SCHEDULE: Creative Realities Secures $30M, Acquires CDM

Creative Realities, Inc. received a $30 million investment from North Run Capital affiliates and acquired DDC Group International, Inc. for CAD$70 million, strengthening its market position.

Summary

• Creative Realities, Inc. completed a private placement (PIPE Transaction) on November 6, 2025, raising $30.0 million through the sale of 30,000 shares of Series A Convertible Preferred Stock.
• North Run Strategic Opportunities Fund I, LP (NR-SOF) invested $25.0 million for 25,000 shares, and NR-SOF I (Co-Invest I), LP (NR Co-Invest) invested $5.0 million for 5,000 shares.
• The Series A Preferred Stock accrues dividends at 5.25% per year on a Stated Value of $1,000 per share and is convertible into common stock at an initial conversion price of $3.00 per share.
• Conversion of the Series A Preferred Stock is subject to a 19.99% beneficial ownership limitation and an Exchange Cap of 2,102,734 shares, both of which may be increased or removed with shareholder approval.
• A portion of the PIPE proceeds funded the acquisition of DDC Group International, Inc. (CDM) from Cineplex Entertainment Limited Partnership for CAD$70,000,000, which closed immediately after the PIPE transaction.
• North Run Capital designees, Thomas B. Ellis and Michael Bosco, were appointed to the Issuer's Board of Directors, and the Board size will not exceed seven members.
• The Issuer entered into a registration rights agreement, committing to file a shelf registration statement for the resale of common shares issuable upon conversion of the Series A Preferred.

Sentiment

Score: 7

Explanation: The company successfully raised $30 million and completed a strategic acquisition, which are positive developments for growth. The investment terms include a fixed dividend and board representation for the investor, indicating a structured and supportive capital infusion. However, the conversion limitations and the need for shareholder approval for full flexibility introduce some minor complexities.

Positives

• Secured $30.0 million in new capital, providing significant funding for strategic initiatives and strengthening the balance sheet.
• Acquired DDC Group International, Inc. (CDM), indicating strategic growth and potential market expansion in its industry.
• The Series A Preferred Stock offers a fixed dividend rate of 5.25% per year, providing a predictable return for the institutional investors.
• New board representation from a significant investor (North Run Capital) could bring valuable oversight and strategic guidance to the company.

Negatives

• The conversion of Series A Preferred Stock is subject to a 19.99% beneficial ownership limitation and an Exchange Cap, which requires shareholder approval to increase or remove, potentially limiting immediate liquidity or control for the preferred shareholders.
• The acquisition of CDM for CAD$70,000,000, while strategic, represents a substantial outlay of capital, and its successful integration and performance will be critical for value creation.
• A standstill provision limits NR-SOF's ability to initiate certain corporate actions for two years, potentially restricting activist investor influence or rapid strategic shifts.

Risks

• Failure to obtain shareholder approval for increasing the beneficial ownership limitation or removing the Exchange Cap could restrict the full conversion of Series A Preferred Stock into common shares, impacting investor flexibility.
• Integration risks associated with the acquisition of DDC Group International, Inc. (CDM), including potential operational disruptions, cultural clashes, or failure to realize anticipated synergies and financial benefits.
• Market and general economic conditions could impact the Issuer's business, operations, assets, financial condition, and prospects, affecting the value of the investment.
• The Series A Preferred Stock is subject to automatic redemption for cash upon a fundamental transaction, which could alter the investment's expected duration or return profile for preferred shareholders.

Future Outlook

The Reporting Persons will continue to monitor and evaluate their investment in Creative Realities, Inc. and may engage in discussions with management and the board regarding the company's business, operations, and future plans. Future actions could include acquiring or disposing of securities, or proposing changes to capitalization, ownership structure, operations, or board representation. The Issuer intends to hold a shareholder meeting to approve the issuance of shares in excess of the Exchange Cap and to increase the maximum beneficial ownership limitation to 49.99%.

Management Comments

• "The Reporting Persons will monitor and evaluate their investment in the Issuer on a continuing basis and may engage in discussions with management, the board of directors of the Issuer and other shareholders of the Issuer concerning the business, operations and future plans of the Issuer."
• "Depending on various factors... the Reporting Persons may take such actions with respect to this investment as they deem appropriate including... acquiring Shares or other securities... making proposals to the Issuer regarding changes... or disposing of some or all of the securities."
• "The Board of Directors of the Issuer will recommend the nomination of and recommend the shareholders of the Company vote in favor of re-electing two designees of NR-SOF (currently Thomas B. Ellis and Michael Bosco) to the Board."
• "Company will not take any action to increase the size of the Board to more than seven (7) members."

Industry Context

This filing indicates Creative Realities, Inc. is actively pursuing growth through strategic acquisitions and securing capital from institutional investors. The acquisition of CDM suggests a move to expand its market presence or capabilities, potentially in the digital signage or experiential marketing industry, where Creative Realities operates. The investment from North Run Capital, a strategic opportunities fund, signals confidence in the company's long-term potential and provides the necessary capital for expansion, aligning with a trend of consolidation and strategic investment in specialized technology sectors.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• NA

Related Party Transactions

• The PIPE Transaction involves NR-SOF and NR Co-Invest, which are related parties to the reporting persons (NR GP, Thomas B. Ellis, Todd B. Hammer).
• The appointment of Thomas B. Ellis and Michael Bosco, NR-SOF designees, to the Board of Directors constitutes a related party transaction due to their affiliation with the investing entities.

Stakeholder Impact

• Shareholders: Potential dilution from future conversion of Series A Preferred Stock, but also benefit from the capital infusion and strategic acquisition. Increased governance oversight with new board members.
• Employees: The acquisition of CDM could lead to integration efforts, potentially impacting employees of both Creative Realities and CDM through restructuring or new opportunities.
• Customers: The acquisition of CDM could expand product/service offerings or geographic reach, potentially benefiting customers with a broader range of solutions.
• Creditors: The capital raise strengthens the company's financial position, potentially reducing credit risk and improving its ability to meet financial obligations.

Next Steps

• Creative Realities, Inc. will hold a meeting of its shareholders to approve the issuance of common shares upon conversion of the Series A Preferred in excess of the Exchange Cap.
• Shareholder approval is also sought to permit an increase in the maximum Beneficial Ownership Limitation percentage to 49.99%.
• The Issuer is required to file a shelf registration statement to register for resale the common shares issuable upon conversion of the Series A Preferred.
• The Reporting Persons will continue to monitor their investment and may engage in further discussions or actions regarding the Issuer's business and governance.

Key Dates

Recommendation

The capital raise and strategic acquisition are positive for Creative Realities, providing growth opportunities and financial stability. However, the limitations on preferred stock conversion and the need for shareholder approval introduce some uncertainty. The standstill agreement also limits immediate activist potential. Investors should hold to observe the integration of CDM and the outcome of the shareholder vote regarding the preferred stock terms before making further investment decisions. The 5.25% dividend on preferred stock is attractive, but the common stock's performance will depend on successful execution of the growth strategy.

Keywords

Creative Realities, CREX, North Run Capital, PIPE Transaction, Series A Preferred Stock, Convertible Preferred Stock, DDC Group International, CDM acquisition, private placement, corporate governance, board appointment, shareholder approval, SEC filing, Schedule 13D, investment, capital raise