Crown Electrokinetics (CRKN): Diversifying Through Innovation to Power the Future

Published on March 17, 2025

Crown Electrokinetics Corp. (CRKN) is a leading provider of innovative technology infrastructure solutions that benefit communities and the environment. The company has strategically diversified its operations, establishing three core business divisions - Smart Windows, Fiber Optics, and Water Solutions - each leveraging cutting-edge technologies to drive positive change.

Business Overview and History

Crown Electrokinetics was originally incorporated on April 20, 2015, under the name 3D Nanocolor Corp. On October 6, 2017, the company changed its name to Crown Electrokinetics Corp. to better reflect its core focus on pioneering electrokinetic technology. The company's proprietary electrokinetic glass technology is an innovation derived from microfluidic advancements originally developed by HP Inc., offering groundbreaking applications for energy-efficient smart windows in various sectors.

In 2022, Crown took a strategic step forward by acquiring the assets of Amerigen 7, LLC, marking the company's entry into the fiber optics infrastructure space. This acquisition led to the creation of the Fiber Optics division, which specializes in the design, engineering, and construction of aerial and underground fiber optic networks.

The company further expanded its portfolio in 2024 with the establishment of the Water Solutions division. This division includes the Slant Wells group, which constructs innovative slant wells to provide a sustainable source of water for coastal regions facing water scarcity challenges, as well as Element 82, a subsidiary focused on lead pipe detection and remediation.

To strengthen its capabilities in critical infrastructure projects, Crown also integrated two wholly-owned subsidiaries in 2024 - Paramount Network Construction Inc., which focuses on network construction, and PE Pipelines Inc., dedicated to water infrastructure initiatives, particularly lead service line replacement.

Financial Overview

Financials

Crown's financial performance has been marked by significant progress and diversification in recent years. For the nine months ended September 30, 2024, the company reported record revenue of $13.4 million, a substantial increase from the $0.1 million generated in the same period of 2023. This growth was primarily driven by the Fiber Optics, Slant Wells, and Element 82 segments.

Gross profit for the nine-month period reached $0.9 million, compared to $5,000 in the prior-year period. The company's net loss for the nine months ended September 30, 2024, was $15.5 million, an improvement from the $19.7 million net loss reported in the same period of 2023.

In the most recent quarter (Q3 2024), Crown reported revenue of $8 million, meeting their top-line forecast. The net loss for this quarter was $5.9 million. It's worth noting that the company did not generate any revenue in Q3 2023, making year-over-year growth calculations impossible for this period.

For the fiscal year 2023, Crown reported revenue of $153,000, with a net loss of $29 million. The company's operating cash flow for 2023 was negative $16.2 million, and free cash flow was negative $18.3 million.

Liquidity

As of September 30, 2024, Crown had a cash balance of approximately $3.1 million and stockholders' equity of $9.9 million. The company has no debt on its balance sheet, positioning it well for continued growth and investment in its diversified business lines.

As of December 31, 2023, Crown had $1.1 million in cash and cash equivalents. The company's debt-to-equity ratio stood at 0.46, with total debt of $2.2 million and stockholders' equity of $4.7 million. Crown secured a $600,000 line of credit in 2024, which was fully drawn down and repaid during the year.

The company's current ratio and quick ratio as of December 31, 2023, were both 0.49, calculated from current assets of $1.9 million and current liabilities of $3.8 million. This indicates that the company may face some challenges in meeting its short-term obligations.

Operational Highlights and Outlook

Smart Windows Division

Crown's Smart Windows division is focused on developing innovative electrokinetic glass technology that improves energy efficiency, lowers carbon footprint, and increases comfort in buildings. The company has unveiled a three-phase rollout strategy for its Smart Window Inserts, with the alpha phase expected to commence in Q1 2025. While the development process has been time-consuming, Crown believes the overall market opportunity and total addressable market have grown in tandem, positioning the company for success as it nears commercialization.

The Smart Windows division partners with leading glass and film manufacturers for mass production and distribution of its DynamicTint product. This technology enables windows to transition between clear and dark states within seconds, making it suitable for various applications such as commercial buildings, automotive sunroofs, and residential windows.

Fiber Optics Division

The Fiber Optics division specializes in the design and construction of fiber optic networks, connecting rural and urban communities. In the third quarter of 2024, the company secured three major customer agreements, expanding its footprint in Oregon and Nevada. Crown sees strong demand for its services, with an uncontracted pipeline revenue estimated at over $50 million.

This division provides contracting services for both aerial and underground fiber optic networks. As demand for higher telecommunications bandwidth continues to grow, the Fiber Optics division aims to expand through selective market share growth, potential acquisitions, and the use of cutting-edge equipment like micro trenchers to enhance efficiency and service delivery.

Water Solutions Division

Crown's Water Solutions division is making significant strides in addressing critical water infrastructure challenges. The Slant Wells group recently broke ground on the installation of two slant wells in Cabo San Lucas, Mexico, an area challenged with clean water access. The company has also engaged with new customers for survey work, underscoring the strong demand for its scalable slant well solution.

Additionally, Crown's Element 82 and PE Pipelines businesses have gained momentum in supporting the U.S. Environmental Protection Agency's recently passed Lead and Copper Rule Improvements (LCRI) legislation. Element 82 secured initial lead pipe protection projects in Florida and New York, while PE Pipelines was awarded two initial lead pipe remediation contracts totaling $33 million. The company estimates over $70 million in expected projects related to this initiative.

Outlook and Guidance

For the full year 2024, Crown reiterated its revenue guidance of $22 million, with $9 million expected in Q4 2024. Looking ahead to 2025, the company introduced a revenue outlook of $30 million to $35 million, on track to achieve profitability in the first half of the year.

Risks and Challenges

While Crown has demonstrated impressive diversification and growth, the company faces several risks and challenges. The highly competitive nature of the industries in which it operates, potential supply chain disruptions, and the need for ongoing R&D investments to maintain its technological edge could impact its financial performance. Additionally, the company's reliance on a limited number of large customers in its Fiber Optics and Water Solutions divisions presents concentration risks.

Furthermore, the company's ability to raise capital remains uncertain, leading management to express substantial doubt about Crown's ability to continue as a going concern for the next twelve months. This uncertainty underscores the importance of achieving the projected revenue growth and profitability targets.

Conclusion

Crown Electrokinetics has transformed itself into a multi-faceted infrastructure solutions provider, leveraging innovative technologies to address critical challenges across diverse markets. Its strategic diversification into Fiber Optics and Water Solutions, combined with its core Smart Windows business, has positioned the company for continued growth and profitability. As Crown navigates the evolving landscape, its ability to execute on its ambitious plans and manage risks will be key to unlocking long-term value for shareholders.

The company's recent financial performance, particularly the significant revenue growth in 2024, demonstrates the potential of its diversified business model. However, Crown must continue to focus on improving its liquidity position and achieving sustainable profitability to ensure long-term success. With a strong pipeline of projects and increasing demand for its innovative solutions, Crown Electrokinetics appears well-positioned to capitalize on emerging opportunities in the infrastructure and technology sectors.

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