Crown Electrokinetics Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

Crown Electrokinetics Corp. (NASDAQ: CRKN) reported its Q2 2024 financial results, showcasing significant growth. Key highlights include:

- Revenue of $4.6 million, up 582% from Q1 2024
- Reiterated Q3 revenue guidance of $8.0 million
- Eliminated all investment debt and preferred equity
- Launched new divisions: Element 82 and PE Pipelines
- Regained NASDAQ compliance

Despite the revenue increase, the company reported a net loss of $5.0 million for Q2. Crown's CEO, Doug Croxall, expressed optimism about the company's positioning for the second half of 2024 and value creation in 2025.

Positive

• Q2 2024 revenue increased 582% to $4.6 million from $0.7 million in Q1 2024
• Reiterated Q3 2024 revenue guidance of $8.0 million
• Eliminated all investment debt and preferred equity, improving shareholder equity
• Regained NASDAQ compliance
• Launched new business divisions: Element 82 for lead pipe inspections and PE Pipelines for lead pipe remediation
• Fiber division generated $4.6 million in Q2 revenue

Negative

• Reported net loss of $5.0 million in Q2 2024
• Operating loss of $4.9 million in Q2 2024
• Cost of revenue increased to $4.0 million in Q2 2024 from $23,000 in Q2 2023
• Research and development expenses increased to $1.1 million in Q2 2024 from $0.5 million in Q2 2023

Financial Analyst

Crown Electrokinetics' Q2 2024 results show significant revenue growth, but operational challenges persist. Revenue jumped to $4.6 million, a 582% increase from Q1. However, the company still reported a net loss of $5.0 million, albeit improved from $14.5 million in Q1 2023.

The balance sheet restructuring, eliminating preferred equity and investment debt, is a positive step. Yet, the $8.9 million cash burn for operations in H1 2024 is concerning, despite the $11.8 million raised through financing activities. The projected Q3 revenue of $8.0 million suggests continued growth, but profitability remains elusive.

Investors should monitor the new business lines in lead pipe inspection and remediation for potential growth catalysts, while keeping an eye on the high operating expenses and R&D costs.

Tech Expert

Crown's diversification into fiber optic networks and lead pipe inspection shows promise, leveraging their technological expertise beyond smart glass. The targeted delivery of Gen 1 Alpha Smart Window Insert by late 2024 could be a game-changer, potentially opening new revenue streams.

The significant increase in R&D expenses ($1.1 million in Q2 2024 vs $0.5 million in Q2 2023) indicates heavy investment in innovation. This could lead to competitive advantages but also puts pressure on short-term profitability.

The company's ability to execute on its smart glass technology while expanding into new tech-driven sectors will be crucial. Investors should watch for updates on the Smart Window Insert and the performance of the new divisions to gauge long-term growth potential.

Second Quarter Revenues of $4.6 million up from First Quarter Revenues of $0.7 million, an increase of 582%

LOS ANGELES, Aug. 14, 2024 (GLOBE NEWSWIRE) -- Crown Electrokinetics Corp. (NASDAQ: CRKN) (“Crown” or the “Company”), a leading smart glass technology company and an expert in constructing fiber optic networks and lead pipe inspection and remediation, will report its financial results for the second quarter 2024 today, August 14, 2024.

Doug Croxall, Crown CEO and Chairman, “Our second quarter represents our best revenue quarter in our history. As of today, we have eliminated all investment debt and all classes of our preferred equity; thereby cleaning up both our balance sheet and cap table significantly. We have added to our senior management team and announced two new lines of business with lead pipe inspection and remediation. We are positioned for an outstanding second half of 2024, building atop of recent operational momentum that we expect will position Crown for a significant year of value creation in 2025.”    

Corporate Updates During and Subsequent to the Q2 2024

• Reiterates revenue guidance for third quarter of $8.0 million
• Gen 1 Alpha Smart Window Insert delivery date targeted for late 2024
• Fiber division generates $4.6 million of Q2 revenue an increase of 582% over Q1 revenue
• Twin Dolphin slant well project underway in Los Cabos Mexico and should lead to other international slant well projects  
• Management additions in Electrokinetic Film division as well as Element 82 and PE Pipelines divisions
• Launched Element 82 specializing in lead pipe inspections and PE Pipelines focusing on lead pipe remediation
• Restructured balance sheet eliminating all preferred equity and improving shareholder equity by three times
• Regained NASDAQ Compliance

Financial Results for the Second Quarter ended June 30, 2024

Revenue:

For the quarter ended June 30, 2024, Crown booked $4.6 million of revenues compared to $0.7 million in the first quarter of 2024. For the six months ended June 30, 2024, the Company's revenue was $5.3 million, compared to $0.1 million for the six months ended June 30, 2023.

Cost of revenue:

Cost of revenue was $4.0 million and $23,000 for the three months ended June 30, 2024, and 2023 and $5.8 million and $0.1 million for the six months ended June 30, 2024 and 2023, respectively.

Expenses:

Depreciation and amortization expense for the three months ended June 30, 2024 and 2023, were $0.2 million and $0.1 million, respectively.

Research and development expenses were $1.1 million for the three months ended June 30, 2024 compared to $0.5 million for the three months ended June 20, 2023.

General and administrative (“G&A”) expenses were $4.2 million for the quarter which included $2.4 of non-cash equity compensation expense. This represents a $0.1 million decrease in G&A expenses compared to 2023.

Loss from Operations:

Loss from Operations for the second quarter were $4.9 million, in line with the same quarter in 2023. June YTD operating losses were $8.6 million compared to $9.0 million in 2023.

Net losses:

Net losses were $5.0 million compared to $14.5 million in Q1 2023. June YTD Net losses were $9.6 million compared to $16.8 million in 2023.

Cash:

For the six months ended June 30, net cash increased $2.9 million to $4.0 million as the company deployed $8.9 million of cash for operations, $0.1 million for investments, and raised $11.8 million in financing activities.

Revenue guidance:

The Company expects third quarter revenues to be in line with previous guidance of $8.0 million.

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Date: August 14, 2024
Time: 12:00 PM ET
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About Crown Electrokinetics

Crown is comprised of two divisions, Fiber Optics and Electrokinetics Film. The Electrokinetics Film division is a smart glass technology and the creator of our Smart Window Insert based on its patented electrokinetic film. Crown’s Fiber Optics division is a builder of underground fiber optic networks as well as other utility infrastructure projects.

Safe Harbor Statement: 

Statements in this news release may be "forward-looking statements". Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions, or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in forward-looking statements due to numerous factors. Any forward-looking statements speak only as of the date of this news release and Crown Electrokinetic Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this news release.

This press release does not constitute a public offer of any securities for sale. Any securities offered privately will not be or have not been registered under the Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Crown Electrokinetics

IR Email: info@crownek.com

Source: Crown Electrokinetics: www.crownek.com

Crown Electrokinetics, Corp
Statements of Operations
(in thousands)
		Three Months Ended June 30,								Six months ended June 30,
			2024				2023				2024				2023
Revenue		$	4,648			$	37			$	5,330			$	59
Cost of revenue, excluding depreciation and amortization			4,183				23				5,819				54
Depreciation and amortization			74				81				286				263
Research and development			1,111				490				1,867				1,031
General and administrative			4,187				4,328				5,970				7,722
Loss from operations			(4,907)				(4,885)				(8,612)				(9,011)
Other income (expense):
Interest expense			(145)				(2,508)				(1,005)				(4,525)
Loss on extinguishment of warrant liability			-				-				-				(504)
Loss on extinguishment of debt			-				(2,345)				-				(2,345)
Gain on issuance of convertible notes			-				-				-				64
Change in fair value of warrants			23				2,130				-				7,736
Change in fair value of notes			-				(6,883)				-				(7,000)
Change in fair value of derivative liability			-				-				-				-
Other expense			-				(28)				(24)				(1,234)
Total other income (expense)			(122)				(9,634)				(1,029)				(7,808)
Net loss			(5,029)				(14,519)				(9,641)				(16,819)
Deemed dividend on Series D preferred stock			-				-				-				(6)
Cumulative dividends on Series A preferred stock			-				(5)				-				(9)
Cumulative dividends on Series B preferred stock			-				(29)				-				(49)
Cumulative dividends on Series C preferred stock			-				(10)				-				(10)
Cumulative dividends on Series D preferred stock			-				(53)				-				(84)
Cumulative dividends on Series D preferred stock							-								-
Cumulative dividends on Series D preferred stock							-								-
Cumulative dividends on Series D preferred stock							-								-
Cumulative dividends on Series D preferred stock							-								-
Cumulative dividends on Series F preferred stock			-				-				-				-
Cumulative dividends on Series F-1 preferred stock			-				-				-				-
Cumulative dividends on Series F-2 preferred stock			-				-				-				-
Deemed dividend in connection with conversion of Series A, Series B, and Series C preferred stock			(1,350)				-				(1,350)				-
Deemed dividend in connection with conversion of Series F, F-1, and F-2			(3,874)				-				(3,874)				-
Net loss attributable to common stockholders		$	(10,253)			$	(14,616)			$	(14,865)			$	(16,977)
Net loss per share attributable to common stockholders		$	(5.89)			$	(2,720.27)			$	(14.98)			$	(3,951.82)
Weighted average shares outstanding, basic and diluted:			1,739,995				5,373				992,278				4,296

Crown Electrokinetics, Corp
Balance Sheets
(in thousands)
		June 30, 2024			December 31, 2023
Cash		$	3,990		$	1,059
Prepaid and other current assets			378			728
Accounts receivable , net			3,351			83
Other receivables			211			-
Contract asset			1,244			-
Total current assets			9,174			1,870
Prepaid expenses long term			215			-
Property and equipment, net			3,012			3,129
Intangible assets, net			1,269			1,382
Right of use asset			1,878			1,701
Deferred debt issuance costs			292			1,306
Other assets			160			139
TOTAL ASSETS		$	16,000		$	9,527
Accounts payable		$	2,215		$	1,500
Accrued expenses			898			1,194
Lease liability - current portion			735			655
Notes payable short term			636			429
Deferred revenue			1,260			-
Total current liabilities			5,744			3,778
Notes payable long term			296			-
Lease liability - non-current portion			1,178			1,072
Total liabilities			7,218			4,850
Total stockholders' equity			8,782			4,677
TOTAL LIABILITIES AND EQUITY		$	16,000		$	9,527

Crown Electrokinetics, Corp
Statement of Cash flow
(in thousands)
		Six Months Ended June 30,
			2024				2023
	CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss	$	(9,641)			$	(16,819)
	Adjustments to reconcile net loss to net cash used in operating activities:
	Stock-based compensation		2,424				313
	Depreciation and amortization		286				372
	Loss on extinguishment of warrant liability		-				504
	Change in fair value of warrant liability		-				(7,736)
	Loss on extinguishment of debt		-				2,345
	Change in fair value of notes		-				7,000
	Amortization of deferred debt issuance costs		1,014				4,049
	Amortization of right of use assets		383				1,045
	Amortization of notes payable		(15)				-
	Other expenses		-				1,275
	Loss on disposal of equipment		-				235
	Changes in operating assets and liabilities:		-
	Prepaid and other assets		114				(14)
	Accounts receivable		(3,268)				-
	Contract asset		(1,244)
	Note receivables		(211)				-
	Contract liabilities		1,260				-
	Accounts payable		715				886
	Accrued expenses		(296)				(742)
	Lease liability		(374)				(1,101)
	Warranty customer liability		-				-
	Net cash used in operating activities		(8,853)				(8,388)
	CASH FLOWS FROM INVESTING ACTIVITIES
	Cash paid for acquisition of Amerigen 7		-				(644)
	Purchase of equipment		(56)				(707)
	Net cash used in investing activities		(56)				(1,351)
	CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from the exercise of warrants		-				2,061
	Proceeds from the issuance of common stock / At-the-market offering		588				2,198
	Proceeds from the issuance of notes in connection with Line of Credit		-				2,350
	Offering costs for the issuance of common stock / At-the-market offering		-				(91)
	Proceeds from issuance of Series F-1 preferred stock		-				2,328
	Proceeds from issuance of Series F-2 preferred stock		-				748
	Proceeds from issuance of January promissory notes, net of fees paid		-				1,357
	Borrowing of notes payable		1,164				-
	Repayment of notes payable		(646)				(1,997)
	Proceeds from the issuance of common stock in connection with equity line of credit, net of offering costs		10,734				-
	Net cash provided by financing activities		11,840				8,954
	Net increase / decrease in cash		2,931				(785)
	Cash — beginning of period		1,059				821
	Cash — end of period	$	3,990			$	36

FAQ

What was Crown Electrokinetics' (CRKN) revenue for Q2 2024?

Crown Electrokinetics (CRKN) reported revenue of $4.6 million for Q2 2024, representing a 582% increase from Q1 2024 revenue of $0.7 million.

Has Crown Electrokinetics (CRKN) provided revenue guidance for Q3 2024?

Yes, Crown Electrokinetics (CRKN) has reiterated its revenue guidance for Q3 2024, expecting revenues to be approximately $8.0 million.

What new business divisions did Crown Electrokinetics (CRKN) launch recently?

Crown Electrokinetics (CRKN) recently launched two new business divisions: Element 82, specializing in lead pipe inspections, and PE Pipelines, focusing on lead pipe remediation.

Has Crown Electrokinetics (CRKN) regained NASDAQ compliance?

Yes, Crown Electrokinetics (CRKN) has reported that it has regained NASDAQ compliance as of the Q2 2024 financial results announcement.