CRI Paid $16M Cash Plus 2.3M Shares For Reflect Acquisition

March 23, 2022 by Dave Haynes

There have been numerous acquisitions and mergers in the past few years involving companies active in digital signage, and in almost every case, I have ended up writing something like “terms of the deal were not disclosed.”

But publicly traded companies are required to lay out deal terms in filings, at least in the U.S., which is why I can report that Creative Realities, aka CRI, bought Reflect for just over $16 million in cash, as well as issuing shares, notes and something akin to performance bonuses.

The deal between the solutions provider and the Dallas-based CMS software firm was cut last year and was closed about five weeks ago.

Specifically, filings spell out:

• On February 17, 2022, the Company and Reflect consummated a merger, pursuant to which Reflect stockholders collectively received from the Company the following merger consideration:
  • $16.2 million payable in cash; and
  • 2,333,334 shares of common stock of Creative Realities (valued based on an issuance price of $2 per share) (the “CREX Shares”);
  • $2.5 million Secured Promissory Note; and
  • Supplemental cash payments (the “Guaranteed Consideration”), if any, payable on or after the three-year anniversary of the effective time of the Merger (the “Guarantee Date”), in an amount by which the value of the CREX Shares on such anniversary is less than $6.40 per share, or if certain customers of Reflect collectively achieve over 85,000 billable devices online at any time on or before December 31, 2022, is less than $7.20 per share, multiplied by the amount of CREX Shares held by the Reflect stockholders on the Guarantee Date.

I go cross-eyed reading and trying to decode company financials, and can only interpret that 2021 was way better for CRI than 2020, when the pandemic hit and CRI’s primary vertical market – retail – was closed down or constrained.

The CRI PR on its financials says:

• Operating loss was $2.5 million for the year ended December 31, 2021 as compared to an operating loss of $16.1 million during the same period in 2020. The current year operating loss included $0.5 million in costs associated with pursuit of acquisition activities, including the Reflect transaction.
• Net income was $0.2 million for the year ended December 31, 2021 as compared to net loss of $16.8 million for the same period in 2020.
• EBITDA was $3.9 million for the year ended December 31, 2021 as compared to an EBITDA loss of $13.9 million for the same period in 2020. Adjusted EBITDA was $1.2 million in 2021 as compared to an Adjusted EBITDA loss of $3.2 million in 2020. See below for a description of these non-GAAP financial measures and reconciliation to our net loss.