and outstanding Reflect Stock will be exchanged for the Merger Consideration.

Q.     Why are Reflect and Creative Realities proposing the Merger?

A.     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 also considered a number of factors, including the following:

•        the Board’s familiarity with and review of information concerning the business, results of operations, financial condition, competitive position and future prospects of Reflect;

•        the current and prospective environment in which Reflect operates, including national economic conditions, the competitive environment for providers of digital signage technology and services;

•        the results that Reflect could expect to obtain if it continued to operate independently, and the likely benefits to stockholders of that course of action, as compared with the value of the Merger Consideration offered by Creative Realities;

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•        the proposed amendment to the Reflect Certificate of Incorporation amending the liquidation preferences of the various series of Reflect preferred stock to accept the Merger Consideration received in the Merger as full satisfaction of such liquidation preferences;

•        that stockholders of Reflect will receive a portion of the Merger Consideration in shares of Creative Realities common stock, which is publicly traded on the Nasdaq Capital Market;

•        the ability of Creative Realities to obtain financing to close the transaction;

•        the ability of Creative Realities to receive the requisite regulatory approvals in a timely manner and to otherwise close the transaction;

•        the terms and conditions of the Merger Agreement, including the parties’ respective representations, warranties, covenants and other agreements, and the conditions to closing;

•        that under the Merger Agreement Reflect could not solicit competing proposals for the acquisition of Reflect;

•        the merger with a larger and more diversified company offering complementary services and products would provide the combined entity opportunities to realize economies of scale, increase efficiencies of operations and enhance the development of new products and services;

•        the perceived perception of the transaction in the marketplace, especially with customers;

•        that some of Reflect’s directors and executive officers have other financial interests in the Merger in addition to their interests as Reflect stockholders, including financial interests that are the result of existing compensation arrangements with Reflect and/or prospective compensation arrangements with Creative Realities and the manner in which such interests would be affected by the Merger;

•        the opportunities for Reflect employees in the combined entity, including leadership positions and compensation;

•        any rights to Reflect stock options will be cashed out and cancelled pursuant to the Reflect stock option plan and pursuant to agreements with the optionees; and

•        the requirement that Reflect conduct its business in the ordinary course and other restrictions on the conduct of Reflect’s business before completion of the Merger, which may delay or prevent Reflect from undertaking business opportunities that may arise before completion of the Merger.

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

•        Attractive Omnichannel Model with Recurring Revenue Base and Multiple Venues for Growth.    Reflect serves its customers through multiple channels. Its content management system generates subscription-based revenues, with a growing customer base and low churn. Its ad technology platform is growing, with an expanding roster of programmatic advertising partners.

•        Potential for key industry partnerships.    The Reflect board of directors and management team includes individuals with relationships that the Board believes allow Creative Realities to strategically create synergistic collaborations and partnerships with other companies in the industry.

•        Brand Recognition.    Reflect is an iconic brand in the digital signage industry with broad reach, engagement and distribution. Reflect’s brand is constantly focused on improving engagement and optimizing monetization by utilizing proprietary advertising technology.

•        Technology.    Reflect has built a best-in-class tech stack platform with the capability to seamlessly deliver content to hundreds of thousands of devices simultaneously at little cost, yielding operating leverage and efficiencies as the company continues to scale.

•        Synergies.    Creative Realities believes that the combined companies will enjoy both revenue synergies (via upsell and cross sell strategies as well as economies of scale) and cost synergies (via redundant personnel and infrastructure)

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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 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.

Q:     What will the business of Creative Realities be like following the Merger, assuming that the Merger is approved?

A:     Assuming the Merger is approved, following the Closing, the combined company’s business will continue the operations of Creative Realities and Reflect. The combined company will integrate the back office operations of the two entities and continue to utilize the content management systems (“CMS”) of each business, including Reflect’s proprietary ad technology. The Creative Realities CMS will primarily drive digital signage applications in the food sector, with the Reflect CMS servicing all other market segments. The combined company will leverage its increased purchasing power and scale to aggressively pursue enterprise customers via a joint sales and marketing structure.

Q.     What will Reflect’s stockholders receive if the Merger occurs?

A.     Pursuant to the Merger Agreement, the shares of Reflect Stock issued and outstanding immediately prior to the Merger will be cancelled in exchange for the right to receive a proportionate amount of (i) $18,666,667 at closing (such amount subject to adjustment as set forth in the Merger Agreement), (ii) 2,333,334 Creative Realities Shares, and (iii) a right to receive the Additional Contingent Merger Consideration.

Q.     After the Merger, what equity stake will current Creative Realities shareholders and current Reflect stockholders hold in Creative Realities?

A.     As a result of the Merger (assuming, among other things, that no Reflect stockholders exercise appraisal rights with respect to their Reflect Stock in connection with consummation of the Merger), adoption of the Retention Bonus Plan, and consummation of the financings prior to the Merger, Creative Realities shareholders as of immediately prior to the Merger are expected to own approximately 81.8% of the outstanding shares of the combined company, and former Reflect stockholders and Reflect employees are expected to own approximately 18.2% of the outstanding shares of the combined company, assuming the issuance of (i) 2,333,334 Creative Realities Shares in the Merger, (ii) an estimated 333,334 Creative Realities Shares issuable under the Retention Bonus Plan (166,667 of which are issuable on the Closing Date and the remainder of which are issuable over a two-year period after the closing of the Merger as described in more detail in the section titled “The Bonus Plan Proposal” beginning on page 100 of the accompanying joint proxy statement/prospectus) and (iii) an estimated 2,249,347 Creative Realities Shares related to the conversion of the existing related party convertible note as part of the Existing Debt Conversion.

Q.     What equity stake will Creative Realities hold in Reflect after the Closing?

A.     From and after the Effective Time, Creative Realities will own 100% of the equity of Reflect.

Q.     What conditions must be satisfied to complete the Merger?

A.     Unless waived by the parties to the Merger Agreement, and subject to applicable law, the consummation of the Merger is subject to a number of conditions set forth in the Merger Agreement including, among others, receipt of the requisite shareholder approvals contemplated by this joint proxy statement/prospectus and the approval of Nasdaq to the listing of the Stock Consideration after the Merger. For a list of the various closing condition, see “The Merger Proposal — Conditions to Consummation of the Merger

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Q.     When do you expect the Merger to be completed?

A.     It is currently expected that the Merger will be consummated on or about January 31, 2022. This date depends, among other things, on the approval of the Creative Realities Proposals to be presented to Creative Realities shareholders at the Creative Realities Meeting and the approval of the Reflect Proposals to be presented to the Reflect stockholders at the Reflect Meeting. However, the Creative Realities Meeting could be adjourned if the Creative Realities Adjournment Proposal is adopted by Creative Realities’ shareholders at the Creative Realities Meeting and Creative Realities elects to adjourn the Creative Realities Meeting to a later date or dates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Creative Realities Meeting, each of the remaining Creative Realities Proposals have not been approved. The Reflect Meeting could be adjourned if the Reflect Adjournment Proposal is adopted by Reflects’ stockholders at the Reflect Meeting and Reflect elects to adjourn the Reflect Meeting to a later date or dates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Reflect Meeting, each of the remaining Reflect Proposals have not been approved. The Merger Agreement provides that the Merger Agreement may be terminated by either party if the Merger has not been consummated by January 31, 2022 (the “Outside Date”); provided that the terminating party is not in material breach of any representation, warranty, covenant, agreement or obligation contained in the Merger Agreement at the time of such termination.

Q.     Will Creative Realities enter into any financing arrangements in connection with the Merger?

A.     Creative Realities intends to raise up to $25 million of capital in one or more debt financings, consisting of up to $10 million of senior secured debt, and up to $15 million of unsecured, convertible debt, together with the possible issuance of warrants to purchase Creative Realities Shares. The convertible debt will be evidenced by the issuance of convertible notes, the terms of which would likely permit the conversion or payment of any principal or accrued interest outstanding under any convertible promissory notes in Creative Realities Shares.

As the terms of such financings are not currently known, Creative Realities cannot provide exact figures as to the amount of dilution that may result to both the Creative Realities public shareholders and the Reflect stockholders from the exercise of any warrants issued, or the conversion or payment of any principal or accrued interest outstanding under any convertible promissory notes issued in such financing. Based on current discussion with Slipstream Funding, LLC, Creative Realities’ lender, all or a portion of the capital to be raised by Creative Realities may be obtained by debt financing by Slipstream, the terms of which may require Creative Realities to convert a portion of Slipstream’s current loan into Creative Realities Shares at a discount to the current market price at the time of closing (the “Existing Debt Conversion”) If Creative Realities enters into a binding commitment in respect of any such financings, Creative Realities will file a Current Report on Form 8-K with the SEC to disclose details of any such financings.

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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.

Q:     Why am I receiving this joint proxy statement?

A:     You are receiving this joint proxy statement/prospectus in connection with the Creative Realities Meeting. Creative Realities is holding the Creative Realities Meeting to consider and vote upon the following proposals. Your vote is important. You are encouraged to vote as soon as possible after carefully reviewing this joint proxy statement/prospectus.

(1)     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. 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.”

(2)     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) Creative Realities shares that may be issued in connection with 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.”

(3)    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.

(4)     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.”

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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.

Q:     When and where is the Creative Realities Meeting?

A:     The Creative Realities Meeting will be held on January 28, 2022 at 9 a.m. Eastern Time, at Creative Realities’ headquarters located at 3050 Magisterial Drive, Suite 102, Louisville, Kentucky 40223.

Q.     How will the insiders vote in connection with the Creative Realities Proposals?

A:     In connection with the execution of the Merger Agreement, certain Creative Realities shareholders who in the aggregate own approximately 44.9% of the outstanding shares of common stock of Creative Realities as of December 27, 2021, executed voting agreements with Creative Realities and Reflect, whereby such shareholders have agreed to vote in favor of, and to adopt and approve, the Creative Realities Proposals, subject to the terms of the voting agreements, and provided a proxy to Creative Realities to vote such Creative Realities shares accordingly.

Q:     How does the Creative Realities Board recommend that Creative Realities shareholders vote?

A:     After careful consideration, the Creative Realities Board recommends that Creative Realities shareholders vote “FOR” each of the Creative Realities Proposals, including the Bonus Plan Proposal, the Share Issuance Proposal, the Advisory Compensation Proposal and the Creative Realities Adjournment Proposal, if presented.

Q:     What happens if I sell my Creative Realities Shares before the Creative Realities Meeting?

A:     The Record Date for the Creative Realities Meeting is earlier than the date that the Merger is expected to be completed. If you transfer your Creative Realities Shares after the Record Date, but before the Creative Realities Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Creative Realities Meeting. If you transfer your Creative Realities Shares prior to the Record Date, you will have no right to vote those shares at the Creative Realities Meeting.

Q:     What vote is required to approve the Creative Realities Proposals presented at the Creative Realities Meeting?

A:     Approval of each Creative Realities Proposal requires the affirmative vote of a majority of the votes which are cast by shareholders present in person or represented by proxy at the Creative Realities Meeting.

In addition, as the date hereof, all of the officers and directors, and certain shareholders of Creative Realities who own approximately 44.9% of the issued and outstanding Creative Realities Shares have agreed to vote for each of the Creative Realities Proposals.

A 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, but if a valid quorum is otherwise established, it will have no effect on the outcome of any vote on the proposals. Abstentions will be counted in connection with the determination of whether a valid quorum is established and Broker non-votes will not be counted for purposes of establishing a quorum.

Q:     How many votes do I have at the Creative Realities Meeting?

A:     Our shareholders are entitled to one vote at the Creative Realities Meeting for each Creative Realities Share held of record at the close of business on December 27, 2021, the Record Date for the Creative Realities Meeting.

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Q:     What constitutes a quorum at the Creative Realities Meeting?

A:     Holders of a majority of the votes of Creative Realities’ issued and outstanding shares as of the Record Date that are entitled to vote on the Creative Realities Proposals at the Creative Realities Meeting, present in person or represented by proxy, constitute a quorum. In the absence of a quorum, the Chairman has the power to adjourn the Creative Realities Meeting.

Q:     What happens if the Advisory Compensation Proposal is not approved?

A:     Approval of the Advisory Compensation Proposal is not a condition to completion of the Merger, and because the vote on the Advisory Compensation Proposal is advisory only, it will not be binding on Creative Realities. Accordingly, if the Bonus Plan Proposal and Share Issuance Proposal are approved and the other conditions to closing are satisfied or waived, the Merger will be completed even if the Advisory Compensation Proposal is not approved. If the Merger is completed, the advisory compensation will be payable to Creative Realities’ executive officers, subject only to the conditions applicable thereto, regardless of the outcome of the vote on the Advisory Compensation Proposal.

Q:     Do I have appraisal rights if I object to any of the Creative Realities Proposals?

A:     No. There are no appraisal rights available to holders of Creative Realities Shares in connection with the Creative Realities Proposals.

Q:     When is the Merger expected to be completed?

A:     It is currently anticipated that the Merger will be consummated promptly following the Creative Realities Meeting, provided that all other conditions to the Closing have been satisfied or waived. For a description of the conditions to the completion of the Merger, see the section entitled “The Merger Proposal — The Merger Agreement — Conditions to Closing of the Merger.

Q:     What do I need to do now?

A:     You are urged to read carefully and consider the information contained in this joint proxy statement, including the annexes, and to consider how the Creative Realities Proposals will affect you as a shareholder. You should then vote as soon as possible in accordance with the instructions provided in this joint proxy statement and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank, or other nominee, on the voting instruction form provided by the broker, bank, or nominee.

Q:     How do I vote?

A:     If you were a holder of record of Creative Realities Shares at the close of business on December 27, 2021, the Record Date for the Creative Realities Meeting, you may vote with respect to the proposals in person at the Creative Realities Meeting, or by completing, signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank, or other nominee, you should contact your broker, bank, or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the Creative Realities Meeting and vote in person, obtain a legal proxy from your broker, bank, or nominee.

Q:     What will happen if I abstain from voting or fail to vote at the Creative Realities Meeting?

A:     At the Creative Realities Meeting, we will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. A failure to vote or an abstention will have the same effect as a vote against each of Creative Realities Proposals.

Q:     What will happen if I sign and return my proxy card without indicating how I wish to vote?

A:     Signed and dated proxies received by us without an indication of how the shareholder intends to vote on a proposal will be voted “FOR” each Creative Realities Proposal.

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Q:     If I am not going to attend the Creative Realities Meeting in person, should I return my proxy card instead?

A:     Yes. Whether you plan to attend the Creative Realities Meeting or not, please read the enclosed joint proxy statement carefully, and vote your Creative Realities Shares by completing, signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided.

Q:     If my Creative Realities Shares are held in “street name,” will my broker, bank, or nominee automatically vote my shares for me?

A:     No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe the proposals presented to the shareholders at the Creative Realities Meeting will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. If you do not provide instructions with your proxy, your bank, broker, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank, broker, or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the purpose of determining the existence of a quorum or for purposes of determining the number of votes cast at the Creative Realities Meeting. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

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

A:     Yes. You may change your vote by sending a later-dated, signed proxy card to our acting secretary or our proxy solicitor so that it is received prior to the Creative Realities Meeting or attend the Creative Realities Meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to our acting secretary or proxy solicitor, which must be received by them prior to the Creative Realities Meeting. You can find address of our acting secretary and proxy solicitor in “Who can help answer my questions?” If your Creative Realities Shares are held of record by a brokerage firm, bank or other nominee, you must instruct your broker, bank or other nominee that you wish to change your vote by following the procedures on the voting instruction form provided to you by the broker, bank or other nominee. If your Creative Realities Shares are held in street name, and you wish to attend the Creative Realities Meeting and vote at such meeting, you must bring to the meeting a legal proxy from the broker, bank or other nominee holding your Creative Realities Shares, confirming your beneficial ownership of the shares and giving you the right to vote your shares.

Q:     What should I do if I receive more than one set of voting materials?

A:     You may receive more than one set of voting materials, including multiple copies of this joint proxy statement and proxy card or voting instruction cards. For example, if you hold Creative Realities Shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date, and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

Q:     Who bears the cost of soliciting proxies?

A:     Creative Realities will bear the cost of soliciting proxies in the accompanying form and will reimburse brokerage firms and others for expenses involved in forwarding proxy materials to beneficial owners or soliciting their execution. In addition to solicitations by mail, Creative Realities, through its directors and officers, may solicit proxies in person, by telephone or by electronic means. Such directors and officers will not receive any special remuneration for these efforts.

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Q:     Who can help answer my questions about the Creative Realities Proposals?

A:     If you have questions about the Creative Realities Proposals or if you need additional copies of the joint proxy statement or the enclosed proxy card, you should contact:

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.

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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.

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

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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.

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.

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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 90 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.

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CREATIVE REALITIES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
As of September 30, 2021
(In thousands)

 

CRI

 

RSI

 

Transaction Accounting Adjustments

 

Notes

 

Pro Forma as Adjusted

ASSETS

 

 

   

 

   

 

 

 

     

 

 

CURRENT ASSETS:

 

 

   

 

   

 

 

 

     

 

 

Cash and cash equivalents

 

$

2,772

 

$

3,886

 

$

(3,886

)

 

(e)

 

$

4,157

   

 

 

 

 

 

1,835

 

 

(a)

 

 

 
   

 

   

 

   

 

(450

)

 

(l)

 

 

 

Accounts receivable, net

 

 

2,591

 

 

2,351

 

 

 

 

     

 

4,942

Unbilled receivables

 

 

180

 

 

 

 

18

 

 

(c)

 

 

198

Accrued revenue

 

 

 

 

18

 

 

(18

)

 

(c)

 

 

Work-in-process and inventories

 

 

1,952

 

 

174

 

 

 

     

 

2,126

Prepaid expenses and other current assets

 

 

1,517

 

 

105

 

 

 

     

 

1,622

TOTAL CURRENT ASSETS

 

 

9,012

 

 

6,534

 

 

(2,501

)

     

 

13,045

   

 

   

 

   

 

 

 

     

 

 

Property and equipment, net

 

 

1,155

 

 

314

 

 

 

     

 

1,469

Capitalized software development costs

 

 

 

 

2,792

 

 

(2,792

)

 

(d)

 

 

Operating right of use assets

 

 

712

 

 

 

 

951

 

 

(f)

 

 

1,663

Intangibles, net

 

 

3,372

 

 

 

 

21,000

 

 

(d)

 

 

24,372

Goodwill

 

 

7,525

 

 

 

 

9,933

 

 

(g)

 

 

17,458

Deferred income tax asset, net

 

 

 

 

3,172

 

 

(3,172

)

 

(j)

 

 

Other assets

 

 

5

 

 

36

 

 

667

 

 

(k)

 

 

708

TOTAL ASSETS

 

$

21,781

 

$

12,848

 

$

24,086

 

     

$

58,715

   

 

   

 

   

 

 

 

     

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

   

 

   

 

 

 

     

 

 

CURRENT LIABILITIES:

 

 

   

 

   

 

 

 

     

 

 

Short-term related party convertible loans payable, net

 

$

1,209

 

$

 

$

(1,209

)

 

(a)

 

$

399

   

 

 

 

 

 

608

 

 

(a)

 

 

 
   

 

 

 

 

 

(1

)

 

(a)

 

 

 
   

 

 

 

 

 

(208

)

 

(a)

 

 

 

Short-term convertible loans payable, net

 

 

 

 

 

 

1,730

 

 

(a)

 

 

891

   

 

 

 

 

 

(247

)

 

(a)

 

 

 
   

 

 

 

 

 

(592

)

 

(a)

 

 

 

Accounts payable

 

 

1,554

 

 

645

 

 

 

     

 

2,199

Accrued expenses

 

 

1,694

 

 

323

 

 

445

 

 

(f)

 

 

2,462

Contract liabilities

 

 

 

 

2,563

 

 

(2,563

)

 

(c)

 

 

Deferred rent and tenant allowance, current portion

 

 

 

 

110

 

 

(110

)

 

(f)

 

 

Note payable, current portion

 

 

 

 

500

 

 

(500

)

 

(e)

 

 

Deferred revenue

 

 

770

 

 

 

 

2,563

 

 

(c)

 

 

3,333

Customer deposits

 

 

368

 

 

 

 

 

     

 

368

Other current liabilities

 

 

283

 

 

 

 

 

     

 

283

TOTAL CURRENT LIABILITIES

 

 

5,878

 

 

4,141

 

 

(84

)

     

 

9,935