Nature of Business and Liquidity |
3 Months Ended |
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Mar. 31, 2025 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Nature of Business and Liquidity | Nature of Business and Liquidity Organization
Crown Electrokinetics Corp. (the “Company”) was incorporated in the State of Delaware on April 20, 2015. Effective October 6, 2017, the Company’s name was changed to Crown Electrokinetics Corp. from 3D Nanocolor Corp.
The Company's "Smart Windows" division commercializes technology for smart or dynamic glass. The Company’s electrokinetic glass technology is an advancement on microfluidic technology that was originally developed by HP Inc.
On December 20, 2022, the Company incorporated Crown Fiber Optics Corp., a Delaware-based corporation, to own and operate its acquired business from the acquisition of Amerigen 7, LLC (“Amerigen 7”) in January 2023. Crown Fiber Optics Corp. is accounted for as a wholly-owned subsidiary of the Company. The Crown Fiber Optics Corp. entity includes both the “Fiber Optics” division, which provides contracting services to the fiber optics and telecommunications infrastructure industry, and the “Slant Wells” group, which focuses on the construction of slant wells for the provision of ocean water to desalination plants.
On July 26, 2024, the Company incorporated Element 82 Inc. ("Element 82"), a Delaware-based corporation, to enhance its portfolio with expertise in lead remediation.
On July 26, 2024, the Company incorporated PE Pipelines Inc., a Delaware-based corporation, to expand its portfolio in lead service line replacement and related water infrastructure projects.
On July 26, 2024, the Company incorporated Paramount Network Construction Inc. ("Paramount"), a Delaware-based corporation, to expand its portfolio in network construction and related infrastructure projects. This strategic incorporation strengthens the Company's capabilities and expertise within the critical telecommunications and public utility sectors.
On November 21, 2024, the Company incorporated Crown Construction Holdings Corp., a Delaware-based corporation, to expand its Crown Construction umbrella initiatives.
January 2025 and June 2024 Reverse Stock Split
On June 14, 2024, the Company’s board of directors authorized a reverse stock split (the “June 2024 Reverse Stock Split”) at an exchange ratio of one-for-150 basis. The June 2024 Reverse Stock Split was effective on June 25, 2024, such that every 150 shares of common stock were automatically converted into one share of common stock.
On January 28, 2025, the Company’s board of directors authorized a reverse stock split (the “January 2025 Reverse Stock Split”) at an exchange ratio of one-for-150 basis. The January 2025 Reverse Stock Split was effective on January 30, 2025, such that every 150 shares of common stock were automatically converted into one share of common stock.
The Company did not issue fractional certificates for post-reverse split common stock shares in connection with the January 2025 Reverse Stock Split and the June 2024 Reverse Stock Split. Rather, all shares of common stock that were held by a common stockholder were aggregated and each common stockholder was entitled to receive the number of whole common stock shares resulting from the combination of the aggregated common stock shares. Any fractions resulting from the reverse split computation were rounded up to the next whole common stock share amount.
The number of authorized shares and the par value of the common stock were not adjusted. In connection with the January 2025 Reverse Stock Split and the June 2024 Reverse Stock Split, the conversion ratio for the Company’s outstanding convertible preferred stock was proportionately adjusted such that the common stock issuable upon conversion of such preferred stock was decreased in proportion. Proportionate adjustments were made to the per share exercise price and the number of shares issuable upon the exercise or vesting of all stock options, restricted stock units and warrants outstanding, which resulted in a proportional decrease in the number of shares of the Company’s common stock reserved for issuance upon exercise or vesting of such stock options, restricted stock units and warrants, and, in the case of stock options and warrants, a proportional increase in the exercise price of all such stock options and warrants.
All references to common stock, restricted stock units, warrants and options to purchase common stock share data, per share data and related information contained in the condensed consolidated financial statements and the accompanying
notes have been retroactively adjusted to reflect the effect of the January 2025 Reverse Stock Split and the June 2024 Reverse Stock Split.
Nasdaq Delisting Determination
On March 3, 2025, the Company received a delisting determination of the Nasdaq Stock Market LLC ("Nasdaq"). Nasdaq will complete the delisting by filing a Notification of Removal from Listing and/or Registration on Form 25 with the SEC after applicable appeal periods have lapsed. The Company has submitted a request for reconsideration to the Nasdaq Hearings Panel and has otherwise appealed the determination to the Nasdaq Listing and Hearing Review Council as necessary. Trading of the Company’s common stock was suspended on Nasdaq effective with the open of the market on March 5, 2025. The Company’s common stock is eligible and has been traded on the over-the-counter ("OTC") market starting March 5, 2025 under the Company’s existing symbol "CRKN".
Liquidity and Going Concern
The Company has incurred substantial operating losses and negative cash flows from operations since its inception. As reflected in the condensed consolidated financial statements, the Company had cash of approximately $22.5 million and an accumulated deficit of approximately $152.6 million as of March 31, 2025. For the three months ended March 31, 2025, the Company had a net loss of approximately $9.7 million, and approximately $11.0 million of net cash used in operating activities.
The Company previously concluded in its annual report on Form 10-K for the year ended December 31, 2024, that based on the Company’s cash balance, $21.5 million in at-the-market net proceeds in January 2025, and the anticipated quarterly profit, measured in net income, starting in the second half of 2025 from revenue generated by Fiber Optics division, and its planned spending, substantial doubt about the Company’s ability to continue as a going concern did not exist.
As part of the quarterly reporting process, the Company has reassessed its future revenue growth in 2025 in response to the actual operating results for the three months ended March 31, 2025 and the current market conditions, including uncertainties arising from the new administration's policies and recent cost-cutting measures. While the Company anticipates growth in 2025 and 2026, the early-stage nature of a substantial portion of its operations introduces uncertainty regarding the timing and scale of this growth. As such, there can be no assurance that projected growth targets will be achieved as planned or at anticipated volumes.
The Company has previously obtained additional capital through the sale of debt or equity instruments to fund operations. The Company’s common stock was suspended on Nasdaq, subject to delisting, on March 5, 2025, which has negatively impacted the Company's ability to raise capital. Following the Nasdaq suspension and potential delisting of the Company's common stock, the Company is no longer able to raise capital under its existing at-the-market offering program or equity line-of-credit. There can be no assurance that the Company will be able to raise needed capital under acceptable terms, if at all. The sale of additional equity may dilute existing stockholders and newly issued shares may contain senior rights and preferences compared to currently outstanding shares of common stock. Debt securities may contain covenants and limit the Company’s ability to pay dividends or make other distributions to stockholders. If the Company is unable to secure the necessary financing, it may be forced to scale back or discontinue operations.
Given the uncertainties surrounding the operational growth and capital acquisition, management believes there is substantial doubt regarding the Company’s ability to continue as a going concern for the twelve months following the issuance of these condensed consolidated financial statements.
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
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