Creative Realities Back In Red, But Sales Up In Big Way

November 15, 2017 by Dave Haynes

After a positive stretch, the first in years for the blended entities, Creative Realities is back well into the red ink zone, based on new SEC filings.

We have incurred net losses and negative cash flows from operating activities for the years ended December 31, 2016 and 2015. For the three months ended September 30, 2017 and 2016 we incurred net losses from operations of $(3,587,000) and $(2,344,000), respectively.

For the nine months ended September 30, 2017 and 2016 we incurred net losses from operations of $(4,486,000) and $(4,735,000) respectively.

As of September 30, 2017, we had cash and cash equivalents of $4,585 and a working capital deficit of $(8,430,000). In November 2017, we received notification from Slipstream Communications, LLC, a related party, of their intent to extend the maturity date of our term loan to August 17, 2019 and to extend the maturity date of our promissory notes on a rolling quarter addition basis which is now January 15, 2019.

Management believes that due to the expected extension of these debt maturity dates, our current cash balance and our operational forecast and liquidity projection for 2017 and 2018, we can continue to meet our obligations and operate as a going concern through at least the next twelve months.

On the positive side, sales increased by $5,390,000 or 66% for the nine-month period ending September 30, 2017 compared to the same period in 2016.

In an investor call, Mills said the slip to negative is an accounting thing …

We started the year with less than a $3 million backlog at the beginning of 2017. Where we’re headed in 2018 from a revenue perspective, if you take our run rate for 2017, which will be $18 million and then understand the fact that we have $12 million of the $18 million, which is effectively two-thirds of that already committed in orders today.

As we look at the big picture 2016 revenue was $13.5 million when we lost money because the businesses were coming together. 2017 the revenue is $18 million for the year and we lost a much smaller sum, which by the way we would have been breakeven on an EBITDA basis had we have been able to recognized the additional $8 million that slipped into 2018. 2018 we will exceed $28 million in revenue and we will be profitable on a GAAP basis. It’s an exciting time for CRI and I remain extremely bullish and confident on the direction we are headed the team that we’ve built.

Here’s a podcast with the company’s CEO Rick Mills from earlier this year, who talks about turnaround plans …