Good morning. This is Will Logan, Chief Financial Officer of Creative Realities, Inc. Welcome to the CRI’s Year-End 2021 Financial Results and Earnings Call. All lines have been placed on mute to prevent any background noise. The Company has prepared remarks, summarizing the 2021 results along with additional industry and company updates. The company's prepared remarks will include a brief presentation of company materials, which can be viewed through the webinar by logging into joinwebinar.com and entering the meeting ID 618107963. Following the company's prepared remarks, there will be a live question-and-answer session. If you would like to ask a question during that time, please hit the raise hand button. Alternatively, questions can be submitted during the call via email to ir@cri.com. This call including the presented materials will be recorded and a copy will be available on our website at cri.com following the completion of the call. Joining me on the call today is Rick Mills, CEO of CRI. I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. The words anticipated, believes, expects, intends, plans, estimates, projects, should, may, propose and similar expressions or the negative versions of such words or expression as they relate to us or our management are intended to identify forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in our annual report on Form 10-K filed with the SEC on March 22, 2022. Any forward-looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events. During this call, we may present both, GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our public filings. It is now my pleasure to introduce Rick Mills, CEO of Creative Realities, Inc.

Thanks, Will. Good morning, everybody. I want to take a little moment to go and discuss what we do in a little more detail. We have some new investors, new shareholders. And so I'd like to literally spend some time on that. First, you look at the company information here and all the different things that we do in digital signage. Digital signage typically includes the display technologies and those type of things. We sell and install those devices and services. We own several proprietary digital signage software platforms, which generate significant SaaS revenue. One question we often get is where do you see our work? Well, frankly, it's all around you. We serve market-leading companies. So there's a good chance if you leave your home today, to shop, work, eat, play. You will encounter one or more of our digital signage experiences. Our work is in automotive dealerships, theme parks, the lobby of your doctor's office, retailers, movie theater lobbies, convenience stores, restaurants, including quick-serve drive-throughs, et cetera. Sources of revenue, we really have four core buckets of revenueOne, the first and most important bucket is recurring services. These are sticky, long-term contractual agreements, we provide -- which provide subscription licensing and our support services for our digital signage software platforms. And all that is sold through a SaaS model, Software as a Service. Second bucket is services. That's really assisting our customers in the hardware design and engineering of their solution to fit their space. The actual hardware installation, content development, content scheduling. And the last and not least is, post-deployment network and field support, what we commonly refer to as day two services. Third bucket we -- of revenue is media sales, as part of the merger with Reflect. We acquired a media sales business. And that's…

Thanks, Rick. We've put a few quarterly highlights on the page. I just picked a few to talk about, and then we'll go through some of the financial performance. We had a couple of debt activities in the period receiving forgiveness for our PPP loan and the elimination of a seller note. We had an announcement in 2Q about the win of a C-store customer, which we converted through the balance of 2Q and added up to 7,000 incremental displays onto our network in the current year. In the third quarter, we performed an installation project, which we hope expands in 2022 by rolling out 1,300 C-store locations on behalf of a large tobacco chain in a period of only eight weeks. And we think that speaks to the size and scale of what we can accomplish and deliver in the market as a single vendor sole source provider. In the fourth quarter, we announced the three-year renewal of an OEM automotive contract, which increased the annual SaaS revenue by 300% versus the prior contract. We obviously announced the merger with Reflect that has closed in February of 2022 and gone ahead and entered our first sales activity, which reflected -- that resulted in a win that frankly, we've talked about neither company likely would have won that on our own. It was the combined performance and the full services offering that managed to deliver and land that customer. Turning to the balance sheet. We've compared 2020 to 2021 here. And I just wanted to provide a couple of highlights. First, we've got a net working capital improvement year-over-year of about $3.2 million, driven by a few things. We've reduced our inventory balances by $0.5 million year-over-year. We'll continue to expect those to reduce throughout 2022. During the period, we…

Thanks Will. 2022, let's start with the Reflect merger. What we gained? Well, we gained some customers. These are great customers, they're enterprise customers, they were generating revenue of -- or SaaS revenue of $7 million approximately. We gained some great technology, ReflectView, world-class -- world-class, digital signage management system. AdLogic, patented world-class ad serving capability that is today delivering 50 million ads per day. So, you look at that and wow, what a great fit. What -- then the synergies, okay, are all there. So, there's enhanced revenue opportunities. So those come into play. Long-term value creation of the company and think about, number one, it prevents the downside realities of in action. We are one of the leaders in the industry due to the acquisitions we've done. And so we continue to keep pace or we're actually ahead of the rest of the industry in growth and in size due to our consolidation assets. And we've got some great marketing capability in some new markets, but I got to tell you, the real win here is the talent. The real win is the talent. The folks at Reflect add tremendous depth and breadth to our talent pool inside the company. And as you all know, what separates winners from losers, people. We go back to the 4Ws, why we will win people. And so we're really glad and there's probably some -- by the way, some Reflect people on this call, some employees today, and I want to take a moment and welcome all the Reflect folks who are on this call who have joined our company. Thank you for joining. Thank you for your contribution, and welcome to our combined company. Now let's talk about the real revenue. Our pro forma 2021 revenue coming out of COVID,…

Great. We've got several questions that have come in via the IR inbox that will run through Rick, and then we'll open the phone lines in order to respond to any questions that we may have on the call.

So the first question, I received was how is the integration going of the two companies. So I'll take that one, Rick, and then you can chime-in if you have any additional. So always some bumps and bruises with integration, but overall, I would report integration has gone spectacularly thus far. We're only about 30 days in, but members from both organizations are clearly aligned on our business model, how to streamline it for further efficiencies and how to grow. We truly approach this transaction with reflect from a merger mentality. We learned throughout the diligence phase the reflect as a company has some incredible processes, people and fundamental talent to fill gaps in our organization and vice versa. Our focus through the integration has been to identify the best of each company adopts and modify. We're well down the path with respect to integrating operations, procurement, warehouse, fulfillment, order entry, project management. We're in process on evaluating the combined company branding and marketing approach, including our go-to-market strategy and pricing structures. We are seeing strong responses from existing customers on the cross-sell opportunities and our single-vendor approach for enterprise customers. There will be continuing step changes, but we currently expect to have completed the bulk of the planned integration activities no longer -- no later than probably the end of the third quarter 2022. And when fully implemented, we targeted about $2 million in cost synergies between the companies. Many of those won't be fully recognized in the statement of operations this year until 2023, as we kind of close out that integration process. Okay. Rick anything to add there?

No.

Okay. Great. Next question that we got was, Rick, could you give an update, what are the other areas within your industry and your company where an acquisition might strengthen your expertise or product offering to potential customers?

We continue to look for what we call edge activity. Those are things that happen at the edge of the network. It might be analytics. It might be camera work. It might be some of that type of thing. So those are where we look to add those incremental services. But at the end of the day, we're all about customer acquisition by doing -- by acquiring a competitor, we want to acquire their customers, cross-sell them are rich depth of current services and put them on our platforms to achieve greater scale and lower cost.

Perfect. Thanks, Rick. Okay. One year, are companies using COVID relief monies to invest in the digital marketing industry. So, I'll take that one. We have experienced some utilization of COVID relief monies for investments in digital transformation. I'd say most of those funds were utilized in 2020 and early 2021. What we are seeing now, which is really a reflection of the COVID pandemic is the recognition by clients of the value of digital transformation. So, our conversion time line for onboarding a new client and deploying has really shortened. We used to talk about an 18-month cycle. That's really shrunk down. And we're seeing increases in corporate budgets for the use in digital projects really across the board and across our vertical markets. Next question received. Rick, I'll ask you to provide an update here. Where is the large contract that we've discussed in the past stand today?

That contract has been on hold as we have transitioned through the pandemic. We hope to be able to give news over the next two quarters on that contract beginning. It currently has not, but it is soon scheduled, but it's been delayed several times in the past and we look forward to giving news on that in the next two quarters.

Would you say there has been any movement, Rick, in that discussion with the customer or client?

Yes, ongoing movement. They are at the absolute finish line. We have rebegun weekly conference calls actively discussing the launch markets, et cetera. So, yes, lots of activity, nothing to make an announcement about at this time.

And just to clarify for folks on the call, Rick, as far as the revenue projections for 2022 that we've provided, does this contract influence those projections? How is it incorporated or not?

It is currently not contemplated in our 2022 numbers. If we were to ultimately execute that. And the plan is or remains to roll that out, we would expect to give an update in guidance in the future quarters.

Great. Thanks. We got a question here that says, what's the projected stock price of the company once the meaningful mergers and acquisitions are completed? I'll take that. I think based on our internal valuation models, we certainly have an expectation for the stock, probably not something that we're ready to share publicly. What I will say is that we recognize that there's a dislocation in the markets and that we, as a management team, have some work to do and surfacing the value of our company. We've got a strategy in place to surface that value. We'll be launching and engaging an IR firm in the next 30 days. We're executing on our operational plan to deliver at or above budget, and we're continuously evaluating the capital structure for potential efficiencies. So, I would say, based on the ARR of the company at the current market multiples, it implies we're trading well below the intrinsic value of the company, probably by a factor of multiples.

I might add many multiples.

Fair enough. So, those were the written questions. We'll turn to the phone line here. Are there any additional questions? It does not appear that anyone has raised their hand at this time.

Let me conclude the call by thanking all of our shareholders, clients, partners, and employees for their continuing efforts, commitment, and support as we work together to transform CRI into the leading brand in digital signage solutions. This concludes the CRI 2021 earnings call.