SCHEDULE: Creative Realities CEO Backs Preferred Share Issuance

Creative Realities, Inc. CEO Richard Mills has entered into a voting agreement to support the issuance of Series A Convertible Preferred Stock in connection with a $30.0 million private placement.

Summary

• Richard Mills, CEO of Creative Realities, Inc., entered into a Voting Agreement on October 15, 2025, with the Company.
• The agreement commits him to irrevocably vote his shares in favor of shareholder approval for the issuance of Conversion Shares related to a Securities Purchase Agreement.
• The Securities Purchase Agreement involves a private placement of 30,000 shares of Series A Convertible Preferred Stock for an aggregate gross purchase price of $30.0 million.
• The Preferred Shares are convertible into Common Stock, subject to a 19.99% 'Beneficial Ownership Limitation' and an 'Exchange Cap' limitation.
• Shareholder approval is required to issue Conversion Shares exceeding the Exchange Cap and to increase the Beneficial Ownership Limitation to 49.99%.
• The company anticipates closing the Offering concurrently with its pending acquisition of DDC Group International, Inc.
• Richard Mills beneficially owns 1,435,260 shares, representing 12.8% of the class, which includes 302,601 direct shares, 450,000 RSUs, 653,334 vested options, and 29,325 shares owned by RFK Communications, LLC.

Sentiment

Score: 7

Explanation: The filing outlines a strategic capital raise and an acquisition, supported by the CEO's voting agreement. While there's potential for dilution, the capital infusion and growth strategy are generally positive. The need for shareholder approval introduces a minor contingency.

Positives

• The private placement of $30.0 million in preferred shares indicates a significant capital inflow for the company.
• The CEO's commitment to vote in favor of the necessary approvals suggests strong internal support for the transaction and strategic direction.
• The capital raise is linked to a pending acquisition of DDC Group International, Inc., which could be a strategic growth move for the company.

Negatives

• The need for shareholder approval for conversion shares exceeding the Exchange Cap and increasing the Beneficial Ownership Limitation suggests potential dilution for existing common shareholders if approved.
• The conversion of preferred shares into common stock could increase the total number of outstanding shares, potentially impacting earnings per share.

Risks

• Failure to obtain shareholder approval for the issuance of Conversion Shares in excess of the Exchange Cap limitation and to increase the maximum Beneficial Ownership Limitation percentage to 49.99% could hinder the full execution of the private placement terms.
• The closing of the Offering is subject to the satisfaction of closing conditions and is anticipated to be concurrent with the pending acquisition of DDC Group International, Inc., implying a risk if the acquisition does not close.
• Potential dilution for existing common shareholders if the preferred shares convert into common stock and exceed current limitations.

Future Outlook

The company anticipates closing the $30.0 million private placement of preferred shares concurrently with the closing of its pending acquisition of DDC Group International, Inc. A shareholder meeting will be called not later than 90 days after the offering's closing to approve the issuance of additional conversion shares and an increased beneficial ownership limitation.

Management Comments

• Richard Mills, CEO of Creative Realities, Inc., has entered into a Voting Agreement to support the necessary shareholder approvals for the private placement.

Industry Context

This filing indicates a strategic move by Creative Realities, Inc. to raise capital through a private placement of convertible preferred stock, likely to fund an acquisition (DDC Group International, Inc.). This is a common strategy for growth-oriented companies seeking to expand market share or capabilities, especially in the digital signage or experiential technology sector where Creative Realities operates. The use of convertible preferred stock allows for capital infusion while potentially deferring common stock dilution until conversion.

Corporate Governance

Related Party Transactions

• Richard Mills, CEO of Creative Realities, Inc., is the Shareholder entering into the Voting Agreement with the Company. He beneficially owns 1,435,260 shares (12.8%) of the company's common stock.

Stakeholder Impact

• Shareholders: Potential for dilution if preferred shares convert to common stock, but also potential for growth from the acquisition funded by the capital raise. The CEO's voting commitment provides clarity on management's stance.
• Creditors/Investors (Buyers of Preferred Shares): Will receive preferred shares with conversion rights, providing a structured investment opportunity.
• Employees: Potential for expanded opportunities if the acquisition of DDC Group International, Inc. is successful.

Next Steps

• Closing of the private placement Offering, anticipated concurrently with the acquisition of DDC Group International, Inc.
• Calling and holding an annual or special meeting of shareholders not later than 90 days after the closing of the Offering to approve the issuance of Conversion Shares in excess of the Exchange Cap and to increase the maximum Beneficial Ownership Limitation percentage to 49.99%.
• Filing of a Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock with the Minnesota Secretary of State prior to the closing of the Offering.

Key Dates

Recommendation

The company is undertaking a significant capital raise of $30.0 million via convertible preferred stock to fund a pending acquisition. This is a strategic growth initiative that could be beneficial long-term. The CEO's commitment to vote in favor of the necessary shareholder approvals signals strong internal support. However, the conversion of preferred shares could lead to dilution for existing common shareholders, and the success of the overall strategy hinges on the completion of the acquisition and the subsequent shareholder vote. Given these factors, a 'hold' recommendation is appropriate as investors await further clarity on the acquisition's closing and the shareholder approval outcome, balancing growth potential against dilution risks.

Keywords

Creative Realities, Voting Agreement, Securities Purchase Agreement, Preferred Stock, Private Placement, Capital Raise, Shareholder Approval, Richard Mills, DDC Group International, Acquisition, Convertible Preferred Stock, SEC Filing, Schedule 13D