CREATIVE REALITIES, INC. Stock Compensation Disclosure

NOTE 15: STOCK-BASED COMPENSATION

 

A summary of outstanding options as of December 31, 2025 is included below:

 

Time Vesting Options

 

								Weighted
								Average				Weighted								Weighted
								Remaining				Average								Average
Range of Exercise				Number				Contractual				Exercise				Options				Exercise
Prices between				Outstanding				Life				Price				Exercisable				Price
$0.01	-	$4.00			1,064,000				9.44			$	2.44				-			$	-
$4.01	-	$8.00			480,005				4.67				7.39				480,005				7.39
8.01+					22,225				2.00				22.33				22,225				22.33
					1,566,230				7.87			$	4.24				502,230			$	8.05

 

Performance Vesting Options

 

Weighted

Average

Weighted

Weighted

Remaining

Average

Average

Number

Contractual

Exercise

Options

Exercise

Outstanding

Life

Price

Exercisable

Price

240,000

4.42

$

7.59

240,000

$

7.59

 

Market Vesting Options

 

Weighted

Average

Weighted

Weighted

Remaining

Average

Average

Number

Contractual

Exercise

Options

Exercise

Outstanding

Life

Price

Exercisable

Price

733,334

6.46

$

3.00

733,334

$

3.00

 

		Market Vesting Options								Time Vesting Options								Performance Vesting Options
						Weighted								Weighted								Weighted
						Average								Average								Average
		Options				Exercise				Options				Exercise				Options				Exercise
Date/Activity		Outstanding				Price				Outstanding				Price				Outstanding				Price
Balance, January 1, 2025			733,334				3.00				591,897			$	9.57				240,000			$	7.59
Granted			-				-				1,170,500				2.46				-				-
Forfeited or expired			-				-				(196,167	)			9.72				-				-
Balance, December 31, 2025			733,334				3.00				1,566,230			$	4.24				240,000			$	7.59

 

The weighted average remaining contractual life for options exercisable is 5.48 years as of December 31, 2025. No options were exercised during 2025. The aggregate intrinsic value of stock options outstanding and exercisable as of December 31, 2025 was approximately $252,000 and zero, respectively.

 

There are 2,000,000 shares authorized for issuance under the Company's 2014 Stock Incentive Plan (the “2014 Plan”). There are 1,475,564 options outstanding under the 2014 Plan as of December 31, 2025. The Company’s ability to issue new awards under its 2014 Plan expired in 2023.

 

On October 18, 2024, the Company’s shareholders approved the Company’s 2023 Stock Incentive Plan (the “2023 Plan”), which authorizes the issuance of up to 2,500,000 shares.  There are 1,064,000 options outstanding under the 2023 Plan as of December 31, 2025.

 

Employee Awards

 

On April 1, 2025, the Company granted stock options to purchase an aggregate of 567,500 shares of common stock to employees pursuant to the Company’s 2023 Plan, which was previously approved by shareholders. The options have an exercise price of $1.95 per share, equal to the closing market price of the Company’s common stock on the grant date. The options vest in equal annual installments over a three-year period, subject to continued service through each vesting date, and expire ten years from the date of grant. The Company determined the grant-date fair value using the Black-Scholes option pricing model with key assumptions including expected volatility of 96%, expected term of 6.5 years, risk-free interest rate of 4.00%, dividend yield of 0%, and the Company’s stock price of $1.95 as of the valuation date. The awards will be recognized as stock-based compensation expense on a straight-line basis over the requisite service period in accordance with ASC 718 Compensation - Stock Compensation (ASC 718), based on the grant-date fair value of the options.

 

On June 2, 2025, the Company granted stock options to purchase an aggregate of 378,000 shares of common stock to employees under the 2023 Plan. The options have an exercise price of $3.05 per share, equal to the closing market price of the Company’s common stock on the grant date. The options vest in equal annual installments over a three-year period, subject to continued service through each vesting date, and expire ten years from the date of grant. The Company determined the grant-date fair value using the Black-Scholes option pricing model with key assumptions including expected volatility of 94%, expected term of 6.5 years, risk-free interest rate of 4.17%, dividend yield of 0%, and the Company’s stock price of $3.05 as of the valuation date. The awards will be recognized as stock-based compensation expense on a straight-line basis over the requisite service period in accordance with ASC 718 based on the grant-date fair value of the options.

 

On June 2, 2025, the Company accelerated the vesting of the market-vesting options to purchase 733,334 shares of common stock. Prior to such acceleration, the vesting of these options depended on the Company’s share price meeting various price targets. One such share price target was an amount equal to the “Guaranteed Price,” as such term is defined in the Merger Agreement by and among the Company, Reflect, CRI Acquisition Corporation, a Delaware corporation, and RSI Exit Corporation, a Texas corporation and representative of the former stockholders of Reflect (“RSI”). On March 14, 2025, the Company and RSI settled and resolved a dispute related to the Guaranteed Consideration. On June 2, 2025, in consideration of the efforts in resolving and settling such dispute, the Compensation Committee of the Company fully vested the 733,334 options. As a result of the amendment and corresponding vesting, the Company recognized stock compensation expense of $1,149 during the year ended December 31, 2025.

 

On July 3, 2025, the Company granted 575,000 restricted stock units to employees under the 2023 Plan. The restricted stock units vest in three equal installments over a period of three years, subject to continued service through the applicable vesting dates. The grant date fair value of the restricted stock units was estimated at $3.30 per share based on the closing price of the Company’s common stock on the grant date. During the year ended December 31, 2025, 50,000 of these restricted stock awards were forfeited. The awards will be recognized as stock-based compensation expense over the requisite service period in accordance with ASC 718 based on the grant-date fair value of the options.

 

On September 15, 2025, the Company granted stock options to purchase an aggregate of 15,000 shares of common stock to employees under the 2023 Plan. The options have an exercise price of $2.31 per share, equal to the closing market price of the Company’s common stock on the grant date. The options vest in equal annual installments over a three-year period, subject to continued service through each vesting date, and expire ten years from the date of grant. The Company determined the grant-date fair value using the Black-Scholes option pricing model with key assumptions including expected volatility of 94%, expected term of 6.5 years, risk-free interest rate of 3.75%, dividend yield of 0%, and the Company’s stock price of $2.31 as of the valuation date. The awards will be recognized as stock-based compensation expense over the requisite service period in accordance with ASC 718 based on the grant-date fair value of the options.

 

On November 20, 2025, the Company granted stock options to purchase an aggregate of 110,000 shares of common stock to employees under the 2023 Plan. The options have an exercise price of $2.73 per share, equal to the closing market price of the Company’s common stock on the grant date. The options vest in equal annual installments over a three-year period, subject to continued service through each vesting date, and expire ten years from the date of grant. The Company determined the grant-date fair value using the Black-Scholes option pricing model with key assumptions including expected volatility of 94%, expected term of 6.5 years, risk-free interest rate of 3.75%, dividend yield of 0%, and the Company’s stock price of $2.73 as of the valuation date. The awards will be recognized as stock-based compensation expense over the requisite service period in accordance with ASC 718 based on the grant-date fair value of the options.

 

On December 1, 2025, the Company granted stock options to purchase an aggregate of 100,000 shares of common stock to employees under the 2023 Plan. The options have an exercise price of $2.89 per share, equal to the closing market price of the Company’s common stock on the grant date. The options vest in equal annual installments over a three-year period, subject to continued service through each vesting date, and expire ten years from the date of grant. The Company determined the grant-date fair value using the Black-Scholes option pricing model with key assumptions including expected volatility of 94%, expected term of 6.5 years, risk-free interest rate of 3.75%, dividend yield of 0%, and the Company’s stock price of $2.89 as of the valuation date. The awards will be recognized as stock-based compensation expense over the requisite service period in accordance with ASC 718 based on the grant-date fair value of the options.

 

The weighted average grant date fair value of employee stock options granted during 2025 was $2.05. Stock-based compensation expense recognized related to stock options and restricted stock units to employees (including the expense described above related to the market-vesting options) for the years ended December 31, 2025 and 2024 was $2,118 and $13, respectively, and is included in general and administrative expenses in the consolidated financial statements.

 

As of December 31, 2025, there was $2,950 of total unrecognized compensation expense related to unvested share-based awards, which is expected to be recognized over a weighted average period of approximately 2.5 years.

 

Director Awards

 

Compensation expense recognized for the issuance of stock options awarded to our Board of Directors for the years ended  December 31, 2025 and 2024 was $165 and $0, respectively, and was included in general and administrative expenses in the consolidated financial statements. As of December 31, 2025, there was $0 unrecognized compensation expense related to share-based awards to directors.