Business Context and Reporting Period
Company: Creative Realities, Inc. (CREX)
Filing Type: Form 8-K (Current Report)
Date of Report: June 19, 2020
Reporting Period: Specific event date (June 19, 2020); not a periodic financial report.
Key Financial Metrics
This filing does not contain audited financial statements, revenue, profit, cash flow, or balance sheet data. The only financial metric disclosed is the potential capital raise amount:
- Proposed Offering Size: Up to $8,000,000 in aggregate offering price of common stock.
- Sales Agent Commission: 3.0% of gross sales proceeds.
Material Changes and Agreements
The filing discloses two material definitive agreements entered into on June 19, 2020:
1. Master Distribution Agreement with InReality, LLC
- Role: Creative Realities becomes the exclusive master distributor of InReality's "ThermalMirror" product in the United States and Canada.
- Term: Initial 12-month term with automatic renewal for successive 12-month periods unless terminated.
- Obligations: The Company must meet minimum purchase requirements starting October 1, 2020, to maintain exclusivity.
- Revenue Model: The Company purchases products at volume-based prices and sells to distributors/resellers. Revenues from software-as-a-service (SaaS) activations and subscriptions are split between the Company and InReality.
- Services: The Company handles installation, basic repairs, and helpdesk; InReality provides escalated technical support.
2. Sales Agreement with Roth Capital Partners, LLC
- Structure: An "at-the-market" offering allowing the Company to sell up to $8,000,000 of common stock through Roth Capital Partners as the sales agent.
- Discretion: The Company is not obligated to sell any shares and may suspend the offering at its discretion.
- Termination: The agreement ends upon the sale of all shares or earlier termination.
Guidance, Outlook, and Risks
Outlook: The Company intends to develop marketing campaigns to promote ThermalMirror sales and may establish distributor and referral programs. The sales agreement provides flexibility to raise capital based on market conditions.
Risks and Contingencies:
- Performance Risk: Failure to meet minimum purchase requirements under the InReality agreement could result in loss of exclusive distributor status.
- Dilution Risk: The sale of up to $8,000,000 in common stock will dilute existing shareholders.
- Market Risk: The Company may choose not to sell any shares under the Roth agreement if market conditions are unfavorable.
Investor Verification Checklist
- Verify the specific minimum purchase requirements for the ThermalMirror product starting October 1, 2020, as detailed in Exhibit 10.1.
- Review the full text of the Sales Agreement (Exhibit 1.1) to understand specific price, time, or size limits the Company may impose on Roth Capital Partners.
- Confirm the current status of the Company's shelf registration statement (Form S-3, File No. 333-238275) to ensure the offering is active.
- Assess the Company's current cash position to determine if the $8,000,000 offering is necessary for immediate liquidity or strategic expansion.