CREATIVE REALITIES, INC. Debt Disclosure

NOTE 11: DEBT

 

Debt consisted of the following:

 

	Issuance		Maturity		December 31,				December 31,				Interest
	Date		Date		2025				2024				Rate
Prior Credit Agreement:
Revolving Credit Facility	5/23/2024		5/23/2027		$	-			$	13,044			See below
Amended and Restated Credit Agreement:
New Revolving Credit Facility	11/6/2025		11/6/2028			4,940				-			See below
Term Loan Facility	11/6/2025		11/6/2028			35,700				-			See below
Promissory Note	3/14/2025		9/14/2027			3,810				-				14%
Total debt						44,450				13,044
Less: debt issuance costs						497				-
Total debt, net						43,953				13,044
Less: current portion of debt, net						4,430				-
Total non-current portion of debt, net					$	39,523			$	13,044

 

Deferred financing costs related to the New Revolving Credit Facility and Revolving Credit Facility of $435 and $243 as of December 31, 2025 and 2024, respectively, are included in other non-current assets on the consolidated balance sheets.

 

Prior Credit Agreement

 

On May 23, 2024, the Company entered into a secured credit agreement (the “Prior Credit Agreement”) with First Merchants Bank (“FMB”) which provided the Company with a three-year secured revolving credit facility of up to $22,100 (the “Revolving Credit Facility”), with an uncommitted accordion feature that provided for additional borrowing capacity of up to $5,000, subject to FMB’s approval and other customary terms and conditions set forth in the Prior Credit Agreement. The Revolving Credit Facility has a maturity date of May 23, 2027, and the Company is required to pay the entire unpaid principal balance of the Revolving Credit Facility on the maturity date, subject to any earlier default under the Prior Credit Agreement. The facility bore a floating interest rate tied to the secured overnight financing rate (“Term SOFR”) as administered by the New York Federal Reserve Board (“NYFRB”) plus applicable margins. The Prior Credit Agreement was secured by substantially all assets of the Company; subject to a borrowing base formula based on eligible accounts and inventory; and contained certain financial covenants including an accelerated repayment of all unpaid principal and interest due on demand upon an event of default.

 

The Company incurred $306 of deferred financing costs in connection with the Revolving Credit Facility that were capitalized and recorded as other non-current assets within the Company’s consolidated balance sheet as of December 31, 2024. Deferred financing costs were amortized as interest expense on a straight-line basis over the term of the Revolving Credit Facility.

 

On May 12, 2025, the Company entered into an amendment to the Prior Credit Agreement to modify the financial covenant related to the Senior Funded Debt to EBITDA ratio, effective March 31, 2025. Pursuant to the amendment, the Company was required to maintain a Senior Funded Debt to EBITDA ratio of less than 4-to-1 through June 30, 2025, and less than 3.75-to-1 beginning in the quarter ending September 30, 2025 and thereafter.

 

On July 24, 2025, the Company entered into a second amendment to the Prior Credit Agreement to amend the borrowing base used to determine the availability of the Company’s revolving line of credit under the Prior Credit Agreement, effective June 30, 2025. The borrowing base (“Borrowing Base Margin”) was a percentage based on the difference between (a) the sum of the net orderly liquidation value of certain contracts of the Company eligible for inclusion; and (b) reserves required by FMB, in each case as determined in accordance with the Prior Credit Agreement. The amendment provided that the Borrowing Base Margin equal (i) 95% from June 30, 2025 through September 29, 2025, (ii) 90% from September 30, 2025 through October 30, 2025, and (iii) 85% on and after October 31, 2025.

 

During the years ended December 31, 2025 and 2024, the Company recorded amortization of deferred financing costs on the Revolving Credit Facility of $61 and $63, respectively, in the Company’s consolidated statements of operations.

 

Amended and Restated Credit Agreement

 

On November 6, 2025 (the “Refinancing Date”), the Company and certain of its subsidiaries entered into the Amended and Restated Credit Agreement (the “Amended Credit Agreement”), with FMB acting as agent (“Agent”), and a new syndicate of lenders (“Lenders”) which included FMB and two additional creditors, Northwest Bank (“NWB”) and Axos Bank (“Axos”; together with NWB, the “New Lenders”). In the ordinary course of its business, Agent has performed and may continue to perform commercial banking and financial services for the Company for which it has received and will continue to receive customary fees and expenses. The Amended Credit Agreement provides the Company, CDMI and CDMUS (collectively, “Borrowers”) with two debt facilities, including a three-year term loan of $36,000 (the “Term Loan”) and a three-year revolving debt arrangement of up to $22,500 (the “New Revolving Credit Facility”). The Term Loan and New Revolving Credit Facility in the Amended Credit Agreement both have maturity dates of November 6, 2028 (the “Maturity Date”) and are secured by all the assets of the Borrowers.

 

The Borrowers are required to pay monthly principal payment installments on the Term Loan equal to $300 on the first day of each successive calendar month following the Refinancing Date, which commenced on December 1, 2025 to the Agent; provided, however, that the last installment shall be due and payable on the Maturity Date (if not paid earlier) and shall be in an amount sufficient to pay in full the entire unpaid principal amount of the Term Loan (the “Final Term Loan Payment”). In accordance with the Amended Credit Agreement, any voluntary pre-payments of the Term Loan will be applied to the Final Term Loan Payment. Additionally, monthly interest payments for both facilities of the Amended Credit Agreement are due and payable on the first day of each successive calendar month following the Refinancing Date, which commenced on December 1, 2025, at a rate equal to the sums of (a) the one-month Term SOFR, (b) base rate of 0.11%; and (c) a floating margin ranging between (i) 2.75% to 3.25% for the New Revolving Credit Facility, or (ii) 3.00% to 3.50% for the Term Loan, in each case adjusted quarterly based upon the Company’s Senior Funded Debt to EBITDA Ratio (as defined in the Amended Credit Agreement). The floating margin is computed as follows:

 

				Margin
		Senior		Applicable
		Debt to		to				Margin
Pricing		Adjusted		Revolving				Applicable
Grid		EBITDA		Credit				to the
Level		Ratio		Advances				Term Loan
I		< 2.50x			2.75%				3.00%
II		> 2.50x			3.25%				3.50%

 

The Amended Credit Agreement also includes a letter of credit sub-facility under which the Lenders may issue commercial or standby letters of credit that reduce the availability under the New Revolving Credit Facility and for which the Borrowers pay a fee equal to the applicable margin on the stated amount of each letter of credit, and a swing line sub-facility that permits short-term advances by FMB, as swing line lender, which are subsequently settled among the loan syndicate as revolving credit advances. All outstanding amounts under the letter of credit sub-facility and swing-line facility are due and payable in full on the Maturity Date or earlier upon an event of default or voluntary termination of commitments.

 

Further, the Amended Credit Agreement requires Borrowers to comply with certain financial covenants on a quarterly basis related to the Fixed Charge Coverage Ratio and Senior Funded Debt to EBITDA Ratio (each as defined in the Amended Credit Agreement). The Amended Credit Agreement also includes certain restrictive covenants and, among other things and subject to certain exceptions and qualifications, limits the Borrowers and any of their subsidiaries’ abilities to: (i) make certain restricted payments, (ii) enter into agreements that create liens other than liens securing the Amended Credit Facility and related documents, and certain other permitted liens, (iii) incur or guarantee additional indebtedness, (iv) engage in liquidations, mergers or amalgamations, (v) dispose of certain assets, and (vi) engage in certain transactions with affiliates. The Amended Credit Agreement also contains certain customary representations and warranties, affirmative covenants and events of default. Upon any events of default which include, among others, failure to make payments of principal, interest or fees when due, the Agent, among other remedies, may (or upon the written request of the Required Lenders (as defined in the Amended Credit Agreement) shall) suspend or terminate the revolving loan commitments, accelerate all outstanding obligations under both the Term Loan and New Revolving Credit Facility, increase the applicable interest rate by 2.0% per annum to the default rate, and/or require cash collateralization of the Company’s assets and letters of credit. As of December 31, 2025, the Borrowers remained compliant with the terms of the Amended Credit Agreement.

 

In accordance with ASC 470, Debt, the syndicated loan facilities embedded in the Amended Credit Agreement were accounted for as (i) new indebtedness comprised of the Term Loan, (ii) new indebtedness comprised of the New Revolving Credit Facility with the New Lenders, and (iii) a modification of the Revolving Credit Facility under the Prior Credit Agreement with FMB as an existing Lender. The Company accounted for the modification by performing the borrowing capacity test to determine that the borrowing capacity with FMB as an existing Lender decreased by approximately 15.6%. The Company then recorded a loss on the modification of $24 which was equal to 16% of existing deferred financing costs immediately prior to the modification. The remaining portion of deferred financing costs of $132 was carried forward to the New Revolving Credit Facility. The Company also incurred additional financing costs in aggregate of $850 which was allocated on a pro-rata basis to (a) the Term Loan facility of $523, which is amortized as interest expense over the term using the effective interest method and included within Term Debt on the Company’s consolidated balance sheets; and (b) the New Revolving Credit Facility of $327, which is amortized as interest expense over the term using the straight-line method and included within other non-current assets on the Company’s consolidated balance sheets.

 

During the year ended December 31, 2025, the Company recorded amortization of debt discount on the Term Loan of $27 and amortization of deferred financing costs on the New Revolving Credit Facility of $50 in the Company’s consolidated statements of operations. As of December 31, 2025, the Company had remaining unamortized debt discount on the Term Loan of $497 and deferred financing costs on the New Revolving Credit Facility of $435.

 

Promissory Note

 

The Promissory Note was issued on March 14, 2025 as part of the Settlement Agreement to resolve the contingent consideration liability. It is an unsecured obligation of the Company. The Promissory Note bears interest at a fixed annual rate of 14.0% (the “Interest Rate”). In the event of a default (as defined in the Promissory Note), or during any period of non-payment caused by restrictions under the Subordination Agreement (as defined below), the interest rate increases to 17.0% per annum (the “Default Rate”). The Promissory Note requires monthly payments of interest only commencing April 14, 2025 and continuing through September 14, 2025. Commencing October 14, 2025, the Company is required to pay principal and interest in accordance with an amortization schedule that requires equal monthly payments of $109 on the 14th day of each calendar month through maturity on September 14, 2027. On the maturity date, the Company is required to make a final balloon payment of $2,277, representing the remaining principal and accrued but unpaid interest outstanding at maturity. As of December 31, 2025, the Company is in compliance with the monthly required payments and there have been no events of default.

 

The principal balance of the Promissory Note (together with accrued but unpaid interest on such amounts) may be prepaid in whole or in part at any time prior to maturity, subject to the Company’s payment of a make-whole payment with such prepayment. The make-whole payment is equal to the aggregate monthly payments of interest on the prepayment amount that would be due after the prepayment date and through the maturity date, using the percentage, if any, by which the Interest Rate exceeds a prescribed “yield maintenance treasury rate.”

 

The Stockholders’ Representative’s rights under the Promissory Note are subject to a Subordination Agreement dated of March 14, 2025, by, and among, the Company, Reflect, First Merchants Bank and the Stockholders’ Representative (the “Subordination Agreement”). Under the terms of the Subordination Agreement, during any period in which an event of default existed under the Prior Credit Agreement, the Company was prohibited from making any payments on the Promissory Note unless FMB provided prior written consent, and the Stockholders’ Representative was prohibited from accepting or enforcing any payments during the subordination period.