Crown Electrokinetics Reports Fiscal 2021 Third Quarter Financial Results and Provides Corporate Update
Improved Balance Sheet upon closing of $21.5 million public offering
Began trading on the NASDAQ under ticker symbol "CRKN"
Completed acquisition of intellectual property portfolio from HP
CORVALLIS, Ore., Feb. 17, 2021 /PRNewswire/ -- Crown Electrokinetics Corp. (NASDAQ: CRKN) ("Crown" or the "Company"), a leading smart glass technology company developing and commercializing patented thin-film solutions, today reported its financial results for the fiscal 2021 third quarter ended December 31, 2020.
"During the fiscal third quarter, Crown completed the necessary steps to become a Nasdaq-listed public company. This included the appointment of three new members to the Board of Directors bringing decades of experience in key areas including global energy solutions, integrated marketing and public company executive leadership, " said Crown Chairman & CEO, Doug Croxall.
"We entered 2021 with great momentum launching and successfully closing a $21.5 million capital raise and simultaneously listing on the Nasdaq Capital Market. Most recently, we completed the purchase of the intellectual property portfolio from HP. Crown is well positioned for its next phase of growth focused on the commercialization of our DynamicTintTM solutions," concluded Mr. Croxall.
Corporate Updates
- Launched the innovative DynamicTintTM Insert in November 2020. Leveraging Crown's DynamicTint in a convenient insert for your home skylight it will be used to control a room's light and make your home more sustainable.
- Enhanced the Board of Directors with the appointments of Edward Kovalik, John Marchese and Christopher Smith on December 1, 2020. The new additions to the Board join Dr. DJ Nag, a globally recognized intellectual property strategist, as independent directors.
- Edward Kovalik is the Chief Executive Officer of Unity National Financial Services, a minority owned boutique investment bank, and co-founder of Prairie Partners. Prior to Unity National, Mr. Kovalik had executive experience at KLR Group, a merchant bank focused on the Energy sector, and Rodman & Renshaw.
- John Marchese is the Founder, President and Managing Partner at Marchese Associates, a branding and integrated marketing consultancy located in Jacksonville Beach, Florida. With over 35 years of marketing and brand consulting experience, Mr. Marchese has worked with C-level executives of Fortune 500 companies to solve highly-complex business and portfolio marketing problems.
- Christopher Smith is a practicing attorney advising domestic corporate, international corporate and personal clients. He has extensive board experience serving as chairman and director of various public and private companies as well as chairmanships of numerous audit and governance committees. Mr. Smith's engagements have included Sylvania International, Puma, Cadence Innovation, Thompson Publishing, Barnes Engineering and Oneida, and other enterprises in a wide variety of industries. He is currently Lead Independent Director of Kubient, Inc. (KBNT), a leading digital communications enterprise.
- Improved the balance sheet with the closing of a $21.5 million gross capital raise on January 28, 2021. The underwritten public offering was of 4,150,000 shares of its common stock at a price of $4.50 per share. The Company received net proceeds of $19.3 million which will be used for general corporate matters, including continued technology development, and manufacturing infrastructure.
- Began trading on the Nasdaq Capital Market under the ticker symbol "CRKN" on January 26, 2021. In addition, the Company effected a 1-for-3 reverse stock split to meet listing requirements for the exchange.
- Completed the acquisition of ten intellectual property (IP) patents covering electrokinetic (EK) technology from HP, Inc. The acquired IP portfolio was incubated and developed by key Crown executives while previously working at HP. These patents cover innovative trade secrets that the team uses to develop innovative smart glass technology including DynamicTintTM.
About Crown Electrokinetics
Crown is a smart glass technology company and the creator of DynamicTint - We Make Your Glass Smarter™. Originally invented by Hewlett-Packard (HP, Inc.), our technology allows any glass surface to transition between clear and dark in seconds. With applications to a wide array of windows, including commercial buildings, automotive sunroofs, and residential skylights, we partner with leading glass and film manufacturers for mass production and distribution. At the core of our technology is a thin film that is powered by electrically-charged pigment which not only replaces common window tints but is also a more sustainable alternative to traditional window treatments. With its unique ability to be retrofitted to existing glass, DynamicTint™ offers myriad benefits related to reducing carbon emissions. The company is supported by a robust patent portfolio. For more information, please visit WWW.CROWNEK.COM.
Forward-Looking Statements
This press release contains forward-looking statements as defined within Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, and terms such as "anticipate," "expect," "intend," "may," "will," "should" or other comparable terms, involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Those statements include statements regarding the intent, belief or current expectations of Crown Electrokinetics and members of its management, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those described in Crown Electrokinetics' periodic reports filed with the SEC, and that actual results may differ materially from those contemplated by such forward-looking statements. Except as required by federal securities law, Crown Electrokinetics undertakes no obligation to update or revise forward-looking statements to reflect changed conditions.
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Balance Sheet |
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December 31, 2020 |
March 31, 2020 |
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(Unaudited) |
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ASSETS |
|||
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Current assets: |
|||
|
Cash & cash equivalents |
$ 35,609 |
$ 48,307 |
|
|
Prepaid & other current assets |
253,906 |
12,693 |
|
|
Total current assets |
289,515 |
61,000 |
|
|
Property and equipment, net |
148,240 |
92,629 |
|
|
Intangible assets, net |
204,651 |
235,007 |
|
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TOTAL ASSETS |
$ 642,406 |
$ 388,636 |
|
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current liabilities: |
|||
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Accounts payable |
$ 1,182,621 |
$ 1,262,389 |
|
|
Accrued expenses |
356,315 |
765,201 |
|
|
Accrued interest |
464,565 |
454,926 |
|
|
Notes payable, net of debt discount of $822,961 and $405,377, respectively |
2,842,931 |
3,083,158 |
|
|
Warrant liability |
2,542,415 |
1,733,718 |
|
|
Related party payable |
25,000 |
49,741 |
|
|
Total current liabilities |
7,413,847 |
7,349,133 |
|
|
Total liabilities |
7,413,847 |
7,349,133 |
|
|
Commitments and Contingencies (Note 12) |
|||
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STOCKHOLDERS' DEFICIT: |
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|
Preferred stock, par value $0.0001; 50,000,000 shares authorized, no shares outstanding |
- |
- |
|
|
Common stock, par value $0.0001; 200,000,000 shares authorized; 7,599,716 shares outstanding as of December 31, 2020 and 5,774,778 shares outstanding as of March 31, 2020, respectively |
760 |
577 |
|
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Additional paid-in capital |
29,758,066 |
9,487,285 |
|
|
Accumulated deficit |
(36,530,267) |
(16,448,359) |
|
|
Total stockholders' deficit |
(6,771,441) |
(6,960,497) |
|
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
$ 642,406 |
$ 388,636 |
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Statements of Operations |
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Three Months Ended December |
Nine Months Ended December |
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|
2020 |
2019 |
2020 |
2019 |
|||||
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Revenue |
$ - |
$ 100,000 |
$ - |
$ 100,000 |
||||
|
Cost of revenue |
- |
153,500 |
- |
460,500 |
||||
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Gross loss |
- |
(53,500) |
- |
(360,500) |
||||
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Operating expenses: |
||||||||
|
Research and development |
838,967 |
483,647 |
2,634,663 |
1,554,413 |
||||
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Selling, general and administrative |
1,857,892 |
1,428,686 |
11,455,061 |
4,297,077 |
||||
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Total operating expenses |
2,696,859 |
1,912,333 |
14,089,724 |
5,851,490 |
||||
|
Loss from operations |
(2,696,859) |
(1,965,833) |
(14,089,724) |
(6,211,990) |
||||
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Other income (expense): |
||||||||
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Other expense |
(483) |
- |
(54,709) |
- |
||||
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Interest expense |
(340,880) |
(309,422) |
(2,664,897) |
(1,226,021) |
||||
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Loss on exchange of notes payable for common stock and warrants |
- |
- |
(1,521,348) |
- |
||||
|
Loss on extinguishment of debt |
(255,046) |
- |
(452,646) |
- |
||||
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Change in fair value of warrant liability |
(598,899) |
- |
(1,337,355) |
136,326 |
||||
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Chang in fair value of derivative liability |
38,771 |
38,771 |
- |
|||||
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Total other expense |
(1,156,537) |
(309,422) |
(5,992,184) |
(1,089,695) |
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Net loss |
$ (3,853,396) |
$ (2,275,255) |
$ (20,081,908) |
$ (7,301,685) |
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Net loss per share, basic and diluted: |
$ (0.45) |
$ (0.58) |
$ (2.70) |
$ (2.03) |
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Weighted average shares outstanding, basic and diluted: |
8,595,124 |
3,946,403 |
7,430,701 |
3,605,001 |
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Nine Months Ended December 31, |
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2020 |
2019 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
$ (20,081,908) |
$ (7,301,685) |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation |
10,662,994 |
3,713,956 |
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Issuance of common stock to consultants |
302,109 |
240,000 |
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Issuance of common stock and warrants in connection with cancellation of consulting agreement |
- |
264,520 |
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Depreciation and amortization |
56,709 |
57,893 |
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Loss on extinguishment of debt |
452,646 |
- |
||
|
Loss on exchange of notes payable for common stock and warrants |
1,521,348 |
- |
||
|
Amortization of debt discount |
2,255,845 |
976,662 |
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Non-cash expenses for placement agent |
54,961 |
- |
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Change in fair value of warrant liability |
1,337,355 |
(136,326) |
||
|
Chang in fair value of derivative liability |
(38,771) |
- |
||
|
Bad debt expense |
- |
24,788 |
||
|
Changes in operating assets and liabilities: |
||||
|
Prepaid and other current assets |
(188,733) |
28,682 |
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|
Account payable |
120,067 |
652,054 |
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Accrued expenses |
(408,887) |
467,957 |
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Accrued interest |
348,852 |
249,694 |
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|
Net cash used in operating activities |
(3,605,413) |
(761,805) |
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CASH FLOWS FROM INVESTING ACTIVITIES |
||||
|
Purchase of equipment |
(81,964) |
(26,603) |
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Purchase of research and development license |
(25,000) |
- |
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Net cash used in investing activities |
(106,964) |
(26,603) |
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CASH FLOWS FROM FINANCING ACTIVITIES |
||||
|
Proceeds from the issuance of common stock, net of fees |
1,598,700 |
- |
||
|
Proceeds from related party non interest bearing advance |
25,000 |
48,741 |
||
|
Repayment of senior secured promissory note |
(200,000) |
- |
||
|
Proceeds from PPP loan |
205,200 |
- |
||
|
Repayment of related party non interest bearing advance |
(49,741) |
- |
||
|
Repayment of notes payable |
(53,000) |
- |
||
|
Proceeds from issuance of senior secured convertible notes and common stock warrants |
2,676,000 |
638,500 |
||
|
Common stock repurchased and subsequently canceled |
(450,000) |
- |
||
|
Payment of financing costs |
(52,480) |
- |
||
|
Change in cash overdraft |
- |
1,720 |
||
|
Net cash provided by financing activities |
3,699,679 |
688,961 |
||
|
Net decrease in cash |
(12,698) |
(99,447) |
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|
Cash — beginning of period |
48,307 |
99,447 |
||
|
Cash — end of period |
$ 35,609 |
$ - |
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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |
||||
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Unpaid deferred offering costs |
$ - |
$ 181,051 |
||
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Unpaid research and development license included in accounts payable |
$ 75,000 |
$ 100,000 |
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Beneficial conversion feature in connection with notes payable |
$ 618,657 |
$ 27,918 |
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Issuance of common stock in connection with conversion of notes |
$ 4,493,623 |
$ - |
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Issuance of common stock in connection with notes payable |
$ 1,133,650 |
$ 321,000 |
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Issuance of common stock in satisfaction of accounts payable |
$ 121,835 |
$ - |
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Exercise of common stock warrants |
$ 10 |
$ - |
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|
Canceled restricted stock awards |
$ 200 |
$ - |
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Reclassification of warrant liabilities |
$ 2,061,288 |
$ - |
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Issuance of common stock warrants |
$ 263,328 |
$ - |
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SUPPLEMENTAL CASH FLOW INFORMATION |
||||
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Cash paid for interest |
$ 60,201 |
$ - |
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|
Cash paid income taxes |
$ - |
$ - |
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SOURCE Crown Electrokinetics
Released February 17, 2021